By Enyichukwu Enemanna
China’s role as a top funding source to developing nations has shifted in recent years, with new loans to poorer countries falling sharply while debt repayments continue to rise, analysis released by ONE Data has indicated.
The inaugural report by the ONE Data initiative discovered that many low and middle-income countries, particularly in Africa are now transferring more funds to China in debt payments than they receive in fresh loans from Beijing.
The shift has coincided with an increase in net financing from multilateral institutions, including International Monetary Fund (IMF) which have become the main source of development finance once debt-service outflows are taken into account.
Multilateral lenders increased net financing by 124% over the past decade and now provide 56% of net flows, equivalent to $379 billion between 2020 and 2024, the analysis found.
“The fact that there’s less lending coming in, but that previous lending from China still needs to be serviced — that’s the source of the outflows,” David McNair, executive director at ONE Data said.
Africa has experienced the most dramatic reversal in financing from China, the world’s second-largest economy. It went from receiving $30 billion to paying out $22 billion, a $52 billion swing.
Africa has experienced the most dramatic reversal in Chinese finance. It went from receiving $30 billion to paying out $22 billion, a $52 billion swing.
In 2020-24, the most recent period for which data is available, Africa saw the largest impact, with an inflow of $30 billion in 2015-19 turning to an outflow of $22 billion.
The data does not include cuts that took effect in 2025. The closure of the U.S. Agency for International Development last year and a drop in allocations from other developed countries has already hit developing economies, especially in Africa.
Once 2025 data becomes available, there is likelihood that it will show a large drop in Official Development Assistance flows, said McNair.
He said the trend was “a net negative” for African nations, as many governments face difficulties funding public services and investment – but would at the same time promote domestic accountability as governments rely less on external financing.
