East African economies have in the past 10 years borrowed $29.42 billion to grow their transport, communication, manufacturing and energy sectors.
The region's economies are now spending almost eight per cent of their revenues to service these loans, which analysts say are becoming a burden, especially given that their impact is yet to be seen on the growth.
The latest data from the China-Africa Research Initiative (Cari) at John Hopkins University shows that Ethiopia owes Beijing $13.73 billion, followed by Kenya at $9.8 billion. Uganda owes $2.96 billion and Tanzania $2.34 billion.
Rwanda, South Sudan and Burundi owe China the least amounts -- $289 million, $182 million and $99 million respectively.
Cari director Deborah Brautigam said that the risk for the African borrowers relates to the projects' profitability.
"It is always important to look at whether these projects will generate enough economic activity to repay these loans, as opposed to being seen as merely ribbon-cutting opportunities," Ms Brautigam said.
The bulk of the monies, according to research by The EastAfrican, went into the transport sector, followed by power, communications and manufacturing.
Ethiopia's biggest intake of the Beijing loans was in 2013, coinciding with the launch of its joint standard gauge railway project with Djibouti. Addis took up more than $6.62 billion from Beijing for its mega projects, which also included the setting up of manufacturing zones.
The data also shows Kenya's new railways line accounted for the highest debt intake from Beijing at $3.7 billion in 2014.
China Exim Bank has been the go-to financier for the region's governments, giving out more than $16.3 billion. The China Development Bank advanced East African economies more than $6.9 billion, while other Chinese lenders are currently owed $6.1 billion, data shows. In terms of sector funding, Ethiopia invested the bulk of its funds in the transport sector ($4.37 billion), which was used for both the Addis Ababa light railway project and the Addis-Djibouti 700km railway. This was followed by communications at $3.16 billion and power projects at $2.54 billion.
Its manufacturing sector, which supports its fledging special industrial zones, including the Eastern Industry Zone and Huajian International Shoe City, received $2.02 billion.
"China gave priority to infrastructure and has promoted Africa's sustainable development through these loans, which have been used for infrastructure construction, energy and the manufacturing industry," said Liu Qinghai, a visiting researcher at Cari and head of the Centre for African Economic Studies at the Institute of African Studies at Zhejiang Normal University.
Kenya's transport sector took in $5.55 billion, largely driven by the new railway line from Mombasa to Naivasha.
Nairobi also took a $597 million loan for its power projects, including the $135 million for the 55 MW solar power plant in Garissa funded by the China Exim Bank.
South Sudan has received $158 million for its transport sector to date, and a further $24 million for its energy projects.
Tanzania's energy sector remains the top financed sector funded by Chinese money, at $1.16 billion.
Dar es Salaam, which has not taken up any Chinese debt under President John Magufuli, has received $552 million for its communications sector.
Uganda, on the other hand, has seen its energy sector receive the highest funding from Beijing, at $1.92 billion, while its transport sector has absorbed $762 million.
Rwanda's China debt for transport amounts to $151 million.
But the region's countries seem to have slowed down bingeing on Chinese debt, with only Kenya and Ethiopia going to Beijing for loans.
Ethiopia borrowed $652 million last year, down from $926 million in 2016, while Kenya took $64 million, down from $1.09 billion in 2016.
In 2016, Kigali took $70 million and Kampala $85 million.
Debt roll over
Last month, Ethiopia became the first country to get its Chinese debt rolled over announcing that Beijing had agreed to restructure its $4 billion loan on the railway linking its capital Addis with neighbouring Djibouti.
Ethiopia's Prime Minister Abiy Ahmed said that the country's loans will now receive a further 20-year extension, which will see its annual repayments narrow to an affordable level.
"In conversations with our Chinese partners, we had the opportunity to enact limited restructuring of some of our loans.
"In particular, the loan for the Addis Ababa-Djibouti railway, which was meant to be paid over 10 years, has now been extended to 30 years. Its maturity period has also been extended," Dr Abiy said.
Kenya also sought to get a grant as part of the package for its $3.8 billion loan for its continuing railway projects, as it seeks to manage its debt burden.
"The Naivasha-Kisumu phase of the SGR will cost $3.8 billion. And owing to its regional significance, I would request that 50 per cent of its cost be provided as part of grant financing," President Uhuru Kenyatta said at the Forum on China-Africa Co-operation in Beijing in August. This request was not granted.
Tim Jones, an economist at the Jubilee Debt Campaign, said that the continent debt problem could worsen, especially given the opaque nature in which they are signed.
"Debt problems are worsening and many lenders bear responsibility, not just China. We need new rules to make all lenders publicly disclose loans to governments at the time they are given. We also need to see these lenders made to restructure and reduce debts," Mr Jones said.
Last month, China' s special envoy to Africa, Xu Jinghu, denied claims that Beijing was burdening Africa with debt, noting that China was Africa's main creditor.
Indeed, data shows that the continent owes more to private lenders than to China.
"It is baseless to shift the blame onto China for these African countries debt problems. Their debt position has 'been built over time even before we came in.
"We have to look at the fluctuations in the international economic situation vis-a-vis the price of minerals, their key exports. This is where the problem is, and not Chinese loans," Mr Xu said.
Credit: Daily Nation
Chinese funds are not for "vanity projects" in Africa but are to build infrastructure that can remove development bottlenecks, Chinese President Xi Jinping said on Monday, telling Chinese firms they also had to respect local people and the environment.
Xi said at a business forum before the start of a triennial China Africa summit their friendship was time-honoured and that China's investment in Africa came with no political strings attached.
"China does not interfere in Africa's internal affairs and does not impose its own will on Africa. What we value is the sharing of development experience and the support we can offer to Africa's national rejuvenation and prosperity," Xi said.
"China's cooperation with Africa is clearly targeted at the major bottlenecks to development. Resources for our cooperation are not to be spent on any vanity projects but in places where they count the most," he said.
China has denied engaging in "debt trap" diplomacy but Xi is likely to use the gathering of African leaders to offer a new round of financing, following a pledge of $60 billion at the previous summit in South Africa three years ago.
Chinese officials have vowed to be more cautious to ensure projects are sustainable. China defends continued lending to Africa on the grounds that the continent still needs debt-funded infrastructure development.
Beijing has also fended off criticism it is only interested in resource extraction to feed its own booming economy, that the projects it funds have poor environmental safeguards, and that too many of the workers for them are flown in from China rather than using African labour.
Xi told business leaders Chinese firms in Africa had to be aware of their social responsibilities and make sure their investments served the community and improved their wellbeing.
"I hope that our entrepreneurs will act to fulfil social responsibilities and respect local culture and tradition," he said.
"I also hope you will do more in staff training and bettering lives for the local people and will put more emphasis on the environment and resources," Xi said.
'AFRICA KNOWS BEST'
Chinese officials say this year's summit will strengthen Africa's role in Xi's Belt and Road initiative to link China by sea and land with Southeast and Central Asia, the Middle East, Europe and Africa through an infrastructure network modelled on the old Silk Road.
Xi said the plan, for which Beijing has pledged $126 billion, would help provide more resources and facilities for Africa and would expand shared markets.
China loaned around $125 billion to the continent from 2000 to 2016, data from the China-Africa Research Initiative at Washington's Johns Hopkins University School of Advanced International Studies shows.
State media has accused the West of sour grapes over China's prominent role in Africa and has angrily rejected claims of forcing African countries into a debt trap.
"In terms of cooperation with China, African countries know best," widely read tabloid the Global Times wrote in an editorial on Monday.
"Western media deliberately portray Africans in misery for collaborating with China and they appear to have discovered big news by finding occasional complaints in the African media about Sino-Africa cooperation," it said.
Every African country is represented at the business forum apart from eSwatini, self-ruled Taiwan's last African ally that has so far rejected China's overtures to ditch Taipei and recognise Beijing.
African presidents in attendance include South Africa's Cyril Ramaphosa, Egypt's Abdel Fattah al-Sisi, Zambia's Edgar Lungu and Gabon's Ali Bongo.
There are some controversial guests. Sudan President Omar al-Bashir, who has been in power for nearly 30 years, is wanted by the International Criminal Court for war crimes over killings and persecution in Sudan's Darfur province between 2003 and 2008.
Xi told him on Sunday that "foreign forces" should not interfere in Sudan's internal affairs, China's Foreign Ministry said.