"Power Plays: China’s Changing Energy Financing in Africa" China Global South Project, 4 April 2025

Chinese financiers are pivotal players in Africa’s energy sector, with the two major policy banks, the China Development Bank (CDB) and the Export-Import Bank of China (Exim Bank), alone having provided $54.7 billion of energy finance on the continent.

By 2018, when Chinese financing to Africa reached $34 billion, commercial banks and suppliers [...] were accounting for about one-third of the total.

Conversely, policy banks have seen their financing flows decreasing, grappling with economic and regulatory headwinds post-2017, such as a drop in China’s foreign reserves and internal reforms.

This downturn coincided with a sharp reduction in the offerings of risk insurance for overseas financiers and a wave of restructurings involving debt-burdened borrowers such as Ethiopia, Ghana, and Zambia.

[...] references to commercial-oriented instruments—such as commercial creditors, equity investors, and export-credit insurance providers—have risen sharply, surpassing mentions of policy-based finance.

Our analysis demonstrates that Chinese commercial creditors in Africa levy higher interest rates, offer shorter loan maturities and impose more restrictive grace periods than their state-owned policy bank counterparts. [...] Additionally, commercial banks generally impose shorter loan terms, with a median maturity of 10 years, starkly contrasting with the roughly 15-year median provided by state-owned policy banks.

This means credits from commercial creditors are more expensive, potentially imposing a greater debt burden compared to policy-bank funding for the same amount of resources.

CDB-financed power generation projects are estimated to emit just under 60 million tonnes of carbon dioxide annually, compared to 7.5 million tonnes from Exim Bank-funded projects.

[...] the environmental impact of these projects varies significantly: CDB-financed power generation projects are estimated to emit just under 60 million tonnes of carbon dioxide annually, compared to 7.5 million tonnes from Exim Bank-funded projects.

[...] CDB predominantly employs commercial lending practices, with a less institutionalised decision-making process and less involvement of external agencies. This autonomy allows CDB to prioritise profitability, often favouring projects with higher immediate returns but greater environmental costs.

The evolving landscape of Chinese lending in Africa, characterised by a diversification of creditors and their varying financial capacities, is signalling a recalibration of Chinese energy finance strategies on the continent.

Moving forward, Chinese energy finance is likely to become more sophisticated. [...] despite these expected differences between the Chinese creditors, all of them are anticipated to move away from the traditional focus on large-scale hydropower and coal projects. This could potentially pave the way for a more diverse and sustainable African energy portfolio.