JOHANNESBURG, Jan 27 (Reuters) – China’s role as a major financier to developing nations has changed over the past decade, with new loans to poorer countries falling sharply while debt repayments continue to rise, according to analysis released by ONE Data.
The inaugural report from the ONE Data initiative found that many low- and middle-income countries — particularly in Africa — are now transferring more funds to China in debt payments than they are receiving in new financing from the world’s second-largest economy.
The swing coincided with an increase in net financing from multilateral institutions, which have become the main source of development financing once debt service issues are considered.
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 are fewer loans coming in, but that the previous loans from China have yet to be serviced – that’s the source of the outflow,” said David McNair, executive director of ONE Data.
In 2020-24, the most recent period for which data is available, Africa saw the biggest impact, with inflows of $30 billion in 2015-19 turning into outflows of $22 billion.
The data does not include reductions that came into effect in 2025. The closure of the United States Agency for International Development last year and reductions in allocations from other developed countries have already hit developing economies, especially in Africa.
Once the 2025 data becomes available, it is likely to show a large drop in Official Development Assistance flows, McNair said.
He said the trend was a “net negative” for African nations, as many governments face difficulties in financing public services and investment – but at the same time promotes domestic responsibility as governments rely less on external funding.
The report also highlighted a wider decline in bilateral financial flows and in private external debt – also trends likely to be exacerbated by cuts in aid from 2025 onwards.
(Reporting by Colleen Goko; Editing by Karin Strohecker and Kevin Liffey)