Trains delayed: Ethiopia debt woes curtail China funding

ADDIS ABABA/BEIJING (Reuters) – Ethiopia has been lauded by experts from China’s ruling Communist Party as a “model country” in Beijing’s $126 billion Belt and Road initiative to build rail, road and sea links tying China to Eurasia and Africa.

It said that Chinese investment in the country was cooling and that the China Export and Credit Insurance Corp was reducing the scale of its investment there.

Against a backdrop of rising worry over African indebtedness to China, Prime Minister Abiy Ahmed will visit Beijing for the Forum on China-Africa Cooperation (FOCAC), which starts on Monday.

He is due to meet Chinese Prime Minister Li Keqiang and is expected to court investment from Chinese firms into Ethiopia’s agro-industrial and pharmaceutical businesses, China’s Xinhua news agency said.

Ethiopia has been a top destination for Chinese loans in Africa, despite its lack of natural resources, with state policy banks extending it more than $12.1 billion since 2000, according to the China Africa Research Initiative (CARI) at the Johns Hopkins School of Advanced International Studies in Washington (SAIS).

The country’s ruling EPRDF coalition, in power since ousting a military junta in 1991, aims for Ethiopia to reach middle income status by 2025 and is pursuing ambitious manufacturing-led industrialization that has involved building roads, a railway, and industrial parks – as well as mounting debt.

Ethiopian Central Bank Governor Yinager Dessie told Reuters in July that the government hopes to reduce its debt with China, which he said holds most of Ethiopia’s bilateral foreign debt.

“We will have some discussions in the months ahead. I don’t exactly know where that discussion will take us in terms of seeing or looking for diversified options for debt repayment,” Dessie said.
read more