Beijing’s Tightening Grip: Reassessing China’s High-Stakes Debt Strategy in Africa

Djibouti, Djibouti  — A decade after China’s big-ticket infrastructure spree swept across Africa, the shine is fading. Railways, highways, and ports still stand as symbols of ambition. But the debts behind them are now coming due.

From Djibouti to Nairobi and Addis Ababa, governments are rethinking their dependence on Chinese loans. And Beijing, once the continent’s biggest builder, is rethinking its own playbook.

For years, China was Africa’s largest bilateral lender, pumping more than $170 billion into projects between 2000 and 2022. The Belt and Road Initiative transformed skylines and closed infrastructure gaps that Western powers ignored. But the price tag has been steep, sparking fierce debate over whether Beijing is helping or trapping nations in debt.

That debate is now colliding with reality. With repayments piling up and global shocks squeezing economies, countries are struggling to pay. China is quietly pivoting—scaling back mega-projects and instead pushing smaller, less risky investments it calls “small and beautiful.”

The Horn of Africa: Debt in Sharp Focus

Nowhere is the shift clearer than in the Horn of Africa, where China’s projects have left a deep mark—and deep debts.

Djibouti: Strategic but Strained

Djibouti sits at one of the world’s busiest shipping lanes. China built railways, ports, and even its first overseas military base there. The investments gave the tiny country global weight.

But by 2023, Djibouti’s debt had ballooned to 76% of GDP, with China holding more than 70% of it. Some projects haven’t lived up to expectations, and repayment has become a struggle. In 2022, Djibouti suspended payments and later secured a temporary reprieve from China’s Exim Bank. Officials insist the borrowing was necessary, but doubts over long-term sustainability remain.

Ethiopia: Restructuring for Survival

Ethiopia has leaned heavily on Chinese money, especially for the Addis Ababa–Djibouti Railway. But the railway has struggled to turn a profit.

Facing mounting pressure, Addis Ababa turned to Beijing. China agreed to stretch repayment terms from 10 to 30 years, then granted a two-year suspension. In 2024, Ethiopia struck a $4.9 billion restructuring deal with creditors, with China playing a key role. It was a sign Beijing is willing to bend when its influence is on the line.

Kenya: The SGR Burden

Kenya’s Standard Gauge Railway, linking Mombasa to Nairobi, is the most controversial of all. Backed by billions in Chinese loans, it was billed as a game changer.

Instead, it has become a lightning rod. The railway has failed to cover its costs, leaving taxpayers to fill the gap. Courts declared its initial contract illegal in 2020. Lawmakers are now openly calling for loan renegotiations, admitting the country cannot keep up with payments. Parts of the contract that have surfaced show lopsided terms favoring Beijing.

A New Chapter in China-Africa Ties

The experiences of Djibouti, Ethiopia, and Kenya tell a broader story. African governments still want Chinese investment—but on better terms. The days of borrowing blindly for mega-projects are over.

Beijing, too, is adjusting. It has joined multilateral debt relief talks and is shifting toward smaller, more targeted projects. The test now is whether both sides can strike a balance: Africa’s need for development against the risks of debt, and China’s quest for influence against the demand for sustainable partnerships.

The stakes are high. And the world is watching.