New Delhi, March 7 (NationPress) The established model of resource-backed loans by China in Africa is facing increasing scrutiny from experts and development officials, as highlighted in a recent report.

This lending strategy, which connects loans to anticipated commodity exports like oil, copper, and cobalt, has been prevalent throughout the continent for financing infrastructure projects. However, its long-term viability is now under serious question, according to the Daily Monitor.

The African Development Bank (AfDB) has voiced concerns about this approach, with President Akinwumi Adesina labeling the loans as “asymmetrical” and “non-transparent,” advocating for a halt to resource-backed lending (RBLs) in African countries.

Critics contend that China’s transition from lending to debt extraction is placing immense pressure on national budgets and jeopardizing economic stability, as per the report.

Although Chinese financing has spurred an infrastructure surge for over two decades, the slowdown post-COVID and a decrease in new loans have revealed significant weaknesses.

“Linking repayments to unpredictable commodity markets has ensnared nations like Venezuela and Angola in a ‘creditor trap,’ compelling them to increase resource exports to meet debt obligations,” the Daily Monitor reported.

This model also fosters corruption and mismanagement, as loans are often tied to Chinese state-owned contractors through non-competitive bidding processes, frequently resulting in inferior infrastructure.

For instance, Ecuador’s Coca Codo dam fell short of delivering the expected economic benefits.

The effects of this model on African nations are highly variable. Angola managed to utilize its oil income to decrease its debt from $10.2 billion to $8.9 billion in the first half of 2025, stabilizing its debt-to-GDP ratio to approximately 9 percent.

Conversely, Kenya is grappling with the financial strain of the Chinese-funded Standard Gauge Railway, dedicating $1 billion annually from a $33 billion budget to service debts, with obligations being restructured in Chinese yuan, according to the report.

Experts assert that China’s resource-backed debt model, once celebrated as “patient capital,” is shifting towards a cycle marked by economic and ecological fragility.

As access to easy credit diminishes, borrowing countries must navigate the challenge of balancing rising debt with domestic development needs, raising critical questions about the sustainability and fairness of this approach.