Economic Giants of the East and Debt Accumulation in Sub Saharan Africa

Abstract

This study investigates the level to which Chinese Loan Financiers’ contribute to debt pile up in Sub Sahara Africa countries (SSA). Using a panel data from 45 SSA countries from 2000 to 2017 and adopting the Pooled Ordinary Least Sqaure (OLS) regression method, the findings suggested that credit disbursement from Commercial Development Bank (CDB) and Suppliers Credit to SSA countries each has a significant positive impact on SSA debt accumlation. However, credit from Eximbank has a significant negative impact on debt accumulation in SSA. In terms of sectorial contribution to debt stock, the Envrionmental sector was the highest recipient of Chinese loans compared to Multisector, Food and Unallocated sectors in SSA. The useful implication is that to minimise debt stock in SSA countries, policy makers within the sub region must efficiently take debt miimising decisions after analysing the tradeoff between pressing development needs and the debt accumulation. As an input to existing literature, this study makes available an imperative contribution for deliberations on the relevance of external borrowing and debt accumulation in SSA. JEL: C23, G51, H6