have shown that while RFI agreements offer valuable opportunities, there are often also considerable risks involved. In addition to issues over good governance and transparency, there are concerns about the structural effect of Chinese investment on African economies.
It is important to state that RFI agreements do not necessarily worsen Africa’s resource curse, nor are they a panacea for the development challenges on the continent. If RFI projects are well-chosen and implemented, they can in theory, produce significant returns for a country’s economy. Yet, if African governments do not carry out the necessary due diligence for selecting projects, make inappropriate agreements, or accrue too much debt, the consequences of RFIs could be potentially severe.
The coronavirus pandemic has placed enormous strain on the budgets of many African countries. This is as most developing countries in Africa are often not well-positioned to commit resources to fight the pandemic and repay their debt commitments simultaneously. That being said, China seldom writes off RFI loans due to several domestic constraints and usually prefers to adopt more flexible options on repayment.
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