• Tenfold increase in Chinese policy lending into MENA from 2015 to 2016
  • UAE was the top target country for lending in MENA
  • Sub-Saharan Africa has seen the vast majority of lending into MEA since 2014
  • Power projects attracted most of the financing

The value of loans from Chinese lenders to energy and infrastructure projects in the Middle East and Africa (MEA) has soared between 2014 and 2017, from USD 300mn to USD 8.8bn, with policy lenders China Development Bank and China Exim particularly active in helping bridge the MEA’s infrastructure gap, according to the latest research by global law firm Baker McKenzie*.

Almost half of the total USD 19bn of Chinese outbound loans poured into infrastructure projects in sub-Saharan Africa since 2014 were made last year (2017). Notably, Chinese lenders accounted for more than 40% of all infrastructure finance in sub-Saharan Africa in 2017 and its policy banks made more than four fifths of lending by Development Finance Institutions in the region. The African countries seeing most Chinese lending are Kenya and Nigeria, which alone have swallowed up almost 40% of the USD 19bn of lending to projects in sub-Saharan Africa since 2014.

Chinese policy lending into the Middle East and North Africa (MENA) increased nearly tenfold from 2015 to 2016 alone, from USD 368mn to USD 3.5bn, reflecting the Chinese government’s vision for an enhanced relationship with the countries of a strategic region. The Arab nations play an important role in China’s signature Belt and Road Initiative (BRI) for strong trade routes linking China with central and South-East Asia.

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Sandeep Puri is the Head of the UAE Banking & Finance practice of Baker McKenzie Habib Al Mulla, based in Dubai. He has extensive experience advising on all aspects of banking, finance and capital market matters across the Middle East. Sandeep has been based in the UAE since 2003 and has worked on both conventional and Islamic finance transactions across various asset classes, including project finance, corporate finance, asset finance, real estate and capital markets (including sukuk).

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