Horn, Reinhart and Trebesch (2021) warn that Chinese loans to developing countries collateralized against natural resource revenues have the potential to become a threat to debt sustainability due to the size of such deals and their lack of transparency. The lack of transparency is highlighted by the authors’ estimate that 50% percent of Chinese lending (overall, not just RBLs) is missing from official statistics.

Some studies have focused on the role of China. Brautigam and Gallagher (2014) provide a systematic empirical overview of Chinese commodity-backed loans (with data on loans until 2011) and discuss some key features of these loans. Sanderson and Forsythe (2012) analyze these deals from the perspective of China’s development banks. Meidan (2016) analyzes their importance in terms of China’s access to oil resources.

Another group of relevant studies focus on the resolution of debt repayment problems in cases where there is collateralized lending; and two papers look at the outcome of renegotiating collateralized debt extended by China. In the case of Gardner et al. (2020) the borrower is the Republic of Congo, while Acker et al. (2020) look at loans taken by Angola and Chad. Both papers contrast collateralized loans with uncollateralized loans.

There has been very little work on the socio-economic impact of projects financed via RBLs. Fieldwork by Tang and Shen in Ghana found that the Bui Hydropower Project in Ghana, financed via an RBL backed by cocoa proceeds, “has improved local urban households’ access to electricity and increased their ownership of electric appliances” (Tang & Shen, 2020).

The World Bank and IMF, among other international financial institutions, have analyzed collateralized loans in order to formulate their own recommendations. The IMF-WB (2020) concludes that collateralized transactions “can be beneficial to a developing country borrower under a range of circumstances”, but also points to risks and discourages this practice when the proceeds are not spent on assets which can be used to repay the loans, when loans are excessively large and when the details of such borrowings are opaque. The policy paper also touches on a number of considerations, many of which are also stated in this paper, including the fact that such loans are often over-collateralized (they use excessive amounts of collateral) to enhance the borrower’s creditworthiness. They also highlight how the secured nature of certain RBLs might run afoul of negative pledge clauses in loan contracts, including loans made by multilateral development banks.

There are also multiple case studies focused on a single or small number of RBLs. These include Alves (2013) who compares the experience of Angola and Brazil; Gillies and Quaghe (2018) who discuss a proposed deal in Nigeria; and Landry (2018) who looks at the Democratic Republic of Congo’s (DRC) Sino-Congolaise des Mines (Sicomines) case.

The current paper adds to the literature by providing a more detailed large-scale empirical review of existing RBLs based on data that we reviewed. Our work builds on earlier findings published by the Natural Resource Governance Institute (NRGI, 2020), and extends it significantly using novel data and further analysis.

# 3. Data

The analysis in this paper is based on an extended database of 30 major resource-backed loans. These loans cover the period 2004-2018 across Sub-Saharan Africa, covering 11 countries. This database builds on a data set of RBLs first published by NRGI (2020) which itself built primarily on the Johns Hopkins SAIS China-Africa Research Initiative’s (CARI) data set on Chinese lending to Africa.4

> 4 CARI-BU (2021) https://chinaafricaloandata.bu.edu/

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