Editor's note: He Yinghao is an assistant researcher at the Institute for National Strategy and Regional Development, Zhejiang University. The article reflects the author's opinion and not necessarily the views of CGTN.

Under the framework of the Forum on China-Africa Cooperation (FOCAC), the special loan for the development of African small and medium-sized enterprises (SMEs), undertaken by China Development Bank, has become an important financial instrument supporting Africa's real economy under the Belt and Road Initiative (BRI). 

According to official data from China Development Bank, the initiative has cumulatively disbursed over 26 billion yuan ($3.8 billion), covering 33 African countries, supporting more than 40,000 SMEs, and directly creating 430,000 jobs. The funds are mainly directed toward productive sectors such as agriculture, manufacturing, logistics, and infrastructure. Its core value lies not in short-term liquidity support, but in using development finance to help Africa build local industrial capacity and long-term growth foundations.

One of the most persistent challenges facing African economies is not a lack of market demand, but the financing constraints faced by SMEs. According to the International Finance Corporation (IFC), nearly 40% of formal SMEs in developing countries face an unmet financing need totaling $5.2 trillion. In Africa, SMEs account for around 80% of employment, yet many struggle to secure stable financing because of limited collateral, high borrowing costs, and restricted access to long-term credit. In sectors such as agro-processing, manufacturing, and infrastructure-related industries, the shortage of patient capital has become a major barrier to business expansion, competitiveness, and industrial upgrading.

The special loan is designed to address exactly this structural bottleneck. Unlike short-term commercial lending, it focuses on long-term investment in agro-processing, industrial parks, local manufacturing, logistics networks, and supply chain development. Its purpose is not simply to ease temporary financial pressure, but to help businesses expand production, improve competitiveness, and build lasting growth capacity. Such investment does more than create jobs, generate tax revenue, and strengthen local supply chains. It also helps African economies move beyond dependence on raw material exports by supporting industrial upgrading and stronger domestic growth drivers.

Some Western institutions argue that policy finance under the BRI distorts market allocation and weakens market principles. From the perspective of development economics, however, this criticism may not fully capture a basic reality: markets do not emerge in a vacuum. They require infrastructure, industrial capacity, and most importantly, patient capital. 

In many African countries, the more pressing constraint is not excessive government intervention, but the shortage of long-term capital needed to support industrialization. Without financing for infrastructure, agricultural modernization, and early-stage manufacturing, market systems themselves cannot develop effectively. In this sense, development finance is not a substitute for markets. It is what makes markets possible in the first place.

More importantly, policy finance plays a critical role in addressing the structural financing gaps that market mechanisms often fail to cover during the early stages of industrialization. Infrastructure development, agricultural modernization, and manufacturing upgrading usually require long investment cycles, slow returns, and involve significant positive externalities. These are precisely the kinds of investments that short-term commercial capital is often unwilling or unable to finance. 

Policy finance, therefore, does not weaken market principles; rather, it serves as a necessary correction to market failure. The industrialization experience of many countries shows that long-term, stable, and patient capital is indispensable in the early stages of development. Only after productive capacity and basic industrial foundations are established can private capital enter on a sustainable basis. Without this foundation, markets cannot function effectively.

In this sense, the value of BRI special loans lies not simply in providing funding, but in helping African countries build industrial foundations and strengthen sustainable development through long-term capital support. These loans not only address financing constraints more effectively, but also create the conditions necessary for markets to develop and function. Claims that such financing "weakens market principles" may not fully reflect the realities of industrialization in developing countries and may blur the distinction between building markets and operating mature ones.

For African countries, what matters most is not short-term financial relief, but long-term development finance that can support industrialization, create jobs, and strengthen industrial competitiveness. The experience of the African SME special loan shows that development finance is not opposed to markets, but rather helps create the conditions for markets to grow. This is not only central to China-Africa cooperation, but also carries broader relevance for other Global South countries working toward economic transformation.