China has loaned Eritrea US$23 million to develop telephone systems, the normally isolationist Horn of Africa state said this week. China has been gradually extending its influence and links with many nations in Africa, which it views as a rich source of raw materials needed to power its economy.

The Eritrean Information Ministry’s web site said the loan was "payable over a long period of time". "On the basis of President Isaias Afwerki’s visit to China from 17 to 24 February last year and the agreements reached in different development and economic programs, the government of the PRC (People’s Republic of China) extended a loan amounting to USD 23 million," it said.

The agreement was signed on Tuesday by Eritrea’s National Development Minister, Woldai Futur, and China’s ambassador in Asmara, Ju Zian, the announcement said. "The loan is for the development of infrastructure for both fixed and mobile telephones," Eritrean Information Minister Ali Abdu told Reuters.

Eritrea is expected to begin mining gold and other minerals in 2008, but interests between the two states may go deeper. On his visit to China last year — a rare foreign foray which also included Pakistan — Afwerki reportedly visited a military college that once trained him. Six months later, Eritrea received a senior military delegation from China. In March, Afwerki welcomed Chinese construction officials and expressed a desire for stronger economic ties.