China is cementing its position as Africa’s top trade partner and aid donor.
At the Forum on China-Africa Cooperation (FOCAC), a triennial gathering of Chinese and African leaders that has been convening at a summit level since 2000, Chinese President Xi Jinping promised $60 billion of aid, investment and loans to African states.
The new pledges, which include $10 billion of investments from Chinese companies, coincide with concerns over the growing level of indebtedness of some African states, particularly to China.
Since the launch of FOCAC Africa has borrowed heavily from China. On Monday, when the two-day FOCAC meetings opened, African states’ indebtedness to Beijing had reached $130 billion.
“There is a growing sense of worry over the volume of debt African countries owe China, and there are serious concerns over the ability of the most heavily indebted African countries to repay and service the loans,” says Mohamed Fayez, Asian Affairs expert at Al-Ahram Centre for Political and Strategic Studies.
“It has been easy for African states to borrow, and Beijing has been keen to provide loans for Africa.”
China is an easy partner for African states, says Fayez, “in the sense that unlike Western donors Beijing does not require borrowing countries to observe any democratic or human rights standards or adopt a particular economic system.
“It does not place constraints on the spending of the loans or request any follow-up auditing. It is very basic give and take: African countries get aid, loans and investments and China gains influence in a continent rich in natural resources and with an important presence in the UN General Assembly.
“China is competing over Africa with the US, Japan, India and the old colonial powers and it is winning,” says Fayez. Beijing has much more economic presence “in countries where it was competing with the US, Japan and India” and “has significantly marginalised the influence and presence of the old colonial powers.”
It has not been easy or cost-free for Beijing, says Fayez. The Chinese government and Chinese companies had to be fast and forthcoming in their economic reach-out to a continent desperate for aid, infrastructure and commodities, from cheap kitchenware to armaments.
In the process several African countries have significantly improved their infrastructure, either through direct aid or loans from the Chinese government or through cooperation with the Asian Infrastructure Investment Bank, established in 2016 with capital of $100 billion, and the Silk Road Fund, established two years earlier with $40 billion capital.
Beijing’s motivation is to gain economic clout. “But it is also about a specific trade strategy, the Belt and Road Initiative [BRI], which Beijing believes will consolidate its economic status internationally,” says Fayez.
BRI, an ambitious trade and development plan that seeks to connect most of Asia, a good part of Africa and the entire Mediterranean basin, was launched in 2013.
“An enormous project which requires mega infrastructure, it has proved convenient for many countries in Asia and also in East Africa.
Beijing aims to connect Asia with Africa through a series of ports on the Indian Ocean and the Red Sea, and through connected railways and roads. Much of the infrastructure is already under construction.
“China already has a series of connected railways that link cities in east China to cities across Asia and in southern Europe.” There is an expressway in Uganda, railways in Angola and Nigeria, an advanced railway in Ethiopia, a railway connecting Tanzania with Zambia and one connecting the capital of landlocked Ethiopia to the port of Dijbouti where Beijing has a military base.
In the process, says Fayez, China has become the single largest bilateral financer of infrastructure in Africa. “Yes, this helps the development of countries with an established partnership with Beijing, but it is all in the service of BRI.”
“When Egypt thinks of its relations with China it will certainly be eying potential benefits from BRI which will extensively use the Suez Canal, and have spinoffs for Egypt in terms of its trade relations with Africa, especially East Africa with which Egypt has major strategic interests and a sub-regional preferential trade agreement.”
“Intercontinental trade between Egypt and other countries of Africa has always been hampered by the absence of efficient commercial transportation. Now China is building the infrastructure.
Egypt and China have excellent relations. Egypt just needs to consolidate its African presence to make the most of an opportunity that is up for grabs.”
“Though BRI is designed to serve the interests of China other countries will inevitably benefit. To what extent depends on how hard they work at it.”
Fayez agrees with analysts and diplomats who say the ongoing trade battle between the US and China is resulting in Beijing moving faster with its BRI plans.
China could end up losing its share of US markets in which case it will need alternatives, and Africa is a big market.
As China seeks to move faster with BRI it may well, in the pursuit of stability, lend its backing to conflict management in African countries, says Fayez.
China has been during the past year controlling a bigger share of the military purchase of African countries, Fayez said. He explained that some of these armaments are being tried in Africa and are bringing more strength to civil wars there.
“With the advanced plans of BRI, we could actually see a strategic change in the position of China there,” he said.
As China continues to build in Africa, African countries accrue more debt. A recent IMF report identified 40 per cent of low-income countries in Africa as suffering a debt distress.
“There are worries that if countries fail to honour their debts they might have to concede land, ports or natural resources to China,” says Fayez. Beijing has already discussed such concessions with Asian countries that are deep in hock to China.
China’s engagement in Africa is not philanthropic. It is seeking advantages, not least the inevitable political influence it will have over African states in the UN “which, when needs arise, could be used to halt any attempt by Taiwan to seek UN recognition of its independence and prevent rival Asian powers Japan or India from joining the UN Security Council following any reforms at the international body”.
But what do African countries gain in return?
“They might not gain as much as China but there are development and connectivity benefits,” says Fayez.
Chinese leader Xi Jinping insists Beijing is placing no political conditions on its economic cooperation with Africa. And the current chair of the African Union (AU), Rwandan President Paul Kagame, points out those who are warning Africa of a Chinese debt trap have hardly been at the forefront of aiding the continent.
Kagame spoke of the importance of greater cooperation in identifying and meeting Africa’s development needs and said African countries should work together beneath the AU umbrella to maximise the benefits that accrue through cooperation with China.
* A version of this article appears in print in the 6 September 2018 edition of Al-Ahram Weekly under the headline: Development vs debt