In Africa, the impact of the Africa-Sino relationship is more visible in infrastructure development, investment, trade and human capital development[3]. It has also led to African commodity producers to command higher prices considering China’s massive demand for raw materials to fuel its growth. This relationship has also created considerable challenges on African countries that have not diversified their economies. Loans from China have provided African countries with an alternative source of capital, making them less dependent and overly reliant on the World Bank in development finance. As a result, this has made China the leading financier across the continent[4].
The relationship between Africa and China has been growing steadily over time, with African states benefitting through trade with China during the past decade to the tune of USD 160.0 billion in 2011 from just USD 9.0 billion in 2000[5]. The impact of this relationship is such that African countries have access to a very large export market in China for their raw materials and in turn they can acquire goods and other services from China to grow their economies. As part of the Africa-China relationship, China has extended more than USD 86.0 billion in commercial loans to African governments and state-owned entities between 2000 and 2014, an average of about USD 6.0 billion a year. China’s presence in African has been reinforced by the recent visit by the its president to some of the rapidly growing economies on the continent including South Africa. The visit to South Africa by the high-powered Chinese delegation on the eve of the Brazil, Russia, India, China and South Africa (BRICS) summit saw the signing of investment agreements between the two countries. This could be read as a deliberate move by African nations who have made a shift from the over-reliance on the west and institutions which came with what African countries considered stringent, controlling conditions that came with high interests which ended up leaving them in debts to pay over long periods[6].
China’s role on the African continent has been defined by the financing of more than 3000, largely critical infrastructure projects[7]. At the sixth Forum on China-Africa Cooperation (FOCAC) summit in South Africa in 2015, the Chinese president Xi Jinping pledged USD 60.0 billion in commercial loans to the African countries, which would increase lending to at least USD 20.0 billion a year if that pledge is fulfilled[8].
China also has regional interests and relationships with African regional bodies like the Southern African Development Community (SADC). The relationship is geared towards regional infrastructure investment through the China-Africa Joint Chamber of Commerce and Industry[9]. SADC gets to benefit through the priority infrastructure projects in the Energy, Transport and Water Sectors for the 15 years duration 2013 to 2027 as contained in the SADC Regional Infrastructure Development Master Plan blueprint that will guide the implementation of cross-border infrastructure projects[10]. The Master Plan is being implemented over three five-year intervals, with the first interval covering the periods from 2012 to 2017 and initial investment target of around USD 64.0 billion. The second and third intervals will cover the periods from 2017-2022 and 2022-2027 with a total proposed investment of between USD 428.0 billion and USD 558.0 billion respectively[11].
Individual African countries where China has been consistently making investments include Zimbabwe where China is the largest foreign investor[12]. This relation has been viewed to be largely in favour of China, with the latter merely exploiting the natural and mineral resources of the former. However, Angola is by far the largest recipient of all Chinese loans, with USD 21.2 billion in cumulative loans[13]. Currently, China imports one third of its oil from Africa, and some of its investments are tied to resource extraction[14]. For example, Angola has negotiated its oil resources for infrastructure development. Ethiopia follows second as the largest recipient of Chinese loans at USD 12.3 billion, Sudan at USD 5.6 billion, Kenya at USD 5.2 billion, and the Democratic Republic of Congo (DRC) at USD 4.9 billion. These top five countries constitute more than 50.0% of all Chinese official loans to Africa[15].
Transportation constitutes the largest sector financed by Chinese loans sitting at USD 24.2 billion extended to projects to African nations. Energy, which is mainly electricity is the second largest sector that African countries benefit from, constitutes USD 17.6 billion in financial assistance. This is followed by mining and oil sectors at USD 9.0 billion, and communication projects at USD 6.5 billion. The rest of the loans are for funding miscellaneous projects in several sectors[16].
Of the USD 24.2 billion loans for transportation, Africa benefitted through road construction, maintenance at USD 9.6 billion and railways comprised USD 9.5 billion. Electricity infrastructure is the second largest sector at USD 17.6 billion in which African countries used the funds for hydroelectric projects, power transmission and distribution lines, gas pipelines, gas-power plants, and coal power plants constituting the top five categories. Hydropower projects alone constitute USD 8.0 billion. More than 83.0% of the mining sector loans went to Angola’s state-owned oil company Sonangol[17].
One key criticism against China’s aid policy is its strong selfish motivation that puts its own political and economic interests ahead of recipient’s priorities of economic development. While Africa-Sino relation is often touted as “win-win” by Chinese and African leaders, the relationship has been criticised for being biased toward Africa’s natural resource exports in return for Chinese manufactured consumer goods[18]. The argument is centred on whether this relationship is actually promoting African development or fuelling instead China’s economic growth at the expense of African economies[19]. The argument is that China acquires raw materials at very low prices compared to the expensive processed finished manufactured goods that African nations buys from the Chinese, skewing the balance of trade. Additionally, an outcry from the local South African and Botswana textile manufacturers who complain about the flooding of Chinese textiles which seem to get dumped onto the local market at a very low prices that end up driving local producers out of business. Manufacturing is the main contributor to employment and economic growth; thus, African countries would be better off investing in manufacturing and beneficiation instead of merely exporting raw materials to China.
It can be said that China’s presence on the African continent presents both opportunities and challenges. It is the responsibility of African governments to be pro-active in harnessing these opportunities to their advantage. The case in point will be for African countries to strategically place themselves into benefiting from the USD 900.0 billion scheme that the Chinese are extending through the Belt and Road Action Plan. “One Belt, One Road” is an initiative spearheaded by the Chinese government to improve trade and economic integration across Asia, Europe, and Africa[20]. The strategy uses free-trade agreements and infrastructure projects – including roads, ports and railways – to create a modern Silk Road across 65 countries, which have a combined GDP of USD 21.0 trillion. It includes both an economic land “belt” through Eurasia, and a maritime “road” to connect coastal Chinese cities to Africa and the Mediterranean. For Africa, BRI isn’t only a better connection to the Chinese market. This, together with the promise of Chinese-funded infrastructure, has raised African interest in the initiative, even as some Africans have reservations about the rise of Chinese influence[21]. The launch of a new Chinese-funded rail network, which will link the interior of Kenya to the Belt and Road port of Mombasa in the country’s coast, revealed this doubt. As leaders praised it as a massive achievement that will supercharge Kenya’s future development, popular opinion was more divided, with complaints that the project is too expensive and will lead to undue Chinese influence in the country.
According to the Chinese government’s official plans, BRI has two African hubs: Kenya and Egypt. But Chinese-funded rail and communication networks are also linking other East African countries like Ethiopia, Tanzania and Rwanda to the BRI route[22]. The most significant of these is Kenya’s newly inaugurated Standard Gauge Railway. This Chinese-financed and built network links Mombasa and Nairobi, and future extensions will connect to an existent Chinese-built line between Ethiopia’s capital of Addis Ababa and Djibouti, as well as to other countries in the region. The combination of port and anti-piracy expansion will arguably smooth long-distance trade with China, while facilitating African trade via closer BRI hubs. Mozambique recently discovered offshore natural gas. While not officially a BRI country, it is positioned to benefit from BRI-related port and shipping expansion in order to sell natural gas to China[23]. The benefits to Mozambique here seem to be a clear positive.
Chinese inclusion of Africa in the Belt and Road Initiative means the continent is suddenly confronted with a whole new set of opportunities and dilemmas. On the positive side, some East African governments see the influx of Chinese investment in infrastructure and manufacturing as a way to bridge infrastructure gaps and to position their countries as new logistics and manufacturing hubs that could serve not only Africa but gain access to overseas markets.
By Kudzai Tamuka Moyo & Michael Andina
[1] AU 2010. China & Africa: Assessing the Relationship on the Eve of the Fourth Forum on China Africa Co-operation (FOCAV IV), African Union: Addis Ababa. Available At: https://au.int/ [Last Accessed: 29 July 2018].
[2] Berhe, M.G. & Hongwu, L. 2013. China-Africa Relations: Governance, Peace and Security, Institute for Peace and Security Studies: Addis Ababa. Available At: https://www.africaportal.org/ [Last Accessed: August 2018].
[3] Ayodele, T. & Sotola, O. 2014. China in Africa: An Evaluation of Chinese Investment, Initiative for Public Policy Analysis: Lagos. Available At: http://www.ippanigeria.org/ [Last Accessed: 22 June 2018].
[4] Thrall, L. 2015. China’s Expanding African Relations: Implications for U.S National Security, Rand Corporation: Santa Monica. Available At: https://www.rand.org/ [Last Accessed: 2 July 2018].
[5] Brautigam, D. & Hwang, J. 2016. Eastern Promises: New Data on Chinese Loans in Africa: 2000 to 2014, China-Africa Research Initiative: Washington, D.C. Available At: http://www.sais-cari.org/ [Last Accessed: 2 September 2018].
[6] Edinger, H. & Sandrey, R. 2013. Is China bad for Africa’s Industrialisation? , on the International Centre for Trade and Sustainable Development Website, viewed on 29 July 2018, from https://www.ictsd.org/.
[7] Alves, A.C. 2013. ‘China’s ‘Win-Win’ Corporation: Unpacking the Impact of Infrastructure-for-Resources deals in Africa’, South African Journal of International Affairs, Vol. 20, Issue 2, pp.: 207-226. Available At: https://doi.org/ [Last Accessed: 2 September 2018].
[8] Sun, Y. 2016. The Sixth Forum on China-Africa Cooperation: New Agenda and New Approach?, The Brookings Institute: Washington, D. C. Available At: https://www.brookings.edu/ [Last Accessed: 02 July 2018].
[9] SADC 2015. SADC China Investment Seminar, on the Southern African Development Community Website, viewed on 22 June 2018, from https://www.sadc.int/.
[10] SADC 2015. SADC China Investment Seminar, ibid.
[11] SADC 2015. SADC China Investment Seminar, ibid.
[12] Thompson, R. 2012. Assessing the Chinese Influence in Ghana, Angola and Zimbabwe: The Impact of Politics, Partners and Petro, Stanford University: Stanford. Available At: https://docplayer.net/ [Last Accessed: 2 September 2018].
[13] Brautigam, D. & Hwang, J. 2016. Eastern Promises: New Data on Chinese Loans in Africa: 2000 to 2014, ibid.
[14] Shelton, G. & Kabemba, C. 2012. Win-Win Partnership? China, Southern Africa and the Extractive Industries, on the Southern Africa Resource Watch Website, viewed on 2 September 2018, from http://gold.sarwatch.org/.
[15] Brautigam, D. & Hwang, J. 2016. Eastern Promises: New Data on Chinese Loans in Africa: 2000 to 2014, ibid.
[16] Brautigam, D. & Hwang, J. 2016. Eastern Promises: New Data on Chinese Loans in Africa: 2000 to 2014, ibid.
[17] Brautigam, D. & Hwang, J. 2016. Eastern Promises: New Data on Chinese Loans in Africa: 2000 to 2014, ibid.
[18] Edinger, H. & Sandrey, R. 2013. Is China bad for Africa’s Industrialisation?, ibid.
[19] Alves, A.C. 2013. ‘China’s ‘Win-Win’ Corporation: Unpacking the Impact of Infrastructure-for-Resources deals in Africa’, ibid.
[20] Xia, L. 2018. China Signs More Trade Deals with Belt and Road Countries, on the Xinhua News Agency Website, viewed on 2 September 2018, from http://www.xinhuanet.com/.
[21] SADC 2015. SADC China Investment Seminar, ibid.
[22] Xia, L. 2018. China Signs More Trade Deals with Belt and Road Countries, ibid.
[23] Yan 2018. China, Mozambique Sign Cooperation Agreements Worth USD 100 Million, on the Xinhua News Agency Website, viewed on 2 September 2018, from http://www.xinhuanet.com/.
