How co­op­er­a­tion with China can de­liver more African de­vel­op­ment

This whole de­bate about Africa's debt trap to China is be­ing driven by anti-Chi­nese sen­ti­ment or Sino­pho­bia.

Financial Nigeria Magazine - - Contents - Efem N. Ubi, PhD, is a Re­search Fel­low and Head, Divi­sion of In­ter­na­tional Eco­nomic Re­la­tions, at the Nige­rian In­sti­tute of In­ter­na­tional Af­fairs, La­gos.

Since its es­tab­lish­ment 18 years ago, the Fo­rum on China-Africa Co­op­er­a­tion (FOCAC) has re­mained a ver­i­ta­ble plat­form on which Africa’s po­lit­i­cal, eco­nomic and so­cio­cul­tural re­la­tion­ship with China has con­tin­ued to wax stronger. In fact, China has, over the years, used this plat­form to en­gage with nearly all the coun­tries of Africa, ex­cept Swazi­land.

Last month, from Septem­ber 2-4, the Sev­enth Min­is­te­rial Con­fer­ence of FOCAC was held in Bei­jing, China. In at­ten­dance were heads of state and gov­ern­ment, heads of del­e­ga­tion, the Chair­per­son of the African Union Com­mis­sion, min­is­ters of for­eign af­fairs and min­is­ters in charge of eco­nomic co­op­er­a­tion from China and 53 African coun­tries. This year’s fo­rum por­trayed, once again, how se­ri­ous and im­por­tant both Chi­nese and African gov­ern­ments re­gard mu­tual de­vel­op­ment. Like ev­ery other FOCAC, the sev­enth ses­sion has also seen nu­mer­ous prom­ises/pledges from China to Africa.

This is ev­i­dent in the new com­mit­ments China made to Africa. At the sum­mit, China’s Pres­i­dent, Xi Jin­ping, an­nounced an­other $60 bil­lion pack­age for as­sis­tance and loans to Africa. The break­down of the 2018 FOCAC’s pledge shows $15 bil­lion was al­lo­cated for grants, in­ter­est-free loans and con­ces­sional loans; 20 bil­lion is for credit lines; $10 bil­lion is ear­marked for a spe­cial fund for de­vel­op­ment fi­nanc­ing. An­other $5 bil­lion has been al­lo­cated for a spe­cial fund for fi­nanc­ing

im­ports from Africa. $10 bil­lion was ear­marked for in­vest­ment in the next three years.

What is dif­fer­ent about the new pledge com­pared to the $60 bil­lion pro­vided in 2015, is that this time around, China gave a huge con­sid­er­a­tion to sup­port im­ports from Africa. The aim is to bal­ance Chi­naAfrica trade, which has re­mained in deficit over the years. In other words, it is be­lieved the fund will en­cour­age more Chi­nese im­ports from Africa, es­pe­cially im­ports of “non-re­source prod­ucts.”

De­vel­op­ment fi­nanc­ing has been in­creased by $5 bil­lion, bring­ing the to­tal for this form of fi­nanc­ing to $10 bil­lion.

The eight ma­jor ini­tia­tives of FOCAC over the next three years as high­lighted by Pres­i­dent Xi in­clude in­dus­trial pro­mo­tion, in­fra­struc­ture con­nec­tiv­ity, trade fa­cil­i­ta­tion, green de­vel­op­ment, ca­pac­ity build­ing, health care, peo­ple-to-peo­ple ex­changes, and peace and se­cu­rity.

The Fo­rum on China-Africa Co­op­er­a­tion Bei­jing Ac­tion Plan (20192021) is also in­dica­tive of the key ar­eas of en­gage­ment in the next three years. The key ar­eas, which ev­ery African coun­try en­gag­ing with China should fo­cus on are agri­cul­ture, in­dus­trial ca­pac­ity de­vel­op­ment, in­fra­struc­ture de­vel­op­ment, tourism, in­vest­ment and eco­nomic co­op­er­a­tion, trade, health care, ed­u­ca­tion, en­vi­ron­men­tal pro­tec­tion, anti-cor­rup­tion, con­sular af­fairs, im­mi­gra­tion, ju­di­ciary and law en­force­ment. These are crit­i­cal ar­eas that could trans­form Africa.

Thus, with the re­bound­ing of the Chi­nese econ­omy, there are more op­por­tu­ni­ties for co­op­er­a­tion be­tween China and Africa. I will look at three fac­tors that need to be given greater at­ten­tion in the next three years if Africa is to fur­ther max­i­mize the ben­e­fits of FOCAC.

Africa must en­gage strate­gi­cally

The ques­tion I of­ten ask is; how can African coun­tries har­nessed this co­op­er­a­tion for their max­i­mum and mu­tual ben­e­fits? Nearly all, if not all the in­dus­tri­al­ized coun­tries, have a pol­icy of en­gage­ment with Africa. On the con­trary, I have not seen any pol­icy doc­u­ments de­pict­ing, for in­stance, Nige­ria’s strate­gic en­gage­ment with the in­dus­tri­alised na­tions.

It is im­por­tant to note here that to pro­tect na­tional in­ter­ests, it is crit­i­cal for African coun­tries to have a pol­icy as well as an agenda for in­ter­na­tional co­op­er­a­tion. This is the only means through which China-Africa re­la­tions can be a win-win.

The Belt and Road Ini­tia­tive

It is worth not­ing that even with the much that has been at­tained in the re­la­tion­ship be­tween China and Africa, many African coun­tries, in­clud­ing Nige­ria, were ex­cluded from the Belt and Road Ini­tia­tive (BRI). A pe­rusal of the Ac­tion Plan adopted at the FOCAC sum­mit shows the role BRI will play in Africa’s de­vel­op­ment.

The in­ter­est­ing thing about the 2018 FOCAC is that China and coun­tries in Africa have come to terms with the fact that Africa should be part of the BRI. As seen in the pre­am­ble of the ac­tion plan, “the two sides be­lieve that Africa is an im­por­tant part­ner in the Belt and Road co­op­er­a­tion, and pledge to lever­age the strengths of the Fo­rum and sup­port China and Africa in jointly build­ing the Belt and Road.” In that re­spect, “The two sides will take the Belt and Road Ini­tia­tive as an op­por­tu­nity to strengthen multi-di­men­sional, wide-rang­ing and in­depth co­op­er­a­tion for mu­tual ben­e­fits and com­mon de­vel­op­ment.” It is hoped the BRI will pro­vide Africa with great op­por­tu­ni­ties to build their in­fra­struc­ture as well as ca­pac­ity in var­i­ous is­sues, in­clud­ing science and tech­nol­ogy.

Debt trap myth

Re­cently, there have been se­ries of news about Africa’s “debt trap” to China. Who is putting Africa in this debt trap? China is not the only coun­try lend­ing to Africa. Other ad­vanced West­ern coun­tries and West­ern fi­nan­cial in­sti­tu­tions are also giv­ing African coun­tries loans. In fact, Africa owes far more debt to West­ern coun­tries and their in­sti­tu­tions than to China. This is vividly ob­served by the China-Africa Re­search Ini­tia­tive (CARI) at the Johns Hop­kins Uni­ver­sity School of Ad­vanced In­ter­na­tional Stud­ies.

The CARI noted that China has only pro­vided about $114.4 bil­lion loans to Africa from 2000-2016. This is about 1.8 per­cent of Africa's to­tal ex­ter­nal debt. On the other hand, the In­ter­na­tional Mone­tary Fund (IMF) and the World Bank own around 36 per­cent of Africa’ debt. I con­tend that this whole de­bate about Africa’s debt trap to China is be­ing driven by anti-Chi­nese sen­ti­ment or Sino­pho­bia.

China’s aid can, at times, ac­tu­ally de­liver real ben­e­fits to the re­cip­i­ent states. What­ever loans African coun­tries col­lect should be in­jected into build­ing pro­duc­tive in­fra­struc­ture and should be used for the pur­pose for which the money was bor­rowed.

Con­clu­sion

From the fore­go­ing, FOCAC has grad­u­ally be­come an im­por­tant plat­form for col­lec­tive di­a­logue and an ef­fec­tive mech­a­nism for en­hanc­ing prac­ti­cal co­op­er­a­tion be­tween China and African coun­tries. How­ever, the Fo­rum must se­ri­ously ad­dress other chal­lenges such as trade im­bal­ance, ex­treme poverty, in­se­cu­rity, un­der­de­vel­op­ment, cli­mate change, and low in­dus­tri­al­iza­tion.

FOCAC has grad­u­ally be­come an im­por­tant plat­form for col­lec­tive di­a­logue and an ef­fec­tive mech­a­nism for en­hanc­ing prac­ti­cal co­op­er­a­tion be­tween China and African coun­tries.

A ses­sion of the 2018 Fo­rum on China-Africa Co­op­er­a­tion

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