By Patricia Heras Poza
In 2018, the Forum on China-Africa Cooperation (FOCAC) closed with President Xi Jinping’s famous pledge to provide $60 billion in financial support to Africa. This translates into $20 billion in credit lines, $15 billion in grants, zero-interest loans, debt relief, concessional loans, and $10 billion in investment financing. The realization of the “African dream” and its subsequent liberation from the so-called “underdeveloped trap” has never shone brighter as it does today.
As early as 1976, the year when Mao Zedong’s China finished building the Tazara railway, Chinese development assistance to Africa was on the move. Since then, as one of the fiercest capitalist states of the world, China has consistently worked to strengthen its diplomatic relations within the African continent. It is then not coincidental, as stated in China’s Role in the Development of Africa’s Infrastructure that “some of the most extensive infrastructure operations are in the more resource-endowed African countries, such as Angola and Zambia.” China pours funding into the agricultural, manufacturing, and energy sectors as well as urban infrastructure projects and extractive industries. Though these investments may paint China as a Messiah, its relentless mercantilist attitude and complex nature of its offerings cannot be overlooked.
Ironically, back in the 1970s when Mao Zedong began weaving his spiderweb in Africa through the penetration of Chinese economic, political, and cultural influence, there was consensus in the West that these infrastructural projects were ideologically driven. However, today some commentators fail to acknowledge that China’s active participation in the global race for energy procurement and its anxious quest to lay its hands on Africa’s rich fountain of raw materials is not only ideologically motivated, but also represents a means to sustain its burgeoning economy.
“If you want to prosper, consider building roads,” says a Chinese proverb. Even though this philosophy may work in the most resource-rich African states which need capital for the construction of infrastructure networks, this classical pro-Chinese development argument points right to the problem at hand. Following this proverb literally, the Chinese government recently launched the ambitious Belt and Road Initiative (BRI) involving 138 countries. While the BRI has fed the hungry demand for development in some emerging economies like India and Afghanistan, the project harbors a darker side. Despite the ambitiousness behind the BRI, the predatory nature of the project has drowned many of the involved developing economies in a pool of unsustainable debt. This only increases their dependency on China. To put numbers to it, African governments and State-owned enterprises (SOEs) owe China more than $150 billion. This amounts to over 20% of their combined external debt owed to China, making the superpower the single largest creditor state.
But of course, the million-dollar question is how are these African countries going to manage to pay off that debt? Easy: repayment is secured through future receivables including port access rights and natural resources such as mineral deposits, oil, gas, copper, and the like. The problem with this long-term collateralization of assets and resources in countries like Zambia, where China controls the country’s broadcasting company, or Djibouti, where they had to surrender control of their strategic port, is the weakening of these countries’ sovereignty and self-reliance.
So, while the BRI was supposed to yield technology and skills transfer, improved connectivity and logistics and a raised profile of countries to attract further investment for the promotion of African goods and commodities, countries like Angola, Ethiopia, Sudan, Namibia, and Zambia are seeing limited benefits to their economies. For example, Kenya’s cement exports to the region decreased by 40% due to the abundance of Chinese cement entering the country. In 2017 the World Bank announced the weary state of Kenya’s economic competitiveness as a result of the influx of Chinese excess capacity in Tanzania and Uganda.
Regarding employment, even though the figures show that 89% of employees working in 10,000 Chinese firms in Africa are African, only 44% are African. Also, Chinese sourcing of local African firms only constitutes 47%, meaning that local firms are unable to exploit the benefits of Chinese investment. What this demonstrates is that the supposedly positive “no conditionality” policy that led many African countries to choose China as their partner of choice, is turning out to be quite poisonous. But especially toxic is the increasingly evident lack of transparency of China’s juicy lending. This not only represents a grave risk to recipient countries but it also diverges from the Paris Club’s international efforts to provide financial sustainability and transparency to acquire assets in exchange for debt.
Clearly, such a scenario is once again raising important questions about the true cost of foreign aid and development. Considering how invested China already is, this is only the beginning of the story. For now, China has successfully driven its Trojan Horse deep into the heart of the African continent, and there is no saying how much trickery remains.
Featured image courtesy of Patricia Heras