Efem Nkam Ubi, Research Fellow, Nigerian Institute of International Affairs
Subjects of Interest
- Economic Development
- Geopolitical Analysis
- International Affairs
- International Trade
How cooperation with China can deliver more African development 15 Oct 2018
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 socio-cultural 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 China-Africa 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 (2019-2021) 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 in-depth 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.
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.
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