International Policy Digest

World News /11 Dec 2019

Beijing is Getting Some Important Things Right in Africa

Having just spent 4 months living and traveling in Africa, it has been difficult not to notice China’s growing influence and impact throughout the Continent. The Chinese government and Chinese companies have been aggressively investing in infrastructure, manufacturing, and other parts of Africa’s economy for the better part of a decade. Chinese-funded buildings, advertising, and exhibits are everywhere, and one of its biggest smartphone makers – Tecno – dominates in many African markets. China has made some big mistakes along the way, but it has also gotten some important things right.

Beijing is often accused of engaging in debt-trap diplomacy in Africa (and elsewhere) – deliberately lending to impoverished African countries knowing that the debt will never be repaid, imposing harsh and unfair lending terms, and seizing strategic assets when defaults inevitably occur. In the Democratic Republic of Congo, Kenya, and Zambia, for example, Chinese-funded infrastructure has been built, resulting in tens of billions of dollars of government debt.

While some of the allegations made against China in Africa are indisputable, others are simply not true, and the positive side of China’s engagement with Africa gets lost amid the flurry of criticisms. Among them is an oft-repeated criticism that Chinese companies primarily employ Chinese workers. China actually creates more jobs in Africa than any other foreign investor, and surveys of employment on Chinese projects there have repeatedly found that three-quarters or more of workers are locals.

While early-stage projects, particularly in countries where China has had little experience, tend to be staffed primarily by Chinese employees, that pattern has tended to be reversed over time.

And while, on an individual country basis, Chinese foreign direct investment has accounted for a significant portion of the national debt in Africa, it is worth noting that from 2000 to 2016 Chinese loans only accounted for just 1.8% of Africa’s foreign debts, and most of that had been invested in infrastructure. While some Chinese loans contain onerous terms, many others tend to either be competitive with or at a lower interest rate, than most of the multilateral development banks. Some of that debt is eventually written off.

It is also worth noting that, in 2018, President Xi pledged to give $60 billion to African countries, with no political strings attached (apparently), to focus on infrastructure development. In 2018, the Trump administration allocated $5.2 billion in foreign aid to Africa, a 35% decrease from 2015 aid levels, saying that America was choosing to focus on the countries with the most strategic value to the United States. As Washington steps away from Africa, Beijing is stepping up.

In 2015, Afrobarometer surveyed 54,000 people in 36 African countries. China ranked number two in terms of favorable views, following the US. In three of five regions of the Continent, China either matched or surpassed the US in popularity vis-à-vis its approach to development. Public perceptions not only confirmed China’s perceived economic and political importance to Africa but also generally portrayed its influence as beneficial. While the jury will be out for some time about whether China’s experiment with Africa was a net-plus or minus, its impact on African business and society is casting a wide net, and much of its impacts are positive.

Apart from providing many tens of billions of dollars of much-needed investment in African infrastructure, Beijing is stimulating entrepreneurialism throughout the Continent. In 2017, McKinsey estimated that some 10,000 Chinese small businesses had been created in Africa. About 90% of Chinese firms in Africa are actually privately owned. Nearly a third are involved in manufacturing, a quarter in services, and about a fifth each in either trade, construction, or real estate.

As the world’s natural resources become increasingly scarce, African countries have come to realize just how many cards they hold, and they have finally decided to stand up to China. Many of them are not simply agreeing to whatever terms Beijing may suggest in order to secure investment, but are instead giving Beijing a list of priority investments, on their own terms. The Angolans, for example, began specifying exactly the number of schools and railroad lines they would like the Chinese to build, and what they hoped to achieve as a result.

Should African countries successfully manage the transition from nations that merely possess natural resources to manufacturing powers that can actually compete with China, the nature of their relationship with Beijing will change even further. That said, both sides know they ultimately need each other.

The challenge will be to find the right balance between China’s wealth, power, and money, and African countries’ resources and vast potential. African leaders were previously afraid to stand up to China because they needed the money (or were simply greedy) and feared that Beijing’s money would not flow. Many of them did not consider the consequences of vast quantities of Chinese investment; nor did the Chinese. But Africa is now becoming a smarter client and a more difficult and demanding negotiator.

Say what you will about how China is doing this, it is heavily engaged in Africa at a time when the continent really needs such engagement, and existing sources of aid are grossly inefficient to meet Africa’s growing infrastructure and other needs. Beijing has a habit of actually doing things while other countries may only talk about doing so. Some of its tactics may be objectionable on many levels, and the net result of some of its actions may prove to be largely negative over time, but it has stepped up to the plate when action was needed. Hundreds of millions of people in Africa and around the world will not forget that, and may even say that they would like their governments to be more like China as a result.

A version of this article first appeared in the Straits Times.