Commentary | Meryl Burgess, Africa-Chinese dilemmas and Africa-Asian dreams: time for new partnerships?
China has been on the receiving end of plentiful negative publicity in the last few years impacting its overseas engagement: from claims of neo-colonialist actions in Africa, cyber security concerns, trade imbalances, environmental destruction, to its role in the COVID-19 pandemic, discrimination against black Africans in Guangzhou and so-called “debt trap diplomacy.” Rising debt levels among African countries from Chinese loans in particular have led to claims that China is pulling back from its engagement in Africa. While its continued focus on the Belt and Road Initiative raises questions about whether or not China is indeed pulling back from Africa, other economies, especially those in Asia, have sensed that the time is right to revive their attention to, and engagement in, Africa.
African countries are in need of much more than what China has been providing in the last decade or two. Despite massive Chinese contributions to Africa’s economic development through major infrastructure building and trade partnerships, as well as aid to essential sectors such as healthcare, education and peace and security, among others, Africa is still plagued by underdevelopment, poverty and inequality, as well as high unemployment rates. Additionally, the COVID-19 pandemic continues to test the continent with unprecedented social and economic challenges that will take many decades to repair.
Despite all this, Africa has been home to several of the fastest growing economies in the world in recent years, as it possesses copious natural resources, a youthful population, a rising middle class, and growing manufacturing industries. East African countries such as Tanzania, Ethiopia and Rwanda, in particular, have been among the fastest growing economies. For almost two decades, China has taken risks and entered parts of Africa where no one else would (building infrastructure in extremely underdeveloped countries and engaging states ridden with political instability such as Zimbabwe and South Sudan), while many other countries retreated and decreased their economic activities. With China constantly under a negative spotlight and African countries fertile in economic opportunities, now is the time for other Asian economies to refocus their attention to Africa. Not to mention, Africa’s natural resources and young labour force are opportunities for other economies to not only invest in Africa but also benefit from the continent. With similar backgrounds, economic and developmental concerns, Africa is increasingly being viewed as a key to Asia’s economic futures, and on the other side, Asia as the key to much-needed sustainable development and growth in Africa.
“Africa is increasingly being viewed as a key to Asia’s economic futures, and on the other side, Asia as the key to much-needed sustainable development and growth in Africa.”
Trials and tribulations of China’s engagement in Africa
Recent criticisms of Chinese actions in Africa are of course not without reason. For instance, when China began its modern-day Africa engagement, most of its attention and cooperation were with resource-rich countries to solidify access to raw materials. Known for its massive oil reserves, Angola became the top supplier of crude oil to China in the early 2000s, as well as China’s biggest trading partner in Africa at the time. A bartering model was developed, whereby China delivered resource-backed loans to finance roads and power stations built by Chinese companies. Today, more than $20 billion is owed by Angola to a number of Chinese entities.
China has also been criticised for how their investments in the continent have a strong focus on sectors that are environmentally sensitive (oil and gas, mining, hydropower, and timber), along with infrastructure projects that help to facilitate environmentally sensitive investments (such as roads, railway and transmission lines). In the last few years this criticism was not only highlighted within the China-Africa sphere but also in the Belt and Road Initiative, where dissenting voices in Southeast Asia protested environmental destruction and droughts from Chinese hydropower projects along the Mekong River.
More recently, 2020 has not boded well for Chinese investments in Africa. Due to the detrimental impacts from the COVID-19 pandemic, developing regions have experienced unprecedented socio-economic difficulties. In particular, the World Bank calculated that the 2020 downturn will likely increase sub-Saharan Africa’s poverty rate and return the continent to 2015 poverty levels. In addition, African countries are facing major debt burdens, mostly due to nearly $150 billion worth of bilateral loans given to governments and state-owned companies by China for infrastructure projects. For most of 2020, China’s involvement in a G20’s debt service suspension initiative was slow, leading to countries such as Zambia heading for Africa’s first sovereign default in a decade as a result of owing around $3 billion to Chinese entities. These and other concerns have led to major criticisms of China’s global activities.
China’s domestic shifts and Africa’s unique challenges
Still, we have to recognise that China is not going anywhere, and while there may be a decline from the amount of global investment it has committed in the last decade, this has more to do with changing domestic situations rather than its global reputation. In 2020, the German insurer Allianz and its credit insurance subsidiary Euler Hermes reported that China may slow its international engagement and decrease its funding (particularly, loans, investment and trade) to African states. Two major reasons are given for this shift: China’s new “dual circulation” economic strategy which places a greater focus on the domestic market, or internal circulation. This means China will look inward to tap the potential of its huge domestic market and rely on “indigenous innovation” to fuel growth. Secondly, China’s economy is set to continue its slowdown to around 4% – diminishing from the 7% observed each year in the 2010s. This slowdown could possibly impact overseas lending and investment activities. Moreover, similar to the rest of the world, China faces impacts from the pandemic. As governments are unable to repay debts, this is having an enormous impact on China and the need to reconsider where and how they provide loans.
On the other side, what could potentially be pushing China out of Africa? Notwithstanding the issues around trade deficits and debt, many scholars have referred to Africa’s political instability, corruption, as well as administrative barriers that are not conducive to foreign investors. Moreover, strong civil society networks can also be a deterrent. During the construction of the Standard Gauge Railway (SGR) project in Kenya (a railway line linking the port of Mombasa to Nairobi), Chinese financial backers and construction companies experienced many occasions where the project was halted due to local environmental activists filing petitions with Kenya’s National Environment Tribunal because of the lack environmental impact assessments (EIAs) for the project. Additionally, after the completion of the SGR, legal battles continued in 2020 as Kenya’s Court of Appeals found that the contract for the SGR was illegal, since “the procurement process breached Article 227 of the Kenyan Constitution, as it was not open to a public tender, and so was not ‘fair, equitable, transparent, competitive and cost-effective’.” Thus, in Africa, China is faced with many issues and contexts that are not necessarily dealt with in the Mainland. While weak governance and corrupt African officials are often blamed for bad deals, in some countries, foreign actors may also face strong civil society networks and judicial systems. In China, civil society exists but rarely are they able to hold the government accountable for wrongdoing.
Africa diversifying economic partners… can old friends step up?
The current shifts taking place, both globally and with China, make room for other economies to come to the table and begin expanding their partnerships with African states. Recently, there has been rhetoric by newly-elected President of the United States, Joseph R. Biden on the United States’ commitment to working with the African Union (AU), as well as calls for more attention to the European Union-Africa partnership by policy-makers. To be sure, many African countries remain dependent on aid from the US and Europe. However, in order to develop the continent more sustainably, more economic investment in local areas is needed, rather than aid distributed through African governments and NGOs. It is here where new Asian partners can step in to revive past cooperation with African governments towards more fruitful opportunities and growth.
Asian countries such as Japan and India have long invested in the African continent, as well as provided ODA. Over the last decade, however, there was a decline rather than an increase. During 2014-2018 Africa’s total trade with China increased, while total trade with other major partners such as the EU, Japan, Brazil, India and Switzerland decreased. Japan, in particular, was one of the first countries to engage in relations with Africa in the mid-1970s, but it now lags behind many other economies in terms of business and the number of Japanese companies working in African markets. At the end of 2017 Japan’s FDI stocks in Africa stood at just $8.7 billion. In the same year, France had made the biggest direct investment to the continent with $64 billion, followed by the Netherlands ($63 billion), the US ($50 billion), and China with $43 billion (Japan Times, 2019). Similar to Japan, India has also not performed adequately in its trade relationship with the continent, trying to catch up to China’s enormous footprint in Africa. While China’s bilateral trade with Africa in 2018 was $185 billion, India’s trade with Africa amounted to $62 billion in the same year.
Despite declines in the past, both Japan and India have recently committed to changing their approaches to Africa and have begun expanding their economic activities in Africa. During the two previous Tokyo International Conference of African Development (TICAD) summits (2013-2019), the Japanese government shifted from primarily an aid donor to boosting private-public partnerships. Consequently, since 2016 Japanese private investment in Africa has reached $20 billion. At the same time, India, too, began to shift focus from aid to investment. Indian firms are now investing in Africa’s energy, automobiles, pharmaceuticals, and information and communication technology sectors, among others. India’s growing trade with Africa led it to overtake France and Britain, to become Africa’s third largest trading partner behind China, whose trade with African countries is still “three times that of India’s” (ibid), and the US. Finally, in 2017 Japan and India joined forces to launch the Asia-Africa Growth Corridor (AAGC), under which they would work together on massive infrastructure development and connectivity plans within Asia and Africa, as a companion to the two countries’ Free and Open Indo-Pacific policy.
South Korea and other Asian countries have also renewed their interest in Africa. The Korea Africa Foundation was established in 2018 focusing on youth, technology, and entrepreneurship, while the Korea Overseas Infrastructure and Urban Development Corporation (KIND), a government agency whose role is to foster public-private partnerships abroad and to support Korean companies with project implementation, opened a branch in Nairobi, their fourth office in the world and the first in Africa. Meanwhile, the Association of South-East Asian Nations (ASEAN) signed the Treaty of Amity and Co-operation (TAC) with South Africa in November 2020. With similar development concerns and mutual issues that cut across transnational borders, this is an important relationship for both sides. Moreover, by formalising relations with ASEAN as a bloc, South Africa could create strategic relations that could benefit the country as well as the SADC (Southern African Development Community) region and Africa as a whole in the future.
While these countries and regions provide new and welcomed economic opportunities for the continent, they also potentially provide options for more environmentally-sustainable growth in Africa. Even though the Chinese government developed a policy plan for a “green” BRI and is considered the biggest producer of renewable energy, Chinese banks and companies have continued to finance the construction of seven coal plants in Africa, with 13 more in the pipeline mostly in sub-Saharan Africa. In contrast, both Japan and South Korea adopted more sustainable options after UN Secretary-General Antonio Guterres urged nations to stop financing the coal industry in 2020. After facing criticism over its support for the fossil fuel, Japan said it would tighten state-backed financing criteria for overseas coal-fired power plants, while South Korea also made pledges to not invest in coal abroad.
Through TICAD, Japan has also embarked on its African partnerships in line with the Sustainable Development Goals (SDGs) and Agenda 2063, endorsed by the AU. Thus sustainable development practices is said to be linked to its various pursuits in the continent. With the increasing threat of climate change in Africa and the need to balance conflicting demands of nature conservation and the promotion of economic development, Africa needs partners with sustainable practices. While addressing vast environmental challenges domestically, both Japan and India have also made commitments to global sustainable development. Between 2011 and 2018, Japan assisted with raising approximately $30 billion in climate financing and projects supporting green growth through the Asian Development Bank (Silverberg and Smith, 2019). At the 2015 Paris conference, Japan pledged $13 trillion to the developing world. India, on the other hand, faces major energy security concerns because of its high economic growth path and is looking at alternative energy sources. Because renewable energy is important both for India and Africa, India is looking to cooperate with the continent on promoting the use of solar and hydropower. While Africa has the resources for renewable energies, India could provide the experience, finance and technological capacity which Africa may be lacking.
African priorities and alternative paths for the future
Like other developing regions, African countries have suffered a heavy blow from the COVID-19 pandemic, with many experiencing rising levels of poverty and increased unemployment. Thus, Africa’s priorities lie in the need for major economic development and job creation. China has provided an alternative development path for African nations, however, whether or not that model is good for long-term growth is questionable. China’s own growth was unprecedented in terms of speed and scale. However, this also led to environmental destruction that the government is now trying to redress. Thus, while African countries embrace China’s willingness to finance major infrastructure development, safeguarding the environment as well as preventing the massive loan burdens experienced today needs to be high on the agenda.
Attracting foreign investment and pursuing more equal trade relations, be it from China or other partners, is critical. While partnerships with China, as well as the US and the EU remain important, other countries and regions present significant economic opportunities for Africa. Japan, India, and South Korea (to an extent) have already deepened their interest and economic pursuits in the continent. If these countries continue to invest in Africa’s growing industries and increase trade relations rather than provide aid, Asia could find partners that could meet their demands for raw materials as well as untapped markets for their economic pursuits. On the other side, they could also be the key to Africa’s much-needed sustainable development and growth. By investing in greener growth and providing developing regions with finance and capacity for renewable energies, Japan and India could offer more environmentally-sustainable development compared to China, and furthermore contribute towards the global fight on climate change. With shifts in China’s domestic situation impacting its global investment, there may be a widening gap for old and new partners to engage Africa and create “mutual benefits” for the continent and themselves.
Dr. Meryl Burgess is an independent researcher with a PhD in Political Science from Stellenbosch University, South Africa. Her research interests include global governance and cooperation; China-Africa relations; and more broadly, Africa-Asia Affairs, particularly focusing on environmental issues, governance and the roles of non-state actors.
To cite this essay, please use the suggested entry below:
Meryl Burgess, “Africa-Chinese dilemmas and Africa-Asian dreams: time for new partnerships?,” criticalasianstudies.org Commentary Board, April 12, 2021; https://doi.org/10.52698/RGSL6420.