Author: Emmanuel A. A. Ubiu Date: Monday, 23 September 2024
Country: South Sudan
Source: South Africa and China presidents at the Summit of the forum on China-Africa cooperation (Business Insider Africa)
China has strengthened its ties with Africa through significant financial support, especially during the recent Forum on China-Africa Cooperation. However, concerns about unsustainable debt arise as China becomes Africa's largest creditor, with countries like Angola facing heavy financial burdens that divert funds from essential sectors like education.
Despite these issues, many African leaders appreciate China’s economic-focused approach, viewing it as free from political interference. This has led to substantial trade, particularly in crude petroleum and raw materials, raising questions about the long-term effects of reliance on Chinese investments for Africa's economic growth.
Recently, China seemed to have cemented its diplomatic ties with the majority of African states. From the red carpet treatment, to the generous donations given to all African leaders who attended the China-Africa Summit which is widely known as the “Forum on China-Africa Cooperation’ (FOCAC).
The importance of this summit was highlighted by the attendance of over 50 African heads of State in addition to Moussa Faki, Chair of the African Union Commission and António Guterres, the Secretary General of the United Nations who was a guest in this summit.
China's Economic-Only Approach: Why African Leaders Are Embracing It
China has proven over the years that its interests in Africa are purely economic without any political strings attached to it.
This has persuaded many African leaders for example, in 2023, following Niger’s coup, China didn’t hesitate to complete a 2,000 km pipeline to deliver the country’s growing oil output to an export terminal in Benin.
African leaders seem to be attracted by this.
China’s sourcing of Key Raw Materials from Africa
Looking at the trade between China and African nations, Angola has been China’s biggest trade partner in Africa. The largest items traded between the nations are Crude Petroleum ($21.5B), Petroleum Gas ($132M), and Granite ($89.3M).
Table1: Africa’s biggest exporters to China
Source: China in Africa: The Role of Trade, Investments, and Loans Amidst Shifting Geopolitical Ambitions.
Further, there’s a little concern from the international community who believe that China\s debt policy isn’t sustainable. It is seen as a way to gain geo-political leverage over African States.
Africa's Debt Crisis: The Impact of Unsustainable Loans and Rising Costs
In 2019, China was Africa’s second largest creditor after “Bondholders”. But according to a 2024 report by the World Economic Forum, China has become Africa’s largest creditor.
Now looking at China’s biggest debtor in Africa, it doesn’t come as a surprise that it is Angola. This is why China is being bashed by the international community for their unsustainable debts offers to African countries.
There has been a popular research that says countries in Africa are spending more on interest payment than education which has raised concerns.
The continent is perceived as the world’s next economic hub that is said to be the home of over 500 million young people aged 15-24 by 2080.
However, Africa’s ability to develop is said to have been hindered by “Unsustainable debts” rendered by China to Africa.
China’s role in Africa’s Development
Speaking at the FOCAC in 2018, South Africa’s president, Cyril Ramaphosa said, “Through FOCAC and other forums, China has worked to ensure that Africa's development is prominent on the international agenda. Building on these remarkable achievements, we welcome the announcement ... by President Xi of new FOCAC initiatives that will have a significant and lasting impact on peace, stability and sustainable development on the African continent.”
This highlights how instrumental China has been in developing African States and contributing to sustainable Development. Looking at China’s biggest developmental projects in African states, we see why this is true.
1. Zimbabwe's Hwange Thermal Power Station
Chinese loans helped Zimbabwe's Hwange Thermal Power Station to increase its electricity generation capacity.
Source: Zimbabwe's Hwange Thermal Power Station (Zhang Baoping/Xinhua/Getty Images)
2. Mozambique’s Maputo-Katembe bridge
The Chinese-built Maputo-Katembe in Mozambique and it was inaugurated in 2018.
Source: Maputo-Katembe bridge in Mozambique (Roberto Matchissa/AFP/Getty Images/File)
3. Kenya’s Standard Gauge Railway (SGR) project.
Although being in its phase I, connecting Nairobi to Mombasa, the SGR project is a very ambitious project that is planned to link the East African countries of Kenya, Rwanda, Democratic Republic of the Congo and South Sudan, as part of the East African Railway Master Plan.
Source: Kenya’s Standard Gauge Railway (SGR) project (gettyimages)
4. African Union’s headquarter in /Addis Ababa
China funded the entire $200m African Union Head Quarters in Addis Ababa
Source: African Union’s headquarter in Addis Ababa (gettyimages)
5. Africa Center for Disease Control (Africa CDC)
In 2018, at the Beijing Summit of the Forum on China–Africa Cooperation, China announced the construction of the African CDC headquarters as a flagship project in its partnership with Africa.
Source: Africa Center for Disease Control (Africa CDC) (gettyimages)
[1] Quartz (2018), Africa’s resource-rich nations are getting even more reliant on China for their exports, https://qz.com/africa/1605497/belt-and-road-africa-mineral-rich-nations-export-mostly-to-china.
[2] UN Trade and Development (2023), A sequence of shocks beyond its borders diminished Africa’s ability to develop and led to fast increasing debt levels, https://unctad.org/publication/world-of-debt/regional-stories
[2] Observer Research Foundation (2021), China in Africa: The Role of Trade, Investments, and Loans Amidst Shifting Geopolitical Ambitions, https://www.orfonline.org/research/china-in-africa\.
[3] BBC (2024), China shifts gear in Africa as it looks to a green future, https://www.bbc.com/news/articles/cy0r74j7j1wo.
[4] Embassy of the PRC (2024), Xi Jinping Meets with United Nations Secretary-General António Guterres, http://za.china-embassy.gov.cn/eng/zgyw/202409/t20240908_11487180.htm.
[5] BBC (2012), African Union opens Chinese-funded HQ in Ethiopia, https://www.bbc.com/news/world-africa-16770932.
[6] Statista (2019), Leading creditors to African economies in 2019, https://www.statista.com/statistics/1224067/leading-creditors-to-african-economies/#:~:text=Bondholders%20accounted%20for%2027%20percent,Africa's%20total%20external%20debt%20stock.
[7] We Forum(2024), Why strong regional value chains will be vital to the next chapter of China and Africa’s economic relationship, https://www.weforum.org/agenda/2024/06/why-strong-regional-value-chains-will-be-vital-to-the-next-chapter-of-china-and-africas-economic-relationship/#:~:text=China%20has%20become%20Africa's%20largest,face%20a%20global%20economic%20slowdown.
[8] Xinhua Net (2018), Quotes from South African president's speech at FOCAC summit, http://www.xinhuanet.com/english/2018-09/04/c_137442038.htm
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