China's Economic Inroads in Africa

By Henry Srebrnik, [Summerside, PEI] Journal Pioneer

China is now the single largest bilateral financier of infrastructure in Africa, surpassing the African Development Bank, the European Commission, the European Investment Bank, the World Bank and the Group of Eight (G8) countries combined.

In 2017 alone, the newly signed value of Chinese contracted projects in Africa registered $76.5 billion, according to Standard Bank’s China Economist Jeremy Stevens.

Across trade, investment, infrastructure financing, and aid, no other country has such depth and breadth of engagement in Africa. Chinese firms of all sizes and sectors are bringing capital investment, management know-how, and entrepreneurial energy to every corner of the continent.

China's investments in the infrastructure of African nations are particularly strong, encompassing utilities, telecommunications, port construction and transportation.

The impact is conspicuous all over Africa, from new airports and roads as well as ports and high-rise buildings. They are also creating much-needed jobs.

The seventh Forum on China Africa Cooperation (FOCAC), held in Beijing in September, highlighted China’s expansive economic diplomacy, including a $60 billion pledge in “no-strings” attached development assistance.

The absence of political conditions makes this aid more attractive to countries that struggle with fulfilling requirements such as reducing corruption and increasing accountability.

But only five African countries have a trade surplus with Beijing and many are in danger of defaulting on their debts.

In recent years, Nigeria has received relatively large funds from China for railways. China is backing two major standard-gauge rail projects: One is a line from Lagos to Kano, the other a coastal railway from Lagos to Calabar. 

The Nigerian government hopes that the latter will support peacekeeping in the Niger Delta region, thus improving oil investments there, oil being another key interest of China in Africa.

One-third of China’s oil supplies comes from the African continent, mainly from Angola. In recent years, China has made $19 billion in loans to Angola. 

The Luanda government has supplied oil to China in exchange for Chinese financing and construction of major infrastructure projects.

Djibouti in August launched the first phase of a Chinese-built free trade zone billed as Africa’s largest. The government, which is heavily indebted to Beijing, seized control of Doraleh Container Terminal from Dubai-based DP World. 

Djibouti President Ismail Omar Guelleh invoked emergency measures to gain control of the port, in order to hand over operations to Chinese state-connected firms.

Djibouti stands to be a key node in China’s strategy of linking ports worldwide to their greater “One Belt, One Road” initiative.

Another of the new Belt and Road countries is Senegal, which was part of President Xi Jinping’s four-country visit to the continent last summer.

Chinese loans are paying for a new wrestling stadium, a highway to the city of Touba, and part of an industrial park.

Kenya has now borrowed far more from China than from any other country. But it has also come to depend on a flood of Chinese manufacturing imports. Kenya’s trade with China has grown eightfold in the past decade, according to President Uhuru Kenyatta, who has complained about this trade imbalance.

The 51-kilometre four-lane Entebbe-Kampala Expressway that connects Uganda’s capital to the Entebbe International Airport was built by a Chinese company using a $476 million loan from the Export-Import Bank of China.

Uganda has taken $3 billion worth of Chinese loans. “This debt acquired from China comes with huge business for Chinese companies, particularly construction companies that have turned the whole of Africa into a construction site,” economist Ramathan Ggoobi of Makerere University has remarked.

Still, President Yoweri Museveni views the Chinese as “more business-like” than western investors.

China’s strategy on the continent is a comprehensive one, including economic, political and security elements.

For instance, China wants African diplomatic support in the UN and elsewhere in its quest to regain Taiwan and prevent secession in Tibet and Xinjiang.

Over the past five years, China’s official arms sales to Africa have increased by 55 per cent and its share of the African arms market has doubled to 17 per cent, surpassing the United States.

The need to protect China’s increased investments in Africa have driven a shift away from China’s traditional non-interference in the internal matters of other countries to new diplomatic and military initiatives on the continent. For many, this smacks of a new form of colonialism.

After all, the European powers that carved up the continent in the 19^th century also began the process by at first claiming they needed to protect their economic interests.