August 18, 2023
From Internationalist 360

Elijah J. Magnier
Chinese loans in Africa by country (Graph by Fikayo Akeredolu, DPIR, University of Oxford) 

The geopolitical race for influence in Africa is accelerating as global powers such as the United States and Russia intensify their efforts to forge distinctive ties with the continent. The United Nations predicts that Africa’s population will double to 1.1 billion by 2050, driven by rapid urbanisation, eventually surpassing two billion people. As the International Monetary Fund has confirmed, this growth positions Africa as the second fastest-growing continent in the world. This trajectory marks the end of the “first scramble” for Africa’s resources in five centuries. It heralds the emergence of a “second scramble”, driven by its burgeoning markets, abundant natural resources, human capital and strategic maritime links with other continents.

China has set its sights on Africa, launching a series of ambitious projects and infrastructure developments to connect the continent’s nations and challenge its Western counterparts for supremacy. Europe’s historic colonial powers, which once held sway over African lands, are now grappling with diminished influence, facing backlash from some African nations and losing their foothold in others. France, for example, has faced expulsions from two countries, Mali and Burkina Faso, and rising populist sentiment against its presence in the region, mainly in Niger.

China’s engagement with Africa dates back to the Ming dynasty in 1644, and this historic relationship continues. In particular, China supported Egyptian President Gamal Abdel Nasser’s decision to nationalise the Suez Canal 1956, leading to student exchanges and a cultural bridge between the two regions. Unlike China, which focuses on economic projects and infrastructure to expand its influence, the United States and France are concerned with military bases and counter-terrorism efforts in Africa.

As China’s new foreign minister Wang Yi embarked on a tour of African countries, he underlined Beijing’s unwavering commitment to its relations with the continent. China’s strategy is based on a soft approach to cementing ties, a policy in place since 1991. China’s proactive approach was highlighted by the launch of the ‘Silk Road’ initiative in 2013, which saw the creation of 46 new and renovated African ports connecting Africa to the rest of the continent. This investment has secured its position as the largest investor in sub-Saharan Africa. Beyond traditional projects, China’s engagement spans various sectors, including education, healthcare, technology and scientific research, further consolidating its foothold in the region.

During a significant Sino-African summit, President Xi Jinping pledged billions of dollars to support the continent’s development, with a significant portion earmarked for development projects and interest-free loans. China has also cancelled substantial African debt, demonstrating its commitment to promoting progress.

When many African countries were in debt distress in the 1980s and 1990s, China cancelled more than 85% of the interest-free loans outstanding at the time. According to the China Africa Research Initiative (CARI) at Johns Hopkins University, between 2000 and 2019, China has cancelled at least $3.4 billion in debt, almost all of its interest-free loans to African countries. From 2022, China said it would forgive 23 interest-free loans to 17 African countries and redirect $10 billion of its International Monetary Fund reserves to nations on the continent.

Critics, meanwhile, raise concerns about China’s growing influence in Africa, often depicting it as a debt-laden conquest. However, data from the World Bank shows that 49 African countries owe 39% of their debt to multilateral institutions, 35% to private creditors (excluding Chinese private creditors), and 12% of the continent’s debt burden is owed to China and Chinese lenders. In 2021, private lenders will charge 5% interest, while China and multilateral lenders will charge 2.7% and 1.3%, respectively.

China’s African economic activities have flourished, with around 10,000 Chinese companies operating internationally. McKinsey & Company predicts that China’s earnings will reach a staggering $440 billion by 2025, driven mainly by ventures in South Africa, Ethiopia, Ivory Coast, Mali, Nigeria, Kenya, Angola, Egypt, Niger, Sierra Leone and other countries.

The difference between China’s approach and Europe’s is striking. China’s meticulous execution of projects, free from political interference or impositions, contrasts with Europe’s short-term, value-laden policies, which often neglect infrastructure development. Historically, European powers have extracted Africa’s vital resources, leaving minimal contributions to the continent’s growth. While Europe engages in military efforts under the pretext of fighting terrorism, China remains firmly focused on economic advancement.

In an era of changing geopolitical dynamics, Africa is at the center of a new contest for influence.

China’s proactive, development-oriented stance is reshaping the continent, leaving the West to face a transformed landscape. The implications are clear: the West must adapt to the dynamics of evolving economic power, guided by a vision of investing in Africa’s development and rebuilding its neglected infrastructure. As China’s presence solidifies, Africa’s fate is intertwined with the changing tides of global influence, ushering in a new chapter for the continent and its strategic partnerships.Amid this evolving dynamic, China’s position in Africa is firmly established, making it an irreplaceable actor.As a result, the West is being forced to deal with the rise of these economic powers, competing to win hearts and minds in exchange for investments that will revitalize Africa’s long-neglected infrastructure.This new reality has emerged while the West remains preoccupied with conflicts in the Middle East and the recent confrontation with Russia in Ukraine, inadvertently diverting attention from the growing competition in Africa.

Over the last two decades, China has embarked on a number of African projects, covering diverse sectors such as infrastructure, energy, telecommunications, agriculture, education and health. These projects aim to promote economic development, strengthen diplomatic ties and guarantee access to essential resources.Here are some notable Chinese projects in Africa over the last twenty years:

1. Infrastructure development: China has been a major player in building essential infrastructure in Africa, including roads, railroads, bridges, ports and airports.For example, the Addis Ababa-Djibouti railroad in Ethiopia, the Mombasa-Nairobi Standard Gauge railroad in Kenya and the Abuja-Kaduna railroad in Nigeria are major rail projects financed and built by China.

2. Energy projects: China has invested heavily in energy projects in Africa, mainly in the development of power plants and renewable energy sources. Notable projects include hydroelectric dams, solar power plants and wind farms. The Ethiopian Renaissance Dam (GERD) and various solar energy projects in Morocco and Egypt are examples of China’s involvement in the energy sector.

3. Telecommunications:Chinese companies have played an important role in the development of telecommunications infrastructure across Africa. Huawei, a Chinese technology giant, is involved in building and upgrading communication networks in several African countries.

4.Extraction of natural resources: China’s demand for natural resources has led to investments in mining and extraction projects in Africa. These projects cover a range of minerals and resources, including oil, gas, copper and iron ore.Chinese companies have been involved in oil exploration in Sudan and Angola.

5.Agriculture and food security: China has supported agricultural initiatives in Africa to improve food security and promote sustainable agricultural practices. This includes irrigation projects, agricultural production and the transfer of agricultural technology.

6. Education and training: China has provided scholarships and training opportunities for African students and professionals. Many African students have been educated in China, contributing to the sharing of knowledge and the development of human capital.

7. Health: China has been involved in health projects, including building hospitals and medical facilities and providing medical equipment and expertise. This has been particularly important during global health crises such as the Ebola outbreak.

8. Trade and economic zones: China has established special economic zones and industrial parks in some African countries to promote trade and economic cooperation.These zones aim to attract foreign investment and facilitate the transfer of technology.

9. Cultural and people-to-people exchanges: China has promoted cultural and educational sales through initiatives such as the Confucius Institutes, which offer Chinese language and cultural programs at African universities.

10. Debt relief and diplomacy: China has been involved in debt relief and diplomacy in Africa, offering loans, grants and assistance to support economic development and strengthen diplomatic ties.33

It is important to note that the scope and impact of these projects vary from one African country to another. While Chinese investment has contributed to infrastructure development and economic growth in some cases, in others it has raised concerns about debt sustainability, environmental impact and labor practices.The nature and success of these projects depend on a complex interaction of economic, political and social factors.

While the West faces challenges, China’s steady progress on the African continent is reshaping the narrative.The appeal of China’s approach, based on economic cooperation rather than imposition, has attracted considerable support. Former Senegalese president Abdullah Wade captures this contrast very well, noting that while it may take five years to negotiate an agreement with the World Bank, China can do the same in three months.

China has canceled or renegotiated some African debts to create goodwill, strengthen partnerships, reduce the financial burden on African nations, support economic development and improve diplomatic relations. Here are some examples of Chinese debt cancellations in Africa:

1. Zambia: In October 2020, China announced that it had agreed to defer interest and principal payments on certain loans owed by Zambia. This decision was taken to help Zambia resolve its debt problem, which has been exacerbated by the economic impact of the COVID-19 pandemic.

2. Seychelles:China canceled a significant portion of Seychelles’ debt in January 2018. The move was part of a wider debt reduction plan to ease Seychelles’ fiscal challenges.

3. Tanzania: China canceled part of Tanzania’s debt in 2013 – the debt relief was aimed at promoting economic cooperation and strengthening bilateral relations between the two countries.

4. Democratic Republic of Congo (DRC): In 2010, China canceled part of the DRC’s debt in a bilateral agreement.The debt relief was provided to help the DRC manage its debt load and promote economic stability.

5.Angola: China has engaged in debt restructuring discussions with Angola, one of the African countries with significant Chinese loans. Although these discussions will not lead to a definitive cancellation, they are aimed at easing the pressure on Angola’s debt repayments.

Debt cancellation or restructuring is accompanied by specific conditions or agreements related to future economic cooperation, such as increased trade, investment or participation in projects financed by China.

It is usually negotiated on a case-by-case basis, and the terms can vary.However, despite these cases of debt relief, concerns have been raised about the overall debt sustainability of African countries with substantial Chinese loans.Some critics argue that while debt relief can provide temporary relief, it needs to address the underlying issues of debt management and transparency.China’s rise in Africa has not gone unnoticed by other global players.Turkey in 2008 and the United States under the administration of President Barack Obama in 2014 launched their engagements in Africa, seeking a share of the growing opportunities. Russia has also entered the fray, holding two summits to emphasize its exclusive interest in Africa’s strategic resources, which include vital commodities such as oil, gas and minerals.

Visits by European leaders and foreign ministers to Africa, which were once compelling, now carry less weight in influencing the continent’s trajectory. The European narrative, characterized by short-sighted interests, “values” and “human rights conditions”, has struggled to sway African nations towards its vision.Europe’s history of resource extraction without commensurate investment in development further undermines its influence.On the other hand, China’s sustainable economic growth and partnership approach are in tune with African aspirations.The ongoing conflict in Ukraine has been a watershed, recalibrating global power dynamics and providing an opening for emerging players to challenge Western dominance.With Africa’s vast resources at stake, it is no surprise that it has become a battleground for influence, with competing powers vying to position themselves as the continent’s benefactors.Africa welcomes competition from the world’s superpowers and other nations willing to establish a healthy relationship with the continent, far from any dictate.

Elijah J Magnier is a veteran war correspondent and senior political risk analyst with more than 35 years of experience.

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