One of the biggest challenges in trying to explain China’s role in Africa is that is often involves unpicking long-established narratives. Quartz Africa pulled together a panel of three of the foremost thinkers on China-Africa relations particularly when it comes economics, finance, development and trade to help our readers see beyond the headlines, bluster and speculation.
To be clear, as one of our speakers reminds us, some of these narratives are aided by a lack of transparency, not just from the Chinese but also from African governments who may be democratic in terms of elections, but not in the sense of explaining their decisions to their electorates.
Hannah Ryder is co-founder/chief executive of Development Reimagined, a Beijing-based consultancy with expertise in the fields of international development, diplomacy, environment and public relations, across all regions of the world.
W. Gyude Moore is a senior policy fellow at the Center for Global Development in Washington DC, he’s a former minister for public works in Liberia and a former chief of staff to president Sirleaf-Johnson
Eric Olander is co-founder/managing editor of China Africa Project, an independent, non-partisan media initiative dedicated to exploring every facet of China’s engagement in Africa. Eric is also the co-host of the weekly China in Africa podcast that is now among the top-10% most downloaded shows worldwide.
Africa’s Chinese debt
African economies were on course to have a decent 2020 albeit weighed down some of its bigger countries with expected average growth around 3.8%—and then the global Covid-19 pandemic hit the continent. On Thursday, the World Bank reiterated its forecast from April that sub-Saharan Africa will tip into its first recession in 25 years after the devastating effects of lockdowns to domestic economies, limited international trade, slower global business and economic activity.
The economic downturn which has been much more significant that the immediate health impact across Africa has accelerated or amplified many existing problems in several Africans, none more so than a looming debt problem.
But as our panelists explained, despite all the headlines: “Africa” doesn’t actually have a Chinese debt crisis. As China Africa Project’s Eric Olander explains: “About 10 countries have a serious debt challenge with China, about five of them near to crisis level.” Those countries include Angola for the sheer size of its debt to China (around $20.1 billion) and Zambia, where more than 50% of its $11.97 billion external debt is to Chinese banks and institutions.
Development Reimagined’s Hannah Ryder puts it in a broader and historical context with discussions of African debt. “There are 55 African countries, 16 of them account for 84% of the debt.” Ryder also pointed out in the context of global debt, Africa’s share is still very small and, when framed as a “crisis,” things are still empirically better than the 1980s which ultimately led to the “Highly Indebted Poor Countries” initiative in the late 1990s.
Not just roads and railways
Much of the discussion and concern about African debt to China is strongly linked to the role Chinese firms, mostly state owned enterprises and banks, have played in funding and building much-needed infrastructure such as major highways, railways and airports among others all across Africa. What China is doing here is helping African governments plug a much touted “infrastructure gap” which African Development Bank estimated in 2018 could be as up to $107.5 billion a year to get close to where these governments need to meet their development goals.
But as Center for Global Development’s W. Gyude Moore points out, China has been crucial not just for building roads and railways, but also for enabling telecommunications and digital networks. Moore points to the vital role China’s Huawei, which has been much maligned by the US government over the last 18 to 24 months, has played in helping up to 40 African countries roll out 21st century communications networks. “Most of that moving online occurred on the back of fiber infrastructure that’s built and paid for by Chinese money and Chinese companies.” Moore also points to China’s role in backing African space programs.
All the speakers point to how China has over the last two decades gained traction on the continent by seeing Africa as not just a place for aid and piecemeal development projects but instead as a place for investment and opportunity unlike African countries’ traditional Western partners. “Outside of a few extractives the West didn’t really see Africa as a place to do business,” adds Moore.
African governments, civil society and long-term economic watchers generally agree on one thing, the African Continental Free Trade Area agreement, which is set to create the world’s large free trade area since the World Trade Organization was established, is a great opportunity. In particular it will incentivize a much needed boost in the traditionally paltry intra-African trade.
But it will also encourage African governments working closer together when dealing with large foreign powers including China. African governments would benefit in sharing their learnings, the panelists say, rather than having to learn anew with every negotiation.
While these are, of course sovereign states, there are undoubtedly common lessons to be applied with neighboring countries as they deal with large Chinese state owned enterprises and banks. This could be particularly important for the smaller African economies with populations the size of China’s tertiary cities as they try to engage on some sort of equal footing.