11 March 2018
London, Kampala, Addis Abeba, Dakar, Nairobi, Juba, Dar es Salaam and Johannesburg.
Construction of the Karuma hydroelectric project in Uganda, one of the African countries where China is investment billions in infrastructure
Africa attracted more Chinese state lending for energy infrastructure than any other region last year, highlighting Beijing’s view of the continent’s growing economic and strategic importance.
A study by Boston University academics shows that nearly one-third, or $6.8bn, of the $25.6bn that China’s state-owned development banks lent last year to energy projects worldwide went to African countries. This was ahead of south Asia, with $5.84bn.
The loans bring total Chinese energy finance in Africa since 2000 to $34.8bn. While this is well behind the $69bn lent in Europe and Central Asia, the $62bn in Latin America and the $60bn in Asia over the same period, the 2017 data illustrate Africa’s growing importance.
“China is trying to replicate its model of development in Africa to show the world that the Chinese economic model really works,” said Yu Jie of LSE Ideas, a think-tank based at London School of Economics.
The strong lending follows a 2015 promise by Xi Jinping, China’s leader, for a total of $60bn in Chinese investments to Africa by the end of this year to demonstrate what he called a “common future”. Statistics on how close Beijing is to realising the overall $60bn target are not yet available, analysts said.
Some soundings, though, suggest a growing affinity. An 2016 Afrobarometer survey of 36 African countries found that 63 per cent of Africans found China’s influence “somewhat” or “very” positive. Asked which countries provided the best development model for Africa, China placed second only to the US with 24 per cent and 30 per cent respectively.
Financing energy projects is one of the main strands in China’s push to win market share and diplomatic friends in developing counties by building much-needed infrastructure.
Power generation and transmission were the largest lending segment, accounting for $22.3bn of the total, with the remainder being going to oil and gas exploration and extraction, according to data from Boston University’s Global Development Policy Centre. All the $6.8bn in 2017 lending to Africa was for power projects.
Geographically, the lending has been concentrated into six countries, with Angola, Nigeria, Zambia, Uganda, South Africa and Sudan getting $23.8bn of the total $34.8bn since 2000. The Boston University data tracks loans from the China Development Bank and Export-Import Bank of China, the world’s two largest development banks.
The door to Chinese lenders has been left open by a comparative lack of action from the western-backed multilateral lenders. “Traditional multilateral development banks have not been forthcoming in big energy and China has been more than willing to fill the void,” said Kevin Gallagher, professor of global development policy at Boston University.
In addition, Prof Gallagher said, Africa’s demographic explosion, which is likely to lead to an additional 1.3bn people on the continent by 2050, underscored the demand for power generation and transmission for decades to come.
Beijing’s testing ground: The country’s politicians, lenders and businesses eye opportunities for growth and greater geopolitical influence.
On Pate Island, off the coast of northern Kenya, there are light-skinned Africans with Chinese features, fragments of ancient Chinese porcelain, and even a place named “New Shanga”.
All lend weight to a local story that shipwrecked sailors from the fleet of Zheng He, the 15th-century Chinese explorer, settled on the island many years before Columbus set foot in the US.
Whether or not there are descendants of the great Chinese helmsman’s crew in Kenya, records show that huge ships reached the east African coast more than 500 years ago, swapping Chinese treasures for exotica such as ivory, ostriches and zebras.
Indeed, there is a long if tentative history of contact between China and Africa, cemented under Mao Zedong in the 1960s with anti-colonial solidarity and the construction of engineering works, notably the 1,860km Tanzam railway linking Zambia with the Tanzanian coast.
In the past 15 years, however, the level of engagement by Chinese state-owned enterprises, political leaders, diplomats and entrepreneurs has put centuries of previous contact in the shade.
The China-Africa relationship — partly spontaneous and partly the fruit of an orchestrated push from Beijing — is shifting the commercial and geopolitical axis of an entire continent that many western governments had all but given up on. While Europeans and Americans view Africa as a troubling source of instability, migration and terrorism — and, of course, precious minerals — China sees opportunity. Africa has oil, copper, cobalt and iron ore.
It has markets for Chinese manufacturers and construction companies. And, perhaps least understood, it is a promising vehicle for Chinese geopolitical influence.
“To have 54 African [nations as] friends is very important for China,” says Jing Gu, director of the Centre for Rising Powers and Global Development in East Sussex, who contrasts Beijing’s mostly good ties with African governments with the tense relationship it has with neighbours from Tokyo to Hanoi.
Kenyan President commissions the new Nairobi-Mombasa railway built by China Road and Bridge Corporation.
Many, including some Africans, are suspicious of what they see as a neocolonial land grab, in which companies acting as proxies for the Chinese state extract minerals in return for infrastructure and finance that will saddle governments with large debts.
The behaviour of Chinese actors in Africa, in common with those from the west, has often fallen short of the exemplary. There have been legitimate complaints about Chinese companies employing few locals, mistreating those it has and paying scant regard to the environment.
Nevertheless, there is a begrudging recognition that China has mostly benefited Africa and that the country’s participants on the continent have learnt lessons.
Beijing’s engagement with Africa is more multi-layered than is often recognised. China, Ms Jing says, has used Africa almost as a testing ground for its growing international ambitions, whether through peacekeeping missions or construction of the roads, ports and railways intended to bind much of the developing world, via a new Silk Road, to the Middle Kingdom.
Howard French, whose book China’s Second Continent charts the experience of about 1m Chinese entrepreneurs who have settled in Africa, agrees. “Africa has been a field where China can try various things in a very low-risk environment,” he says. “Africa has been a workshop of ideas that now have a much bigger scale and strategic significance.”
A few numbers illustrate the shift. In 2000, China-Africa trade was a mere $10bn. By 2014, that had risen more than 20-fold to $220bn according to the China Africa Research Initiative at Johns Hopkins School of Advanced International Studies in Washington, though it has fallen back because of lower commodity prices.
Over that period, China’s foreign direct investment stocks have risen from just 2 per cent of US levels to 55 per cent, with billions of dollars of new investments being made each year.
China contributes about one-sixth of all lending to Africa, according to a study by the John L Thornton China Center at the Brookings Institution. Certainly, China has been attracted by Africa’s abundant resources: oil from Angola, Nigeria and Sudan, copper from Zambia and the Democratic Republic of Congo, and uranium from Namibia.
Chinese President Xi Jinping with Ethiopian prime minister Hailemariam Desalegn at the Belt and Road Forum in Beijing last month. In recent months, Chinese companies appear to have made an effort to corner the market for cobalt, crucial for the production of electric car batteries, with multibillion-dollar purchases of stakes in mines in Congo, the world’s biggest producer.
From Libya and Zambia to Ghana and Mozambique, Chinese businesses have gained a reputation for unbridled extraction, whether of old-forest timber, oil, gold or illegal ivory. Yet the emerging China-Africa relationship goes well beyond commodities.
One of the top destinations for Chinese investment in Africa is Ethiopia, a mostly resource-poor country of 100m people that is pursuing Chinese-style state-led development. Ethiopia has few resources of interest to China other than its strategic location and potentially large market, should its fast growth of the past 15 years prove sustainable.
Since 2000, Ethiopia has been the second-biggest recipient of Chinese loans to Africa, with financing for dams, roads, rail and manufacturing plants worth more than $12.3bn, according to researchers at Johns Hopkins.
hat is more than twice the amount loaned to oil-soaked Sudan and mineral-rich Congo. In fact, a far larger portion of US direct investment — 66 per cent vs 28 per cent for China — goes into mining.
China-Africa ties have proliferated in other areas. Beijing has 52 diplomatic missions in African capitals against Washington’s 49. Of the UN Security Council’s five members, China has the most peacekeepers on the continent, with deployments of more than 2,000 troops in Congo, Liberia, Mali, Sudan and South Sudan. From Africa’s perspective, although China presents risk it brings tangible benefits in finance and engineers.
More importantly, it brings choice. That is welcome for African governments that have, for decades, been locked in often unproductive relationships with foreign donors who have brought billions of dollars in aid, but also, in the 1980s and 1990s, brought what many view as the ruinously prescriptive Washington consensus of market-based development and reform.
“The narrative of donor and recipient has changed considerably with China,” says Dambisa Moyo, a Zambian economist whose 2009 book Dead Aid questioned the aid-based ties of Africa to Europe and the US. “African countries need trade and they need investment. To the extent that China, or anybody else — India, Turkey Russia or Brazil — bring new trading and investment opportunities to Africa, that’s good news.”
A Senegalese worker helps raise the Chinese flag before the visit of the Chinese vice-president in May.
Jeffrey Sachs, director of the Earth Institute at Columbia University, calls China’s newfound enthusiasm “the most important single development for Africa in this generation”. Beijing, he says, can help transform the continent. “They know how to build big projects,” he says, referring to the dams, ports, airports, railways, telecommunications networks and roads that Chinese groups are building in even the most obscure corners of the continent. “They know how to get them done.”
Throughout Africa, people on the streets and in power echo these sentiments. Beijing’s official policy of non-interference makes it an attractive partner to African leaders in countries from Angola to Zimbabwe fed up with lectures from former colonial powers about human rights or democracy.
A 2016 Afrobarometer survey of 36 African countries found that 63 per cent of Africans found China’s influence “somewhat” or “very” positive. Asked which countries provided the best development model for Africa, 30 per cent said the US and 24 per cent China, placing them number one and two. Yet there is disquiet about the rise of Chinese influence.
“I think the Chinese know what they want. It is the Africans who don’t know what they want,” says PLO Lumumba, director of the Kenya School of Law. “China wants to control. China wants to be a world power,” he says, adding that African governments are taking on so much Chinese debt that they will be in economic and political hock to Beijing.
Godfrey Mwampembwa, a cartoonist better known as “Gado” whose political satire is syndicated all over Africa, says something similar. “It’s the same old story: now you have the Chinese conquering Africa, but what is Africa getting out of it?”
In one of his cartoons, Lilliputian African leaders shake the hand of a towering Chinese figure. The caption reads: “We are equal partners.” In an interview with the Financial Times last month, Uhuru Kenyatta, the Kenyan president who has used Chinese billions and engineering know-how to mount a huge infrastructure push, expressed concern at the fact that Africa has moved into trade deficit with China.
Beijing he says, is “beginning to appreciate that, if their win-win strategy is going to work, it must mean that, just as Africa opens up to China, China must also open up to Africa”.
Chinese peacekeepers in South Sudan.
Mr French says Africans’ view of China “is still positive, but not as exuberant as it was”. People welcome the infrastructure, he says. But they insist their governments should not be taken for a ride, either by overpaying, accepting shoddy work or allowing Chinese companies to use all their labour and materials.
Africans resent it, he says, when corrupt governments inflate the price of projects — as has been alleged with the $4bn Mombasa-Nairobi railway, inaugurated this month — to make space for kickbacks. Still, he adds, Chinese companies have become more attuned to such issues than critics suggest.
A decade ago, they thought that dealing with the government was enough. Now they realise, they also need to engage civil society and international non-governmental organisations on issues from local skills to the environment. Chinese and local staff for Kenya Railways at the Nairobi terminus of the new railway.
Chinese companies like to be seen to be transferring skills. Huawei, which earns 15 per cent of its global revenue in Africa, trains 12,000 students in telecoms a year at centres in Angola, Congo, Egypt, Kenya, Morocco, Nigeria and South Africa. According to Johns Hopkins researchers, 80 per cent of workers on Chinese projects are African, even if many are in low-skilled jobs such as trench-digging.
“I give the Chinese a fair amount of credit,” says Mr French. “They have been mounting quite a steep learning curve from almost no knowledge to becoming very sophisticated players.” Ms Jing of the Centre for Rising Powers says China wants the relationship to be seen as mutually beneficial.
“China is actively pursuing an African industrialisation strategy,” she adds. “It is hoping to transfer low-wage production to Africa in the next 10 years.” The crucial thing for African governments, says Ms Jing, is to take control of their relationships, whether with the west or China.
That means setting priorities, ensuring skills are transferred and negotiating with foreign partners on their own terms. “It is up to the Africans. They need to be clear about who can play what role,” she says. “It is not for outsiders to decide.”
Push into Africa seen as a scramble for state funds The evolving China-Africa relationship is not monolithic, but conducted by multiple players with different agendas.
On the one hand, there are 54 African countries and, on the other, various Chinese banks, state-owned enterprises, provincial governments, private companies and individuals. “When you look at what China is doing in totality you see chaos, not coherence,” says Minxin Pei, a Chinese scholar, who rejects the idea of a grand Chinese strategy for Africa.
Uwe Wissenbach, an expert on Chinese projects in Africa, also cautions against the idea of a Beijing “master plan”. The construction of the $4bn railway from Mombasa to Nairobi was Kenya’s idea rather than China’s, he says. Even though the railway may be extended to Uganda and possibly Rwanda, it is not a Beijing strategy to link east Africa.
Rather, it was an opportunistic bid by state-owned China Road and Bridge Corporation for a lucrative contract, he says. The absence of a sweeping strategy does not mean there is no state influence. Chinese leaders have been active in courting African governments.
In 2015, Xi Jinping, China’s president, pledged $60bn for African projects over three years despite the downturn in commodity prices. Beijing has consistently encouraged Chinese companies, many with huge surplus capacity at home, to win contracts in Africa. “When the government says: ‘This is the new frontier; it’s lucrative and people should go there,’ then people do go there,” says Mr Wissenbach.
Policy directives from Beijing come with cheap finance and an implicit state guarantee should African governments default on loans. Rather than Beijing carving up the world, he suggests, what has emerged is a scramble for Chinese state funds. “In that sense, it is strategic but it’s also very opportunistic.”
Tillerson tells Africa that China finance imperils their sovereignty: Chinese investment in Africa: Beijing’s testing ground US abdication in Africa hands political opportunities to China.
Further momentum behind China’s engagement with Africa has come from the Belt and Road Initiative (BRI), a signature programme of Mr Xi to finance and build infrastructure in more than 80 countries in Asia, Africa, the Middle East and Europe.
In Asia and Europe, Beijing has experienced some resistance to the BRI, largely because of the size of debt burdens being incurred by some recipient countries and criticism over a perceived lack of contracts being awarded to local contractors. In Africa, so far, the BRI roll-out has been comparatively smooth, analysts said.
However, Rex Tillerson, the US secretary of state who is on a five-nation tour of Africa, warned on Thursday that the continent should be careful when accepting Chinese investment, saying countries should “not forfeit any elements of your sovereignty as you enter into such arrangements with China”.
Tillerson tells Africa that China finance imperils their sovereignty First senior Trump official to visit continent questions Beijing’s investment drive Rex Tillerson accepts a cup during a traditional Ethiopian coffee ceremony at the US embassy in Addis Ababa.
Rex Tillerson has warned African governments they risk forfeiting their sovereignty when accepting money from China as the US secretary of state began the first visit to the continent by a senior Trump administration official.
Mr Tillerson’s implied criticism comes as the US plays policy catch-up on a continent that hosts five of the world’s top-10 growing economies but where many struggle to secure financing. Some African governments have tended to bristle at Washington’s approach.
Speaking at the African Union headquarters in Addis Ababa, the Ethiopian capital, at the start of a week-long visit, Mr Tillerson said that while the US was “not attempting to keep Chinese investment dollars out of Africa”, governments could lose control of infrastructure and resources if projects went wrong. China is ploughing billions of dollars every year into infrastructure initiatives.
“Oftentimes, the financing models are structured in a way that the country, when it gets into trouble financially, loses control of its own infrastructure or its own resources through default,” Mr Tillerson said. African nations should “not forfeit any elements of your sovereignty as you enter into such arrangements with China”, he warned.
The comments drew a quick response from Sergei Lavrov, Russia’s foreign minister. Speaking during a visit to Zimbabwe, he said it was “not appropriate” for Mr Tillerson “to criticise the relations of his hosts, when he was a guest there”, Reuters reported.
Oftentimes, the financing models are structured in a way that the country, when it gets into trouble financially, loses control of its own infrastructure or its own resources through default .
The five-nation visit by America’s top diplomat has been billed as an apology tour after President Donald Trump reportedly dismissed “shithole countries” in Africa and elsewhere in comments made in January.
Mr Trump’s remarks drew strong criticism, although he said that was “not the language used”. Asking about the comments at a press conference with Mr Tillerson, Moussa Faki, the AU chairperson, said the “incident is of the past” and refused to answer questions on it.
Mr Tillerson twice refused to answer questions on the issue. John Ashbourne, Africa economist at Capital Economics in London, said Mr Tillerson’s remarks on China were partly motivated by a sense in the administration that it was “being left behind or displaced in importance” in Africa. “The Americans are on the back foot on many African issues,” he said.
“Africa hasn’t been a focus for the Trump administration at all. There’s been a total lack of direction.” Recommended Africa’s power shuffle is a renewal, not a revolution Without Gary Cohn, the White House will lack normality and structure Ethiopia’s state of emergency signals struggle to damp discontent Beijing overtook Washington as the largest trade partner with Africa in 2009, although the US remains the biggest aid donor.
China is investing more than $7bn a year in infrastructure projects in Africa, according to Witney Schneidman, a retired diplomat and expert on US-Africa relations. The Trump administration has also been slow to make Africa appointments, going through three potential Africa directors of the National Security Council before picking Cyril Sartor, a former CIA deputy assistant Africa director.
The state department has yet to successfully nominate an assistant secretary for Africa. Peter Pham, Africa director at the Atlantic Council think-tank, said the administration was putting security, governance, trade and investment at the forefront of US-Africa relations.
“It’s an easy trope to claim the administration does not have a policy [on Africa] . . . but there’s a policy theme at the strategic level and you just have to connect the dots to see it,” he said. Mr Tillerson also met senior Ethiopian officials and urged them to lift the state of emergency imposed last month following almost three years of anti-government protests. He will also visit Djibouti, where the US has its largest military base in Africa, as well as Kenya, Chad and Nigeria.