Western nations, lenders handed Africa to China on silver platter

For a country that was twice as poor as Zambia four decades ago, China’s growing influence over Africa’s development is embarrassing African governments and Western lenders in equal measure.

Admittedly, Africans are becoming increasingly agitated by China’s presence and dominance, particularly in the continent’s trade and infrastructure development, even as African leaders rejoice in taking up more Chinese debt.

Western lenders are fuelling the fire, claiming that China is leading Africa into a debt trap that could enable it to take over the countries that fail to pay — literally, placing them under receivership.

Such sentiments continue growing, fuelled by the $60 billion that China’s President Xi Jinping pledged for Africa at the Forum on China-Africa Co-operation (FOCAC) in Beijing earlier this month.

There’s growing controversy about how China wields immense powers in the global trade and investment architecture, and how precisely it’s likely to use that power.

DEVELOPMENT NEEDS

The underlying issue is that Africa’s old partners — comprised of the powerful, most developed nations and the multilateral lenders that they control — have supported its development for the past half a century but failed to respond effectively to its development needs and priorities.

The West handed Africa to China on a silver platter by being heavy-handed and leaving the poor borrowers exposed to a new suitor.

The Western lenders’ primary focus was not necessarily aligned to the development needs and priorities of the recipients.

While they invested in small infrastructure projects and social development programmes, the Chinese have put more funds into improving Africa’s infrastructure to stimulate equitable growth and create jobs for the youth.

POINT OF CONTENTION

The Chinese have become part of the solution to Africa’s infrastructure deficit that requires an investment of $93 billion annually. Massive investment in roads and railways, for example, would reduce the cost of road freight, which is estimated at four times that of developed countries.

Another point of contention is contracts. While negotiations with Africa’s traditional partners have been laborious and implementation slow, the Chinese are faster in procurement and implementation of projects.

And though criticised for being less concerned about governance, environment and gender issues, they also impose less conditionalities than the Western lenders.

There’s also an emerging theory that China reads increasing threats from the United States, its largest trading partner, and needs to expand its market in Africa by supporting African countries to grow.

This week, the US slapped tariffs on $200 billion of Chinese goods, and China imposed retaliatory tariffs on $60 billion of American imports.

TRADE DEFICIT

The problem for the President Donald Trump administration is the growing US trade deficit with China, which reached $376 billion last year. The US is also China’s largest debtor.

China knows it stands to lose more if the conflict continues.

As it seeks a solution, it is looking at how to spread its eggs in more baskets — and Africa provides a good opportunity for market growth.

The problem is how quickly a better market can evolve. Africa is a poor, complex continent suffering from a development crisis mainly fuelled by political and social conflicts or poor management of natural disasters.

It’s more clearly seen in the Zambia-China story.

Over the past 40 years, the income of the average Zambian (per capita) increased 1.6 times from $490 to $1,300 and that of a Chinese multiplied 42 times from $200 to $8,690.

POOR

While the typical African has remained poor for 40 years, the Chinese have graduated from poverty to upper middle income, transforming China to the second largest economy after the US.

After its radical shift from a centralised to market-based economy in 1978, China sustained an unprecedented 10 per cent growth over a long time, lifting 800 million of its people out of poverty.

Africa’s growth rate of 3.5 per cent isn’t enough to improve the livelihoods of the 437 million living in extreme.

Even with support from China and the West, it should reform internally to create opportunities for rapid growth and poverty reduction.

Mr Warutere is a director of Mashariki Communications, [email protected].