Friday, September 06, 2024

China offers Africa $66b in fresh funding, promises a million jobs


Republic of the Congo President Denis Sassou Nguesso and Chinese President Xi Jinping shake hands at the opening ceremony of the ninth Forum on China-Africa Cooperation (FOCAC) Summit, at the Great Hall of the People in Beijing, China Sept 5, 2024.

September 05, 2024 

BEIJING — President Xi Jinping pledged on Thursday (Sept 5) to step up China's support across debt-laden Africa with funding of nearly US$51 billion (S$66 billion) over three years, backing for more infrastructure projects, and the creation of at least one million jobs.

China was ready to step up co-operation with Africa in industry, agriculture, infrastructure, trade and investment, Xi told delegates from more than 50 African nations gathered in Beijing for the three-yearly Forum on China-Africa Cooperation Summit.

"China and Africa account for one-third of the world population. Without our modernisation, there will be no global modernisation," Xi said.

China, the world's biggest bilateral lender, promised to carry out three times as many infrastructure projects across resource-rich Africa despite Xi's avowed new preference for "small and beautiful" schemes based around selling advanced and green technologies in which Chinese firms have invested heavily.

Chinese President Xi Jinping delivers his keynote speech at the opening ceremony of the ninth Forum on China-Africa Cooperation (FOCAC) Summit, at the Great Hall of the People in Beijing, China Sept 5, 2024.

The Chinese leader committed 360 billion yuan (S$65.98 billion) in financial assistance over three years, but specified that 210 billion would be disbursed through credit lines and at least 70 billion in fresh investment by Chinese companies.

Smaller amounts would be provided through military aid and other projects.


At the 2021 China-Africa summit in Dakar, China promised at least US$10 billion in investment and the same again in credit lines. This time, the financial assistance would be in yuan, in an apparent push to further internationalise the Chinese yuan.

PHOTO: Reuters

After the opening ceremony, delegates adopted the Beijing Declaration on building "a shared future in the new era" as well as the Beijing Action Plan for 2025-2027, Chinese state media said.

Xi also called for a China-Africa network of land and sea sea links and co-ordinated development, urging Chinese contractors to return to the continent now that Covid-19 curbs that disrupted its projects had been lifted.

He did not mention debt in his speech, despite Beijing being many African states' biggest bilateral lender but the Action Plan included terms for repayment postponements and called for the establishment of an African rating agency.

United Nations Secretary General Antonio Guterres told the summit that African countries' inadequate access to debt relief and scarce resources was a recipe for social unrest.

African lending arrangements vary from country to country. Gulf states like Saudi Arabia come after China for countries such as Ethiopia. Others like Kenya would have many creditors including European nations. There are also debts to multilateral bodies such as the World Bank and private bond holders.


The forum chalks out a three-year programme for China and every African state bar Eswatini, which retains ties to Taiwan.

In addition to 30 infrastructure connectivity projects, Xi said China was ready to launch 30 clean energy projects in Africa, offering to co-operate on nuclear technology and tackle a power deficit that has delayed efforts to industrialise.

But he did not reiterate his pledge at the 2021 forum in Dakar for the Asian giant to buy US$300 billion worth of African goods, pledging only to unilaterally expand market access.


Analysts say Beijing's rules on plant sanitary checks are too strict, making China unable to meet that promise.

But Africa looks set to receive more Chinese financing instead. Last year, China approved loans worth US$4.61 billion to Africa, in the first annual increase since 2016.

"I'm here to see how best we can foster our relationship with China," Princess Dugba, Sierra Leone's fisheries and marine resources minister, said on the summit's sidelines.

"China is getting us a fish harbour, which is one of the first of its kind," she said.


China pushes smaller, smarter loans to Africa to shield from risks


By AFP
September 6, 2024

As African leaders gathered this week for Beijing's biggest summit since the pandemic, President Xi Jinping committed more than $50 billion in financing over the next three years - Copyright AFP GREG BAKER


Matthew WALSH

China’s years of splashing cash on big-ticket infrastructure projects in Africa may be over, analysts say, with Beijing seeking to shield itself from risky, indebted partners on the continent as it grapples with a slowing economy at home.

Beijing for years dished out billions in loans for trains, roads and bridges in Africa that saddled participating governments with debts they often struggled to pay back.

But experts say it is now opting for smaller loans to fund more modest development projects.

“China has adjusted its lending strategy in Africa to take China’s own domestic economic troubles and Africa’s debt problems into account,” Lucas Engel, a data analyst studying Chinese development finance at the Boston University Global Development Policy Center, said.

“This new prudence and risk aversion among Chinese lenders is intended to ensure that China can continue to engage with Africa in a more resilient and sustainable manner,” he told AFP.

“The large infrastructure loans China was known for in the past have become rarer.”

As African leaders gathered this week for Beijing’s biggest summit since the pandemic, President Xi Jinping committed more than $50 billion in financing over the next three years.

More than half of that would be in credit, Xi said, while the rest would come from unspecified “various types of assistance” and $10 billion through encouraging Chinese firms to invest.

Xi gave no details on how those funds would be dished out.



– Loans redirected –



China has for years pumped vast sums of cash into African nations as it looks to shore up access to crucial resources, while also using its influence as a geopolitical tool amid ongoing tensions with the West.

But while Beijing lauds its largesse towards the continent, data shows China’s funding has dwindled dramatically in recent years.

Chinese lenders supplied a total of $4.6 billion to eight African countries and two regional financial institutions last year, according to Boston University research.

The key shift concerns those on the receiving end: more than half of the total amount went to multilateral or nationally owned banks — compared with just five percent between 2000 and 2022.

And although last year’s loans to Africa were the highest since 2019, they were less than a quarter of what was dished out at the peak of nearly $29 billion eight years ago.

“Redirecting loans to African multilateral borrowers allows Chinese lenders to engage with entities with high credit ratings, not struggling individual sovereign borrowers,” Engel said.

“These loans reach private borrowers in ailing African countries in which African multilateral banks operate.”

– Modest approach –


China coordinates much of its overseas lending under the Belt and Road Initiative (BRI), the massive infrastructure project that is a central pillar of Xi’s bid to expand his country’s clout overseas.

The BRI made headlines for backing big-ticket projects in Africa with opaque funding and questionable impacts.

But China has been shifting its approach in the past few years, analysts said.

It has increasingly funnelled money into smaller projects, from a modestly sized solar farm in Burkina Faso to a hydropower project in Madagascar and broadband infrastructure in Angola, according to Boston University’s researchers.

“The increased volume of loans signals Africa’s continued importance to China, but the type of loans being deployed are intended to let Africans know that China is taking African concerns into account,” Engel told AFP.

This does not mean that Beijing is “permanently retrenching its investments and provision of development finance to the continent”, Zainab Usman, director of the Africa Program at the US-based Carnegie Endowment for International Peace said.

“Development finance flows, especially lending, (are) now starting to rebound,” she said.

– No ‘debt traps’ –


African leaders have this week secured deals with China on a range of sectors including infrastructure, agriculture, mining and energy.

Western critics accuse China of using the BRI to enmesh developing nations in unsustainable debt to exert diplomatic leverage over them or even seize their assets.

A chorus of African leaders — as well as research by leading global think tanks like London’s Chatham House — have rebuked the “debt trap” theory.

“I don’t necessarily buy in the notion that when China invests, it is with an intention of… ensuring that those countries end up in a debt trap,” South African President Cyril Ramaphosa said in Beijing on Thursday.

One analyst agreed, saying that for many Africans, China has “become synonymous” with life-changing roads, bridges and ports and the debt-trap argument ignores the “positive impact” Beijing has had on infrastructure development on the continent.

“The reality is some (African) countries have had a tough time fulfilling their debt repayment commitments due to a multiplicity of factors,” Ovigwe Eguegu, a policy analyst at consultancy Development Reimagined, said.

Engel, of the Boston University research centre, said the argument mistakenly assumes that “China solely has short-term objectives in Africa”.

That, he said, “vastly underestimates (its) long-term vision… to shape a system of global governance that will be favourable to its rise”.



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