Among the fulcrum points of contemporary international affairs, the relationship between China and the more than fifty countries that make up Africa is among the most closely watched. Critics and defenders alike cannot say enough about Beijing’s ties with the mysterious continent.
Contemporary realities and prospective gains are what drive a state’s foreign policy. Thus, while it may have been a different set of motives that drove Africa and China to one another between the 1960s and 1980s (this interesting history and its impact on the relationship today will be returned to at a later section), to students watching and studying the relationship between China and African countries, there are three main motives to Beijing’s interest in Africa today. Firstly, there is the oft-stated prospect of natural resources on which most critics tend to end their analysis. Secondly, there are the opportunities to be gained in the vast markets in Africa’s growing middle class. Thirdly, there are political considerations that Beijing has as its main aims and tries to hasten at all times; chief among these is its being recognised as the “one China” instead of Taiwan by African states and, some argue, the alienation of the west within Africa in a battle for economic frontiers and political allies.
Likewise, Africa has a set of its own motives in engaging with China. A cursory look at the African Union’s Vision 2063 will reveal these in depth. But very briefly, we can state here that they include funding for its initiatives to do with industrialisation, infrastructure, as well as education and healthcare in face of the structural adjustment programmes which prescribed austerity measures such as cutting government spending beginning in the 1980s under conditional aid and loans from Bretton Woods institutions.
The relationship between Africa and China has so far not been particularly perfect and harmonious. The most salient example of this is perhaps the reality that China has tended to export more to the continent than the other way round. Even though there are more than fifty African countries, the balance of trade is tipped in favour of China. Looking at the characteristics of the trade, an even more oblique picture emerges as it is clear that China mainly imports mineral resources (timber and forestry from Gabon, copper from Zambia, cobalt from the Democratic Republic of Congo, and oil from Angola to mention a few) and in turn exports into the continent manufactured textiles and technologies which, because of their affordability, tend to bring about a crowding-out effect on the continent’s domestic producers. In fact, trade unions have been at the forefront of attempting to curb China’s access to African markets. The Congress of South African Trade Unions in South Africa launched a “buy local” campaign that was motivated by a perceived threat posed by China in 2012. Moreover, more jobs have allegedly been threatened in the West African coast by alleged illegal fishing by Chinese nationals. Furthermore, less than optimum conditions in Chinese-owned factories in Zambia led in 2004 to the death of close to 40 employees in an explosion. And throughout the window period in which African countries were given access to US markets by the American Growth Opportunity Act, Chinese companies allegedly took advantage of that and set-up and registered businesses in Africa so as to gain access to the US market for themselves.
Facts and allegations such as these have become ready points to those who claim that China is neo-colonial in its relations with continental Africa. According to the view, the lopsided and imbalanced trade is reminiscent of the “scramble for Africa” which characterised the colonial relations between the Western European states and their African colonies. In what has been termed the “New Scramble for Africa”, China is cast as the new colonial power in the continent taking advantage of the continent’s citizens and taking away valuable commodities in exchange only for trinkets. Yet, this is a view of the relationship that is grossly over-simplistic. The nuances are not completely appreciated. For example, the risks that China has taken in taking over tottering projects in the continent (Nigeria’s oil sector, and Sudan after allegations of terrorism sponsoring, for example) are overlooked. Overlooked too, are the billions of aid that the People’s Republic gave without conditions to the continent while it was itself still a developing entity in the twentieth century, and even today. The high watermark of Africa and China’s relationship has been formed on the back of these contributions. The People’s Republic also has as one of its claimed principal aims the improvement of the relations into a win-win scenario.
Despite claims to do with China’s “neo-colonialism”, China has differentiated itself from the West by being avowedly non-interfering in internal African governance issues. This has been its niche. But some scholars read into this a lack of long-term orientation in Beijing’s interest in Africa. In other words, China seems to be only – and temporarily so – interested in extracting resources to complete its developmental project. Otherwise, the critics claim, she would be much more interested in improving Africa’s polities as a sign of long-term orientation.
On the other hand, some argue that China is fostering good governance in a manner that is both prudent and organic. As one Chinese government-associated scholar, He Wenping, sees it, “the fact is China is striving to develop economic and trade cooperation in Africa, helping African countries in large scale infrastructure development, raising people’s living standard, reducing poverty and vigorously developing African personnel training programs, which are all helping to build an economic and human resources foundation for Africa to realize democracy and good governance.” Under this view, China may be, coincidentally or otherwise, promoting (at least the conditions for) democratization through bringing in social and economic development and therefore – if democratization theorists are to be believed – will create a middle class that is capable of bringing about democratic change. Economic development also means a rooting out of “careerism” in African politics; alternative forms of enrichment apart from politics in the private sectors improves governance and leads to declines in corruption. Furthermore, according to a Brookings Institute report, China has not been a funder of unscrupulous dictators as is nominally argued. The greatest volume of China’s investment, the report states, is concentrated in democratic or semi-democratic states – Botswana, Namibia, and Zambia. And South Africa, largely considered the most democratic state on the continent, is China’s largest trading partner on the continent.
The earliest contact between China and Africa can be traced to the Han dynasty around 200 BC and more sporadic contacts between then and the seventeenth century when the Qing Dynasty famously began an inward turn and the Emperor banned all outside visitation and either burned sea-going vessels or let them rot without maintenance. But no understanding of the current set of relations between the two entities could be proper without appreciating the immense impact of the Cold War era between the late 1940s and 1980s in which so much of the present world order was forged. It was in these years that USSR-aligned China sponsored and even trained communist and other left-leaning movements in Africa. After the outright break with Moscow, China went on its independent, and in many ways more successful tirade to win allies on the continent by sponsoring those independence and revolutionary parties that were not only anti-West but also not yet in cooperation with the Soviets. The most noteworthy among these movements was perhaps Robert Mugabe’s Zimbabwe African National Union (ZANU) and its encompassing Zimbabwean African National Liberation Army (ZANLA) which was fighting a bush war against Ian Smith’s regime in Rhodesia and went on to become the ruling party of independent Zimbabwe. The great result of this being that the relationship between the two countries is extremely positive today. China also has close relations with Angola and Mozambique for almost similar, though perhaps more controversial reasons.
Other outcomes for the present relations between Africa and China were not entirely positive. Due to its zeal for funding and aiding particularly leftist parties in Africa, in the throes of the Cold War, China may have also alienated some African countries who were pro-West – Cameroon, whose President Ahidjo at the time (1963) stated that “China is one of the states supporting terrorism in Cameroon. We have proof, for Cameroonian terrorists are in Communist China,” is a particular example. Perhaps because of this, Cameroon was among the last African countries to recognize mainland China over Taiwan as the One China. Still, China and Africa share a common and painful history of sufferings under colonial invasions. Today in the modern era, they also share the goal of common development for survival and development in a self-consciously Western-dominated international order.
The almost exponential spike in Chinese investment in Africa occurred in the years succeeding 2000. It cannot be coincidence that this is the year in which the Forum on China-Africa Cooperation was established. To date, there have been five such meetings between Chinese and African statesmen. A cursory look at each of these fora will reveal the extent to which they have been a launching ground for initiatives that have gone a long way in pushing African development further.
The first conference, which took place on Chinese soil, passed the Beijing Declaration of the Forum on China–Africa Cooperation and the Programme for China–Africa Cooperation in Economic and Social Development which has laid the basis of future forums and engagement. The second conference, which took place in Ethiopia, saw an increase in attendance and awareness as more than 70 ministers from China and 44 African countries attended the conference. The Conference passed the Addis Ababa Action Plan (2004-2006) which had among its declarations both entities’ plans for further trade plans as well as debt relief and development commitments. In the third conference, which returned to Beijing in 2006, PRC President Hu Jintao and heads of state from 35 African countries were in attendance. President Hu rolled out $5 billion worth of concessionary loans to Africa during the summit. As one of the “Eight Measures” for Sino-African relations, President Hu announced the creation of the China-Africa Development Fund to further Chinese investment in Africa with US$1 billion of initial funding with its fund expected to grow to US$5 billion in the future. On the fourth conference, held in Egypt, there was a great deal of introspective reviewing of the Forum and in addition to this, A $10 billion low-cost loan was announced on November 9, 2009, double the $5 billion loan announced and implemented at the 2006 Beijing Summit. Furthermore, Wen announced that China will write off the debt of some of the poorest African nations. He said China will construct 100 new clean-energy projects on the continent covering solar power, bio-gas and small hydro-power and gradually lower customs duties on 95 percent of products from African states with which it has diplomatic ties. He also stated that China would undertake 100 joint demonstration projects on scientific and technological research, receive 100 African postdoctoral fellows to conduct scientific research in China and assist them in going back and serving their home countries. The number of agricultural technology demonstration centres built by China in Africa will be increased to 20. Likewise, 50 agricultural technology teams would be sent to Africa and 2,000 agricultural technology personnel would be trained for Africa, in order to help strengthen Africa’s ability to ensure food security. China also would provide medical equipment and antimalarial materials worth 500 million yuan to the 30 hospitals and 30 malaria prevention and treatment centres built by China and train 3,000 doctors and nurses for Africa. It was further stated that China will build 50 China–Africa friendship schools and train 1,500 school principals and teachers for African countries and increase the number of Chinese government scholarships to Africa to 5,500 by 2012. China will also train a total of 20,000 professionals of various fields for Africa over the next three years. Already, Africa, as a result of these initiatives, became the second largest engineering services contract market for China. Statistically, there are nearly a million Chinese in Africa, with 1,600 Chinese enterprises doing business on the continent.
The presence of China in Africa, and particularly the creation of the Forum has proven effective in ways that could not have been predicted. It has made other entities ever more willing to reconsider their relationship with the continent. In what economists term the “crowding-in effect” the United States under President Obama in particular set itself on a new, China-like path in the wake of the Forum. In what Lauren Dickey, writing for The Diplomat in 2014, labelled the US’s “belated beginning” in “its treatment of Africa as a strategic continent,” the country launched in 2014 the US-Africa Leaders’ Summit in Washington; historically, marking the first time a sitting American president had invited all the leaders of Africa to a single event to discuss regional issues and the macro US-Africa relationship (a la FOCAC). If indeed emulation is the highest form of flattery, then FOCAC must rightfully exalt at its exemplary stature. In the meeting, promises were made by President Obama of, amongst others, a $14 billion commitment by U.S. companies for investments in Africa’s construction, manufacturing, energy, finance, and technology sector. With President Donald Trump’s unpredictable administration, we cannot yet say for certain whether this reconsideration of the relationship will continue, but so far there has been evidence that it may not, as the budget for international aid, for example, got considerable cuts proposed (at the time of writing, US Congress was opposing the motion, however).
Nevertheless, regarding the prospect of a far-reaching full win-win relationship, usage of the Forum beyond just as an aid-granting and investment platform must involve tackling other implicative and negative issues. The Forum, for example, has spoken very minimally on perhaps one of the most important issues facing Africa today: climate change. This, no doubt, would be a major bone of contention as Beijing is one of the leading polluters in the world today. But the Forum cannot be said to be living up to its mandate if it fails to delve into potentially polarizing issues of the contemporary age. But it may not be, as shown in an article in Modern Diplomacy, China is ready to be the leader of the clean energy revolution; and even a cursory look at China’s current Five-Year Plan for the years between will reveal quite the extent to which Africa is crucial to China’s aims and will thereby paint a clear picture of the Forum and its significance. The list of the aims include economic growth with a “medium-high” GDP target of 6.5 percent; double GDP and per capita income by 2020 from the 2010 base; foreign investment increase; yuan convertibility by the year 2020; and increase in welfare as well a relaxing of the One Child policy to a Two Child policy all show just how crucial it is for China to have as many economic partners as attainable and Africa, as a source of both natural resources and market frontiers, is indispensable to the rising giant. The Forum, while far from perfect, has an important and increasingly central role to play in harmonising the gains between China and Africa.
Training Young African Leaders Through the United States Leadership Programs
The U.S. Department of State and the International Research & Exchanges Board (IREX), an international, nonprofit organization that specializes in global education and development, have offered admissions to the 2022 cohort of the “Mandela Washington Fellowship for Young African Leaders” in the United States.
The Mandela Washington Fellowship is funded by the U.S. Department of State’s Bureau of Educational and Cultural Affairs and administered in partnership with IREX. The fellowship creates stronger ties between 49 sub-Saharan African countries and the United States with the goal of strengthening democratic institutions, spurring economic growth, and enhancing peace and security on the continent.
Accomplished in their careers and dedicated to serving their communities, the 2022 Mandela Washington Fellows represent the geographic, cultural, and racial diversity of Africa. The participants come from a variety of socioeconomic backgrounds including small business owners, public sector leaders, and non-profit professionals; represent equal numbers of women and men; and include individuals with disabilities.
This year the sellection was from a pool of more than 38,000 applicants, the 700 fellows are leaders in agriculture, civil society, education, healthcare, and other fields and different backgrounds. The fellows, between the ages of 25 and 35, are accomplished innovators and leaders in their communities and countries.
*The fellows participate in six-week Leadership Institutes, studying Business, Civic Engagement, or Public Management hosted by U.S. colleges or universities. Throughout the Institutes, fellows enrich local U.S. communities while sharing best practices.
*After the Institutes, fellows convene for a summit, where they forge connections with one another and U.S. leaders from the private, public, and non-profit sectors, setting the stage for long-term engagement between the United States and Africa.
*Professional Development Experiences (PDEs). Up to 100 competitively-sellected fellows work with private, public, and non-profit organizations for six weeks. Both fellows and hosts benefit from discussing shared issues and challenges in their sectors, broadening their perspectives, and positioning U.S. organizations for international engagement.
*Reciprocal Exchanges. The U.S. citizens have the opportunity to apply to travel to Africa to collaborate on projects with fellows, building upon connections initiated during the program. These partnerships and professional connections are intended to form lasting relationships, expand markets and networks, and increase mutual understanding.
*Opportunities for Alumni. The Fellowship Alumni continue to build the skills and connections developed during the program through access to ongoing professional development, networking, and collaboration opportunities with support from the U.S. Department of State and affiliated partners.
*Virtual Programming. The fellows watch presentation in a classroom at Syracuse University during their Mandela Washington Fellowship Leadership Institute. Then participate in a session with Dean James Steinberg at Syracuse University.
The fellowship leverages stakeholder expertise to deliver a suite of virtual programming for selected candidates and Fellowship Alumni to support their continued leadership development and strengthen their access to networks and resources.
For six weeks, the fellows participate in Leadership Institutes at 27 U.S. educational institutions, in 20 states across the United States. Throughout the program, they will develop lasting connections with Americans and enrich local communities while enhancing their skills through leadership training, experiential learning, and networking.
They develop innovative solutions to pressing challenges in their home countries and collaborate with their peers from both the United States and Africa. Additionally, the fellows give back to their U.S. host communities: since 2014, Fellows have contributed to community service and worked with different organizations across the United States.
The fellows connect with each other and U.S. professionals, setting the stage for continued collaboration when they return home. These substantive, short-term placements allow fellows to contribute their skills and insights to U.S. organizations and grow as early-career professionals.
The fellows continue to build on their skills and connections developed during their time in the United States through access to ongoing professional development, networking, and collaboration opportunities for Alumni. The fellows may also apply for their U.S. colleagues to travel to Africa to continue project-based collaboration through the Reciprocal Exchange component.
Launched in 2014, the Mandela Washington Fellowship is the flagship program of the Young African Leaders Initiative (YALI) and embodies the U.S. commitment to invest in the future of Africa.
YALI was created in 2010 and supports young Africans as they spur economic growth and prosperity, strengthen democratic governance, and enhance peace and security across Africa. Since 2014, nearly 5,100 young leaders from every country in Sub-Saharan Africa have participated in the Mandela Washington Fellowship.
Why African Leaders Complain of Wheat Imports and Yet Ignore Zelensky
Modern Diplomacy media monitoring shows that only four African leaders were present at the Ukraine President Volodymyr Zelensky’s address to the Africn Union (AU), the 55-member continental bloc held on June 20. Ukraine’s leader Zelensky has been addressing golbal leaders, international organizations and regional associations soliciting their assistance to end the crisis involving Russia’s “special military operation” that began late February. He has addressed the United Nations, the United States Congress and European Union among others during these past months.
Now in its fourth month, the special military operation targeting “demilitarization and denazification” of the former Soviet republic of Ukraine, now in its fourth month, has shattered the global economy, sent prices skyrocketing and generating deep-seated social discontent among the population worldwide due to raft of unprecedented sanctions imposed by the United States, European Union, Australia, New Zealand, Japan and host of other countries.
France and Germany pressured African Union leaders for months to join a Brief Zoom call with Ukraine’s Volodymyr Zelensky. But, 51 of 55 African heads of state (93%) boycotted the meeting, showing clear neutrality over the Western proxy war with Russia. Western governments have tried to rally the nations of Africa to join their war on Russia. But the vast majority of the continent has ignored their pressure campaign.
For months, Ukraine attempted to organize a video conference between the African Union and Western-backed leader Volodymyr Zelensky. France and Germany put heavy pressure on African governments to attend the Zoom call, which was held on June 20. The conference ended up being a total failure, however. The heads of state of just four of the 55 members of the African Union joined the meeting.
In other words, 93% of the leaders of the African continent did not attend the video conference with Zelensky. This was a clear sign of Africa’s overwhelming neutrality in the proxy war between the West and Russia.
France’s major newspaper Le Monde described Zelensky’s video call as “an address that the African Union (AU) has delayed for as long as possible and has been keen to keep discreet, almost secret.” Ukraine had tried to organize the conference since April, but the AU had repeatedly pushed it back.
Le Monde noted that “the organization of the simple video message illustrates the tense relationships between Mr. Zelensky and the leaders of the continent,” who are “sticking to a neutral position.” Citing an internal source, The Africa Report identified the very few African heads of state who attended the call as Senegal’s President Macky Sall, Côte d’Ivoire’s President Alassane Ouattara, and the Republic of the Congo’s President Denis Sassou Nguesso.
Also at the video conference was Mohamed al-Menfi, the leader of the Libyan Presidential Council, which is recognized by some countries as a legitimate government, although this is disputed by many nations, and Libya has remained territorially divided since a 2011 NATO war destroyed the central state.
At the meeting with Zelensky, these three or four heads of state were joined by Moussa Faki, a politician from Chad who serves as chair of the African Union, and some lower level diplomats of other countries. The African Union apparently tried to keep the conference as quiet as possible. It did not post anything about the call on its official website. It did not tweet about the meeting either.
The only official recognition of the call came from Faki, in a lone tweet, in which he cautiously “reiterated the AU position of the urgent need for dialogue to end the conflict to allow peace to return to the Region and to restore global stability.”
Ukrainian president @ZelenskyyUa addressed the @_AfricanUnion Assembly today. We reiterated the AU position of the urgent need for dialogue to end the conflict to allow peace to return to the Region and to restore global stability. Moussa Faki Mahamat (@AUC_MoussaFaki) June 20, 2022
The United States and European Union frequently claim that they are acting on behalf of the “international community, but events like this demonstrate that when Washington and Brussels say international community, they actually just mean the roughly 15% of the global population in the West and their loyal allies in Australia, New Zealand, South Korea, and Japan.
Multipolarista detailed in a report in March how the vast majority of the world’s population, which resides in the Global South, has remained neutral over the Western proxy war in Ukraine. Countries with some of the largest populations on Earth, such as China, India, Pakistan, Brazil, Ethiopia, Bangladesh, Mexico, and Vietnam, have remained neutral.
Many more nations in the Global South, such as South Africa, Iran, Venezuela, Cuba, Nicaragua, North Korea, and Eritrea, have openly blamed NATO and the United States for causing the war in Ukraine. Global South nations representing the majority of the world’s population have either blamed US/NATO for the Ukraine war or are neutral, including: China, India, Pakistan, Brazil, Ethiopia, Bangladesh, Congo, Iran, South Africa, Mexico, Tanzania and Vietnam.
Establishment British newspaper The Guardian, which is closely linked to UK intelligence agencies, published an article in March reluctantly acknowledging that many African countries “remember Moscow’s support for liberation from colonial rule, and a strong anti-imperialist feeling remains.” The report noted that a significant number of African leaders are “calling for peace but blaming Nato’s eastward expansion for the war, complaining of western ‘double standards’ and resisting all calls to criticise Russia.”
It conceded that nations like South Africa, Zimbabwe, Angola, and Mozambique, “are still ruled by parties that were supported by Moscow during their struggles for liberation from colonial or white supremacist rule.”
Russia Today also has important trade relations with Africa. As one of the world’s top producers of wheat, Russia is a significant source of food for the continent. While food insecurity is an endemic problem in formerly colonized nations in Africa that were ravaged by centuries of Western imperialism, the United States has threatened to make this crisis even worse.
The New York Times reported that the US government is pressuring food-insecure countries in Africa not to buy Russian wheat.
Nearly all African countries are struggling to contain the impact of the crisis, two years after the coronavirus pandemic had locked them up behind borders and unprecedented climate change compounding difficulties facing the continent. African leaders complained bitterly that they become direct victims of the Russia-Ukraine crisis. Russia has consistently brushed aside this accusation and rather blamed Western and European sanctions for the precarious situation that has equally engulfed Africa.
Russia’s President Vladimir Putin had talks with Senegalese President Macky Sall, who is also African Union Chairperson, in Sochi on June 3. Russia has always been on Africa’s side in its fight against colonialism, Putin said, reminding Africa again about Soviet assistance that was offered more than 60 years ago. The United Nations declared Africa fully independent in 1960, and Organization of African Unity (OAU) was formed on 25 May 1963 in Addis Ababa, Ethiopia. The OAU transformed into what is now referred to as African Union.
According to reports, 17 African countries abstained from voting on the resolution at the United Nations. Some policy experts say this Africans’ voting scenario at the UN opens a theme for a complete geopolitical study and analysis. There are so many interpretations and geopolitical implications though.
Nevertheless, the African Union, Regional Economic organizations and the African governments are still and distinctively, divided over the Russia-Ukraine crisis due to divergent views and worse, afraid of contradictions and confrontations posed by the crisis and its effects on future relations with Russia.
“We are at a new stage of development and attach great importance to our relations with African countries,” Putin noted. According to him, the development of relations between Russia and Africa has shown glaring positive results. In particular, the trade turnover is steadily increasing.
“In the first months of this year it grew by 34%. We are striving to develop humanitarian ties with African countries and we will do everything that depends on us to make this process gain momentum,” he specified, adding that Russia has always been on the side of Africa.
Despite the unprecedented sanctions and information warfare launched by the United States and its satellites, Russia manages to maintain the entire bilateral cooperation in working order, and to saturate it with a relevant substantive agenda, noted Sergey Lavrov, Minister of Foreign Affairs of the Russian Federation.
His message reaffirmed that “in these difficult and crucial times the strategic partnership with Africa has become a priority of Russia’s foreign policy. Russia highly appreciates the readiness of Africans to further step up economic cooperation.”
Lavrov said: “It is in the interests of our peoples to work together to preserve and expand mutually beneficial trade and investment ties under these new conditions. It is important to facilitate the mutual access of Russian and African economic operators to each other’s markets and encourage their participation in large-scale infrastructure projects. The signed agreements and the results will be consolidated at the forthcoming second Russia-Africa summit.”
With the upcoming second Russia-Africa summit, the date and other detailed information are being withheld. But Kremlin Aide Yury Ushakov said mid-June that both sides are planning, referring to Russia and the African Union.
Can cryptocurrencies be used as a geopolitical weapon? The case of Central African Republic
April 27 can be considered a trailblazing day for the cryptocurrency industry in Africa, as the Central African Republic (CAR) approved bitcoin as its legal tender. This is the second country globally to move forward with such a bold move, after El Salvador, in September 2021, decided to adopt the prevalent cryptocurrency for internal financial transactions. This move might be seen by blockchain and cryptocurrency enthusiasts as the start of a revolution in Sub-Saharan Africa and, under certain circumstances, this might prove to be true, eventually. Nonetheless, in the current state of affairs, where CAR ranks in the 9th place in poverty globally and only 15% of its residents enjoy the perks that electricity entails, this move seems to be out of scope and not taking into consideration the actual issues that people in the Central Africa state are facing. In addition, the adoption comes at a very suspicious timing, where Russia, CAR’s main security guarantor, already 4 months into the war on Ukraine, is eyeing positively cryptocurrencies as a way to perform financial transactions. Combined with the overall conundrum in the region regarding cryptocurrencies and the urge of the Bank of Central African States towards Bangui to annul this decision, a strong geopolitical element arises. Hence, several questions are brought up, including the feasibility of such a decision and the impact it can have on the local communities, lessons that can be learnt from regions where crypto tokens are being mined, as well as threats and potential geopolitical implications for CAR and for the region.
Can bitcoin make such a big impact on the CAR community?
As mentioned, it would be safe to deem it impossible that a nation with less than 15% access to electricity, less than 10% access to internet and a highly problematic grid could, at the moment, support an energy-intensive practice such as decentralized finance and its broader mining process. President Touadera, a PhD holder and assistant professor in mathematics, is fully aware of that and hitherto resorted in the short-term move of establishing the mining company for the electronic currency in Dubai. Nevertheless, this kind of structure and arrangements are very unlikely to benefit the people in the Central African country on the long-term. If Bangui is willing to support this technology, major reforms are needed in the electricity sector to increase access and reliability. President Touadera can follow two paths with that regard.
The first one would involve power plants that rely on conventional fossil fuels, such as coal, oil and natural gas, or hydropower stations. Currently, Bangui is mostly an oil importer, part of which is used to power the only thermal station in the country, located in Bangui. Imports come mainly from DR Congo($37.8mln), with France being also a significant oil partner($547k). A decision to build several conventional power plants to support digital currency mining would require, first of all, major funding. For a country that has around 45% debt-to-GDP ratio and has already resorted to the IMF for assistance 17 times and still has unresolved arrangements, seeking assistance to international financial institutions would face backlashes. Additional imports will also be needed. For both challenges to be overcome, another obstacle are the sustainability pledges in light of the Paris Agreement. Development banks, for example, are no longer funding such projects, even if they will actually change the macroeconomic landscape in a country. CAR will then need to involve global key players that still support conventional fuels, such as Russia and China. And while Moscow is in a financially weakened position amidst its isolations following the invasion of Ukraine, China is better situated. However, Beijing has also made several promises to participate in combating climate change. These promises limit the potential maneuvers it can make with regards to fossil fuel investments, but they certainly do not constitute a complete ban. These can be considered good news for Bangui and it can pursue support from the East Asian giant, but it is advisable that they do so with caution, as alleged debt traps are already starting to generate devastating results in countries such as Sri Lanka and Pakistan.
The second path would encompass broad investments in intermittent renewable energy units, such as solar and wind parks. This move has an acutely higher chance of attracting investment from key actors from around the world, both public, private but also international financial institutions with much friendlier arrangements. In this case, however, other issues come up. A grid that relies heavily on intermittent RES is a decentralized grid that requires modernization both of its infrastructure and its regulatory framework. Both will need resources, which translates to additional funding/potential debt, but also higher technical expertise, which is very challenging to be found within the country. A big impediment with that regard is expected to be put by the government as well. Reflecting on the fact that the government in Bangui scored solely 24/100 in the transparency index, place in the 154th position globally, modernization and unbundling of the grid is a tedious process that mandates transparency and hence a conflict of interest is projected to happen. Last, but not least, the ambitions of President Touadera to make CAR a blockchain hub could also backfire, converting it into a terrorist hub instead. Electronic currency mining hubs in a decentralized grid become an extremely appealing target, both to control energy resources and to make untraceable financial transactions. Considering CAR’s proximity to Lake Chad, where FACT rebels and Boko Haram have occasionally been active, and to the Great Lakes, where the ADF currently operates, making such reforms for a radical shift to decentralization ought to come with the respective security measures.
Geopolitical and Security Implications for a Conflict-Torn Region
Comprehending the myriad challenges that the Central African state will have to face, so that the adoption of bitcoin can actually have a substantial societal impact, many are contemplating on potential hidden agendas in Bangui. The action of Russian PMC’s in CAR to fight insurgents, such as terrorist groups, audibly delineate the status of the Kremlin as a security partner for the country. Considering the alliance of the two countries and the fact that, virtually simultaneously, both states started exploring the possibility of using digital currencies, this move can be seen as additional pressure from Moscow to exert influence to partners in Sub-Saharan Africa. The fact that Gazprom Neft decided to partner with BitRiver, the largest crypto-mining colocation services supplier, for the mining of bitcoin with flare gas, depicts that Russia sees another solution to break out of the isolation by the global community due to the war in Ukraine and that solution is decentralized finance. This means that, from now on, electronic currency from blockchain has the potential of being converted to a geopolitical asset, or even geopolitical weapon. This becomes remarkably alarming if one considers that the outreach of the Russian mercenaries spans across Sudan, South Sudan, Madagascar, Mozambique, Libya and other African states.
For Moscow and its security partners, this creates a fine line between strengthening their partnership and becoming a harbor for terrorists which will enhance instability and mayhem. On one hand, this will increase financial interconnection with Sub-Saharan Africa, which is something that the Kremlin is currently lacking and the situation is expected to get worse. Trade with Africa is projected to be heavily disrupted due to the sanctions and decentralized finance can function as a lifeline for Moscow, but also as a way to even enlarge its influence. On the other hand, a form of currency that is not able to be controlled by a centralized authority, in a terrorism-torn region, has a high chance of being used for financial transactions between terrorists. This can make the job of the Russian PMC’s orders of magnitude difficult and destabilize Central and Southern Africa. Combined with the effects of the pandemic and climate change over the past years, a mix of devastation that can wreak complete havoc has high potential of occurring.
As final, and obvious, potential geopolitical implications, Sub-Saharan Africa can easily turn into a fully fragmented arena based on each country’s stance on cryptocurrency. Countries such as Cameroon and Gabon have a clear stance against the actions of CAR and have audibly stood against the actions of Russia in Ukraine. This decision from Bangui comes as a means for additional polarization, leading to a decrease in collaboration efforts within the region. A further fragmentation can only be seen as a positive outcome for terrorist groups to expand their action across Central and Southern Africa. It can also lead to escalations and a replication of the battlefield in Ukraine. This would be a catastrophic scenario, as CEMAC has made colossal efforts and steps forward to maintain regional peace and stability. Other regional security guarantors, such as France, ought to pay a great deal of attention during the coming months and even play the role of the mediator, should any verbal disputes arise.
What does the future have in store for CAR and Central Africa?
Blockchain is a disruptive technology that can have an immense positive impact on the local communities, if circumstances allow and if used appropriately. This does not seem to be the case for CAR, as President Touadera made a bold move of adopting bitcoin as a legal ledger, but has done so without considering the current major limitation posed by the electricity grid nor the geopolitical implications for the region. Both internally and regionally this can create a chain of events that can have far-reaching ramifications for regional stability and can end up backfiring for cryptocurrency enthusiasts’ ambitions to increase the usage of decentralized finance. Combined with the current shift of the geopolitical world order and the influence of the Kremlin on Bangui, there are numerous signs that digital currencies might start being used as a geopolitical weapon. The international community, with EU being a key player, ought to pay more attention to the Central African region. Important state actors, such as France, but also international institutions both on security and on finance, such as NATO, the IMF and African Development Bank, need to immediately approach regional players that are willing to cooperate, such as Cameroon and Gabon, but also to approach CAR directly and engage with CEMAC as a whole to find a solution that is fit for everyone, before potential disputes escalate, something that might be used by Russia as leverage later on.
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