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China’s ties with Africa go beyond the “debt trap”

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Authors: Do Quynh Anh & Francis Kwesi Kyirewiah*

Over the past decades, there have been numerous arguments about China’s relations with Africa which is seen as the foundation of Beijing’s diplomacy. Some scholars have linked China-Africa relations to a new form of colonialism and resources diplomatic strategy of China. For historical and political reasons, China has been close with African countries because they share common past of their former colonial suffering and the common tasks of promoting their economic development. Now as the largest developing country as well as the second largest economy of the world, China’s economic relations with Africa en bloc is obviously changing from the previous low-technology aid to a rapidly medium- and high-technology assistance. To that end, China is able to provide more financial aid to all the developing countries including Africa.

To be sure, it is normal for any country to provide aid to each other in terms of borrowing and lending. Historically and politically, the parties involving international financial interactions might end up as enemies. Professor J. A. Frieden, of Harvard once argued, in general, developing countries are by definition short of capital, so most of their governments are eager to borrow abroad. It is therefore presupposed that the prospect of using borrowed money is to speed up growth and increase national output. Yet, sometimes the borrowers could have little incentive to use the money wisely. It is also true that the lending powers have used or misused or even abused the financial weapons available: they can cut off debtor governments from future lending, and they may be able to retaliate in related areas, such as freezing debtor governments’ bank accounts or taking other government-owned properties. Equally noted is that lending governments are able to use broader foreign policy considerations to induce the borrowing side into compliance with the lenders’ demands. That is true in terms of many cycles of lending and debt crises. For example, all through the 19th and early 20th centuries, rapidly growing countries borrowed heavily from the major European financial creditors, primarily London but also Paris, Amsterdam and Berlin. Usually, debts appear to have contributed to economic development, but there are also plenty of crises and political disputes. Therefore, debt crises have existed in world politics for centuries, and now it appears in a new face as “debt trap.”

China’s relation with Africa is relatively new due to the fact that the rise of China and the independence of Africa are the most recent scenario over the past 40-60 years. As Dr. DambisaMoyo, a scholar in international affairs anda native from Zambia, argued, “No country has come to symbolize the profound economic transformation witnessed in the past half-century than China. It has become the largest exporter and the largest foreign currency-holder of the world and it has already surpassed Japan to rank second in terms of GDP.” By 1978, China’s world GDP share was only 1.75%, but since then, it share has risen up to 17% in 2017.Today China is the largest FDI source to Africa and the bilateral trade has been rising substantially. The resultant fact is not necessarily because of China’s smart policy, but equally due to the West’s own folly policymaking.

Yet, China has been targeted by the West headed by the United States as the “debt-trap maker”. The reasons might be different but it argues that China has tried to use its increasing financial power to dictate its Communist will and nationalistic goal in the world affairs, in particular towards the Africans. This is really ridiculous. First, a closer look into the Marshal Plan endorsed by the United States in 1948 to assist European recovery from the war-time destruction, the West called it the “European Recovery Plan” which aimed to invest billions of U.S. dollars to help the war-worn states of Europe. However, when they discuss the economic plan from Beijing and Moscow, they use the terms of traps and conspiracy, such as “Beijing’s expansion is inexorable, has a global scope and is driven by the depression in the West.” Ideologically, the United States has tried to distort any Chinese economic plan including the “Belt & Road Initiative”. Second, the United States and many other countries of the West as well have entertained the mentality of their superiority. They do hold the perception that Europeans are the only most creative people on the Earth. Thus the rise of China is surely regarded as the loss of their superiority and prestige as well. In light of this, the third point is that they have perceived China as a potential or even a real rival or enemy in a geopolitical sense, as U.S. politician Mike Pompeo has repeatedly targeted China both publicly and privately.

However, the relationship between China and Africa has gone beyond the so-called “debt trap diplomacy”. From the mid-1950s, China was committed to supplying all possible aid and supports to the African peoples who were struggling for their national independence, while newly-independent states consistently extend their supports to China diplomatically and politically. Since the last decades of the 20th century, China-Africa relations have been primarily focused on economic cooperation. With its economic power growing, China’s aid has been focused on infrastructure development, consisting of constructing railways, roads and hydropower to business cooperation such as mining, farming and tourism. In return, Africa has made all possible efforts to improve its investment and business environment in order to protect the legitimate rights and interests of Chinese companies. This is now urgent for both sides need to work decisively to transform and upgrade the quality and efficiency of the cooperation in strategic terms. As Italian economist Vilfredo Pareto argued, it is quite possible for there to be an action in an economy that harms no one and helps at least one by one. Whether it is accepted or not, China’s sustained growth can’t be in isolation from the rest of the world in a long perspective.

China’s aid to Africa has never been a lip-service as it believes that in order to insure sustainable economic growth, it is strategically necessary for any country, either small or large, to have a complete transportation network and reliable power-supply system. This is what is referred to as ‘two wings theory for development.’ Today, most African countries lack basic transportation system and sustainable power supply for accelerated and sustainable economic development. For example, agreements signed in various fields between China and Africa wasvalued at over $50 billion between 2015 and 2016. Most African states have been eager to accelerate their national industries’ production capacity in order to achieve their economic independence. Thus far, Chinese companies have been instrumental in the construction of numerous symbolic infrastructure projects, including but not limited to the newly-completed railwayline connecting the capital of Kenya (Nairobi) to its coastal city and port hub of Mombasa, and the highly anticipated network of Chinese-built railway in East Africa. In addition, China is currently the largest contributor to peacekeeping missionin Africa,rangingfrom non-combat peacekeepers in medical and engineering servicesto the deployment of troops in Sudan.

For sure, China’s overall capacity in Africa has been much greater than 50 years ago when it started the first railway from Tanzania to Zambia during the Cold War heydays. Now is the time for China to link infrastructure development to a grand strategy, such as “the Belt & Road Initiative” proposed by Chinese President Xi in 2013. This is manifested by the completion of the railway line from Nairobi to Mombasa in 2018. Politically, according to the consensus between China and Africa, the leaders of the two sides vowed to promote their comprehensive ties to a new-level of strategic partnership. Also unlike Western foreign-aid policies, which generally prioritize political issues and social values, China’s aid has been primarily driven to economic issues. On one hand, this is consistent with China’s adherence to non-intervention policy in domestic affairs of other states. On the other hand, both China and Africa look forward to a future of unprecedented transformation on the launch of the Nairobi-Mombasa railway  that would not only revolutionized the transport sector of Kenya, but also more important stimulating investments in advanced manufacturing in Kenya and African as a whole.

For China, the pace of transformation of Africa has been remarkable. Even though its short-term goal remains economic and diplomatic, it seems inevitable that China’s basic interests will eventually lead it to far greater involvement in the continent. Though diverse in both economics and politics, Africa remains sided with China on international issues, and this quasi-alliance strictly delimits the scope of Sino-African collaboration and the opportunity to assist in the formation of Chinese conceptions and strategy in the world politics for decades to come. It is true that Chinese leaders are well-aware of this advantage.

In conclusion, China has high expectations for Africa as the latter has an immense reservoir of resources to spur its envisioned growth and China’s economic growth. As a rising power, Chinawillwork in conjunction with Africa towards the creation ofa more just and impartial world order and that places the East Asian giant in a stronger position to provide more substantial aid to Africa under win-win cooperation. As expressed at the G-20 FM meeting in Bonn in 2017, Chinese Foreign Minister reconfirmed that China would carry on enhancing strategic relationships with Africa. China would alsoabide by the key tenet which aims to develop the local, regional and international economics in light of “Africa’s initiative, Africa’s consent and Africa’s first”. Due to this, China’s strategic partnership with Africa is patently beyond the debt trap diplomacyin terms of Beijing’s global strategy.

*Francis Kwesi Kyirewiah, a PhD student in International Affairs, at SIPA, Jilin University, China.

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Africa

The challenge of COVID-19 in Africa

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Migrant women and their children quarantine at a site in Niamey, Niger. © UNICEF/Juan Haro

Since its emergence in December last year, covid-19 has spread rapidly around the world, flooding the health system and weakening the global economy. As a result of the epidemic, the virus has spread across the African continent. So far, nearly 48 countries have been affected, but the impact has been felt from the beginning of the crisis. With the spread of covid-19 on the African continent, Africa has responded rapidly to the epidemic, and the number of cases reported so far has been lower than people had feared. The experience of past epidemics, that is, age structure, certainly works, and so does the response of all actors: the state, civil society, regional organizations… However, the economic and financial impact of the epidemic is enormous. Nevertheless, the challenges are still great due to the strategy adopted by the government, public support for the measures taken, the resilience of the health system, economic impact, cross-border cooperation, etc… In recent years, African countries have done a lot to improve the well-being of the people on the continent. Economic growth is strong. The digital revolution has begun. The free trade zone has been decided. But the epidemic threatens progress in Africa. It will exacerbate existing inequalities, hunger, malnutrition and vulnerability to disease. Demand for African goods, tourism and remittances have declined. The opening of the free trade zone has been delayed, and millions of people may fall into abject poverty.

The African continent has some advantages

However, the continent’s unique demographic structure suggests that it may not be as affected by the epidemic as the rest of the world. In fact, globally, people over the age of 65 are the age group most likely to be complicated by the epidemic. In Africa, a very young continent, only 4% of the population belongs to this age group (20% in France, 16% in the United States and 11% in China). This will make Africa’s experience different from that of its aging European and Asian neighbors. Another factor of hope that has been repeatedly mentioned is the climate of the African continent, which will not be conducive to the spread of the virus. However, so far, this theory has not been supported by any data.

Moreover, the health crisis we are facing is not the only one that has affected the African continent in recent years. For example, since 2013, the Ebola epidemic has killed tens of thousands of Africans, providing crisis management experience for the affected countries. After discovering that Asia, Europe and the United States have been seriously affected by the virus, this may partly explain why many countries on the African continent have taken swift and severe measures, such as checking airport temperature, closing borders, closing airports, closing airports, closing airports, etc. Suspension of international flights or isolation measures. The virus spread rapidly in Europe before it really affected Africa, which is why some African governments responded highly to the crisis.

Some concerns

However, some inherent factors in the African continent hinder the implementation of certain preventive measures, which are of the same scale as those in Europe, Asia or the United States. Social distance is complex in a continent where nearly 200 million people live in crowded shantytowns or are used to living in harmony with their families. In addition, some Africans live in a water shortage environment, especially in remote urban areas, which makes simple (effective) gestures (such as washing hands regularly) difficult.

Finally, measures to limit the employment of citizens may endanger the survival of many people, since half of the population lives on less than $2 a day, has no savings or wealth, and the informal sector accounts for 85.8% of employment. It should also be noted that the large-scale spread on the continent is worrisome because it is estimated that the health systems of African countries are at different levels, but most of them are not able to cope. They lack not only medical staff, but also equipment, especially for the treatment of people living with HIV. Respirators are not enough for patients. The African continent, in particular, still faces treatable but in many cases fatal diseases: AIDS, tuberculosis and malaria. The burden of covid-19 on the medical system often hinders the treatment of these other diseases.

Economic issues

What is the impact on African economy? It’s hard to say. However, the impact was felt even before the first pollution case was announced. In fact, intra African trade currently accounts for less than 18% of the continent’s trade, which means that Africa’s economy is heavily dependent on trade with the rest of the world. In addition, the industry of the African continent is mainly concentrated in raw materials. Due to the crisis, the prices of raw materials have been seriously affected. Some of Africa’s major economies are still heavily dependent on exports of resources such as oil or minerals. The global crisis has led to a collapse in the prices and demand for these raw materials, although their exports account for more than a quarter of the total exports of 25 countries and 55% of Africa’s GDP.

Border closures also make it impossible for these countries to rely on tourists to restore their economic health. The epidemic may help to redefine the relationship between African countries and external actors. Finally, most of these countries do not have the capacity to deploy economic support or stimulus plans on a scale comparable to that of western countries to limit the impact of the crisis. In this regard, we understand that despite the collapse of tourism, Egypt is one of the most resilient economies on the African continent. Thanks to “strong domestic markets and the authorities’ strong response to fiscal and monetary policy”, the country even feels luxurious to be one of the few countries to achieve positive growth (+ 3.5%) in 2020.

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SADC Counts on EU and US for Security Funding in Mozambique

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The 16-nation Southern African Development Community (SADC) is counting funding from the United States and European Union (EU) to support its proposed military deployment (3,000 troops) in Cabo Delgado, northern Mozambique, according to Andre Thomashausen, professor emeritus of international law at the University of South Africa (UNISA).

Thomashausen said that Pretoria “is desperately seeking” ways to strengthen and rehabilitate its military operational capabilities through the intervention in northern Mozambique and “SADC wants this entire operation to be funded by support from the European Union and, to some extent, the United States. SADC is envisaging a role for the European Union of financial rather than logistical or human resources support.”

SADC technical assessment mission has proposed sending a military intervention force of 3,000 troops as part of its response to help fight the militant insurgency in Mozambique. In terms of military assets, the SADC assessment team proposes that 16 be sent to Mozambique, namely two patrol ships, a submarine, a maritime surveillance plane, six helicopters, two drones and four transport planes.

On April 28, Southern African ministers have agreed to deploy a regional force in Mozambique. But the Southern African leaders meeting that was scheduled for April 29 to assess the security situation and offer the final approval for deployment of SADC military force was postponed due to unavailability of South African President Cyril Ramaphosa and Botswana President Mokgweetsi Masisi.

Botswana is the current chair of the SADC division, which is tasked with promoting peace and security in the region. Botswana President Mokgweetsi Masisi is quarantined due to Covid-19. Ramaphosa was busy giving testimony to an inquiry into corruption under his predecessor Jacob Zuma.

Botswana and South Africa along with Zimbabwean President Emmerson Mnangagwa, are the current members of the SADC security organ troika. The three would have met Mozambique President Filipe Nyusi at the summit to decide whether to accept the proposed intervention plan.

The insurgency broke out in Mozambique’s northeast in 2017 and the rebels have stepped up attacks in the past years, with the latest March 24 heinous attack left more than 2,800 deaths, according to several reports, and about 714,000 people displaced, according to government sources.

The worsening security situation is a major setback for Mozambique. While it hopes to reap nearly US$100 billion in revenue over 25 years from LNG projects, the state failed its pledge to maintain and enforce security after several warnings. Now French energy group Total declared force majeure on its €20 billion liquefied natural gas (LNG) project following the insurgent attacks. The gas project located about six kilometers from the city that suffered the armed attack in March.

In an official release, the Paris based Total officials said considering the evolution of the security situation in the north of the Cabo Delgado province in Mozambique, Total confirms the withdrawal of all Mozambique LNG project personnel from the Afungi site. This situation leads Total, as operator of Mozambique LNG project, to declare force majeure. The suspension of work arising from the “Declaration of Force Majeure” will remain in force until the government restores security in a verifiable and sustainable manner.

Besides that, Mozambique is rocked with frequent kidnappings. In a recent interview with Lusa, the president of Confederation of Economic Associations of Mozambique (CTA), the largest employers’ association in the country, Agostinho Vuma, said that kidnappings targeting entrepreneurs and their relatives are a negative feature of the country’s business environment.

In addition, a report by ratings agency Standard & Poor Global also said militant attacks in Mozambique’s Cabo Delgado province still pose a “significant threat” to production facilities associated with one the biggest natural gas discoveries in the world.

S&P, which ranks Mozambique’s foreign debt at CCC+, seven rungs below investment grade, said it expected economic growth in the country to recover in 2021 on higher mining output, especially linked to liquefied natural gas (LNG) production.

But that rebound was subject to completion of the gas projects in the face of mounting security risks, as well as risks of droughts and flooding. Mozambique was battered by two massive cyclones in 2019, and another hit its shores in this year.

“If this project comes on stream as expected by 2024-2025, it will benefit Mozambique’s economic outlook, and support wealth levels that are currently very low by global comparison,” said S&P. But most benefits will materialize beyond our current forecast horizon as gas production will likely come on stream in 2025 given the delays experienced in 2021.”

The ratings firm project gross domestic product (GDP) to expand 2.5% in 2021 after last year’s 1.25% contraction. It however sees economic growth to average 5.5% from 2022 onwards.

With an approximate population of 30 million, Mozambique is endowed with rich and extensive natural resources, but remains as one of the poorest and most underdeveloped countries in the world. It is one of the 16 countries, with collective responsibility to promote socio-economic and political and security cooperation, within the Southern African Development Community (SADC).

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Mozambique: Total Halts Gas Project, Parliamentary Opposition Parties Demand Accountability

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(image: Mitsui)

The French energy giant Total has finally announced suspension of its gas project and that will leave an unmeasurable impact on the economy of Mozambique.

The Mozambican government has largely failed with its security policy and ignored experts’ advice on security after several warning issued after militant bloody attacks bloody in 2017 by a group known locally as al-Shabab. Experts also attributed attacks to governance deficit and disparity in development in northern Mozambique.

Its scale raised doubts over the viability of the biggest single investment in Africa even before the latest raid. March’s attack on Palma took place just 10 kilometers (six miles) from the gas project’s nerve center, despite a government commitment to set up a 25-kilometre security radius around the site.

French energy giant Total has a massive multi-billion gas project in northern Mozambique, but has now declared a “force majeure” situation beyond its control, a legal concept meaning it can suspend fulfilling contractual obligations.

The declaration “will remain in effect until the Government of Mozambique has restored security and stability in the province… in a verifiable and sustainable manner,” the company said in its official release on April 26.

Meanwhile, the Mozambican parliamentary opposition parties have demanded “scrutiny” of the cost of war in the northern province of Cabo Delgado, accusing the government of “failure” and warning of the risk of the conflict being used for the “illicit enrichment of the elites.”

The requirement was made during the second and last day of questions to the government session in the Assembly of the Republic of Mozambique.

“The defense and security sector must be scrutinized, because elites in times of war use this sector for their illicit enrichment,” said Deputy Fernando Bismarque of the Democratic Movement of Mozambique (MDM), Mozambique’s third-largest parliamentary party.

Insisting on a reply to the question that the MDM had already posed about the costs of the fight against “terrorists” and the use of “mercenaries” in Cabo Delgado, Fernando Bismarque accused the government of making “a secret” of expenditure on the conflict in the north of the country.

“It is the Government’s role to render accounts to the Assembly of the Republic. It is not and should not be any state secret, because it is this House that approved the State Budget and we are within the scope of our constitutional and regimental powers to oversee government action,” the MDM deputy said.

Last week, the Confederation of Economic Associations of Mozambique (CTA) said Total had already suspended contracts with a series of businesses indirectly involved in the gas project.

The National Petroleum Institute (INP), a Mozambique government body that governs energy projects, similarly said that Total “may not fulfil contractual obligations and could suspend or cancel further contracts, depending how long the halt (to construction) lasts.”

The Ministry of Mineral Resources and Energy, through the National Petroleum Institute (INP) gave an assurance in a statement that the Mozambican authorities are continuing to work towards the restoration of “normal security conditions” and ensuring that enterprise activities can resume “as soon as possible.”

The suspension of work arising from the “Declaration of Force Majeure” on Total’s LNG project in Mozambique will remain in force until the Government has restored security in the province in a verifiable and sustainable manner.

In the release, the Paris based Total officials said that considering the evolution of the security situation in the north of the Cabo Delgado province in Mozambique, Total confirms the withdrawal of all Mozambique LNG project personnel from the Afungi site. This situation leads Total, as operator of Mozambique LNG project, to declare force majeure.

That however, Total expresses its solidarity with the government and people of Mozambique and wishes that the actions carried out by the government of Mozambique and its regional and international partners will enable the restoration of security and stability in Cabo Delgado province in a sustained manner. Valued at €20 billion, it is the largest ongoing private investment in Africa.

About Total: Total is a broad energy company that produces and markets fuels, natural gas and electricity. Our 100,000 employees are committed to better energy that is more affordable, more reliable, cleaner and accessible to as many people as possible. Active in more than 130 countries, our ambition is to become the responsible energy major.

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