First decrease of Chinese investments in Africa
Dec 03, 2021
This week ended the summit on “Forum on China and Africa Cooperation” (FOCAC) which took place in Dakar, the capital of Senegal. Topics of discussion were trade and security, foreign investments, and Covid-19.
Chinese President Xi Jinping announced $40 billion to support the continents work toward industrialization. The money will be allocated via African financial institutions, investment from Chinese firms, trade financing and the International Monetary Fund special drawing rights. That marked a 33% drop from the $60 billion committed at the same summit in 2018, when China only matched the previous event’s guarantee. One the reason of the decrease in funding is due to the Chinese economy dropping for the first time in 10 years.
We also see a shift in the attitude towards China. Due to the bad will China got from incomplete infrastructure projects and putting developing countries in “debt-traps”. This may lead the Chinese to offer less onerous terms for aid and investment in the near future. China doesn’t want to be seen as a country that lends substantial amounts of money to countries which in turn cannot repay the loan.
For example, earlier this week, local media reported the Ugandan government was seeking to amend a Chinese loan agreement to avoid losing control of the nation’s only international airport, a claim Beijing called “made up.”
Another incitement for China to shift their Africa strategy towards a humbler, is the increased focus the continent is getting from Europe. The EU President Ursula von der Leyen has presented the 'Global Gateway' project, which aims to raise some EUR300bn in funding by 2027 for infrastructure projects, mainly in Africa. Its unstated aim is to meet the growing Chinese influence, notably as Africa's largest trading partner.
We see now how the new multipolar world will shift the involvement in Africa. China, which has invested heavily in Africa for the past 20 years, has now reduced its investment while the EU has made it clear it will increase its financing to improve its influence and trade. At the same time, Russia has strengthened its ties with many African countries around security policy.