Seven Years of China’s Belt and Road Initiative: How are Developing Countries Benefiting?

By Ssemanda Allawi.

In 2013 – seven years ago, Chinese president Xi Jinping gave a set of speeches where he announced the proposal of the now famous Belt Road Initiative (BRI). Xi delivered the first speech about BRI during his visit in Kazakhstan, elaborating his desire and vision of restoring the ancient silk road which offered routes from Peoples Republic of China, through Central Asia to the far Europe. In October, 2013 during his speech to Indonesian parliament, president Xi announced his maritime silk road concept to Indonesians to facilitate trade and ease movement of goods and services.

In the seven years of the project’s implementation, BRI has registered considerable achievements seeing over 29 International Organisations and over 71 countries sign or joining it. This means that more than a third of global GDP and more than two thirds of world’s population are part of the project!  This means that upon completion, the project will make the world’s largest market easy to access and traverse on both road and sea which are key in transportation and mobility of goods and services.

However, this is not without critics especially from some parts of western world with the U.S leading critics of the project with claims such as lack of transparency from Chinese authorities especially its financing while others branding the project is part of what they call China’s debt diplomacy.

However, research indicates that claims of lack of data on funding of the projects are largely wrong as a number of studies and research work  have given a clear view  of funding of this project.

Critics of China and BRI project in particular have often claimed the project is too expensive and will see developing countries fall in what they call China’s “debt diplomacy” with some western capitals branding the project Beijing’s debt trap. Many of critics have always cited Sri Lanka’s Hambantota which was leased to a Chinese firm for 99 years to help repay the country’s debts. The claims that Hambantota port was seized by China are also ambiguous considering the current state of the port if compared to how its state before the Chinese firm invested in it.

Washington has also been very critical of BRI project and generally China’s funding of infrastructure development in different parts of the world claiming that many of Beijing’s clients are  pariah states

However, some of these claims seem to be political with Washington screed of China’s growing relations with the rest of the world which they see as one way of antagonising U.S’ strategic interests. A case in point is citing Beijing’s growing relations with African state of Djibouti. In 2018, U.S’ top military commander in Africa, Marine General Thomas Waldhauser told U.S’ House Armed Services Committee that China’s state-owned China Merchants Port Holdings owning shares in Djibouti’s meant that U.S military could face “significant” consequences. Djibouti is one of many countries China considers part of its Belt Road Initiative.

In regard to Beijing’s infrastructure assistance going to undemocratic states, this is largely wrong. Most of Beijing’s borrowers are democracies with countries such as South Africa, Tanzania, Brazil, Kenya, and Tanzania. Other democratic countries that that have benefited from China’s infrastructure loans include United Kingdom (UK). China is a major investor in UK’s Hinkley Point Nuclear power plant in Somerset.

Therefore, despite critics of BRI, it can be argued that the project so far is a success. Indeed, in 2019, a study by World Bank entitled; “Belt and Road Economics: Opportunities and Risks of Transport Corridors” analysed transportation projects along the BRI routes and concluded that benefits to recipient countries and the entire world would benefit from the project. In Kenya for example, as a result of Belt Road Initiative project, the country built a 470 km railway line from Kenya’s capital, Nairobi to the coastal city of Mombasa which shortened travel time from 10 hours to five, created over 46,000 jobs and helped the country’s GDP by 1.5%.

Despite the study reporting more cases of policy impediments than infrastructure impediments – such as customs delays, bureaucracy, red tape, imports tariffs and corruption which increase trade costs, the study is a proof that BRI will play a significant role toward both social and economic development of the world.

From the above and findings of this study, it is evident that improving investment climate is a key complementary when it comes to supporting and investing in infrastructure sector. This can be realised through deep trade agreements such as the proposed Africa Continental Free Trade (AfCFTA). On Global scale, agreements such as BRI, AfCFTA and the recently reached trade liberalisation agreement between China and ASEAN, Australia, South Korea, New Zealand and Japan can help to eliminate tariffs which sometimes are barriers of trade.

Therefore, critics of infrastructure development should not look at infrastructural development in lenses of competition but rather putting in place facilities to aid trade. In particular, those criticising BRI branding the project a debt trap or debt diplomacy should reconsider their exaggerated claims. For example, countries that do borrow funds from China have also on many occasions borrowed from the so-called traditional donors or World Bank, IMF as well as other private bond holders. This means these countries diversify their sources of finances and thinking that they are beholden to China is ignoring key and glaring facts.

However, whereas it is very hard to present facts of the so-called debt diplomacy, there are genuine concerns when it comes to debt sustainability especially to African countries. However, these concerns should not only be tied to borrowing from China but rather all relevant lenders. This is because, unlike domestic debt, foreign debt has to be serviced using exports and this way, there are clear limits that point at how much borrowing developing or poor countries may take and continue to thrive.

In addition, the impact of Covid-19 pandemic on global economies feared to cause recession has should serve as a warning that many developing countries may find it hard to sustain their debts. Almost all countries that were projected to continue with a positive economic growth curve before covid-19 now are IMF analysis shows these countries projections were negatively impacted by covid-19 which has caused negative impact on countries exports and affected their GDP growth and hence, raising questions if these countries can sustain their debts. Indeed, many of China’s clients in Africa are in debt distress.

Early this year, China joined G20 in offering developing countries debt relief as a way of helping countries affected by Covid-19 pandemic recover. Among countries to benefit from this plan include 40 from sub-Saharan region. Despite this effort, debt moratorium alone may not be a magic bullet for Africa and other developing countries. Debt restructuring or write-downs. The challenge is that such arrangements often are done through the Paris Club of which China is not a member. However, if China wants to write-down debts on some African countries and developing countries in general, it can since it has done it before

On the other hand, the US announced a new development finance institution, also known as U.S. Development Finance Corporation (USDFC) to compete with China in offering infrastructure funding to development countries.  Though this is a positive development, this initiate alone will not bring swiping changes. Most of developing countries prefer to use Chinese funding when it comes to infrastructure funding. Though they may look generous, traditional funders and their multinational banks prefer to fund sectors such as administration, social services and the so-called democracy promotion instead of funding the much-needed infrastructure programs. For example, at first 70% of World Bank’s funding went to infrastructure but has been reducing to recently 30% despite huge funding gaps in infrastructure sectors in developing countries.

It is important to note that developing countries are still faced with shortage of funding especially in infrastructure projects which are key for development. A study by World Bank and McKinsey Global Institute found that funding for infrastructure projects such as transport and electricity is lacking, noting that to ensure a socially inclusive development by 2030, there is need to spend more than $3.3 trillions annually of which 60% of this must go to developing countries in Africa. African Development Bank (ADB) on the other hand estimates that to meet demands of their growing population, replace aging infrastructure, African countries must spend between $130-$170 billion annually on infrastructure. Also, a 2017 study by World Bank “Why We Ned to Close the Infrastructure Gap in Sub-Saharan Africa” suggested that if these countries reduce funding gaps for infrastructure, the region’s GDP per capital will grow by 1.7% and hence. All the above shows that any infrastructure assistance to developing countries should not be underestimated and hence, the view that BRI project is a positive initiate for developing countries world over.

In conclusion therefore, as studies have indicated, BRI project has more benefits if compared with challenges it may bring. Instead of critiquing the project largely to Geo and Global politics, China’s critics especially the U.S should back the project and where possible embrace and support new trade agreements such as AfCFTA to improve trade and investment climate in developing countries than only negatively criticising funders that fund developing countries projects. Also, the U.S may champion calls to reform the The Bretton Woods institutions and offer attractive alternative funding to developing countries, reduce their anti-China rhetoric and instead participate with China whenever there are efforts to offer debt relief.

Africa and China Share Common Approach to Climate Change.

By David Monyae

Weather patterns across the globe are signalling that climate change will bring about catastrophic calamities to all of us.

Increasingly, droughts, heatwaves, wildfires, rising sea levels, warming oceans, thawing permafrost, changing rain and snow patterns are adversely heart-rending.

Africa and China joined the rest of the world at the UN’s 75th anniversary last month to highlight the urgent need for global responses to climate change.

Prior to his address to the UN, President Cyril Ramaphosa warned the world must “swiftly reduce carbon emission and adapt to the effects of climate change, we will be facing one state of disaster after another for many years to come”.

President Xi Jinping of China avoided playing games demonstrated by his counterpart President Donald Trump on climate change.

Instead, he pledged that China will achieve carbon neutrality by 2060, a move that has been commended and welcomed all over the world.

Although there are many notable differences in appearance, style, and approach among Africans themselves, on one hand, and China, on the other, they share a common position on climate change. The reason Africa and China shared a common position at the UN on climate change is because it receives high priority within the Forum on China-Africa Co-operation.

At the Beijing Summit in 2018, UN Secretary-General Antonio Guterres highlighted the increased co-operation between Africa and China.

He furthermore noted how Africa and China are pursuing what he considered as the “two mutually compatible road maps”, thus, AU’s Agenda 2063 and the UN 2030 Agenda for Sustainable Development in pursuance of the Belt and Road Initiative.

It is in this context therefore that Africa and China committed themselves to being environmentally friendly in the construction of mega-projects across the continent.

There are also many lessons Africa can learn from China’s rapid rise. China is the only country in the world that has uplifted more than 700 million out of poverty in four decades.

While Africa aspires to follow some aspects of China’s development model, it ought to be mindful of the environmental impact of its development.

China achieved its development at a very high cost to the environment, but President Xi Jinping’s commitment to the Paris Agreement and setting clear targets of carbon neutrality by 2060 has made China a leading global champion on climate change along with the African continent.

It must be recognised that Africa is the smallest producer of CO2 emission yet it is one of the most affected by climate change. In recent years, Africa has had endless calamities caused by climate change.

East Africa experienced swarms of voracious desert locusts amid Covid-19, threatening food security.

The city of Cape Town was on the verge of reaching “Day Zero” in 2018 due to a lack of rainfall.

Mozambique, Zimbabwe, and Malawi are still recovering from Cyclone Idai.

Farther afield, Ethiopia and Egypt are facing simmering tensions over the Grand Ethiopia Renaissance Dam on the Nile River.

Indeed, Africa should work with China and the rest of the world to prevent President Ramaphosa’s prophecy from becoming a reality.

 

Politics of Pandemic: How Zimbabwe is Using Covid-19 to Stifle Human Rights.

Harare, Zimbabwe.

Arguably, no country has not been affected by the outbreak of the novel Coronavirus pandemic. But for Zimbabwe, many believe Covid-19 presented an opportunity for authoritarian regime to use Coronavirus measures and entrench itself while grossly violating fundamental freedoms.

Strict measures characterised by one of Zimbabwe’s tough lockdown which authorities say are meant to slow the spreading of the virus saw majority of Zimbabwe’s 16 million people already suffering a parsimony economy face unprecedented hardships as many got trapped into the city as a result of lockdown which police enforced sometimes mercilessly.

The July 21st dusk to dawn curfew indefinite curfew and strict travel restrictions announced by President Emmerson Mnangagwa was resulted into a debate and many critics claimed was regimes effort to curtail opposition and dissenting voices against economic hardships and corruption cases in the country. Indeed, Tendai Biti, the vice president of Zimbabwe’s major opposition party, claims that government’s restrictions had nothing to do with controlling Covid-19 adding that; “It’s madness. You can’t impose a state of emergency, he has no right to declare state of emergency, it’s a serious curtailment of rights. You need parliament [to rectify the declaration].”

Emergency Powers, Political Tensions and Arbitrary Arrests.

Arguably, Covid-19 has provided political leaders especially authoritarian regimes across the globe a rare opportunity to dismiss critics and entrench their leadership through different measures in hiding behind the fight against Coronavirus. In Europe for example, prime minister Viktor Orbán Used the Coronavirus to Seize More Power as he maintained and justified state of emergency rule.

Arguably, Covid-19 has provided political leaders especially authoritarian regimes across the globe a rare opportunity to dismiss critics and entrench their leadership through different measures in hiding behind the fight against Coronavirus. In Europe for example, prime minister Viktor Orbán Used the Coronavirus to Seize More Power as he maintained and justified state of emergency rule, while in the U.S, Trump Administration’s history of attempting to avoid institutional checks left Americans shocked as he used Covid-19 to achieve this. Though the possibility of politicians using coronavirus excuse to grab more power seems to be a global phenomenon, in Africa where institutions lack independence, as was indicated in 2019 Democracy Index which reported half of 44 governments in sub-Saharan Africa as authoritarian with the other 22 categorised as hybrid regimes or flawed democracies, is a clear signal that more African states are likely to use coronavirus for political reasons which analysts argue will hinder democracy and entrench dictatorship.

In Zimbabwe, president Mnangagwa who came to power through a 2017 coup against Robert Mugabe, his regime has used covid-19 measures to deny opposition political space and arrested journalists and critical voices and forced many into hiding — highlighting how a man who came to power promising renewal has in the eyes of the opposition, slipped from bad to worse compared to president Mugabe many linking him to corruption, financial missteps, teetering economy, and authoritarian rule.

Activists and opposition politicians argue that Zimbabweans charged with a form of treason during Mnangagwa’s three years in office is already much higher than during Mugabe’s 37 years tenure, according to research by a coalition of 22 Zimbabwean rights groups, a signal that Mnangagwa is not ready dissenting voices.

By mid-July, over 105,000 had been arrested for what police say they had violated regulations aimed at controlling the spread of the virus which critics deny branding arrests as government’s tricks of using the measures to target the opposition and arrest activists.

International bodies such as United Nations and Human Rights Watch have all criticized politicians in Harare for using Covid-19 to stifle human rights and called on African Union and regional bloc SADC to denounce human rights abuse in Zimbabwe.

Journalist and writers targeted

Journalists and writers have also not been spared as authorities intensify crackdown on critics. Hopewell Chin’ono, a Zimbabwean journalist and documentary filmmaker was arrested after exposing corruption in government. He was later charged with incitement to commit public violence and has been severally denied bail while country’s health minister, Obadiah Moyo whose $60 million corruption case Hopewell exposed was granted bail.  Mduduzi Mathuthu, an investigative journalist has been in hiding for fear of being arrested for doing his work. Lawyers contend several journalists have been targeted for exposing theft of public funds by some government officials including corruption scheme involving the country’s top officials.

Mathuthu told The Associated Press he decided to hide for he was fearing for his life as many journalists and critics have been detained, or abducted and tortured by state operatives. “The president has labeled us terrorists and has spoken of flushing us out, and that has dark connotations because it gives me a picture of an animal being startled and chased into the open to be killed,” Mathuthu noted. His sounded his fears after Zimbabwe’s Emmerson Mnangagwa’s vowed to continue with the clampdown against those he described as threatening the countries peace and calling his critics “dark forces,” “Opposition terrorists groups” and “a few bad apples” that should be “overcome.”

Zimbabwean Human Rights activists and lawyer, Doug Coltart decried president Mnangagwa’s language tweeting that; “When @edmnangagwa talks of “opposition terrorist groups” destabilizing the country what he means is: •Students carrying the Zimbabwean Flag • Journalists investigating corruption • Nurses asking PPE and a living wage • Citizens exercising their Rights. #ZimbabweansLivesMatter,” while Dewa Mavhinga, the Southern Africa Director, Human Rights Watch investigating Zimbabwe, South Africa, eSwatini and Malawi tweeted photos of alleged “victims abducted & tortured by elements in the Zimbabwe security forces” who visibly looked frail and tortured.

Author, Tsitsi Dangarembga who has also been critical of corruption in the country was detained by police just three days after her novel “This Mournable Body” was listed for Booker Prizes Award.

Western diplomats have also consistently accused Harare of poor human rights record. Several western countries including United States of America have amplified their voices against what they described as using covid-19 to stifle human rights and argued president  Mnangagwa to keep the inauguration pledge he made in 2018 to respect human rights.  The ruling party described diplomats warning as “rubbish” arguing there is no human rights abuse and all those arrested have cases especially violating regulations meant to counter covid-19.

Zimbabwe has registered over 6,388 cases of covid-19 with 195 deaths which includes high profile officials such as agriculture minister Perrance Shiri, army spokesperson among others officials. The country is struggling with cases as health workers protests over poor pay, and lack of personal protective equipment while handling covid-19 cases.

If you are in Zimbabwe and want to contribute to this analysis send your comments or message to info@dwcug.org or WhatsApp message to +46729349395.

 

 

Why are coups always led by colonels?

 

By Elizabeth Dickinson.

Passport‘s brilliant editor, Joshua Keating, asked me a very good question the other day: why does it seem like African coups are always led by middle-ranking military officers? The recent coup in Niger was led by Col. Salou Djibo, a “little known commander of a platoon based near the capital.” Guinea’s coup in late 2008 put …

Passport‘s brilliant editor, Joshua Keating, asked me a very good question the other day: why does it seem like African coups are always led by middle-ranking military officers? The recent coup in Niger was led by Col. Salou Djibo, a “little known commander of a platoon based near the capital.” Guinea’s coup in late 2008 put the erratic and paranoid Captain Moussa Dadis Camara at the country’s helm.  Then of course there’s Libya’s Col. Qaddafi, who has proclaimed himself King of Kings but hasn’t risen in military rank since seizing power in a coup in 1969.

So what gives? Why aren’t the generals the ones kicking out the countries’ regimes? I have a few thoughts.

Passport’s brilliant editor, Joshua Keating, asked me a very good question the other day: why does it seem like African coups are always led by middle-ranking military officers? The recent coup in Niger was led by Col. Salou Djibo, a “little known commander of a platoon based near the capital.” Guinea’s coup in late 2008 put …

Passport‘s brilliant editor, Joshua Keating, asked me a very good question the other day: why does it seem like African coups are always led by middle-ranking military officers? The recent coup in Niger was led by Col. Salou Djibo, a “little known commander of a platoon based near the capital.” Guinea’s coup in late 2008 put the erratic and paranoid Captain Moussa Dadis Camara at the country’s helm.  Then of course there’s Libya’s Col. Qaddafi, who has proclaimed himself King of Kings but hasn’t risen in military rank since seizing power in a coup in 1969.

So what gives? Why aren’t the generals the ones kicking out the countries’ regimes? I have a few thoughts.

Why not the generals? At least in the countries I know in West Africa, this makes perfect sense. Generals are often close to the leadership; their appointments are usually somewhat political and come with the benefit of a bit of patronage and a lot of pomp and circumstance.  I met Generals in Nigeria who led more comfortable lifestyles than some Lagos bankers. They’re educated, often cosmopolitan, and know that they have more to lose through a coup than by simply staying put. They have no reason to upset the  status quo. And at least in countries where there is a history of coups, politicians are also equally wary of annoying their military upper ranks for a similar reason.

So why not the little guys? Well, because they could never do it. The usual ranking soldier is underpaid, if paid at all. They’re often undertrained, and couldn’t mobilize the resources or strategy to get the job done. (Having said this, the little guys do often go along with a coup once it’s happening … nothing like the sense that your paycheck or next meal is moving to make you want to follow it.)

So the middle guy is the one left. They’re paid better than some, but not good enough for most. Like the coup leader in Niger, they’ve often had foreign training. They control strategic components of the miltiary — in Guinea’s case, the petrol procurement, and in Niger’s case, a platoon in the capital. They know enough people to mobilize the ranks, but they are not as politically tainted. They’re well connected but not appointees; they’ve often just risen through the ranks.

There’s one other key detail in all this: those paychecks. As happens in many salary structures  in West African countries (not just militaries), each person who pays a subordinate takes a cut out of their paycheck as a “fee.” (Read: skimming off the top.) The foot soldiers get their pay skimmed by the lieutenants; the lieutenants get theirs skimmed by their superiors, and on and on it goes. Bad as this is for the low-level guys, it really bites for the mid-level people, whose salaries are picked at by their powerful superiors above. They’re managing, they’re doing serious work … and they’re not getting paid. They have a taste of power but not enough fiscal incentives not to rock the boat.

Lo and behold, you get a coup. A well trained, well connected, underpaid, and generally disgruntled middle man is your suspect — guilty as charged.

Source: Foreign Policy.

 

Africa: The world’s Fastest growing Continent but home to 90% of World’s Poorest?

Ssemanda Allawi

Africa was for so long seen by some as a dark continent or a hopeless continent as the Economist once put it.
However, in the last two decades, the image of Africa has been improving with experts and economists predicting the continent is on verge of take-off which has made the continent the great hope of the world with the world bank arguing that; “Africa could be on the brink of an economic-take off, much like China was 30 years ago.”

Analysts argues that in recent years, Africa’s growth has been impressive despite economic hardships in some different parts of the world. Indeed, Economist later updated Africa’s status from “the hopeless continent” to “Africa rising .”
Analysis predict that African countries will continue with better economic performance than most of other regions – with the continent maintaining 7 of the world’s ten fastest growing economies in 2020.

In their five years foresight report for Africa (2020-2025), Brookings Institution predictions indicate greater performance for African countries with Senegal topping the list at 8.3%, Rwanda 7.9%, and Niger at 7.3%. Uganda is listed in 4th position with its economy expected to grow by 7.2% while Mozambique is in 5th position with its economy projected to grow by 6.9%.

For the year 2020 alone, International Monitory Fund projections indicate that African small economies will perform higher than the continents giants with South Sudan’s economy projected to grow by 8.2%, Rwanda 8.1%, Côte d’Ivoire at 7.3%, Ethiopia 7.2% while Senegal will grow at 6.8%. Benin will see its economy in 2020 grow by 67%, Uganda 6.2% while Kenya, Mozambique, Niger and Burkina Faso are all expected to perform at 6%.

Whereas these countries projection present a promising story and contribute total average economic growth rate projection to about 3.8%, (which is about 3.6% for sub-Saharan Africa) it is important to note that these averages are weighed down closer to the global average which is 3.4% by two of Africa’s largest economies; Nigeria and South Africa at 2.5% and 1.1% respectively.
As population stagnate or decrease in Europe, China, Japan and other western countries, Africa’s population of 1.2 billion is projected to double by 2050. More people mean more consumption, more production and consequently more growth. Some African countries economies grew on average at about 6% in the year 2019. That is almost times three of United States of America’s rate and of course higher than many other countries.

Such figures only paint a bright future for Africa. Many of African countries are becoming more liberal in terms of economy while many are registering positive other aspects such as democracy. That notwithstanding, there are some challenges ahead the continent must address.
In 2019, the world bank indicated that Africa may become home to more than 90% of the world’s poor by 2030 citing African governments little fiscal space to invest in poverty-reduction programs as one of the reasons.

This means that African countries are faced with a challenge of low productivity. True, African countries maybe growing now, but the question is for how long. Many are dependent on commodities that more than a half of Africa’s export falls in minerals. Arguably, this makes the continent’s economy very much vulnerable according to fluctuations in global demand. In addition to that, more than two thirds of Africa’s labour force is employed in agriculture – which is predominantly substance farming. It is also important to note that manufacturing which is key for developed economies has not improved well that its total GDP is not different from that of 1970s.

World Bank, IMF and indeed African Development Bank argue that; a one percent point fall in GDP of OECD member countries to Africa’s export rate earnings decline dropping by 10%. Indeed, at height of U.S-China trade war, in June last year, the World Bank revised Africa’s economic growth projection from 3.3% to 2.8%. With China’s official announcement on 17th January 2020 that second largest economy expanded by 6.1% in 2019 from the year before – the worst figure in 29 years , an argument can be made that since China is Africa’s largest trading partner and Foreign Exchange source, the continent may face some shortfalls in their projections.
Such challenges with growing corruption cases in some African countries with a weak private sector which is more in bed with governments for favours, projections for Africa’s bright future may remain unrealised. Unemployment amongst youth is so high – a recipe for future crisis. The recent xenophobic attacks in South Africa offer a good example that unemployment can drive people crazy. There is no doubt Africa has a great potential for economic take off, but this to be translated into something tangible for their people there is need for political willingness to come up with bold reforms, like trade, governance and ensure transparency and fight corruption. It can be argued that the biggest issue we should watch is how the continent will deal with its most valuable resource; not minerals, not oil but people.

A graduate youth in South Africa looking for jobs on streets. Courtesy photo.
A graduate youth in South Africa looking for jobs on streets. Courtesy photo.

 

It is projected that Africa’s share of the world’s population will rise from 1/7th to about 1/5th by the middle of this century. Arguably, if African governments ensure that their people have access to good education, good health care, good governance, and employment opportunities, there will be no one to stop the continent from becoming a power house. Short of this, African governments better worry of their population increase, it will not be a blessing but a created curse.
Yes, African external assistance is important for the continent but what is more important is not aide but important African generated or internal reforms.

Twitter @SsemandaAllawi.

Covid-19 Challenges: Will China’s Debt Relief to Africa Work?

By Allawi Ssemanda

As a result of restless calls for debt relief for African countries due to the inevitable economic meltdown brought about by Covid-19, China’s Debt relief plan for Africa is steadily emerging. It is believed that China is Africa’s Largest single – country creditor and therefore had to lead efforts in discussing debt relief for the continent.

Whereas key questions regarding implementation plans remain unclear, arguably, issues raised bellow present a fair overview of the Chinese plan.

Beijing’s Official Frameworks for Debt Relief.

Recently, officials in Chinese government have made two clear commitment regarding the debt relief debate. The first commitment came during the Group of 20 (G-20) where debt service suspension initiative for the heavily indebted or poorest countries was reached after discussion of finance ministers and Central bank governors. It was after this agreement that China’s Foreign Affairs Ministry observed how G-20 including China agreed to suspend repayment of both principal and interest effective May 1st 2020 until the end of the year, 2020. Under this arrangement, debt service payments owed by the 76 International Development Association (IDA) countries, plus Angola including 40 Sub-Saharan African Countries is suspended.

Beijing’s second commitment came from president Xi Jinping during a virtual event on 18th May 2020 at opening of the 73rd World Health Assembly where he promised $2 billion to help developing countries affected by Covid-19. During the event, president Xi committed that; “China will provide $2 billion over two years to help with Covid-19 response and with the economic and development in affected countries, especially developing countries.

A closer analysis of diction in Chinese version is categorical that such donation will be made from the category of International Assistance. Put differently, it will come from China’s Foreign Aid Budget.

It can be argued that because Beijing designated $2 billion to help developing countries respond to Covid-19 and address its effects on social and economic development in affected countries, China leaves an open door for such allocation to be earmarked toward debt relief. With China’s approach towards bilateral economic and social development, conclusion can be made that such assistance will take bilateral approach. This was evident as was affirmed by China’s Foreign Minister, Wang Yi, during a press conference on May 24th stressing that China will ensure debt relief for African countries in two ways: bilateral approach and the G-20 debt payment suspension Initiative. This was re-emphasized as on June 7th during the launching of the white paper entitled “Fighting Covid-19: China’s Action” with China’s Foreign Ministry emphasizing

that the $2 billion donation earmarked by China to support African countries will be dispensed through bilateral and multilateral means and will help address challenges such as poverty alleviation, public health and supporting economic recovery.

 

Does G-20 Initiative Cover Concessional Loans?

 

Discussing China’s debt relief for African countries without answering the question of concession loans leaves the discussion incomplete. Despite taking a lion’s share of China’s lending to African countries in the last two decades, as a result of their commercial nature commercial loans are not covered under this initiative.

A review of China-Africa Cooperation (FOCAC) financial commitments confirms this. According to Beijing’s 2006 FOCAC pledges, 50% of this funding is concessional in nature with concessional loans at $3 billion while concessional buyer’s credit was $2 billion. The 2009 FACOC pledges the $10 billion commitment China offered was concessional loan. This was actually 10 times bigger than special loans extended to Africa’s small and mid-sized enterprises. For 2012 FACOC financial pledges concessional loans totalled $20 billion which more than 50%. In 2015 concessional loans and exports buyers’ credit was $35 billion making it to about 60% of the total $60 billion committed. In 2018,there was a great shift with concessional loans dropping. Grants, zero interest loans and concessional loans all added to 25% of the $60 China committed to African countries.

With that background, the G-20 agreement as it is now is arguably inform of a pause or standstill not a cancellation of debts. However, this standstill is meant to help African countries time to be able to stand economically and meet their obligations. Further, observers agree that this kind of standstill will apply to concessional loans. Important to note is that the G-20 agreement again, to a pause or standstill, not a cancellation – as it is as of now is applicable for eight months starting from 1st May, 2020 till 31st December, 2020.

It can be argued that with the already devastating economic and health impact Covid-19 pandemic has caused, African countries still need a long debt relief beyond the one negotiated by G-20. This to happen means new negotiations which must look at factors such as resumption of African economies and addressing continued health and economic impact of this pandemic coupled with matching relief efforts by both multilateral creditors and private creditors so as to realise a holistic solution. In other words, the G-20 debt relief frame work which is equivalent to 8 Months suspension of debt repayment period is not long enough. Put differently, broader, bigger and long-term debt relief is not yet on table.

What does President Xi’s Speech mean for African Countries?

On 17th June, 2020, Africa and China held a much-needed China-Africa Extraordinary Summit. The summit was chaired by China and Senegal (in its capacity as co-host of the Forum on China-Africa Co-operation – FOCA), and South Africa (as the current chair of the African Union). Dr Tedros Adhanom Ghebreyesus, the director-general of the World Health Organization (WHO) also attended.

In his address, president Xi pledged that China will stand shoulder to shoulder with African countries stressing that; “Let me reaffirm China’s commitment to its longstanding friendship with Africa. No matter how the international landscape may evolve, China shall never waver in its determination to pursue greater solidarity and cooperation with Africa.” 

During this summit, Chinese President Xi Jinping promised that China will continue helping African countries with equipments needed to contain the spread of Covid-19. Another great gesture was President Xi’s promise which re-emphasized the point that China will waive some debt from African countries due this year, and also restructure time frames for repayment from some countries. Such promises are not new, indeed, in 2015, 2018 and 2019, China wrote-off debts on a number of African countries

China’s promise to fund Africa’s Centre for Disease Control (CDC) in Ethiopia’s capital Addis Ababa as was announced by African Union Commission in many ways shades light of how Beijing is committed to strengthening China – Africa relationship.

Despite a few unresolved questions on the project; such as time frame of proposed CDC and the site, China’s pronouncement that Beijing is ready to fund the centre is enough to further describe Sino-Africa Relations as one of mutual benefit, respect and presents China as a true and reliable ally.

There is no doubt that the decision by Washington to withdraw financial support for World Health Organization at this critical time makes their work difficult, leaving negative consequences especially on regions like Africa which are arguably not fully self-reliant to singly deal with Covid-19.

Covid-19: China-Africa Solidarity Needed Than Ever Before

Even before African countries gained independence, Africa and China shared an intriguing and resilient relationship that despite the distance between the two continents, the now over sixty years cordial relationship between African countries and China can be described as brotherly.

Arguably, the relationship between the two has been characterised by visible solidarity and concerted efforts to engender fairness in the international system. During colonial period when the rest of the world saw Africans as mere objects as some sought to buy Africans as commodities during infamous slave trade, China embarked on a very important role of helping the colonized African countries to snap the shackles of ugly colonial and minority bondage. China’s stand at the time was seen as suicidal. A case in point is that at the time when Beijing announced a kind loan of over $400 Million to help in building of Tanzania – Zambia Railway in late 1960s, economically, China was learning to stand. At this time, China’s per capital GDP was three times less than that of Sub-SaharanAfrica. It can be recalled that till 1978, China’s per capita GDP stood at $156 whereas Sub-Saharan Africa’s averaged at $490!

It is against this background or clear history that Sino-Africa relations even during these hard and difficult times that have been beset by the coronavirus, the two sides continue to stand shoulder to shoulder.

Last week, Africa and China hosted a much-needed China-Africa Extraordinary Summit. The summit was chaired by China and Senegal (in its capacity as co-host of the Forum on China-Africa Co-operation FOCA), and South Africa (as the current chair of the African Union). Dr Tedros Adhanom Ghebreyesus, the director-general of the World Health Organization (WHO) also attended.

During this summit, Chinese President Xi Jinping promised that China will continue helping African countries with equipments needed to contain the spread of Covid-19. Another great gesture was President Xi’s promise that China will waive some debt from African countries due this year, and also restructure time frames for repayment from some countries. While such measures are not very uniqueas the G20 also promised to be lenient to low-income countries encumbered with debt.

China’s promise of meeting bills of putting up Africa’s Centre for Disease Control (CDC) in Ethiopia’s capital Addis Ababa as was announced by African Union Commission in many ways shades light of not just a brotherly relationship between China and Africa but also a ‘heart-to heart’ relationship between the two.

Despite a few unresolved questions on the project; such as time frame of proposed CDC and the site, China’s pronouncement that Beijing is ready to fund the centre is enough to further describe Sino-Africa Relations as one of mutual benefit, respect and presents China as a true and reliable ally.

While on surface it may seem like a perfunctory decision, the choice of inviting WHO’s Dr. Tedros Adhanom Ghebreyesus to grace the occasion was stop-on for it communicated a clear message to those who doubt World Health Organization and was indeed a vote of confidence in Ghebreyesus who a few politicians in some capitals have described as China-Centric. Whether this criticism is political or otherwise, blame game at this critical time would certainly fail WHO’s efforts in ensuring Covid-19 is contained.

There is no doubt that the decision by Washington to withdraw financial support for World Health Organization at this critical time makes their work difficult, leaving negative consequences especially on regions like Africa which are arguably not fully self-reliant to singly deal with Covid-19.

By pulling out their funding from WHO, Trump Administration made it clear to those who want to know that you cannot count on them in the current international system, even when the situation calls for solidarity.

While this may seem far-fetched, one can conclude that it is high time Africa and China lowered their expectations of U.S leadership in dealing with Global crisis through existing International systems. America’s recent withdraw of funds from WHO should serve as an example that president Donald Trump will likely use the same method, he used to win 2016 election; such methods may include employing nationalistic sentiments, and scepticism towards multilateralism as he was clear during his last U.N address where he denounced Globalism. Such methods may in short term see him win the coming elections. What is clear is that impacts of hamstringing global institutions like the WHO in the end leave severe marks.

Therefore, the need for Africa’s own Centre for Diseases Control should not be delayed in anyway, AU leadership should swiftly address the current not tough questions by clearing where the centre should be constructed. Also, China and Africa should show WHO support in these unprecedented times. In my view, more than before, we need Sino-African solidarity.

Namara Collins, Lawyer and Research Fellow at, Development Watch Centre.

Enhanced China-Africa Cooperation Vital to Soften Impact of Covid- 19 – Xi Jinping

Your Excellency President Cyril Ramaphosa,

Your Excellency President Macky Sall,

Your Excellencies Heads of State and Government,

Your Excellency Moussa Faki Mahamat, Chairperson of the African Union Commission,

Your Excellency António Guterres, Secretary-General of the United Nations,

Your Excellency Tedros Adhanom Ghebreyesus, Director-General of the World Health Organization,

China’s President Xi Jinping speaks during the China-Africa summit on solidarity against Covid-19 on Wednesday 17th June, 2020

At such a critical moment in the global fight against Covid-19, we are gathered together in this Extraordinary China-Africa Summit. Friends old and new are connected via video link to discuss our joint response to Covid-19 and to renew the fraternity between China and Africa. I thank President Ramaphosa and President Sall for joining me in initiating the Summit, and I appreciate the participation of all colleagues present. I also want to send my regards to other African leaders who are not able to be with us today.

The sudden onslaught of Covid-19 has taken a heavy toll on countries around the world, with the loss of several hundred thousand precious lives. Here, I suggest that we observe a moment of silence for those who have tragically passed away due to Covid-19 and express our condolences to their families.

– In the face of Covid-19, China and Africa have withstood the test of a severe challenge. The Chinese people have put up a fierce fight and made enormous sacrifice to bring the situation in China under control. Still, we remain mindful of the risk of a resurgence. In the same spirit, governments and peoples in Africa have put up a united front and, under the effective coordination by the African Union, have taken strong measures to effectively slow the spread of the virus. These are indeed hard-won results.

– In the face of Covid-19, China and Africa have offered mutual support and fought shoulder to shoulder with each other. China shall always remember the invaluable support Africa gave us at the height of our battle with the coronavirus. In return, when Africa was struck by the virus, China was the first to rush in with assistance and has since stood firm with the African people

– In the face of Covid-19, China and Africa have enhanced solidarity and strengthened friendship and mutual trust. Let me reaffirm China’s commitment to its longstanding friendship with Africa. No matter how the international landscape may evolve, China shall never waver in its determination to pursue greater solidarity and cooperation with Africa.

Colleagues,

Covid-19 is still affecting many parts of the world. Both China and Africa face the formidable task of combating the virus while stabilizing the economy and protecting people’s livelihoods. We must always put our people and their lives front and center. We must mobilize necessary resources, stick together in collaboration, and do whatever it takes to protect people’s lives and health and minimize the fallout of Covid-19.

First, we must stay committed to fighting Covid-19 together. China will continue to do whatever it can to support Africa’s response to Covid-19. China will lose no time in following through on the measures I announced at the opening of the World Health Assembly, and continue to help African countries by providing supplies, sending expert teams, and facilitating Africa’s procurement of medical supplies in China. China will start ahead of schedule the construction of the Africa CDC headquarters this year.

China will work with Africa to fully deliver the health care initiative adopted at the FOCAC Beijing Summit, and speed up the construction of China-Africa Friendship Hospitals and the cooperation between paired-up Chinese and African hospitals. Together, we will build a China-Africa community of health for all. We pledge that once the development and deployment of Covid-19 vaccine is completed in China, African countries will be among the first to benefit.

Second, we must stay committed to enhancing China-Africa cooperation. To cushion the impact of Covid-19, it is important to strengthen Belt and Road cooperation and accelerate the follow-ups to the FOCAC Beijing Summit. Greater priority needs to be given to cooperation on public health, economic reopening, and people’s livelihood.

Within the FOCAC framework, China will cancel the debt of relevant African countries in the form of interest-free government loans that are due to mature by the end of 2020. For those African countries that are hardest hit by the coronavirus and are under heavy financial stress, China will work with the global community to give them greater support, by such means as further extending the period of debt suspension, to help them tide over the current difficulty. We encourage Chinese financial institutions to respond to the G20’s Debt Service Suspension Initiative (DSSI) and to hold friendly consultations with African countries according to market principles to work out arrangements for commercial loans with sovereign guarantees. China will work with other members of the G20 to implement the DSSI and, on that basis, urge the G20 to extend debt service suspension still further for countries concerned, including those in Africa.

China hopes that the international community, especially developed countries and multilateral financial institutions, will act more forcefully on debt relief and suspension for Africa. China will work with the UN, WHO and other partners to assist Africa’s response to Covid-19, and do it in a way that respects the will of Africa.

To help Africa achieve sustainable development is what matters in the long run. China supports Africa in its effort to develop the African Continental Free Trade Area and to enhance connectivity and strengthen industrial and supply chains. China will explore broader cooperation with Africa in such new business forms as digital economy, smart city, clean energy, and 5G to boost Africa’s development and revitalization.

Third, we must stay committed to upholding multilateralism. In the face of Covid-19, solidarity and cooperation is our most powerful weapon. China will work with Africa to uphold the UN-centered global governance system and support WHO in making greater contribution to the global COVID-19 response. We oppose politicization and stigmatization of Covid-19, and we oppose racial discrimination and ideological bias. We stand firm for equity and justice in the world.

Fourth, we must stay committed to taking China-Africa friendship forward. The world is undergoing profound changes unseen in a century. Given the new opportunities and challenges we face, closer cooperation between China and Africa is needed, more than ever. On my part, I will stay in close touch with all of you, my colleagues, to consolidate our friendship and mutual trust, support each other on issues involving our respective core interests, and advance the fundamental interests of China and Africa and, for that matter, of all developing countries. This way, we will be able to take the China-Africa comprehensive strategic and cooperative partnership to a greater height.

Colleagues,

At the FOCAC Beijing Summit, we agreed to work together to build an even stronger China-Africa community with a shared future. Today’s Extraordinary China-Africa Summit on Solidarity against Covid-19 is our concrete step to deliver the commitment we made at the Beijing Summit and to do our part in the international cooperation against Covid-19. I am convinced that humanity will ultimately defeat the virus, and that the Chinese and African people are poised to embrace better days ahead.

 

Thank you.

DWC

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