As the 2021 Forum on China-Africa Cooperation (FOCAC) approaches, we examine the state of the China-Africa relationship and what should be on the table at this year’s forum.
What is FOCAC?
The Forum on China-Africa Cooperation (FOCAC) is a triennial high-level forum between China and all of the states of Africa, with the exception of Eswatini, which continues to recognise Taiwan.
Modelled on Japan’s Tokyo International Conference on African Development (TICAD), it provides an organising mechanism for Chinese foreign policy toward Africa. Typically attended by the incumbent Chinese president and many of his counterparts across the continent, FOCAC has frequently played host to eye-catching Chinese policy announcements and financial commitments. The forum is alternately hosted in Beijing and major African capitals, and the 2021 edition is due to be held in Dakar, Senegal.
The China-Africa Business Council’s recent report on China’s private sector investment in Africa looks forward to the event as “another milestone and a new starting point for China-Africa economic and trade cooperation” that will provide “a great opportunity for all African countries to attract foreign investment and expand their international influence”.
“Both Chinese and African enterprises should anticipate the opportunity to enjoy great mutual policy benefits,” says the report.
The forum looks to build on the increasingly close economic relations that have been forged between China and Africa over the last 20 years. According to the China-Africa Research Institute at Johns Hopkins University, the value of China-Africa trade in 2019 was $192bn, up from $185bn in 2018. In 2019, the largest exporter to China from Africa was Angola, followed by South Africa and the Republic of Congo. In 2019, Nigeria was the largest buyer of Chinese goods, followed by South Africa and Egypt.
China is also Africa’s biggest source of foreign direct investment – investment surged from $75m in 2003 to $2.7bn in 2019. Chinese FDI flows to Africa have exceeded those from the US since 2014. Between 2013 and 2018, 45% of China’s foreign aid went to Africa. The number of Chinese workers in Africa by the end of 2019 was 182,745, according to official Chinese sources.
How has FOCAC impacted the financial relationship between China and Africa?
The first official FOCAC was held in Beijing in 2006, following two major ministerial conferences in Beijing and Addis Ababa in 2000 and 2003. Between 2000 and 2019, the China-Africa Research Institute at Johns Hopkins University estimated Chinese financiers signed 1,141 loan commitments worth $153bn with African governments and their state-owned enterprises.
In 2015, China unveiled its largest commitment of the conference series, a $60bn package of aid, subsidised lending, and state-backed investment, a commitment repeated in 2018.
Chinese financial support has proved crucial to African countries over the last two decades. Loans from government and state-owned banks have enabled the construction of major infrastructure projects across the continent, including highways, ports, airports and government buildings.
But much of that support has been relatively opaque. According to a research paper released in late September by the China Africa Research Institute, Zambia’s outstanding external debt to Chinese financiers is approximately $6.6bn, almost double the $3.4bn revealed by the previous Zambian government. The estimates do not include substantial arrears to Chinese contractors for unpaid projects, part of an estimated domestic arrears pile amounting to $2bn.
What was promised at FOCAC in 2018?
For the first time in the history of the FOCAC meetings, China’s commitments to Africa stayed flat in 2018, with $60bn pledged over three years. Prior forums had seen an exponential growth in commitments, starting from around $5bn in 2006. According to Annalisa Prizzon, a senior research fellow at the UK-based ODI, the 2018 commitment was more weighted towards aid than previous instalments, with 25% of these commitments – or $5bn a year – in the form of grants, interest-free loans and concessional loans.
In a May speech, Chinese finance minister Wang Yi said that over 85% of the eight major initiatives announced at the 2018 Beijing Summit have been implemented, 70% of the $60bn supporting funds have been disbursed or earmarked, and a large number of cooperation projects have been launched or completed.
Other analysts are less enamoured of the track record of FOCAC in delivering benefits to Africa. Writing for African Business, former Liberian public works minister Gyude Moore says that a vast economic chasm has opened between Africa and China. He argues that this year’s forum presents an opportunity for African states to recalibrate and correct their courses using lessons from China’s past.
Also writing for African Business, Hannah Ryder, CEO of Development Reimagined, an African-led international development agency based in Beijing, calls for “a more organised, collective approach to engagement” on the part of African leaders at this year’s FOFAC, and summarises her organisation’s blueprint for an African China strategy.
What will be on the agenda at this year’s FOCAC?
Analysts have predicted that an era of “easy” Chinese credit in Africa is drawing to a close , as an economic relationship primarily based on the resource trade has shifted towards infrastructure and a political and strategic relationship.
The Covid-19 pandemic has had a catastrophic financial impact on many African countries, leading to fears of debt defaults on the billions of dollars that China has lent the continent over two decades. The World Bank estimates that Africa’s funding gap stood at $290bn in 2020.
Without debt support, unaffordable payments on the vast portfolio of loans from China and other wealthy nations could lead to a series of chaotic defaults by individual African countries.
For its part, China says it is a participant in the G20 Debt Service Suspension Initiative and says it has signed debt suspension agreements or similar understandings with 19 African countries. It has also cancelled interest-free loans due to mature by the end of 2020 for 15 African countries. Yet African countries concerned by their fiscal situation are likely to push for much more generous debt renegotiation and forgiveness.
According to Wang Yi, the conference will also focus on joint efforts against Covid-19, including the provision of more vaccines for the continent. Africa’s share of China’s total global vaccine distribution remains at 8% compared to 61% for Asia, according to a Chinese vaccine tracker report from @BridgeBeijing.
There will also be talks on deepening cooperation on China’s Belt and Road global infrastructure plan and adopting sector-specific cooperation measures for priority areas such as healthcare, investment, trade, industrialisation, agricultural security, climate change, peace and security, human resources and digital economy.
Source: https://www.african.business/
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