Dragon's Wings in Africa - Influence and Investments
Updated: Oct 31, 2022
Africa is among the fastest-growing economies in the world. By 2050, its population is anticipated to double with 80% growth in the cities. According to Mc. Kinsey, by 2025, more than 100 cities in Africa will contain over a million people. The International Monetary Fund has said that Africa is the second-fastest-growing region and is yet to become a $5 trillion economy as household consumption would increase by 3.8%.
With all these nominees one element would surge, that is, the economic opportunities for other nations. And China had substantiated to knock while the Iron was hot. China is taking advantage of a very fundamental part of Africa’s Urbanisation and the cycle of monetary development.
According to Efraim Chalamish, an international economic law professor, advisor, and commentator, “China is pitching itself as an accelerator for growth through infrastructure, especially in places that have a local capacity problem”. Africa is a continent where there is huge potential but African contractors can’t embark on large-scale production. So for that, they have to switch their emphasis either to the West or China and since China is capable of providing inexpensive labor, Africans have held the hand of the People’s Republic for infrastructural advancement. According to J. Stephen Morrison, Chinese leaders and strategists believe that China's historical experience and development model resonate powerfully with African counterparts, thereby creating a comparative advantage vis-à-vis the West.
There are around 10,000 firms owned by China or run by Chinese allocation for the development of infrastructure and since 2005, the value of these firms is more than $2 trillion. Infrastructure-induced growth is something that Africa needs the most and infrastructure is what china is most capable of providing.
Some key players for elaboration in Africa are those tackled by Chinese enterprises, for example, a $12 billion coastal railway in Nigeria, a $4.5 billion Addis Ababa-Djibouti railway, and an $11 billion megaport and monetary zones in Bagamoyo. China’s investment in Africa continues to rise to more than 40% causing erosion of other partakers’ functions in Africa. For instance, US investment plunged to a mere 6.7% from 24% and that of Europe to 34% from 44%.
Another incentive for Chinese revenue in Africa is the fact that Africa has a profusion of natural resources. Africa has about half of the world’s stock of Manganese, an essential unit for steel production, and the Democratic Republic Of Congo on its own possesses half of the planet’s cobalt. Africa also has a considerable amount of Cobalt which is desired for electronics, as well as half of the globe’s known supply of carbonatites, a rock formation that’s the primary source of rare earth’, noted Forbes. With Africa retaining these rich natural aids, China is acting as a feeder economy for Africa.
China imports raw materials and volatile commodities like coal, petrol, limited earth minerals, grain, etc. from Africa and exports the finished merchandise back to Africa increasing its GDP. For example, China imports ⅓ of its oil from Africa. Enhancing to the point, China is Africa’s biggest trade partner having a trade of $200 billion per year. Also, China desires these resources to fulfill its demand for raw materials as an acute shortage is created in China after its initiative of rapid economic growth began. This can be called a new form of colonization embarked by China in Africa.
Consequently, since 2000, Africa has glimpsed a new downward trend of more imports than exports causing a trade deficit of more than $17 billion in 2019. All these measures are leading Africa into a debt trap. Africans want a better future accompanied by economic growth but for that, they are leading themselves into a trap from which escape is not easy. The Addis Ababa-Djibouti Railway solitary cost Ethiopia a quarter of its total 2016 budget. Similarly, Kenya’s 80% Chinese-funded railway which unites Mombasa to Nairobi, cropped up the country’s 6% of GDP.
To create favorable economic conditions, African Continental Free Trade Area (AfCFTA) was recommended at the African Union Summit in 2012, to prepare an agenda for Pan-African trade and cooperation and to pull more people out of poverty through structural and economic change and cooperation. This walk to creating an unrestricted trade zone would help Africa to become self-sufficient but the continuous occupation of China and heightened Chinese loans to Africa counterbalanced numerous outgrowths of this recommended drive. Moreover, Africa is dependent on China to the extent that if there is a possible slowdown in the Chinese economy, it could unravel Africa’s growth momentum by constricting the financial viability of major projects due to the potential tightening of trade and investment credit from Chinese banks which are actively involved in Africa.
Apart from these marketable justifications, the bigger ploy behind it is the geopolitical move. China wants to be a global power surpassing the West, remarkably the US, and is trying its level best to control other provinces making them its allies to counterattack the US. To make its dream a reality, China can plan to establish its military bases in various regions if it gets a monopoly over them.
As of now, there is only one such foreign military establishment in Djibouti in Africa along with 13 other countries. But in the future, after seeing its continuous occupation in the Indian Ocean and nearby regions, and taking over SriLanka’s Hambantota port and Myanmar’s Coco Island, there is a huge possibility that China may establish its military bases in these regions too.
The major intent behind all these notches is an endeavor to change the whole world order and Chinese proliferation in Africa is one of the measures in its voyage to attain its pursuit of evolving a superpower by making Africa dependent on it and dictating the whole globe.
BY STUTI AGARWAL