Analysis

‘The sun still rises from the east’: Africa benefits from trade with Asia and China

Story Highlights
  • The growing economic footprint of Asian countries in Africa has led to a decline in the importance of western countries in Africa, writes Jacqueline Mashingaidze.

By Jacqueline Mashingaidze

Asia’s rising economic footprint in Africa became a significant talking point during the 2000s which saw a significant deepening of economic relations between Asia and Africa. 

China was undoubtedly the most prominent among the Asian countries.Chinese trade, investment, and official financial flows to Africa grew   considerably from 2000 onwards. According to the data of UN UNCTADstat, China’s exports to Africa increased from US$ 5 billion in 2000 to US$ 73 billion in 2011 with an annual average growth rate of 30%, which is much higher than that of China’s total exports (22%).

China’s imports from Africa increased from US$ 5.6 billion in 2000 to US$ 93.2 billion in 2011, with an annual average growth rate of 34 versus 21% for China’s total imports. Much of this increase was attributed to the massive growth in exports of crude oil and other minerals such as copper from Africa to China, it is worth noting that African imports of Chinese manufactures and machinery and equipment also grew rapidly during this period.

However, the most outstanding feature of China-Africa relations was the unprecedented growth of official finance from China to Africa mostly conducted through the China EXIM Bank in the form of concessional loans for infrastructure development in return for resources (often dubbed as infrastructure for resources deals). China emerged as the most important infrastructure (an area which was traditionally ignored by western donors) builder in Africa.

Since 2015, China, Japan, India and Indonesia have held summits in an attempt to solidify and improve their relationships with countries in Africa. India kicked off this trend in October 2015 with the India Africa Forum Summit. This was followed by the Forum on China-Africa Cooperation (FOCAC) held by China in December 2015 and in 2016 Japan held the Tokyo International Conference of African Development (TICAD) in Africa for the first time, since its inception.

Lastly, Indonesia held the Indonesia-Africa Forum (IAF) in April 2018. In each of these summits, sizeable pledges of financial ($10 billion, 60 billion ,30 billion and 1.3 billion respectively) and technical assistance were made to Africa. Some critics may claim that these summits are simply superficial PR exercises which do not yield any tangible benefit to African countries.

It is important to note that they were significant symbolic gestures that gave Africa comfort at a time when her economies were buckling under the impact of commodity price declines and in need of assistance.

India’s economic relations with Africa also expanded rapidly in the 2000s. media reports initially clubbed India and China, however, over time it became clear that Chinese engagement with Africa was quite different from Indian engagement with Africa. India’s relations with Africa were founded on roots in post-colonial solidarity and respect for sovereignty.

There was a fivefold increase in Indian exports to Sub-Saharan Africa from US$ 5.3 billion in 2004 to US$ 28.4 billion in 2014. India’s imports from sub-Saharan Africa grew by a factor of twelve from US$ 2.8 billion in 2004 to US$ 35.2 billion in 2014. India became a leading investor in Africa and is currently the seventh largest investor in Africa.

In 2003, India launched the Indian Development and Economic Assistance (IDEA) program and started supporting development projects in African countries through its lines of credit programme. The programme is currently implementing 77 projects in Africa with a total outlay of US$ 12.85 billion.  India has also trained African officials through its Indian Technical and Economic Cooperation (ITEC) programme and also African students through its scholarship programmes.

India and Japan launched the Asia Africa Growth Corridor in 2017 to improve growth and interconnectedness between Asia and Africa. It also emphasizes areas that are critical to African economic and social development, such as health care, agriculture, food security, and disaster management.

Further, the AAGC is an alternative mechanism for African countries to hedge against unnecessary risk, by reducing reliance on Chinese credit and development finance. Japan ‘s move to partner with India in the AAGC is not entirely altruistic as Japan also hopes that its support to Africa will be rewarded by their support of its long-time efforts to reform the UN Security Council.

The two biggest sectors for Japanese investment in Africa are mining and hydrocarbons, particularly in Mozambique, where Mitsui & Co has invested billions of yen in coal and gas projects. Such investment is backed by the Japan Oil, Gas and Metals National Corporation (JOGMEC), which works to ensure “a stable supply of natural resources to Japan”.

The growing economic footprint of Asian countries in Africa has led to a decline in the importance of western countries in Africa. In 2004, imports from China surpassed US exports to Africa. Although the EU continues to be Africa’s largest economic partner, its standing has declined substantively over the years.

African leaders prefer to partner with Asian countries more because unlike the West, Asian countries do not impose strict conditionalities, respect African sovereignty, and development projects are demand driven. Zimbabwe for example adopted the look east policy after the fast-track land reform programme which alienated the country from the west and cut off financial assistance.

The COVID-19 pandemic has overturned the fortunes of many African countries which are now burdened with huge debts and an uncertain future. Asia has once again come to the rescue of Africa using ‘vaccine diplomacy’. India currently produces two vaccines which are Covishield and Covaxin.

India’s pharmaceutical industry ranks among the largest in the world, currently producing 60% of the world’s vaccines. China has, on the other hand, developed four vaccines (produced by Sinovac, Sinopharm, CanSino and Anhui Zhifei Longcom) and has pledged that its vaccines will be provided as “global public good.”

China has donated Covid vaccines to many African countries. This has helped cement relations between Africa and China and led to African countries buying vaccines from China which are more affordable than those from the West.

 However, some critics have alleged that there are flaws in China’s approach to Africa which have become visible in recent years. Many commentators have accused China of pursuing ‘debt-trap diplomacy’ in Africa and anti-China sentiments are getting louder in most African countries due to poor job creation in Chinese projects, lack of respect for local laws, poor quality of infrastructure created by Chinese builders and secrecy associated with Chinese loans.

Despite this slight dip in enthusiasm for China, it will still remain a large player in Africa and the Western bloc will have to modify its approach towards Africa so that it remains relevant.

📷 Jacqueline Mashingaidze
  • About the author: Jacqueline Mashingaidze writes in her personal capacity. She can be contacted on jackiempotsa@hotmail.com

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