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Asia’s Power Games in Africa: Is Time Up for Europe?
Asia’s rising economic footprint in Africa became a significant talking point and the literature on Asian influence in Africa, often dubbed as the ‘new scramble for Africa’, proliferated. Although all the major Asian countries had already established long-term relationships with Africa, the 2000s saw a substantial deepening of economic relations between Asia and Africa. China was undoubtedly the most prominent among them. Chinese trade, investment, and official financial flows to Africa grew substantially from 2000 onwards. Between 2000 and 2013, Chinese trade with Sub-Saharan Africa increased from US $ 4.1 billion to US $ 66.8 billion. Much of this increase was due to the massive growth in exports of crude oil and other minerals such as copper from Africa to China, although African imports of Chinese manufactures and machinery and equipment also grew rapidly during this period. Chinese investment (including private sector) has also grown in Africa. However, the most striking feature of China-Africa relations is the unprecedented growth of official finance from China to Africa predominantly channelled 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.
India’s economic relations with Africa also expanded rapidly in the 2000s. Though initially clubbed together with China in media reports, soon it became clear that Chinese engagement with Africa was significantly different from Indian engagement with Africa. India’s relations with Africa had its roots in post-colonial solidarity and respect for sovereignty. Trade between India and Africa also grew rapidly from the mid-2000s. 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 India is currently the seventh largest investor in Africa. The scale and scope of India’s development cooperation with Africa also expanded rapidly. 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. India is currently executing 77 projects in Africa with a total outlay of US$ 12.85 billion. Capacity building is at the heart of India’s development cooperation and India has trained generations of African officials through its Indian Technical and Economic Cooperation (ITEC) programme and has committed to training African students through its scholarship programmes and digital initiatives like e-VBAB. India is also partnering with other countries such as the UK and Japan in Africa. The Asia Africa Growth Corridor, launched in 2017, is an ambitious project between India and Japan to improve growth and interconnectedness between Asia and Africa.
The 2000s were also a decade which led to an economic turnaround in Africa. Many African countries such as Ethiopia, and Angola experienced high rates of economic growth on the back of rising Chinese demand for commodities. The global perception of Africa as a problem continent which is incapable of developing also changed. The ‘Africa Rising’ narrative gained currency and many African countries became important investment destinations on account of their high economic growth and growing middle classes.
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 overtook US exports to Africa and by 2013, its imports from Sub-Saharan Africa surpassed African exports to the US. Although the EU continues to be Africa’s largest economic partner, its importance has reduced significantly over the years. African leaders preferred to partner with Asian countries because unlike the West, Asian countries did not impose strict conditionalities, respect African sovereignty, and development projects are demand driven. For countries like Angola and the Democratic Republic of Congo which failed to get credit from international financial institutions in the early 2000s, Chinese loans for infrastructure development were viewed as a blessing.
The pandemic has reversed the fortunes of many African countries which are now saddled with debt and an uncertain future. The flaws in China’s approach to Africa have become more 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. Notwithstanding the dip in enthusiasm around Chinese finance, the country will continue to be a significant player in Africa’s financial landscape in the near future. As a result, Europe will need to modify its approach towards Africa to remain relevant.
The commodity-driven high growth of the last two decades in Africa was not accompanied by job creation and poverty alleviation. Thus, Africa continues to be burdened by massive development challenges like hunger, youth unemployment, infant mortality, and poverty that continue to be major challenges for African countries. Climate and debt distress will only make things worse for Africa in the coming decades. Therefore, Africa’s development partners must focus on climate adaptation and the achievement of sustainable development goals in Africa with a focus on the development of African people as opposed to a simple focus on physical infrastructure. India’s development partnership already has a clear focus on capacity building. Given the importance of a stable and prosperous Africa for Europe, it should also focus its attention on building African capacity, creating jobs in Africa through support for intra-Africa trade, quality infrastructure and building African manufacturing potential. It should also explore new modes of engagement such as triangular partnerships with third countries in order to achieve sustainable development goals in Africa.
This commentary originally appeared in ISPI.
Malancha Chakrabarty (ORF)
12 March 2021
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