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  • Writer's pictureAnzetse Were

African Economies in a Multipolar World

This article first appeared in Project Syndicate on March 13, 2023.


After deepening for two decades, Africa-China economic relations are entering a new phase, owing to a variety of global, bilateral, and domestic factors. While China will remain a key player on the continent, African governments will need to keep their options open and be more mindful of a wider set of interests.


NAIROBI – Governments, businesses, and citizens are navigating a global economic slowdown and levels of inflation not seen in decades, and Africa is no exception. Economic scars from the COVID-19 pandemic, supply shocks from the Russia-Ukraine war, and severe droughts in the Horn of Africa have created significant economic strain. Africa’s public debt is approaching the unsustainably high levels of the early 2000s, and the substitution of low-cost long-term multilateral debt by private funds has driven up debt-servicing costs.


But it is not all doom and gloom. While startup funding declined globally in 2022, African startups had accumulated more than $4.85 billion by December – a 4.75% increase from the previous year. This partly reflects Africa’s increasingly dynamic digital economy, which is expected to grow sixfold by 2050, from an estimated $115 billion to $712 billion. African countries have also managed the COVID-19 pandemic fairly well, owing to a rapid and coordinated response, and it was South African researchers who quickly identified the soon-to-be-dominant Omicron variant in late 2021.


Perhaps most important, Africa-China economic relations are now maturing and entering a new phase, after having grown immensely over the past two decades. Looking ahead, Africa-China economic engagement will be influenced by four factors: Africa’s public-debt distress, China’s changing approach to development finance, a deepening focus on soft power and diplomatic relations on both sides, and the changing composition of African economic interests.


As of late 2022, China accounted for 13.4% of African countries’ total debt stock, on average. Generally speaking, the Chinese government has demonstrated goodwill and acted out of enlightened self-interest in its dealings with indebted African countries. It recently announced that it would waive 23 interest-free loans to 17 unspecified African countries, and it has participated in the G20’s Debt Service Suspension Initiative and Common Framework.


But one should not assume that African governments want China to be pressured into aligning fully with “global debt-restructuring efforts” – by which everyone really means those initiatives led by European and North American institutions. One reason why African governments opted for Chinese financing in the first place is that they appreciated China’s different approach, including its non-patronizing approach and its responsiveness to African governments’ priorities (such as infrastructure) and forms of statecraft.


As China works with African governments on debt relief, rescheduling, and restructuring, we can expect it to signal its alignment with “global efforts” while pursuing its own solutions and focusing on African governments’ priorities. As an equal among creditors, China will continue to present African governments with unique options and to protect its own interests.


China’s state financing has long focused on infrastructure. Between 2000 and 2019, China committed $153 billion to African public-sector borrowers, and at least 80% of those loans went toward transportation, power, telecoms, and water. But China’s lending style has been evolving since 2019, when its loans to African public-sector borrowers fell to $7 billion, down from $9.9 billion in 2018 and more sharply from its peak of $28 billion in 2016. This shift seems to reflect a variety of issues, including China’s consolidation of past investments, its increased focus on domestic development, and its growing interest in lending through multilateral bodies.


One program to watch will be China’s new Global Development Initiative (GDI), which will focus on sustainable development and provide funding to “small and smart projects” in coordination with the China International Development Cooperation Agency. African governments probably can no longer expect “big checks” from China. Moreover, China’s Ministry of Foreign Affairs will play a prominent role in the GDI, reflecting the increasingly diplomatic and political nature of its approach to development aid. For China and African governments alike, the axis of engagement will shift from money to soft power.


With South Africa holding the 2023 chair of the BRICS (which also includes Brazil, Russia, India, and China), an African government will be leading the bloc at a time when it is poised for a major expansion. At a meeting last May, representatives from Afghanistan, Algeria, Argentina, Egypt, Indonesia, Iran, Kazakhstan, Nicaragua, Nigeria, Saudi Arabia, Senegal, Thailand, Turkey, and the United Arab Emirates all expressed an interest in joining a “BRICS Plus.”


South African President Cyril Ramaphosa intends to use his country’s BRICS chairmanship both to advance African interests and to invite other African countries to join BRICS Plus. Ramaphosa’s agenda reflects a strategic outlook that contrasts sharply with that of a bipolar or unipolar world in which African interests will always be deprioritized. It is an outlook that many other African governments share.


Alongside these state-centered shifts is the equally important rise of African private-sector and civil-society players. Their interests will increasingly inform issues like the response to the debt crisis, which will raise questions about hidden debt, contingent liabilities, and governments’ over-accommodation of vested interests in past deals with China. With Africans rightly worried about climate change, there will be much more scrutiny of new projects in this regard, and less appetite for development that will cause environmental degradation.


Equally, there will be zero tolerance for racism and the mistreatment of African workers – a problem for which Chinese companies have expressed “regrets” in the past. While African governments will remain the central locus of African political and economic agency, they will increasingly have to account for the interests of other African stakeholders, too.


While China remains a key player on the continent, African governments will continue to keep their options open. Economic engagement with China still has much to offer, but there is also growing interest from older partners such as the European Union, the United Kingdom, and the United States (doubtless driven by fear of China’s growing influence), as well as potential new players like India, Turkey, Brazil, and certain Arab states.


Africa is entering a new phase in its economic relations with an increasingly complex and multipolar world. Its leaders now have an opportunity to formulate a vision for how they will navigate it.


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