So how are these frequent utterances related to Africa’s political economy? Later this year, President Biden will be hosting African leaders for the US-Africa Leaders Summit. Part of the agenda is to re-establish the US as a formidable trading partner in the continent, as it has been outshined by China. Only recently, the Inter-Region Economic Network (IREN) published a study dubbed ‘The Clash of Systems’, which established that China is quickly surpassing Europe as the leading trading partner, investor and even raw materials exploiter in Africa.
In this same launch, the EU was challenged by Kenyan leaders to shift its perception of Africa from an aid beneficiary to that of an investment partner.
But the sneaky suspicion is that Sino-Africa relations aren’t exactly fair trade based on contracts. If it quacks like a duck then it’s probably a duck, if scramble, exploitation of raw materials, and neo-debt-trap diplomacy are involved then it’s probably the second scramble for Africa just at a Beijing summit.
Europe leveraged aid for trade in Africa (cheap raw materials), China leverages developmental loans for trade in Africa and the US hawks democracy ideals that are no longer within their realm of reality for power. Everyone wants a portion of Africa, but this is a new Africa.
To narrow the complexities, let’s start with China’s string of pearls, which is a geopolitical theory first posited by US researchers in 2004 that refers to the military and commercial infrastructure network developed by China in select countries strategically positioned along the Indian Ocean in select straits.
The pearls are the commercial and military infrastructures built on maritime ports and the string is the sealine of communication between these pearls.
So far China holds more than 70% of Djibouti’s debt and has leased the port for ten years since 2016 for $20m annually.
The string flows from mainland China all the way to the Horn of Africa in Port Sudan. Isaac Kardon, an Assistant Professor in the China Maritime Studies Institute at the US Naval War College argues that the reason behind this is that “Chinese firms are rapidly developing Africa’s ports as platforms for the integrated political, economic, and military presence of the People’s Republic of China (PRC) in each of the continent’s subregions, taking long-term control over ownership and operations of port assets instead of just building them on contracts.”
From the Chittagong port in Bangladesh, Gwadar in Pakistan, Hambantota in Sri Lanka, Kyaupkyu in Myanmar, Malacca in Malaysia, Mombasa in Kenya, and port Sudan to port Djibouti, these are some of China’s network of commercial pearls along the Indian Ocean Region(IOR).
The Port of Djibouti is China’s first overseas military facility and China’s strategic partner. This is due to its strategic position in the Indian Ocean, which overlooks the gulf of Aden and the Bab-el-Mandeb Strait which handles between 12.5% to 20% of annual global trade.
So far China holds more than 70% of Djibouti’s debt and has leased the port for ten years since 2016 for $20m annually. There have been fears Djibouti will go the Sri Lanka way but it won’t be easy for China to take over port Djibouti without a proper tiff from the global north. This is because Djibouti leases land to several foreign militaries including the US.
The case of Sri Lanka
Also in this IOR network, Sri Lanka was forced to give up their Hambantota port on a lease of 99 years to the Chinese company that built it.
Sri Lanka is currently in a financial crisis as the country has been forced to default on its debts with China as one of its leading creditors.
According to the IMF, “the Sri Lankan government restructured the original loans and reached a 99-year concession agreement with China Merchant Port Holdings (CMPH). Under the concession agreement, CMPH paid the Sri Lankan government a total of $1.1bn, broadly equivalent to the original loan amount.”
Sri Lanka is currently in a financial crisis as the country has been forced to default on its debts with China as one of its leading creditors. The shot in the dark among the international community is that China could be a Trojan horse and not the soft bilateral trade investor it presents itself to the least developing states in the global south, specifically in Africa and Asia.
Except, it is African leaders and global south leaders that willingly get into mega-projects with China. China, unlike the US, doesn’t mind heavily investing in corrupt governments like the case of Sri Lanka and Zambia, which have both defaulted their foreign external debts with China as one of their top creditors.
The former US vice president Mike Pence elaborated on China’s deals as debt-trap diplomacy in his latter years which is now shaping discussions on the integrity of China’s bilateral deals. Except, African states remain unconvinced that China could be a neo-colonial adversary. This is because China has given Africa a big break in infrastructure development in under a generation. A move the US and Europe have failed to achieve post colonisation.
China is finally willing to restructure Zambia’s loans, which were at over $17bn at the end of 2021 into more accommodating and less imprisoning terms.
Infrastructure projects and more
Despite the debt-trap diplomacy, African states remain welcoming to China with little to no resistance – almost 40 African states have signed an MOU to join China’s Belt and Road Initiative (BRI), which has boosted and integrated the export and import supply chain in the continent.
There have also been mega projects in the continent through the BRI initiative from railways, superhighways, mega ports, roads, power dams, and more.
So is China undercutting sovereignty in the continent?
Besides commercial activities, China is also establishing itself as the vigilante of the continent with its new global security initiative through military training, intelligence sharing and donating military to UN peacekeeping missions in the Horn of Africa and Sahel.
This might explain why Africa refuses to bite the hand that feeds it. So is China undercutting sovereignty in the continent? Africa’s sovereignty was already undercut over a century ago but there is a new scramble for Africa and African leaders and peoples must stay woke not to lease their independence for the next 100 years.
Understand Africa's tomorrow... today
We believe that Africa is poorly represented, and badly under-estimated. Beyond the vast opportunity manifest in African markets, we highlight people who make a difference; leaders turning the tide, youth driving change, and an indefatigable business community. That is what we believe will change the continent, and that is what we report on. With hard-hitting investigations, innovative analysis and deep dives into countries and sectors, The Africa Report delivers the insight you need.