Since he was appointed chairman of the board of directors of Ecobank at the end of June, the way Alain Francis Nkontchou, 57, speaks has not changed in substance. The former investment banker, co-founder of asset manager Enko Capital, expects the financial sector to support African economies better.
Why Africa’s oil exporters should worry about the China-Iran megadeal
Iran and China are reportedly nearing completion of a wide-ranging oil-for-infrastructure deal that would pave the way for billions of dollars of Chinese investment in Iran’s energy, telecommunications and financial service sectors in exchange for a 25-year supply of oil.
Both sides have acknowledged that talks are underway but neither has confirmed the details.
When a China Radio International journalist asked Foreign Ministry spokeswoman Hua Chunyin about a New York Times report about the deal, Hua refused to comment.
READ MORE: China-Africa: Its the politics, stupid!
Nonetheless, there’s widespread speculation that the deal is worth upwards of $400bn and would provide a critical lifeline to Tehran whose economy has struggled mightily under the punishing weight of U.S. sanctions.
So What Does a Proposed China-Iran Deal Have to do With Africa?
- THE SHIFT AWAY FROM AFRICAN OIL: In his testimony before the U.S.-China Economic and Security Review Commission last May, former U.S. Ambassador and prominent China-Africa scholar David Shinn noted that in 2008 China sourced more than 30% of its oil from Africa but ten years later that figure had fallen to just 18%. This deal with Iran, if it goes through, highlights the continuation of China’s diversification of its oil supplies away from African sources.
- CHINA’S NEW RELIANCE ON PERSIAN GULF OIL: Chinese oil imports from Saudi Arabia surged by 47% last year making Beijing the kingdom’s single largest customer. Similarly, China is also investing heavily in Iraq’s oil infrastructure with an eye on expanding supply from there as well. So, the Iranian deal would further consolidate Chinese dependence on the Gulf for a significant portion of its oil sourcing and likely further diminish its reliance on Angolan and Sudanese suppliers who were once preeminent.
Oil has been the central pillar of Chinese investment in Africa over the past two decades.
When one looks at the latest data from the China Africa Research Initiative at Johns Hopkins University or the new research from the Beijing-based consultancy Development Reimagined, Angola jumps off the page for its outsized role in China’s engagement on the continent.
China spent billions in Africa on the same kind of oil-for-infrastructure deal that it’s now apparently considering in Iran.
But now as it faces tens of billions of dollars in debt rescheduling in Angola and elsewhere in Africa, Beijing is probably also seeing the downside of these kinds of arrangements.
The bottom line is that the days of massive Chinese investments in the African oil sector are most likely over now that they are buying more from producers in Russia, the Persian Gulf, and the Americas.