By Quartz Africa
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While China has consistently doubled or even tripled its financing pledges for Africa during previous Forum on China-Africa Cooperation (FOCAC) meetings, the stagnation of this sum at the last FOCAC summit, held in 2018, should have raised concerns.
This year for the first time, the Asian giant has cut down investment pledges from $60 billion to $40 billion, at the recently concluded ministerial level FOCAC meetings held in Dakar, Senegal. This is a worrying sign of the times for the continent.
It’s easy to rationalize this drastic reduction as a result of China’s poor economic performance in the wake of the pandemic with China’s GDP growth at 2.3% in 2020, down from 6.0% in a pre-pandemic 2019, but this doesn’t tell the full story.
As Africa’s largest creditor, defaults and risk of defaults from African countries are a major risk to China. For example, Zambia, the first covid-era African country to default on sovereign debt in 2020, owes China $6.6 billion. With African leaders including during the conference calling for debt renegotiation amid weak economic forecasts for the region, tightening of purse strings in Beijing is understandable.
Although AU Commission Chairperson Moussa Faki Mahamat welcomed Xi Jinping’s announcement to cancel debts due in 2021, he stated that the financing gap of around $290 billion for the continent is worrying, calling on China to “intensify its efforts to multiply measures aimed at alleviating this burden on national economies, some of which are already heavily affected by peace and security threats.”
In attempts to mitigate waning Chinese investment in the past few years, African leaders appealed for more trust, Senegal’s President Macky Sall urged “Chinese companies to adopt a more confident and optimistic view of investment in Africa.”
However, China seems to show increased devotion to move from the traditional infrastructure and construction investment model to a local development approach. Xi pledged to “encourage its businesses to invest no less than $10 billion in Africa in the next three years, […] establish a platform for China-Africa private investment promotion [and] support the development of African SMEs.”
Through a white paper published a few days before the Conference, China’s State Council Information Office confirmed Beijing’s new vision, stating “China is promoting a new development paradigm with domestic economy and international engagement providing mutual reinforcement, and the former as the mainstay. China’s development will create more opportunities for Africa’s development.”
Xi Jinping emphasized his commitment to a “win-win” partnership, laying out an ambitious China-Africa Cooperation Vision 2035, covering nine programs in as many sectors (health, poverty reduction and agricultural development, trade promotion, investment promotion, digital innovation, green development, capacity building, cultural exchange, and peace and security.)
Beijing also committed to deliver an additional 1 billion doses to the continent, 600 million of which will be donations and 400 million would be provided through joint production by Chinese companies and relevant African countries.