To Benefit from the Belt & Road Initiative, Africa Needs a Unified Approach

Alex Kopytko¹During the research and writing of this paper, it is important to thank Violet Wawire, Dr. John Marangos, Kenneth Dickhudt, and Cornelius Apungwa for their comments, edits, and review. All these individuals are part of the African Political Economy Policy Lab and were crucial in helping draft the final version. , Research Intern, African Political Economy Policy Lab
akopytko@africacfsp.org

The Belt and Road Initiative (BRI) is the Chinese plan to “improve connectivity and regional co-operation on a trans-continental scale through large-scale investments.” The Chinese argue that the BRI will help develop global infrastructure. This paper investigates how the BRI is playing out in Africa. It argues that the Chinese government has ulterior motives and that countries must use caution when dealing with China. Countries that take a cautious approach to the BRI have seen some success. The African continent has been making strides towards a unified monetary union, and, similarly, African countries need to take a unified and limited approach to handle Chinese aid.

Chinese Belt and Road Initiative

Proponents’²“Belt and Road Initiative.” World Bank, March 29, 2018. https://www.worldbank.org/en/topic/regional-integration/brief/belt-and-road-initiative. of the Republic of China’s Belt and Road Initiative (BRI) believe that infrastructure projects could help less developed countries rise out of poverty. Currently, the BRI includes thirty-nine African countries ranging geographically from Tunisia to South Africa. While China is taking a unified approach to dealing with the continent, African countries are still fragmented and have overlapping interests. According to the IMF, there are currently three monetary regions inside of the continent³Risberg, Pearl. “The Give-and-Take of BRI in Africa.” The Give-and-Take of BRI in Africa | Center for Strategic and International Studies. Center for Strategic and International Studies, 2020. https://www.csis.org/give-and-take-bri-africa.. This lack of unity limits any comprehensive or unified approach towards how the continent deals with China. The continent needs to move away from a fragmented system that leaves them divided and vulnerable to Chinese opportunism.

Currently, China is the principal creditor in only the Democratic Republic of the Congo, but this could change. According to the Center for Strategic & International Studies, 67% of African governments’ external debt is owed to either the private sector (which may include Chinese companies) or multilateral institutions, but 20% is also received from Chinese lending.⁴Risberg, Pearl. “The Give-and-Take of BRI in Africa.” The Give-and-Take of BRI in Africa | Center for Strategic and International Studies. Center for Strategic and International Studies, 2020. https://www.csis.org/give-and-take-bri-africa. This may not sound alarming at first, but there are growing concerns that China may place these African countries even further into debt traps in the form of enticing projects which may appear impressive but won’t help these nations improve their economies. In 2015, China partnered with Sri Lanka’s former president to construct a series of infrastructure mega-projects. The Chinese-backed plan for Sri Lanka pushed for a new port, airport, stadium, and conference center. Mostly funded by Chinese loans that Sri Lanka struggled to repay, the country sunk into a debt trap of its own making.⁵Shepard, W. (2020, January 29). How China’s Belt And Road Became A ‘Global Trail Of Trouble’. Retrieved December 20, 2020, from https://www.forbes.com/sites/wadeshepard/2020/01/29/how-chinas-belt-and-road-became-a-global-trail-of-trouble/?sh=37f9e5f3443d These costly projects serve as a warning of things to come in Africa.

For myriad reasons, the BRI seems like a Chinese-led version of the Marshall Plan. For comparison’s sake, the Marshall Plan was instituted by the US during the Cold War to aid post-war economies and keep them from the Soviet sphere of influence. The Marshall Plan⁶History of the Marshall Plan.” George C. Marshall Foundation. Accessed August 31, 2020. https://www.marshallfoundation.org/marshall/the-marshall-plan/history-marshall-plan/. was supposed to provide economic recovery in Europe, but it was also focused on political supremacy. There are fears that the Chinese Communist Party is using its BRI plan for similar political benefits inside and outside of China.⁷Dollar, David. “Understanding China’s Belt and Road Infrastructure Projects in Africa.” Brookings. Brookings, September 30, 2019. https://www.brookings.edu/research/understanding-chinas-belt-and-road-infrastructure-projects-in-africa/.

Africa and the Belt and Road Initiative

As history seems to repeat itself, China is taking advantage of a fragmented Africa in many of the same ways that organizations like the World Bank and the International Monetary Fund (IMF) did during the 1970s, 1980s, and 1990s. According to Ann-Loise Colgan in her article, “How IMF, World Bank Make Africa Sick,” in the late 1970s, the policies recommended to developing nations by the IMF and World Bank advocated for African governments to orient their economies towards greater integration in international markets. They pushed for the privatization of many industries at the expense of social services and long-term development. This policy shift cut back the role of the state along with social programs. The 1970s was also a period that brought high oil prices, rising interest rates, and falling prices on commodities, which directly hurt many African countries and left them unable to repay their growing debts.⁸COLGAN, ANN-LOUISE. “How IMF-World Bank Make Africa Sick.” Green Left. Green Left, September 5, 2016. https://www.greenleft.org.au/content/how-imf-world-bank-make-africa-sick.

The pattern is repeating itself, but now instead of western companies making gains in the region, it is the Chinese government and state companies. Thierry Pairault, who writes for Diplomat Magazine, discusses how countries like Kenya and Ethiopia are already seeing grave consequences from these lopsided debt traps. The magazine states that both countries are facing issues that stem from the First and Second Growth and Transformation Plans. These First and Second Growth and Transformation Plans were instituted by Ethiopia starting in 2010 in order to work towards becoming a middle-income country by 2025.⁹Pairault , Thierry. “China’s Infrastructure-Heavy Model for African Growth Is Failing.” The Diplomat. The Diplomat, July 30, 2020. https://thediplomat.com/2020/07/chinas-infrastructure-heavy-model-for-african-growth-is-failing/. According to Yinagre Desie, Ethiopia’s Commissioner of National Planning, who works with the United Nations, the goal “is to serve as a springboard towards realizing the national vision of becoming a low middle-income country by 2025, through sustaining the rapid, broad based and inclusive economic growth.”¹⁰Desie, Yinagre. “Growth and Transformation Plan II in Ethiopia.” UN: Ethiopia. United Nations, May 2016. https://ethiopia.un.org/en/15231-growth-and-transformation-plan-ii. However, Pairault argues in his article that Ethiopia has not seen the growth that it was promised because the plans involved heavy Chinese cooperation and the Chinese message hasn’t been honest. Specifically, the BRI promised that an investment in infrastructure would cause growth, but it is still hard to tell if this growth will come with hidden costs. This is disingenuous because China is causing an increase in demand for its domestic goods and services that benefit Chinese citizens back home. Additionally, it is utilizing African land and resources for its own domestic growth under the guise of improving their infrastructure.¹¹Pairault , Thierry. “China’s Infrastructure-Heavy Model for African Growth Is Failing.” The Diplomat. The Diplomat, July 30, 2020. https://thediplomat.com/2020/07/chinas-infrastructure-heavy-model-for-african-growth-is-failing/.

Another concern about the impact of the BRI in Africa stems from some of the projects themselves. In, How Will the Belt and Road Initiative Advance China’s Interests? the Center for Strategic and International Studies discusses an important example, the Kampala-Entebbe expressway in Uganda, which connects the capital city with the country’s main airport. Improved roadways are an important feature of a modern city and people need to get from the city to the airport with ease. This project has also helped with congestion and transit times to the airport, but there are other ways that $500 million could be invested into the country. The road doesn’t contribute to Uganda’s productive capacity, especially because Chinese companies bring in many of their own citizens as workers on the projects. Also, while the road helps urban dwellers and multinational companies that want access to the city, it doesn’t seem to give necessary aid and economic mobility to those who need it; there are no long-term gains for the average Ugandan. This inevitably calls into question the tangible gains that projects like the Kampala-Entebbe expressway bring to average people. ¹²“How Will the Belt and Road Initiative Advance China’s Interests?” ChinaPower Project. Center for Strategic & International Studies, August 26, 2020. https://chinapower.csis.org/china-belt-and-road-initiative/. “Below the Belt and Road” from the Foundation for the Defense of Democracies states that “the BRI seems to focus on appealing to regional infrastructure projects that can be an enticing image for investment but may not help a country on the national level.” BRI projects that have a clear regional nature have so far been negotiated at the national level. This highlights a recurring issue: is the BRI good for helping African economies diversify and develop? Or is it beneficial only for urban elites and the Chinese investors who want a stake in African politics? ¹³Dezenski, Elaine. “Below the Belt and Road.” FDD. Foundation for Defense of Democracies , June 19, 2020. https://www.fdd.org/analysis/2020/05/04/below-the-belt-and-road/.

Managing Chinese Influence in Africa

The Chinese government has been able to take advantage of African countries that need better infrastructure, better healthcare, and better technology. The emerging coronavirus pandemic has only added more uncertainty for African economies and healthcare systems. During this unprecedented time, Chinese action may genuinely be delivering much-needed healthcare and technology. However, without a unified approach to Chinese involvement on the continent, each country is vulnerable. Though most infrastructure projects are regional by nature, they can affect the livelihoods of more than one country and can even impact the entire continent. Regional projects seem to allow China to thrive off the overlapping interests of different African countries. A more coordinated response to China could take the form of controlled but limited projects with continental approval, thereby limiting the power of China over individual countries and forcing the Chinese government to reexamine their approach to help with social capital. This could be in the form of transparency, trust and cooperation, instead of costly projects.¹⁴Pairault , Thierry. “China’s Infrastructure-Heavy Model for African Growth Is Failing.” The Diplomat. The Diplomat, July 30, 2020. https://thediplomat.com/2020/07/chinas-infrastructure-heavy-model-for-african-growth-is-failing/.

Regarding a unified Africa, the continent is already making progress. The Abuja Treaty, signed in Nigeria in 1991, is an international agreement that created the African Economic Community and called for an African Central Bank to follow by 2028. In 2019, there were plans for Africa to have a single currency by 2023. The IMF clarifies that currently there are three regional monetary regions – the Common Monetary Area (CMA), the Central African Economic and Monetary Community (CEMAC), and the West African Economic & Monetary Union (also known by its French acronym, UEMOA). This is a start, but a multitude of different unions and overlapping memberships in the different regional groupings make the commitments unclear and redundant, making a unified approach almost impossible. Africa must find an alternative to their fragmented system and replace it with a body that can help to resolve international issues that impact the entire continent.¹⁵Masson, Paul, and Catherine Pattillo. “A Single Currency for Africa? .” Finance & Development. IMF, December 2004. https://www.imf.org/external/pubs/ft/fandd/2004/12/pdf/masson.pdf.

Conclusion

Other parts of the globe already have adopted strategic approaches to dealing with China. Cambodia and Myanmar have taken conservative approaches to the BRI, including a debt management strategy that allows for borrowing only under specific conditions (e.g., only to finance productive infrastructure, and only at very concessional rates). This makes these governments confident that they will not face trouble because of excessive borrowing. These countries do stand apart from African countries mainly due to size, proximity to China, and historical context, but there are things that Africa can learn from their example. Both countries didn’t treat the BRI as a one size fits all economic plan and instead took a hesitant and limited role in the relationship. Picking and choosing allows both countries to have a seat at the table. The example of Myanmar and Cambodia also shows that taking a tentative approach to the BRI can limit the damage and bolster the positives.¹⁶Kha, Sok. “The Belt and Road in Cambodia: Successes and Challenges.” The Diplomat. The Diplomat, April 30, 2019. https://thediplomat.com/2019/04/the-belt-and-road-in-cambodia-successes-and-challenges/. The conversation is crucial, and many African countries seem to have lackluster approaches to what they want out of the BRI. In a moment of waning American soft power, the growth of protectionist trade wars, and escalating populist rhetoric, China is willing to take risks with countries that may require assistance. Moreover, Chinese aid may be enticing to many countries, especially in the aftermath of the COVID-19 pandemic. Nonetheless, China clearly wants access to markets and does not necessarily have the best interests of many African countries at heart. Therefore, a continent-wide strategy in response to Chinese influence is an imperative.