China offers to invest $60-billion in Africa amidst BOR woes
04 September 2018
Chinese President Xi Jinping on Monday pledged $60 billion in new development financing to African countries with "no political strings attached", as China tries to ward off criticism that its huge investments in mostly small developing countries are pushing them deeper into debt with no actual benefits from those investments.
China is looking to Africa to invest its massive cash balances in a move to increase its access to the vast emerging markets and resources in the continent and boosting Beijing’s image and influence abroad.
Pledging $60 billion in new development financing, Xi told African leaders that China's investments on the continent have "no political strings attached", even as Beijing is increasingly criticised over its debt-heavy projects abroad.
The new investments — to be made over the next three years — comes on top of $60 billion funding Beijing offered in 2015, at the start of a two-day China-Africa summit that focused on his cherished Belt and Road initiative.
China has already invested billions of dollars in African and Asian countries for roads, railways, ports and other major infrastructure projects. But these projects are now seen as unworthy by the recipient countries themselves as these have only increased their overseas debt.
But Xi said, “China's cooperation with Africa is clearly targeted at the major bottlenecks to development. Resources for our cooperation are not to be spent on any vanity projects, but in places where they count the most.”
However, Xi admitted there was a need to look at the commercial viability of projects and make sure preparations are made to lower investment risks and make cooperation “more sustainable”.
Belt and Road, Xi said, “is not a scheme to form an exclusive club or bloc against others. Rather it is about greater openness, sharing and mutual benefit.”
Announced at the start of the Forum on China-Africa Cooperation (FOCAC), the $60 billion investments are targeted at eight initiatives over the next three years, in areas ranging from industrial promotion, infrastructure construction and scholarships for young Africans.
He also offered a concession for Africa's least developed, heavily indebted and poor countries by exempting them from debt they have incurred in the form of interest-free Chinese loans due to mature by the end of 2018.
A study by the Centre for Global Development, a US think-tank, found “serious concerns” about the sustainability of sovereign debt in eight Asian, European and African countries receiving Belt and Road funds.
South African President Cyril Ramaphosa defended China's involvement on the continent, saying FOCAC “refutes the view that a new colonialism is taking hold in Africa as our detractors would have us believe.”
During a visit to China last month, Malaysian Prime Minister Mahathir Mohamed warned against "a new version of colonialism," as he cancelled a series of Chinese-backed infrastructure projects worth $22 billion.
Ahead of FOCAC, Rwandan President Paul Kagame, currently the chair of the African Union, also dismissed the concerns, telling the official Xinhua news agency talk of "debt traps" were attempts to discourage African-Chinese interactions.
Nations across Africa are hoping that China's enthusiasm for infrastructure investment will help promote industrialisation on the continent.
Nigerian President Muhammadu Buhari will oversee the signing of a telecommunication infrastructure deal backed by a $328-million loan facility from China's Exim bank during his visit, his office said.
Mr. Xi said Belt and Road complies with international norms, and China “welcomes the participation of other capable and willing countries for mutually beneficial third-party cooperation”.
China has provided aid to Africa since the Cold War, but Beijing's presence in the region has grown exponentially with its emergence as a global trading power.
Chinese state-owned companies have aggressively pursued large investments in Africa, whose vast resources have helped fuel China's transformation into an economic powerhouse.
While relations between China and African nations are broadly positive, concerns have intensified about the impact of some of China's deals in the region.
Djibouti has become heavily dependent on Chinese financing after China opened its first overseas military base in the Horn of Africa country last year, a powerful signal of the continent's strategic importance to Beijing.
Locals in other countries have complained about the practice of using Chinese labour for building projects and what are perceived as sweetheart deals for Chinese companies.
The concerns are likely to grow as countries in other parts of the world — especially Southeast Asia — begin to question whether Chinese aid comes at too high a price.
"Time has come for African leaders to critically interrogate their relationship with China," an editorial in Kenya's Daily Nation said Monday.