There will be major initiatives to bring the futures of China and Africa closer together, China announced during the 2018 Beijing Summit of the Forum on China-Africa Cooperation (FOCAC). Experts said the friendship, or long-term relationship, behind the decision is more significant than the decision itself.
African businesses are “incredibly enthusiastic and encouraged” by the message delivered at the forum, said Jeremy Stevens, Chief Economist with Standard Bank South Africa.
“What’s fantastic is that we’ve seen the emphasis on investment, on building manufacturing, and creating jobs and so on. So when you look at that complex financial package, it’s another step in the direction of positive, long-term, sustainable relationship between China and Africa,” Stevens told CGTN.
At this year’s summit, President Xi Jinping said China will extend $60 billion of financing to Africa. It will be provided in the form of government assistance, as well as investments and loans by financial institutions and companies.
The sum includes $15 billion of grants, interest-free and concessional loans, $20 billion in credit lines, a $10 billion fund for development, and a $5 billion fund to finance trade in Africa. Chinese companies are also encouraged to invest at least $10 billion in Africa in the next three years.
From Stevens’s perspective, that number is not what impressed him most. “For me, the most important thing is how do these government-to-government relationships facilitate business and the commercial decisions of Chinese corporations looking to do business in Africa, and vice versa.”
Professor John Gong from the University of International Business and Economics said the financing might reach wider geographic coverage than before.
“For example, East Africa is a very strategic location for China. Djibouti, Ethiopia, Tanzania and Kenya, these countries are important to China, in terms of trade as well as acquiring strategic resources. (As for) Western Africa, small countries (there) are also quite important to China,” Gong explained.
Gong noted the focus of capital should primarily be on building infrastructure. “Africa is a place where there is massive lack of infrastructure. Electricity, for example, that’s a huge demand. There should be loan concession for aids as well. And also a few projects are for more humanitarian needs,” Gong added.
There is a narrative that China’s loans to Africa are causing many African nations to fall into a “debt trap.” But Gong refuted that argument, saying, “If you look at the debts by African countries, the percentage of what they owed to China is not the largest, compared to the debt owed to the World Bank and International Monetary Fund.”
For the future of China-Africa cooperation, Stevens hopes China will continue to help improve Africa’s infrastructure and facilitate connectivity.
Gong mentioned that China should encourage more Chinese companies, especially labor-intensive ones, moving to Africa to create more jobs there for a very competitive labor force there.