Beijing summit: African leaders target big loans in talks

Leaders of Africa’s big economies such as South Africa and Kenya are in Beijing seeking loans for big infrastructure projects.
Kenya, for instance, is eager to secure additional financing to complete stalled BRI projects.
In return, analysts say China is keen on creating avenues for accessing minerals and market opportunities for their finished products.

This week, the city of Beijing will be hosting a gathering that could shape the future of Africa’s economic landscape for years to come. The Forum on China-Africa Cooperation (FOCAC) is set to welcome a delegation of African leaders eager to secure substantial financing for key infrastructure projects back home.

Amidst intensifying global competition and shifting economic dynamics, this year’s China-Africa summit promises high-stakes discussions.

The Beijing Summit comes at a critical moment not only for Africa but also for China and the broader international community. Over the past decade, China has solidified its position as Africa’s largest trading partner, channeling billions of dollars into infrastructure projects that are poised to spur growth albeit at a steep price. From sprawling railways to modern ports and towering hydroelectric dams, Chinese investment has left a mark on Africa’s economic fabric.

However, the global landscape is rapidly evolving. Mounting competition from the US, Europe, Russia, and other emerging powers has intensified the scramble for influence and resources in Africa. This geopolitical rivalry adds a layer of complexity to the China-Africa summit, as African nations navigate their ties with multiple global partners while striving to meet their development goals.

Policy analyst Ovigwe Eguegu from Development Reimagined underscores the strategic importance of this engagement, telling AFP that African countries are “looking to tap the opportunities in China for growth.” The Beijing Summit thus serves as a pivotal platform for reaffirming and recalibrating the partnership between China and Africa in light of new challenges and opportunities.

The promise and perils of Chinese investment

China’s ambitious Belt and Road Initiative (BRI) has been a cornerstone of its engagement with Africa, facilitating large-scale investments in infrastructure. These ventures have undeniably propelled economic advancement, and improved connectivity. In the first half of this year alone, bilateral trade between China and Africa reached an impressive $167.8 billion, reflecting the depth and resilience of their economic ties.

Yet, this flourishing partnership has not been without controversy. Critics have accused China of burdening African nations with unsustainable debts, leading to concerns over sovereignty and long-term economic stability. Instances such as the $5 billion Standard Gause Railway connecting Nairobi and Mombasa in Kenya manifest the double-edged nature of these investments. While the railway has enhanced transportation and trade, the financial strain has been huge, with subsequent phases of the project stalling due to mounting debts.

Economic slowdowns in China have further complicated matters, making Beijing increasingly cautious about extending large loans. Assistant Minister of Commerce Tang Wenhong acknowledges these challenges, but also highlights the continued growth in China-Africa economic cooperation, noting that “China has remained Africa’s largest trading partner for 15 consecutive years.” The China-Africa summit will thus be a critical forum for addressing these concerns and exploring more sustainable models of collaboration.

Infrastructure ambitions and financial realities

At the heart of the Beijing Summit discussions will be Africa’s pressing need for infrastructure development and the financial mechanisms to support it. Leaders from South Africa, Nigeria, Kenya, and numerous other nations arrive in Beijing with ambitious agendas, seeking funding for projects that can drive economic transformation and improve the quality of life for millions.

Kenya, for instance, is eager to secure additional financing to complete stalled BRI projects and invest in new ventures that can boost its economic growth. President William Ruto’s administration has previously sought a $1 billion loan and debt restructuring from China to alleviate financial pressures and advance critical infrastructure developments. However, recent protests triggered by the government’s debt servicing obligations underscore the delicate balance between pursuing development and maintaining financial sustainability.

Last year, Beijing’s loans to African nations hit the highest level in five years, with research by the Chinese Loans to Africa Database established with Angola, Ethiopia, Egypt, Nigeria, and Kenya making it to the list of top borrowers.

However, with mounting debt vulnerabilities, the need for innovative and flexible financing arrangements that support Africa’s infrastructure ambitions without exacerbating the debt burden has never been more urgent.

The China-Africa summit presents an opportunity for both sides to explore such models, potentially incorporating greater transparency, local capacity building, and diversified investment strategies to ensure mutual benefits.

The race for Africa’s mineral wealth

Beyond infrastructure, the Beijing Summit will also delve into the strategic competition over Africa’s abundant natural resources, particularly its rich deposits of critical minerals. Africa boasts vast reserves of manganese, cobalt, nickel, lithium, and rare earth elements — all essential components for renewable energy technologies and the global transition towards a greener economy.

Countries such as Gabon, South Africa, and the Democratic Republic of Congo (DRC) are central players in this domain, supplying huge portions of the world’s manganese and cobalt. China’s dominant role in processing these minerals positions it advantageously in the global supply chain, but Western nations are increasingly seeking to secure their access and reduce reliance on Chinese processing capabilities.

This intensifying competition raises complex questions about resource sovereignty, environmental sustainability, and equitable economic development. The China-Africa summit offers a platform for African leaders to negotiate terms that ensure fair returns for their countries, promote responsible mining practices, and leverage their resources to foster broader industrialization and diversification of their economies.

Navigating Geopolitical Tensions

The backdrop of escalating geopolitical tensions between China and the USs adds further significance to the Beijing Summit. Disputes over trade policies, technological dominance, and international influence have heightened scrutiny over China’s activities in Africa, with Washington expressing concerns about Beijing’s “malign influence” and alleged attempts to undermine transparency and openness.

China, for its part, maintains that its engagement with Africa is rooted in mutual benefit and win-win cooperation. Tsinghua University’s Tang Xiaoyang told AFP, “We do not just give aid, give them help. We are just partners with you while you are developing. We are also benefiting from it.”

Amid these competing narratives, African nations face the challenge of asserting their agency and pursuing their development agendas without becoming entangled in great power rivalries. As policy analyst Ovigwe Eguegu told AFP, “African countries lack leverage against China. Some people think you can use the US to balance China. You cannot.” The China-Africa summit thus serves as a critical arena for African leaders to articulate their priorities and seek partnerships that respect their sovereignty and strategic interests.

Charting a path forward

Despite the complexities, there are reasons for optimism as the Beijing Summit unfolds. Recent data reflects steady growth in China-Africa investment and trade cooperation, driven by targeted programs in trade promotion, agricultural development, digital innovation, and green development.

China’s direct investment stock in Africa has surpassed $40 billion, creating over 1.1 million local jobs and contributing to increased tax revenues and export earnings for African nations.

These achievements demonstrate the potential for a more balanced and sustainable partnership moving forward. As the world grapples with shared challenges such as climate change, pandemics, and economic inequality, collaborative efforts between China and Africa can yield significant benefits not only for the parties involved but also for the global community.

The China-Africa summit provides a critical opportunity to redefine and strengthen this partnership, embracing models that prioritize transparency, sustainability, and mutual prosperity. By addressing past challenges and leveraging new opportunities, African leaders and Chinese counterparts can work together to build resilient economies, foster innovation, and improve the livelihoods of millions across the continent.

As delegates gather in the grand halls of Beijing, the outcomes will have far-reaching implications, influencing the trajectory of Africa’s development and China’s role on the global stage. In an era marked by rapid change and unprecedented challenges, the success of the China-Africa summit will depend on the ability of leaders to adapt, innovate, and collaborate effectively.