- For the first time, the China-Africa Economic and Trade Expo (CAETE) came to Africa, with Nairobi playing host last week.
- According to the Ministry of Commerce of the People’s Republic of China, the forum is expected to spread across the continent, with different countries hosting it in the coming years.
- The Asian country is keen to continue its influence and trade dominance on the African continent.
China has launched a charm offensive on Africa in renewed efforts to tighten its grip on the continent. The West has recently shown growing interest in political and investment corporations, and China is seen as keen to continue its influence on the continent.
For the first time, the China-Africa Economic and Trade Expo (CAETE) came to Africa, with Nairobi playing host last week. According to the Ministry of Commerce of the People’s Republic of China, it is expected to go around the continent, with different countries hosting the forum in the coming years.
The three-day event was a fortnight after the US government and companies pitched a tent in Nairobi for this year’s American Chamber of Commerce (Kenya)-AmCHAM Summit. At the US–East Africa forum, America and Kenya renewed trade and investment ties as President Joe Biden’s administration moves to strengthen its foreign policies on Africa.
During a media briefing on the sidelines of AmCham, US Secretary of Commerce Gina Raimondo, who was on an official tour of the continent, said America is “all in on Africa.” This sends a strong message to other economies that have renewed their focus on the continent in recent years.
“The US wants to be the partner of choice. The US has some of the leading digital companies in the world, such as AI innovation, research universities, leading biotech companies that want to invest and do business in Africa, deepest venture capitalists, health companies, and many more,” she noted.
There have also been renewed trade and investment ties between Europe, the UK, Russia, and India, among other economies. For instance, in the post-Brexit era, the EU has moved to seal deals with leading African economies. An example is the landmark Economic Partnership Agreement (EPA) with Kenya, signed on December 18, 2023, and has since been ratified. The EPA is expected to boost trade in goods and create new economic opportunities, with targeted cooperation to enhance Kenya’s economic development.
Washington is also eying the East African Community (EAC) and the continent at large amid continued interest from the West in the African Continental Free Trade Area (AfCFTA). Additionally, emerging economies from the Gulf are also closing in on trade with major economies across the continent, with refined petroleum products being key shipments to the continent.
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China’s grip on Africa
Over the past decade, China has made major inroads in Africa, riding on its Belt and Road Initiative, also known as the BRI. Some 150 countries, many in Africa, signed on to the 10-year initiative, which has helped bring roads, rails, and infrastructure to many poor countries. Launched in 2014, the initiative, China’s signature tool for reshaping its global engagements, spans three continents and touches at least 60 per cent of the world’s population.
At least 20 African countries are part of the initiative, which has seen China acquire a sizable, if not the biggest, share of the continent’s infrastructure development. From rail, roads, and ports to real estate, the Chinese have remained among the biggest contractors in the continent. This has, however, not come cheap, as funding for most of the projects has been in the form of loans, which has seen a number of African states saddled in debt.
It is estimated that China extended loans exceeding $170 billion to 49 African countries and regional institutions between 2000 and 2022. According to data from Boston University’s Global Development Policy Centre, a sizable chunk of loans went into projects in West Africa, with Senegal, Benin, and the Ivory Coast borrowing the largest amounts.
In East Africa, Kenya is the biggest beneficiary of Chinese loans and infrastructure development, with a USD3.8 billion investment in the country’s Standard Gauge Railway.
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China-Africa Economic and Trade Expo
President Xi Jinping’s government is now seen to push for more investments in Africa in a renewed effort to tighten its grip on the continent.
During the Nairobi expo, Gao Wei, the managing director of Afripeak Expo Kenya, who was among the exhibition’s organizers, said that the showcase generated much interest among Africa’s business community, keen on forging ties with Chinese enterprises.
At least 10 trade agreements were signed between African and Chinese enterprises, including those involving the Tanzania Sunflower Oil Processing Plant Project, the Yongzhou Inland Port Group-Djibouti Overseas Public Warehouse Construction project, and a cooperation project on trade in Kenya’s dried fish.
People’s Government of Hunan Province Vice Governor Cao Zhiqiang said China will continue implementing President Xi Jinping’s African policies, with trade and investments as key focus areas.
“China will implement agreements agreed upon with African leaders, including those in the energy sector, manufacturing, and agriculture, to improve security,” Zhiqiang said.
For the last 14 years, China has remained Africa’s largest trading partner and primary export destination. In 2022, trade in goods between China and Africa surged by 10.9 per cent, reaching $282 billion.
Kenya’s Investments, Trade and Industry Cabinet Secretary Rebecca Miano said the country is keen to tap more investments from China and increase exports to bridge the trade imbalance, even as it pursues strategic deals with the US, Western markets, and the Gulf Nations.
“China is a key partner; like other partners, we continue to work closely to increase trade and investment opportunities,” Miano said during the Nairobi forum.
China is a global economic powerhouse, boasting a staggering GDP of $18 trillion. The sheer scale of its economy is exemplified by Hunan’s GDP exceeding $700 billion.
Kenya’s Trade ministry has been tasked with doubling Foreign Direct Investments (FDIs) into Kenya from the $800 million recorded last year, to at least $1.6 billion this year. “The following year, we will be looking to double what we have achieved this year,” Ms. Miano said.
China has also strongly supported the implementation of the AfCFTA, emphasizing practical cooperation across various sectors.
“Through partnerships with African financial institutions and collaborative projects in agriculture, water supply, transportation, and energy, China continues to champion Africa’s economic integration and sustainable development,” Kenya National Chamber of Commerce and Industry (KNCCI) president Erick Rutto noted.
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Africa’s natural resources
While most developed countries are pegging their relationship with Africa regarding trade and investment, there is also a growing appetite for its natural resources, with mining being a key target by foreign companies and governments.
The continent is home to huge amounts of diverse natural capital, with nearly 30 per cent of the world’s mineral reserves, 12 per cent of oil reserves, and eight per cent of natural gas located in Africa. It is also home to 40 per cent of the world’s gold reserves, the world’s largest cobalt reserves, diamonds, uranium, and platinum.
In general, up to 30 per cent of the world’s rare earth deposits are in Africa, making it attractive to the developed world which sees the continent as a key driver of the global economy.
The rare-earth deposits are seen by various global industries, including semiconductors, batteries, and green energy developers. Africa also possesses 65 per cent of the world’s arable land, making it central to long-term food production and security.
President Xi Jinping, who secured a precedent-breaking third term as president of China in March last year, is firmly in control of China’s foreign policy, which is expected to underscore the enlistment of African support for reshaping global institutions and validating China’s governance.
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US-Africa trade
As China renews ties with Africa, the US is also keen to renew the African Growth and Opportunity Act (AGOA). Since its enactment in 2000, the AGOA has been at the core of U.S. economic policy and commercial engagement with Africa. The US Congress has proposed extending AGOA to 2041, including more African countries.
AGOA provides eligible sub-Saharan African countries with duty-free access to the U.S. market for over 1,800 products and more than 5,000 products eligible for duty-free access under the Generalized System of Preferences programme.
By providing new market opportunities, AGOA has helped bolster economic growth, promoted economic and political reform, and improved U.S. economic relations in the region. Up to 32 countries will be eligible for AGOA benefits in 2024. In 2015, Congress passed legislation modernizing and extending the program to 2025.
“AGOA is at the centre of President Biden’s administration. We are working closely with Congress on its extension, ensuring continued trade with Sub-Sahara Africa,” Raimondo said during her tour of Africa last month. Meanwhile, Russia’s influence has been gaining ground across Africa in recent years, placing the continent at the centre of a growing geopolitical contest between the superpowers. Moscow continues to pursue a combination of military, diplomatic, and economic interests in Africa.
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