Africa is going to play a key role in shaping the global economic environment for the rest of the 21st century. But where does it turn to for a sustainable and mutually beneficial partnership?
With a population projected to double by 2050 and having one of the rapidly growing urbanized spaces in the world, building and leveraging strategic partnerships under the framework of South-South cooperation in light of these indicators seems to be the assured way to her development.
Already, China is leading about 40 per cent of all investment into infrastructure in Africa. According to the World Bank, Foreign Direct Investment (FDI) flows from China to Africa rose to $3.5 billion, while FDI stock in the continent reached $25 billion.
China has also overtaken Europe and the United States as the largest trading and development partner of Africa with trade reaching $170 billion.
As data presented below indicates Africa’s refreshing and invigorating relationship with China focuses on urbanisation, infrastructure and trade.
China profited massively by investing heavily in building her infrastructure as the backbone to economic growth in the homeland and has sought to replicate same in Africa. So investment in infrastructural development on the continent is the face of China’s economic diplomacy.
In this regard, China has directed its banks through policy to support large scale investments in infrastructure on the continent with thousands of Chinese firms currently stationed and operating in Africa.
“Although oil and extractives still account for a large share, financial services, construction and manufacturing account for 50 percent of Chinese FDI in Africa. In Tanzania, as reported in 2012, the total stock of Chinese investment was $541 million mainly in the low-tech, labour intensive industries, producing mainly for the local market.”
Whither the USA?
Where does the USA rank among global powers that are positioned to play a role in how Africa shapes the global economic environment for the rest of the 21st century? Does the USA value a continent it has over the years treated as an illegitimate step-child?
Well, this week, Kamala Harris, the Vice President of the United States of America, breezed into Accra, the capital of Ghana as part of a duty tour of Africa.
Political watchers have viewed Kamala Harris’s visit, which is expected to take her to Tanzania and Zambia as a subtle gesture by Washington to coax the continent to discard China and to trust Africa’s growing economic future with the West.
Apart from economies discussions, which would be one of the key highlights of the visit, discussions would center around issues of security. Ghana is wary of threats across its border with Burkina Faso where an insurgency by jihadist fighters is ongoing and has claimed 1000’s of lives.
Africa’s development in the 21st century as already mentioned hinges on three cardinal elements, namely, infrastructure, urbanisation and trade.
So far China is way ahead of Africa’s traditional trading partners including the USA and Europe in the provision of vital investments in infrastructural development on the continent.
China’s main investment in Africa has focused on the development of infrastructure to be the wheels to bring about prosperity. The benefits of China’s investments in Africa are enormous.
This is against the background that Africa’s huge reserves of natural resources have not been fully assessed after years of foreign exploitation. However this time around unlike in the past, such exploitation would be governed by modalities which would be mutually beneficial to both parties.
In terms of trade, China has formed 25 special economic zones in Africa. According to the Borgen Project, these areas include 623 businesses, which have brought in $7.35 billion of trade up to 2020.
Chinese investment in infrastructure in Africa has contributed immensely in propelling Africa forward in the global trade market as well as creating online accessibility to information about African markets. Additionally it has resulted in an uptake in services around renewable energy, it’s value chain and the possibilities and opportunities it offers.
“China’s foreign investment in Africa also shows potential in reaching out to boost the service sector also. This is due to the younger generation being increasingly digitally active, the rise of services around renewable energy and telecoms and the increased online accessibility of information concerning African markets.”
According to the Borgen Project, Foreign Direct Investment has still prospered in spite of COVID-19 as a result of more regionalised supply chain.
“This led to more investment in local manufacturing taking advantage of Africa’s low labour costs. This has opened several opportunities for African countries to reduce their poverty levels.”
While the visit to Africa by Vice-president Kamala Harris is welcome, on the basis of available evidence, China’s investment spread across Africa shows clearly that she is in a comfortable lead in the fight for the future of Africa.
Paa Kwesi Plange is a Journalist based in Accra, Ghana. He is the Managing Editor of PKP TV and also serves as the Executive Director of the Center for Investigative Reporting Ghana.