30 African state leaders joined the Forum on China-Africa Cooperation in Beijing. Photo Credit: Department of International Relations and Cooperation, South Africa
By: Ashley Jones-Quaidoo
Travel to Kenya’s capital often includes a requisite visit to Nairobi National Park where tourists flock in hopes of an up close and personal encounter with zebras, giraffes, and lions. However, on a recent visit in September, I encountered something unexpected: Chinese construction companies. In the park, China’s robust economic influence in Africa is on display as a controversial railroad from East to West Kenya is being laid directly through the wildlife reserve. The infrastructure project, an extension of the Chinese-built trans-African railway, is one of many recent Chinese investments on the continent. On September 3rd at the Forum on China-Africa Cooperation, Chinese President Xi Jinping pledged $60 billion in loans to finance projects across Africa. The financing figures include $15 billion in grants and loans, $10 billion in “development financing,” $20 billion in credit lines, and $5 billion in imports from Africa. While the loans have been touted as having “no strings attached”, there is reason to worry that Africa is agreeing to a Chinese debt trap, which could have damaging longterm ramifications on US-Africa partnerships.
The sustainability of Africa’s borrowing appears increasingly uncertain and the matter is causing tensions in the political arena. In South Africa, for example, the Democratic Alliance party recently raised concerns regarding China’s debt diplomacy after the China Development bank rescued Eskom, a leading South African utility company, with a $2.5 billion loan. South African President Cyril Ramaphosa pushed back against concerns stating that, “we are very jealous of our assets and will not hand over South Africa to any other country or any other entity.” Meanwhile, in nearby Zambia anxiety over the potential debt trap escalated as rumors circulated that China planned to gain control of Zambian power company, ZESCO, in order to reconcile the nation’s continuous defaults on Chinese loans.v Although unconfirmed, the reports raised public awareness and concern over the risks associated with such ample lending.vi
Despite these increasing strains, the attractiveness of loans from China has grown in recent years as monies financed by Western institutions such as the International Monetary Fund and World Bank, have complex political stipulations which require proper governance, democracy, or human rights guarantees in exchange for aid. Recently, US Ambassador to the United Nations (UN), Nikki Haley made threats to cut aid to three African Nations for voting against the U.S. in the UN.vii China’s promise of “no strings attached” on the other hand, offers a welcome alternative to these nations.viii
These loans present a myriad of challenges to Africa’s sovereignty. Vital minerals and assets have been used as collateral in exchange for China’s massive development projects. In other agreements, debt services have been paid in resources instead of money.ix As a result of these exchanges, African countries are left with little resources to produce for their own economic growth. Thus, a cycle of dependency is being perpetuated through Chinese loans. While much of the support has been used to build infrastructure across the continent, it has had limited effects on the much-needed transformation Africa’s manufacturing sector. With devoted reform and development manufacturing could provide Africa with the opportunity and employment necessary for sustainable economic growth.x In addition to China’s monetary support, the government is also providing personnel. By exporting Chinese citizens to Africa to work on these government-financed projects, the aforementioned dependency is only deepened.xi
The debt diplomacy China has imposed across Africa has particular implications for the United States. China’s rising influence in the region, threatens to diminish US strategic partnerships across the continent. For example, China owns $1.2 billion dollars of Djibouti’s debt.xii This poses a threat to US strategic interests in the country, which is home to the vital US military base, Camp Lemonnier. If Djibouti defaults on its loan, the nation’s indebtedness to China could threaten US military capabilities, potentially closing off Lemonnier’s access to a vital port which provides logistical support to US operations across Africa. In addition to harming the US strategic capabilities, US business opportunities in the region are limited as Chinese development loans stipulate terms that favor Chinese firms.xii These stipulations increase the risk of Africa’s dependency on China and could have damaging consequences for inter-state competition with China.
In order to counter the growing potential of a Chinese debt trap in Africa, the United States needs to rethink its aid policy on the continent. According to the United Nations, half of the world’s population growth will occur in Africa by 2050 making the region of utmost strategic importance to all global powers.xiv Africa has the potential for great development of its export markets. While partnerships such as the Africa Growth and Opportunities Act have helped to cement trade and investment dialogue, they have assisted only a small number of countries. The United States needs to increase its commercial engagements in Africa and build sustainable models of assistance that will benefit Africans in both the near and long-term. Additionally, western institutions should limit their loan stipulations on countries across the continent where there is a will to increase capacity, and reform institutions and societal structures. It is time for the U.S. to reconsider Africa as a vital interest and recognize the importance of countering China’s expanding global influence for the sake of Africa and US national security.
Ashley Jones-Quaidoo graduated from Bucknell University in 2018 with a B.A. in International Relations. She is currently an Intern with U.S. Customs and Border Protection, and a Thomas R. Pickering Foreign Affairs Fellow. Ashley is in the International Security concentration with a focus on the Africa region.
[i] Agence France Presse, “Kenyan Conservationists Protest as Chinese Company Starts Work on Railway,” The Guardian, March 1, 2018, https://www.theguardian.com/world/2018/mar/01/kenyan-conservationists-protest-as-chinese-company-starts-work-on-railway.
[ii] Ibid.
[iii] Annie Wu, “South African Lawmakers Latest to Call out China for ‘Debt-Trap Diplomacy’”, The Epoch Times, September 12, 2018, https://www.theepochtimes.com/south-african-lawmakers-latest-to-call-out-china-for-debt-trap-diplomacy_2659230.html.
[iv] Ibid.
[v] Ibid.
[vi] Lynsey Chutel, “No, China is Not Taking Over Zambia’s National Electiricity Supplier. Not yet, Anway,” Quartz Africa, September 18, 2018, https://qz.com/africa/1391111/zambia-china-debt-crisis-tests-china-in-africa-relationship/.
[vii] Anita Powell, “African Nations Defiant to US Aid Threat Over UN Voting,” Voice of America, May 2, 2018, https://www.voanews.com/a/african-nations-defiant-to-us-aid-threat-over-un-voting/4374562.html.
[viii] John Campbell, “China Pledges $60 Billion in Financing to an Increasingly Debt-Distressed Africa,” Africa in Transition (blog), Council on Foreign Relations, September 21, 2018, https://www.cfr.org/blog/china-pledges-60-billion-financing-increasingly-debt-distressed-africa
[ix] George Friedman & Xander Snyder, “How China Benefits from African Debt,” Mauldin Economics, January 29, 2018, https://www.mauldineconomics.com/this-week-in-geopolitics/how-china-benefits-from-african-debt
[x] Witney Schneidman & Joel Wiegert, “Competing in Africa: China, the European Union, and the United States,” Brookings, April 16, 2018, https://www.brookings.edu/blog/africa-in-focus/2018/04/16/competing-in-africa-china-the-european-union-and-the-united-states/.
[xii] Ibid.
[xiii] Yemisi Adegoke, “UN: Half of the World’s Population Growth is likely to occur in Africa,” CNN, June 26, 2017, https://www.cnn.com/2017/06/25/africa/africa-population-growth-un/index.html.
[xiv] Witney Schneidman and Joel Wiegert, “Competing in Africa: China, the European Union, and the United States,” Africa in Focus (blog), Brookings Institution, April 16, 2018, https://www.brookings.edu/blog/africa-in-focus/2018/04/16/competing-in-africa-china-the-european-union-and-the-united-states/