China-Africa megaprojects represent a pivotal partnership reshaping the African landscape, with a multitude of infrastructure projects fostering development and connectivity. These large-scale initiatives highlight the significance of Sino-African collaboration in enhancing economic and social progress across the continent.
This article includes comments from the dialogue with the Director of the African Chamber in China, Jilles Djon, providing valuable perspectives on China-Africa megaprojects, offering insights into China’s motivations and the strategic significance of building political relations through these activities.
With reference to the most economically significant megaprojects, what are your views on their relative importance based on different evaluation standards? Which megaprojects with China’s involvement in Africa do you deem noteworthy and highly relevant?
Certain initiatives are not merely commencing due to the submission of a certain country expressing the necessity for specific projects. The investment strategies of Chinese companies in Africa adhere to a distinct pattern. There are certain countries, such as Angola, where China began making investments as early as the 2000s. It is worth noting that, with careful examination of the data spanning from 2000 to 2022, it becomes evident that Angola has emerged as the primary beneficiary of Chinese loans, contrary to popular belief that China has heavily invested in Ethiopia. A total of up to 258 loans, with a cumulative value of 43 billion dollars. This approach provided Angola with an opportunity to break out of the recurring war cycle. The 1990s in Angola were characterised by significant challenges, necessitating the construction of new infrastructure to facilitate the transportation of gas and oil extracted from mineral-rich regions. One of the primary initiatives in Angola is the Caculo Cabaça Hydropower Project, which has an estimated cost of approximately 4.1 billion dollars. It is intriguing to observe that despite the country's significant oil reserves, there exists a deficiency in energy supply. Notably, this issue has prompted the initiation of the foremost and highly costly project undertaken by Chinese corporations in Angola.
Ethiopia is a destination for significant projects; however, it is imperative to also consider the potential impact that this project will have. Ethiopia is a landlocked nation. During the 2010s, there was a desire to establish an industrial sector, as it aligned with the Chinese approach to development, which emphasised the importance of infrastructure and the establishment of a robust industrial base. The objective was to replicate the successful development models observed in cities such as Shenzhen and Pudong in Shanghai, with the aim of establishing an industrial park. Ethiopia has constructed numerous infrastructure projects of this nature; yet, a significant challenge arises when considering the necessity of exporting goods produced within a landlocked nation. What is the methodology for resolving this issue? The construction of the highway was deemed necessary in order to establish a vital connection to the sea. Hence, the Addis Ababa highway was considered the foremost priority. The establishment of this initiative facilitated Ethiopia's integration into the global economy, enabling the country to engage in international trade and commerce. This project also carries a price tag of approximately 4.5 billion dollars. The weight of this initiative is significant, particularly when considering its impact on Ethiopia's potential for economic advancement. There was also reference to the Mombasa-Nairobi Project in Kenya, which is very important and cost an additional investment of $4 billion.
Finally, there is a common perception that China's investment in Africa significantly increased with the initiation of the Belt and Road Initiative. However, it is important to note that China has been regularly investing in Africa even prior to the establishment of the Belt and Road Initiative. A study was conducted spanning the years 2013 to 2022, during which a total of 561 loans were awarded. In contrast, from 2000 to 2012, the number of loans granted amounted to 861. In essence, there is a greater prevalence of loans prior to the establishment of the Belt and Road initiative compared to the period subsequent to its commencement. The prevailing belief among individuals is that China's investments in Africa can largely be attributed to the Belt and Road Initiative, but China's engagement with Africa has been consistent since its membership in the World Trade Organisation.
What is the primary objective of these mega projects initiated by China in Africa? What is the main focus?
From a Chinese perspective, President Xi Jinping proposed a vision to revitalise the ancient Silk Road and sought to consolidate it into a unified initiative. The objective was to establish a shared global civilisation, fostering a sense of commonality and unity across nations. In the 2000s, the primary objective was to attain market access. This is the rationale behind Africa receiving greater investment prior to the implementation of the Belt and Road initiative. The original goal was on establishing access to new markets, which aligns with a widely employed market-oriented strategy. In order to gain entry into a new market, it is imperative to make substantial investments in order to acquire a significant portion of the market. During the period spanning from the early 2000s to the mid-2010s, substantial investments were consistently made for the following rationale. Now, the focus is reaping the profits of those investments. This is a period during which they are experiencing financial gains. They have effectively developed their soft power and are now trying to apply a new understanding and approach to the partnership.
Based on this interpretation, the primary objective of the investments in Africa was the acquisition of market share. By diversifying their export destinations beyond Western countries, the investors aim to reduce their reliance on a single market and gain access to an additional market. The projected population of Africa is expected to reach 2.5 billion individuals within a span of 20 years. Therefore, this is a lucrative market for an organisation that has established its presence maybe two decades ago.
How do you comment on the strategy and the political relations that are behind the mega projects? To what extent does the establishment of political relations through mega projects hold significance?
The political aspect is not the primary concern; rather, it is the geopolitical dimension that holds greater significance. It’s vitally crucial to understand how the Belt and Road changed. It is worth noting that the initiative was previously referred to as the One Belt One Road. The initiative has since transitioned to the Belt and Road Initiative because of its adaptability to the evolving geopolitical landscape. The current focus lies in exploring methods to present a new global paradigm, one that offers an alternative approach to the established rule-based system, which is predominantly championed by the United States. Therefore, the matter at hand is not solely political in nature, but rather possesses a geopolitical dimension. It involves the continued involvement of key stakeholders from both the Western and Chinese factions, but now there is a new vision of the geopolitical side.
The new objective can be observed through the execution of three primary stages. The global civilisation programmes aim to advance the concept of life. The proposition asserts that rather than exclusively endorsing Western civilisation, it is imperative to establish a global civilisation that acknowledges and embraces the diverse riches and resources inherent in each distinct civilisation, hence facilitating their equitable distribution. The global security initiative relates to the comprehensive safeguarding of the entirety of planet and its inhabitants. Lastly, the global development agenda should also be considered. In previous instances, there has been a practise of engaging in shared investment activities, for example through BRICS whereby investments are made in certain countries within the group. The practise of resource sharing is employed to prevent the exploitation of other nations, such as through the imposition of high interest rates, as observed in the operations of institutions like the IMF and other multilateral financial organisations. This new strategy aims to offer an alternative to the existing rule-based order that is in place.
Many projects are difficult to find in practice and there are also projects that are not megaprojects, but are still very large infrastructure projects. Do Chinese suppliers face similar challenges to European suppliers today in the African continent? In terms of mega projects, how do you compare medium-sized private enterprises, specifically those of Chinese and Western origin?
One of the primary obstacles encountered in addressing the current debt crisis is the requirement imposed by international and multilateral financial institutions, such as the IMF, for African nations to disclose their contractual and project agreements with China as a precondition for restructuring their debt. This poses a challenge due to the existence of confidentiality clauses within the agreements between the involved parties. International institutions are reluctant to provide financial assistance to countries that lack the capacity to service their debt or has a seniority within a Chinese corporation, thereby refraining from extending financial support. It is now challenging to ascertain the specific projects that are currently in the pipeline or forthcoming.
For example, some projects are recognised as Public-Private Partnership (PPP) projects. In theoretical terms, the project is categorised as a PPP project. However, in practise, it can be seen as a 100% equity project, as the country lacks the financial capacity to provide the required 15 percent that they have. Consequently, the Chinese party assumes the responsibility of financing the remaining portion of the project. The majority of the projects started in this manner and is transitioning now towards the previously outlined model, integrated investment construction and cooperation. Chinese stakeholders have expressed their willingness to independently operate the project and generate profits if they are unable to return their investment from the government. This approach aims to transform the project into a financially viable venture. It is imperative for us to comprehend the underlying reasons for this paradigm shift. International financial institutions are no longer willing to provide loans to governments for the purpose of financing projects delivered by Chinese enterprises. This is critical and why the primary focus of African governments is now navigating how to secure the funds from traditional financial institutions to fund projects by affordable construction companies, such as those from China. They have superior cost affordability, already employ personnel within Africa and possess diverse portfolio experience, thus they are considered the most optimal choice. Now, the problem of fostering collaboration between these two blocs in order to promote the advancement of Africa is going to be the challenge of the next decades.