By KIRU SICHOONGWE –
It is said that Africa is China’s natural ally.
The relationship between the two is one of the most important in our times.
In fact, at the start of each year, the Chinese foreign minister pays a visit to the continent, as a way to reinforce and strengthen the ever-expanding Sino-African relationship.
China’s presence in Africa can be traced as far back as the 70s when the country committed itself to building a railroad between Tanzania and Zambia.
The construction of the Tanzania-Zambia Railway (TAZARA) was begun in 1970 and operation commenced six years later.
In economic terms, 2013 marked a watershed moment for Africa, as China surpassed the United States (US) as the continent’s top equity investor as measured by foreign direct investment.
Further, despite the headwinds of the COVID-19 epidemic, China had remained Africa’s largest trading partner for 12 successive years by the end of 2020.
According to McKinsey, there are already over 10,000 Chinese-owned enterprises operating in Africa, with 90 per cent of them being private.
Since 2005, the value of Chinese business has exceeded US$ 2 trillion.
There are many sectors in which China invests in Africa, but this article mainly focuses on agriculture, manufacturing, industrial parks, and infrastructure, and briefly on COVID-19 China-Africa cooperation.
Agriculture
Agriculture is Africa’s most important economic activity.
It employs about two-thirds of the continent’s workforce.
Agriculture accounts for about 23 per cent of Sub-Saharan Africa’s Gross Domestic product (GDP).
Despite having 25 per cent of the world’s arable land, the agricultural industry is underdeveloped, accounting for 10 per cent of global output and its potential remains untapped.
Further, climate change has put the sector’s viability in jeopardy.
China is a large agricultural country, with less than 10 per cent of the world’s arable land.
It has managed to produce one fourth of the world’s grain and feed one-fifth of the world’s population.
It has amassed agricultural production management experience as well as practical technology that is tailored to the needs of African countries.
China’s growing interest in agriculture in Africa is well documented.
For the past 60 years, China and Africa have collaborated on agriculture.
Its aid to Africa has been combined with investment in agriculture, constructing demonstration centers for agricultural technology, introduction of planting technologies and improved seeds from China.
Manufacturing
A strong manufacturing sector is widely regarded as a key driver of economic growth and development.
Japan, South Korea and other Asian countries accelerated their transition from low-income, underdeveloped economies to advanced economies in less than a generation, owing to their emphasis on manufacturing-driven development.
Based on UNCTAD’ s statistics, Africa’s manufacturing added value account for less than three per cent of the world’s total, whereas manufacturing exports are only 0.8 per cent of overall global exports.
Manufacturing accounts for a substantial portion of Chinese investment in Africa, which is well received by recipient countries.
China’s direct investment in Africa’s manufacturing industry reached US$5.59 billion at the end of 2019, according to MOFCOM statistics, accounting for 12.6 per cent of China’s overall direct investment in Africa that year.
This was higher than the overall foreign investment in China’s manufacturing industry during the same period, which was 8.9 per cent.
Industrial parks
China’s reform and opening up included the creation of economic and technology development zones.
Since the 1980s, China’s special economic zones and industrial development zones have played a crucial role in the country’s industrialization and urbanization.
In 2006, China approved the first batch of 50 overseas economic and trade cooperation zones, six of which were in Africa.
These zones offer African countries feasible alternatives to supporting the export sector, employment generation, investment opportunities, skills and technology transfer to promote industrialization.
Despite varied outcomes, the zones continue to enjoy widespread support across Africa.
According to the Institute of Development Studies, by 2020, there were 38 economic zones in Africa, with a combined annual turnover of US$680 million.
Infrastructure
Infrastructure development is an essential component of productivity and long-term economic growth.
The need for adequate infrastructure in Africa is very evident.
Its inadequate infrastructure is a binding constraint for practically every other industry.
Closing the infrastructure gap is critical for Africa’s economic growth and long-term development.
Economists estimate that Africa’s inadequate infrastructure costs the continent 2 per cent of its annual output.
According to the China Africa Business Council, the infrastructure deficit in Africa is estimated to be worth US$360 billion between 2011 and 2040.
By the end of 2019, a total of US$13.59 billion was directly invested in Africa’s construction industry by Chinese enterprises, accounting for 30.6 per cent of China’s total direct investment in Africa in the year and making it the largest recipient of China’s investment.
Pandemic era
Most recently, since the beginning of COVID-19, China and Africa have stood out and fought the virus together, resulting in a stronger China-Africa community of health for all.
China sent medical expert teams to African nations to share COVID-19 experience, built pairing up cooperation mechanisms with hospitals in 42 African countries, and provided nearly all African countries with medical supplies, desperately required.
In his message to the Davos Agenda 2022, President Xi Jinping reminded the delegates that China is a country that follows through on its commitments.
Over 2 billion vaccine doses were distributed by China to over 120 countries and international organizations.
“Still, China will provide another 1 billion doses to African countries, including 600 million doses as donation,” Xi said.
In conclusion, China’s footprints are visible across Africa.
China-Africa cooperation continues to help in advancing Africa’s quest for economic revitalization, economic diversification and industrialization.
The cooperation is based on a win-win situation for common development, and not on a zero-sum game basis.
Using its comparative advantage, Africa must accelerate its efforts in promoting key enabling sectors necessary to drive industrialization.
This could open the prospect of attaining significant economic growth, creating jobs for the growing population, and developing its capacity to generate higher value exports.
It is hoped that after COVID-19, cooperation between China and Africa will have better prospects and with a bright shared future.
(The author is an economist and PhD candidate of Economics at Peking University).