The most interesting topic of this year’s G7 meeting that ended last Sunday was not about the rich countries, but rather Africa. After a three day meeting at the Bavarian Alps, once Hitler’s amusement park, leaders of the west deliberated on their next move; how to beat China in Africa.
The G7 introduced the Global Infrastructure and Investment Initiative for developing countries, pledging to raise USD 600 billion over the next five years. The US will grant USD 200 billion of this, while Europe is tasked to mobilize USD 300 billion.
Hundreds of billions of dollars could also come from multilateral development banks, development finance institutions, sovereign wealth funds and other sources, according to US President, Joe Biden.
“Unlike China, this project will be done transparently and with high standards,” claimed Biden, adding the western alliance is united now than ever, after nearing to add Finland and Sweden into the NATO. “The initiative is not aid or charity. It’s an investment that will deliver returns for everyone and would allow countries to see the concrete benefits of partnering with democracies,” Biden added.
China’s Belt and Road Initiative (BRI), a USD 900 billion global project launched in 2013, by Xi Jinping, President of China, had made China Africa’s darling.
The west finally decided to try China’s recipe.
So far, the west’s development program in Africa has been attached to political preconditions, while China followed the “just business” approach. But now, the two seem to be switching roles, as China successfully conducts the first China–Horn of Africa Peace Summit just a few weeks ago.
During a daily briefing in Beijing on Monday, just a day after the G7 summit concluded, Zhao Lijian, spokesperson for the Chinese Foreign Ministry, commented on the G7s project.
“China continues to welcome all initiatives to promote global infrastructure development. We believe that there is no question that various related initiatives will replace each other. We are opposed to pushing forward geopolitical calculations under the pretext of infrastructure construction or smearing the Belt and Road Initiative,” said Lijian.
Africa, which at some point appears to be caught up in a proxy war of global powers, has now two superpowers at its disposal, both boasting multi-billion dollar infrastructure projects. But the major question still remains whether Africa should stick to China, or accommodate both initiatives.
Many experts and officials agree that the new G7 initiative is backed particularly by the US, to contain China’s BRI in Africa.
“The US wants us to shift our cooperation with China to the western camp. But in Africa, China is well positioned to dictate terms than the US. Most African countries owe debts to China. For instance, half our external debt is from China. We cannot take any additional external loans unless China is willing to re-profile our debt distress,” said a senior Ethiopian official whose name is withheld upon request.
“Simply put, China has a soaring soft power over each African nation. Therefore, whatever lucrative projects the west introduces to Africa, it cannot replace China. China is doing much more than projects. China and Russia even represent Africa in the UN. But Americans attach several political demands to a single project,” added the official.
Alemayehu Geda (PhD) an expert in international finance, who conducted various studies on China’s presence in Africa, predicts there are two scenarios when it comes to the G7 initiative. The first is the G7 will not be committed to the Global Infrastructure and Investment Initiative and will remain only a pledge.
“But if the G7 really pursues the initiative, it will be a high time for Africa. But Africa must respond cautiously,” warned Alemayehu, a professor of economics at Addis Ababa University.
For Alemayehu, the competition between China and the west will highly benefit Africa, as long as Africa can exploit the geopolitical interest of the two global powers smartly. He recommends Africa to prepare itself for three pillars, if it wants to benefit from both the BRI and Global Infrastructure and Investment Initiative concurrently.
“Africa has 54 countries. China and the west want to build infrastructure that will define the activities and development path of Africa in the years to come. Before deciding what kind of projects to allow, Africans should enter negotiations as a continent or as a regional interest group. If each African country goes to negotiate with the west or China as an individual country, these global powers will turn Africans against each other and lead us into a deadlock,” said Alemayehu.
According to him, if Ethiopia refuses a project financed by the US, they will go to Djibouti or Eritrea and turn the countries against each other. But if the Horn of Africa collectively agrees on what kind of projects they want, it will save Africa from being balkanized along G7 lines or China’s initiatives.
“Once they place terms and standards at a regional level, African countries can then negotiate at a national level. Otherwise, China will dominate Africa for a long time to come, just like the west enslaved us for the past two centuries,” added Alemayehu.
Before, Africa was not benefiting, as both China and the west’s interest, was to take out resources from Africa. “The infrastructure initiatives can rebalance this through a win-win relationship,” Alemayehu said.
He underscored that Africa can be developed only by Africans, and any project that comes from outside Africa, should be owned by Africans gradually.
“The second is we have to be smart in negotiations. We need experts to negotiate in every sector and projects. If there are no experts for instance in Ethiopia, we have to hire one,” Alemayehu said.
According to him, we must include smart conditionality’s regarding technology transfer and management. “When any foreign project finalizes, we must be able to sustain the technology and management with local manpower. For instance, the railway projects established the Railway Engineering Department at the AAU and graduated 250 railway engineers,” explained Alemayehu.
Experts underlined that global superpowers interest in Africa, categorized into three, is intensifying.
The first being a geopolitical interest especially in the Mediterranean Sea area, comprising the Horn of Africa, the Middle East, extending to China and India, is becoming a global arena.
“It is increasingly becoming a global economic epicenter, with almost two thirds of global population surrounding it, and being the busiest international trade venue. If this region sets its own terms and standards just in the transport sector alone, the US and Canada will be marginalized. So the new initiative is the US’s effort to remain firmly planted in the upcoming new global center,” added Alemayehu.
The second interest is resources.
“Africa constitutes half of the world’s resource. But Africa’s population is less than 10 percent of the world population. Over 90 percent of China’s FDI in Africa is in resource. Only in Ethiopia has China invested in manufacturing,” said Alemayehu adding, “Currently, China’s economic policy is shifting from exports to looking inwards, focusing on fulfilling its domestic demands. To address this demand, China needs Africa’s resource and agricultural supplies badly.”
The third interest is ideological.
“China will not clash with the G7 initiative in Africa. After all, China wants to maintain the security of its investments it has in Africa. China also extended a trillion dollar loan to the US. Therefore, China seeks a peaceful Africa and the US. I believe the global powers competition over Africa, will be a peaceful one,” added Alemayehu.