Over the years, China has increased its interest in Africa, focusing on enhancing the development needs of Africa by building and consolidating its presence through infrastructure, trade, and political alignment with Africa. Hence, this blooming partnership brings mixed feelings to the continent, thus succumbing to more questionings and “what ifs” on China’s motives and, in return, long-term implications on the continent’s future.
BY JUSTUS NAM, EXPERT ON CHINA-AFRICA RELATIONS, UK
a 5 mins read.
China’s engagement with Africa is expected to grow stronger in the coming years. During the FOCAC summit in Beijing in early September, Chinese President Xi Jinping made a substantial pledge of USD 51 billion in loans, investments, and aid to African nations over the next three years, signaling a significant boost in diplomatic relations. This close interaction between China and Africa is not a new phenomenon. Since the 1950s, Chinese foreign ministers have regularly visited African nations during their first annual international trips. Nevertheless, Xi’s recent financial and diplomatic commitments will likely stir concerns among the United States and other Western powers, which have long been engaged in a geopolitical rivalry with China for global dominance.
Furthermore, these pledges may rekindle apprehensions regarding China’s so-called “debt-trap diplomacy”—a controversial notion suggesting that China deliberately pushes countries into debt, leveraging defaults to gain control over critical assets. This view has gained enough traction that South African President Cyril Ramaphosa felt compelled to refute it at the summit. Although the idea of Chinese debt traps, particularly the case of Sri Lanka’s Hambantota Port (leased to a Chinese firm in 2017), has been debunked by many, the narrative persists. As China continues to deepen its ties with Africa, examining what it aims to achieve through this growing relationship is essential.
Both strategic and economic objectives drive China’s engagement in Africa. Strategically, it aims to secure support from African nations in international forums like the United Nations, gain access to vital resources, and promote the global use of its renminbi currency. These objectives align with China’s ambition to become a key player in an increasingly multipolar world order. The establishment of the African Continental Free Trade Area (AfCFTA) in 2018 has further bolstered these opportunities, facilitating the development of cross-border value chains across African nations. China imports many natural resources from Africa, many of which are strategically important, such as those used in battery production. In return, China exports various manufactured goods, including machinery, vehicles, and industrial equipment, to African markets.
CHINA’S EXPANDING INFLUENCE
China, currently the fifth-largest foreign investor in Africa, has seen rapid growth in its investments. Unlike many Western companies focusing primarily on resource extraction and financial services, Chinese firms have also directed significant investments toward the construction and manufacturing sectors. Chinese enterprises are particularly dominant in Africa’s construction industry, often taking on large-scale infrastructure projects financed by Chinese loans. In 2019, Chinese contractors were responsible for about 60% of the total value of construction work across the continent.
However, some Chinese-funded infrastructure projects have faced criticism for not contributing significantly to economic growth in Africa. In certain instances, these projects have added to African countries’ debt burdens. For example, expensive expressways connecting Nairobi and Kampala to their international airports primarily serve urban elites and international travelers, yet they have yet to boost the broader economy significantly.
Recognizing these challenges, China has adjusted its approach to infrastructure financing. In 2021, Xi introduced the idea of “small and beautiful” projects—smaller, more focused investments that better meet the specific needs of partner countries. This concept was reiterated at the most recent summit, emphasizing a shift toward more targeted projects that respond to local demands. This responsiveness to African leaders’ needs differentiates China’s approach from Western nations.
China is in contrast to Western powers which often attach conditions to their aid, such as demands for social or economic reforms. This stance has helped bolster China’s diplomatic influence in the region. A clear sign of this influence is the diminishing number of African countries maintaining diplomatic ties with Taiwan, a region China considers part of its territory. Only Eswatini maintains diplomatic relations with Taiwan, while others host Taiwanese representative offices.
Another key goal for China in Africa is to expand the use of its currency, the renminbi, on the global stage. This effort is part of a broader strategy to reduce the dominance of the US dollar, which gives the United States significant control over international financial transactions. Since the late 2000s, China’s central bank has signed currency swap agreements with African nations like Morocco, Egypt, Nigeria, and South Africa, facilitating trade in the renminbi. Additionally, China aims to promote the renminbi through official lending institutions like the China Development Bank and the New Development Bank.
Like Western nations, China is pursuing various political and economic interests in Africa. However, unlike the West, which has often neglected Africa, China does not need “debt-trap diplomacy” to extend its influence. China can effectively strengthen its position in Africa by offering more favorable partnerships and aligning with African leaders’ priorities. This approach benefits China and holds the potential for mutual growth and development, fostering a sense of optimism about the relationship.
Beijing has enhanced its diplomatic influence by investing in key sectors, the renminbi currency, and offering a noninterference policy, which has been a benevolent alternative to strict conditions imposed by Western powers.
DEBT-TRAP DIPLOMACY
China’s involvement in Africa’s debt sustainability presents a highly intricate scenario. Data from the Boston University Global Development Policy Center indicates that between 2000 and 2022, Chinese loans to African governments and regional institutions amounted to approximately $170 billion. However, China is not Africa’s dominant creditor; it accounts for just 12% of Africa’s total public and private debt. While “debt-trap diplomacy” remains a heated topic, some aspects of China’s lending practices warrant closer scrutiny. A 2022 Aid Data study revealed that nearly half of the loans provided by China to sub-Saharan Africa are not reflected in sovereign debt records, making it challenging to assess accurate debt levels. Despite concerns over opacity and transparency in these agreements, China is unlikely to grant large-scale debt relief or forgiveness. Instead, Beijing typically opts to write off small, interest-free loans.
In the past, African nations’ uncoordinated and poorly structured interactions during the Forum on China-Africa Cooperation (FOCAC) meetings have left the continent in a reactive posture, unable to drive the agenda. To counter this, African governments are now working to craft a unified approach toward China, ensuring harmonized positions ahead of the next FOCAC summit. Moving forward, African countries will likely place less emphasis on aid and instead focus on trade facilitation, pushing for more excellent value addition to their products.
STRATEGIC & ECONOMIC DRIVERS
Some observers suggest that India’s engagement with Africa mirrors that of China, but this characterization overlooks the distinct nature of India’s approach. Unlike China, India’s actions in Africa are not shaped by third-party influences. The Indian model holds specific advantages in sectors like information technology, human resource development, agriculture, and pharmaceuticals. Still, how African leaders have negotiated with China under the FOCAC framework can provide India with valuable insights for its engagement in Africa.
First, India should prioritize consistency in its outreach to Africa. The last India-Africa Forum Summit (IAFS) took place in 2015. Although platforms like the CII-EXIM Bank Conclave and India Africa Defence Ministers’ meetings have been occurring regularly, holding the next IAFS (IAFS-IV) is critical for sustaining momentum, especially after the African Union’s inclusion in the G-20 during India’s presidency.
Furthermore, an India-AU Track 1.5 Dialogue could be established to discuss issues of shared interest in consultation with Africa’s eight officially recognized regional economic communities (RECs). Addis Ababa, Ethiopia, home to the African Union Commission, would be an ideal host for the IAFS-IV. At the same time, New Delhi could benefit from an AU regional office to strengthen ongoing dialogue.
Second, India has the potential to significantly contribute to integrating African economies into global value chains and supporting the continent’s industrialization. Indian businesses should focus on making higher-value investments in agriculture, manufacturing, and pharmaceuticals. India can help generate employment and supply local markets by setting up manufacturing hubs in African countries. African Indian firms could also invest in sectors such as farm mechanization, food processing, irrigation, and cold storage infrastructure to reduce food wastage while promoting “Triple A” (affordable, appropriate, and adaptable) technologies.
BOOSTING INDIA’S CONNECTIVITY IN AFRICA
The third takeaway involves boosting Indian private sector involvement and exploring creative financing models. Although India’s lines of credit are a well-established mechanism for financing African projects, there is growing reluctance among African nations to take on new loans in the post-COVID environment.
Public-private partnerships (PPPs) and blended finance solutions are increasingly viewed as viable alternatives. India’s strategic and commercial interests in Africa should be coupled with support from the Indian government to offer low-cost credit to Indian banks and entrepreneurs. This would enable Indian companies to conduct feasibility studies and develop detailed project reports, ultimately leading to bankable projects. Initiatives like the EXIM Bank’s Trade Assistance Programme could also foster trust and deepen financial ties between India and Africa.
Lastly, India’s digital innovations—particularly its digital infrastructure, including biometrics, mobile connectivity, and Jan Dhan technology—could enhance digital and physical connectivity with Africa. For instance, India’s Unified Payment Interface (UPI) and RuPay services are already operational in Mauritius, and countries like Kenya, Namibia, Ghana, and Mozambique have expressed interest in adopting the UPI platform. To further strengthen Indian-African banking ties and minimize foreign exchange risks, India should consider replacing dollar-based lines of credit with rupee-based ones. This shift would save African countries billions in exchange rate costs, making currency-neutral transactions beneficial for both sides.
Increasingly, African nations are taking control of their strategic direction, with citizens demanding greater accountability from their leaders to ensure their economies move up the value chain. They are reshaping the narrative around Africa, positioning the continent as a prime destination for investment. Observing how African leaders interact with China during FOCAC can provide India with essential insights for enhancing its partnerships across the African continent.
(Justus Nam, is an Expert on China-Africa relations. He is a Research Scholar at Lancaster University, United Kingdom. The views expressed are of the author and do not necessarily reflect the views of The News Analytics Journal.)
