Africa keen for more development funds
September forum to discuss concessional finance, infrastructure and trade
Chinese and African diplomats have started to negotiate the agenda for the Forum on ChinaAfrica Cooperation (FOCAC) taking place in Beijing later this year.
Concessional development finance, infrastructure, trade, climate change and green development, and global governance are expected to top the agenda during the summit, according to diplomatic negotiations between China and African countries.
But FOCAC will also come at a time of growing economic uncertainty; China is facing a property crisis as well as weak business and consumer confidence, while many African countries are in debt distress.
Although the era of massive Chinese bilateral lending is over, observers have said they expected Beijing to accelerate investments in Africa that focused on agriculture, industrialisation and beneficiation – mineral processing.
On April 23 and April 24, 42 diplomats from 29 embassies, including 20 African ambassadors in China, met at a retreat in Beijing to work on setting the FOCAC agenda. The retreat was jointly organised by Beijing-based consultancy Development Reimagined and the African Union representative office in China.
Held every three years, FOCAC is a gathering of China and African countries, with the only excluded nation being eSwatini, which has diplomatic relations with Taiwan. The location of the summit alternates between China and Africa.
FOCAC is the most important mechanism for engagement between China and the African continent. It is also traditionally the forum where big financial commitments are made by China.
Africa’s importance to Beijing is not just economic – politically, most countries in the continent vote on international issues in alignment with China.
But while President Xi Jinping pledged a billion doses of Covid19 vaccines to Africa at the last FOCAC, which was held in 2021 in the middle of the coronavirus pandemic, financial promises were lower than in previous forums: Beijing pledged US$40 billion at that time, whereas in both 2015 and 2018, around US$60 billion was pledged.
Not only was there a dip in funding promises made at FOCAC, but also in the last few years, Chinese lenders, including policy banks like the ExportImport Bank of China and China Development Bank, have been cautious, demanding bankable feasibility studies amid African debt distress.
Despite the possible barriers, a Development Reimagined statement expressed optimism about this year’s FOCAC. “Since Africa’s development needs remain significant, especially in infrastructure, we anticipate that Chinese lending is likely to rebound to pre-pandemic levels,” it said.
But with several months yet until September’s summit, African governments are still deliberating about what they want to be discussed, according to Development Reimagined chief executive Hannah Ryder.
“Key areas for discussion are unlikely to be significantly different from the last 24 years, such as trade – especially value addition [and] not just volume – finance, agriculture, and people-to-people relations,” she said.
“In the retreat, it was also clear that global governance reform and manufacturing – including … pharmaceuticals and other medical products as well the green transition – will no doubt be key areas African countries are looking to engage China on.”
Sub-Saharan geoeconomic analyst Aly-Khan Satchu said the importance of FOCAC could not be underestimated.
“The FOCAC summit remains for me the seminal and most consequential Africa-China meeting,” he said.
Satchu said that in 2018, Xi had indicated the end of the era of “go go” lending when he spoke of no longer funding “vanity” projects, and in 2021 he spoke of “green lanes” and focused on agriculture.
“This time around I expect the FOCAC to seek to accelerate investments which focus on beneficiation, industrialisation and of course agriculture, and on assistance in navigating what has been a perilous debt situation for the continent,” Satchu said. “I expect a significant and accelerated move in regards to sidestepping the dollar and moving dramatically towards the renminbi in terms of trade.”
David Shinn, a China-Africa specialist and professor at George Washington University’s Elliott School of International Affairs, said Chinese lending was unlikely to ever again reach the 2016 peak of US$28 billion. He said over the past three years, Chinese loans had sat at around US$1 billion annually.
“While this low number will probably rise, it will not increase substantially for several reasons,” Shinn said. “Many African countries are reluctant to take on more debt.”
Part of the reason is also that China has already completed so many infrastructure projects in Africa – so there are not as many left to do. “There are fewer large, economically viable infrastructure projects to finance in Africa. China is experiencing some challenging economic issues that is likely to cause it to be more restrained in offering large infrastructure loans,” he said.
Meanwhile, Shinn said, China would try to replace large loans with more foreign direct investment, much of which might be directed towards the agricultural sector.
He said food security was a major internal goal for China; Beijing was anxious to increase sources of food supply from around the world, including Africa. “China has been working for many years to increase trade with Africa. The September FOCAC meeting will almost certainly include another effort to do so,” he said.
Shinn added that China, Africa’s largest trading partner since 2009, has had far more success increasing its exports to Africa than it has had increasing African exports to China.
“Since 2012, Africa has had a trade deficit with China. African oil exports to China dropped substantially in 2023. If this trend continues, Africa’s trade deficit with China is likely to increase,” he said.