The Chinese model is failing Africa

Struggling infrastructure projects are leading to a debt crisis

Leaders from across Africa will gather in Beijing next week for the Forum on China Africa Co-operation. This triennial summit is where China makes the headline-grabbing aid and finance commitments that underpin its role as Africa’s most important economic partner, fostering new political and military co-operation in a region often ignored by western governments.

Nearly a decade ago, China surpassed the US to become Africa’s largest trading partner. Last year, its two-way trade hit $170bn — four times larger than US-Africa commerce. But after more than a decade of vaulting growth in trade, finance and investment, China’s weighty engagement is jeopardising future development prospects in Africa.

The continent holds a special place in the story of China’s modern rise. Before launching its Belt and Road Initiative, the plan to develop trade and infrastructure links across Eurasia, China was building hydropower dams in Sudan and new railways in Nigeria and Ethiopia. And it was in the tiny but geostrategic country of Djibouti on the Red Sea that Beijing established its first overseas military base.

In 2017, China established its first overseas military base in Djibouti. The country is Africa’s largest trading partner.

Beijing’s plans for Africa do not stop there. President Xi Jinping is keen for China to serve as an economic and political model for the developing world. He hopes that China’s infrastructure finance and manufacturing investment in Africa will spur industrialisation and development.

But to be productive and contribute to economic development, infrastructure needs to be high-quality and high-performing. And the evidence shows that China’s infrastructure-driven economic model has been far from efficient and is one to avoid rather than emulate. Over half of China’s infrastructure projects are under-performing, damaging rather than fuelling growth and leaving an enormous debt burden for the domestic economy.

These same risks are now manifesting themselves in Africa. Take the standard gauge railway in Kenya, built and financed by China. Completed last year to connect Nairobi, the capital, with the port city of Mombasa, the railway was grossly overpriced at $3.2bn. Instead of refurbishing the existing line, a far cheaper option, Kenya paid China three times more than the industry standard.

Struggling infrastructure projects like this have intensified a rising debt problem for large and small African economies alike. Now it is hoped investment from China will generate the necessary jobs and revenues for countries to avoid infrastructure-induced debt crises.

But, beyond pockets of growth, the prospects are slim that Africa will capture a large amount of new manufacturing investment and labour. The majority of Chinese manufacturers are, in fact, staying at home and taking advantage of the growing cost effectiveness of automation. And those that do venture abroad regularly choose south and south-east Asia over Africa.

Africans are not blind to the dangers that lie in Chinese engagement on the continent. Political elites and boutique consultancies may be cashing in. However, influential voices, such as Nigeria’s former finance minister Ngozi Okonjo-Iweala, have cautioned against following China’s state-led growth model, arguing it can feed corruption.

Africa needs to better leverage its position with Chinese and other foreign investors. It can group together the growing markets of its regional blocs, such as the East African Community, to negotiate more rewarding trade and financial deals. African leaders can also exploit the geopolitical symbolism Beijing attaches to its engagement there to extract meaningful technology transfers to improve the competitiveness of domestic firms.

The fanfare of next week’s forum is likely to be shortlived. The China model is failing Africa. In the coming years, it will become increasingly difficult for African leaders to ignore the lacklustre results on the ground. They must now re-evaluate their relationship with China and, instead of living out Mr Xi’s dreams for the Chinese model, carve out their own development path.

Author: Luke Patey* (Financial Times)

*Luke Patey is a senior researcher at the Danish Institute for International Studies.

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