United States, China and the Quest for Africa

By Kunle Olawunmi GSS, NIM, Ph.D.

Abstract

Africa is home to some of the world's fastest growing economies and Beijing’s formidable scheme has upstage U.S. socio-economic advantage in the Continent. With Trump’s disparaging moves against NAFTA, Middle East, the European Union and Mexico - Africa may well become the new bride. With the passage of the BUILD Act of 2018, America could overcome its Chinese rivals, but at a cost to Africa. 

Overview

By December 2014, the Chinese economy officially surpassed that of the U.S. and the Americans needed to look for economic benefits outside a raucous Middle East. Again, incremental job loses realized since China joined WTO in 2001 has made NAFTA deals unsustainable to the U.S. and Brexit and Tariff issues creates a complex EU market.  Unfair trade deals, immigration issues have provoked Trump into erecting walls against Mexico and Africa isn’t an area of strategic importance to the State Department. Plausibly until now. 

Visibly, the United States is worried, and this is evident from the recent visit by Mrs. Trump to some African countries in September 2018 - Ghana, Kenya, Malawi and Egypt. Among other steps, the U.S. is also sending Ambassador Tibor Nagi to Nigeria (November 9, 2018) to deliver a public lecture on US–Africa Relations in Abuja.  Mrs. Trump said that she was looking forward to seeing how the US can continue working together with Malawi to support a USAid programme that is focused on children's education. Hitherto, Trump has not paid much attention to the continent, but the United States must do more with better alternatives to state-led economic models, promoted by China. 

Before now, U.S.- Africa Relationship has been defined primarily by the slave trade and the Cold War. No one that is a student of African history would deny the impact of the Cuban troops in Angola, the hazards of landmines in that country and thousands of Africans who lost their lives in an ideologically charged civil war in Ethiopia and those that became refuges around the world. But, things seem to be turning around for Africa.

Perceptibly, mien towards Africa changed somewhat as China made profitable forages into the Dark Continent. In recent times, South Sudan became the first serious frontier of Sino-U.S. African conflict - their encounters in ECOWAS region has drawn more U.S. boots on the ground in such places as Mali, Niger, Ghana and the Gulf of Guinea - a cue from the slave trade and the Cold War period. 

China in Africa

China-Africa relations got off to a slow start after the first Asia-Africa Conference, the Bandung Conference, in 1955. It was Beijing’s attempt to assert its leadership over the nonaligned movement. Since then, Sino-African trade grew from $10.5 billion in 2000, to $29.4 billion in 2004, and over $50 billion in 2006 (Wenping He, 2008). China’s first white paper on its African policy in 2006 publicly announced Africa’s strategic importance and stressed the interest to further such cooperation in the future. 

By 2007 China had become the second largest trade partner - second only to the United States. Cheap currency assures China’s position, as the largest individual country exporter to sub-Saharan Africa with a market share of 9.8% and a volume of $26.5 billion during the period. China Daily noted that in 2008, the volume reached a record of $106.8 billion, with an average growth rate of 30 percent in eight straight years.

China’s direct investment in Africa had also increased sharply during this period and exceeded $5 billion by 2008 (Deborah Brautigam, 2008). China’s growing bond with Africa is startlingly facilitating Chinese energy and weapons dealings - it also competes with U.S.–African trade. Washington would contest Beijing’s unique development model in Africa, with potentially serious consequences for U.S

Washington’s reaction

U.S. government foreign investment entities remain fragmented and outdated - thus, Congress, at the behest of the Trump Administration, has overhauled the often-controversial Overseas Private Investment Corporation (OPIC) & by a vast bipartite vote of 93 for in the Senate - passed the Better Utilization of Investments Leading to Development (BUILD) Act. While the Act transfers to the International Development Finance Corporation (IDFC) the existing USAID Development Credit Authority (DCA), the permissive authority to transfer other functions (the Office of Private Capital and Microenterprise, enterprise funds, and sovereign loan guarantees) can be exercised only with the concurrence of the USAID Administrator.

The Act creates a new entity, new financing and new authorities designed to support Africa & other emerging markets as they build critical infrastructure. Also new, along with authority for equity finance, which OPIC has lacked, the corporation would be allowed to denominate guarantees and loans in local currency, thereby saving the investor the currency exchange risk. The equity authority is to be used where there would be “significant development impact.” (George Ingram, 2018) BUILD authorizes the US government to activate up to $60 billion in US financing for emerging market infrastructure projects. 

Whatever the motivation, BUILD should lead to a diversification of US commercial investment in Africa, which is dominated by hydrocarbon investment- some see this as a response to China. But how should Africa react to this renewed rush.

Can Africa gain Chinese Trust?

Aside Egypt in 1956, early 1960s, saw a surge in diplomatic relations with Beijing with over 10 African countries, including Morocco, Algeria, and Sudan. By the end of the1970s, 44 of the 50 independent African countries had entered into diplomatic relations with China. Beijing’s early interest in Africa was to build conceptual cohesion and advance Chinese-style communism. China’s Africa policy then served two main purposes: first, to counter recognition of Taiwan as the representative of China and thus to shore up votes for the eventual rejection of Taiwan’s China credentials in the United Nations; second, to counter the West’s influence and then the Soviet Union’s influence on the continent (Li Anshan, 2008). With these partially fulfilled, China has moved aggressively on the socio-economic front and she is winning Africa. However, there are indications that Africa’s romance with China may not be profitable. When Rex Tillerson, Mr. Trump's first secretary of state, visited Africa in March 2018, he warned Africa of China's economic engagement with the continent, which he said, encouraged dependency, utilized corrupt deals and endangered its natural resources. Could China be pursuing a neo-mercantilist vision to secure an economic foothold in Africa?

Africa’s solution may be from within.  

For Africa to achieve transformative progress, policy solutions must come from African sources. The Continent may have to make a complete departure from the past when treaties were signed without thoroughly evaluating the clear benefits they could bring to Africa. 

The Africa Growth Initiative was not particularly Africa driven. Though designed to bring together African scholars to provide policymakers with high-quality research, expertise and innovative solutions that promote Africa's economic development, - it is working, but only on cynical and dishonest foreign lifeline. How to deliver an African perspective that informs sound policy, creates sustained economic growth and development for the people of Africa remains the question. 

Recently, President Muhammadu Buhari of Nigeria while inaugurating the Committee for Impact and Readiness Assessment of the African Continental Free Trade Area assures that his country would no longer sign treaties and agreement that has no intrinsic benefit and without proper auditing. “We are determined to breakaway form the past practice of committing Nigeria to treaties without a definite implementation plan to actualize the expected benefit while mitigating the risks. We cannot go back to the days of signing agreements without understanding and planning for the consequences of such actions and our country being the worst for it.” (Azeezat Adedigba, 2018)

How Africa rejoins China-U.S. forages would most likely depends on individual countries for now - as multiple foreign interests have undermined regional and sub-regional efforts in Africa. 

References

Wenping He. “China’s Perspective on Contemporary China-Africa relations”, China Returns to Africa, Chris Alden, Daniel Large and Ricardo Soares de Oliveira, 2008, 151

China Daily. “Trade between China and Africa has broader Prospects” <https://www.entrancechina.org/news.php?id=82717>

Deborah Brautigam. “China’s foreign aid in Africa: What do we know?”, China into Africa: Trade, Aid, and Influence, Editor: Robert I. Rotberg, 2008, pp209

FUTURE DEVELOPMENT

How the BUILD Act advances development George IngramTuesday, July 10, 2018 (https://www.brookings.edu/blog/future-development/2018/07/10/how-the-build-act-advances-development/)

Melania Trump: US first lady arrives in Ghana for solo Africa trip. https://www.bbc.com/news/world-africa-45717641

Li Anshan, “China’s New Policy toward Africa”, China into Africa: Trade, Aid, and Influence, Editor: Robert I. Rotberg, 2008, pp24

We’ll only sign treaties that will impact the lives of Nigerians — Buhari https://www.premiumtimesng.com/news/more-news/291975-well-only-sign-treaties-that-will-impact-the-lives-of-nigerians-buhari.htmlOctober 23, 2018.