Jennifer Spies led Facebook’s product development for the Middle East and Africa, and has over a decade of experience building products that connect communities. Prior to Facebook she served as a foreign policy advisor for Middle Eastern economic security, and worked with Google.org in Rwanda.
On September 3 and 4, leaders of fifty-three African nations gathered in Beijing for the seventh Forum on China-Africa Cooperation (FOCAC), where President Xi Jinping unveiled a new pledge of $60 billion in financing for Africa. While heads of state flew home praising the friendly relations between Africa and China, the summit’s tone highlighted China’s attempt to remake its image on the continent, one that has soured in recent years over concerns around China’s role as a lender.
China’s presence in Africa has been much examined over the past decade, and while the United States is still the largest source of foreign investment on the continent, China’s investment pledges have increased every year since the early 2000s and are expected to surpass receding U.S. commitments in the coming years. China’s economic involvement with Africa was originally built around the concepts of “no strings attached” and a “win-win” relationship. China offered infrastructure and energy financing as an alternative to the Western model of aid and development grants tied to policy agendas like improving healthcare capabilities or strengthening democratic institutions. Since then, some of the continent’s most visible transformations have been powered by Chinese financing: Abuja’s light rail line, Dar es Salaam’s port, and the African Union headquarters in Addis Ababa.
As China’s roots in Africa deepen, the country increasingly faces accusations of burdening the continent with undue debt obligations. China has changed the composition of African debt from primarily concessional financing (such as that of the International Monetary Fund) towards market-based debt with less favorable terms. But China’s Foreign Ministry has rejected the notion that its African investments are predatory, and noted that China represents a miniscule portion of total African debt. Further, the Africa portfolio is not very significant when compared to investments in Europe and Asia. Together, these projects are part of a broader $5 trillion dollar Belt and Road Initiative (BRI), a strategy that spans sixty countries and is reshaping dynamics of trade across Europe, Asia, the Middle East, and Africa.
China’s 2018 FOCAC pledge offered $5 billion less in grants and concessional loans than previous years, representing both caution on China’s part and a worsening debt landscape in Africa. The majority of China’s infrastructure and energy programs are financed through loans, and Africa’s rising debt problems spell trouble for China. Over the past five years, two-thirds of sub-Saharan African countries saw a 20 percent increase in debt-to-GDP ratios (though this rise is not necessarily attributable to Chinese loans). Eighteen countries including the Republic of Congo, Gambia, Zambia, and Mozambique are now classified by the World Bank as high risk for debt distress, a benchmark set by economists when debt-to-GDP ratios surpass 50 percent. In some countries, like Kenya, China is now the largest bilateral creditor. President Xi underscored his commitment in this year’s summit to forgiving debt for the poorest African nations, starting with loans coming due this year.
Once the purview primarily of Western aid organizations, Africa now boasts a more diverse set of international actors. China in particular has stepped up as a major lender that benefits from Africa’s raw material exports. Increased African debt obligations and stress on emerging market currencies threaten this model from evolving much further and may destabilize the region in the coming years. A more sustainable model of economic partnership is needed.