What is the FOCAC Summit? Why and how is China attempting to woo African leaders?

China is hosting the ninth Forum on China-Africa Cooperation (FOCAC) Summit, a diplomatic event aimed at strengthening ties with African nations.

This summit, held in Beijing, comes at a time of economic challenges for China and growing scrutiny over its involvement in Africa. As China shifts its focus to more sustainable and profitable partnerships, the summit is crucial in reshaping the future of Sino-African relations.

What does China gain from Africa?

For over a decade, China has poured more than $120 billion into African infrastructure projects through its Belt and Road Initiative (BRI), funding hydropower plants, railways, and roads across the continent.

This investment has given China unparalleled access to Africa’s energy and mineral resources, while also helping to export its surplus industrial capacity.

However, these projects have been marred by accusations of creating debt traps, exploitation, and corruption. The situation worsened when several African countries, including Zambia and Ghana, defaulted on their loans, leading to complex debt restructuring negotiations.

Despite these challenges, China remains Africa’s dominant foreign economic power. The FOCAC summit in Beijing is the first since 2018 and is the largest diplomatic event hosted by Chinese President Xi Jinping this year.

Leaders from across Africa, including Nigerian President Bola Ahmed Tinubu, Rwandan President Paul Kagame, and South African President Cyril Ramaphosa.

What is China’s strategy to woo African leaders?

China’s lending to Africa surged from $98.7 million in 2000 to a peak of $28.8 billion in 2016, according to Boston University’s Global Development Policy Center, making China the largest bilateral creditor to Africa. However, the scale of lending has significantly decreased in recent years, dropping to $4.6 billion last year.

In response to the economic slowdown, China is shifting its strategy toward public-private partnerships (PPPs) that aim to generate better returns and reduce the risks associated with state-backed loans.

Some recent projects exemplifying this new approach include a $20 billion iron ore mine and railway in Guinea, a $5 billion oil pipeline in Uganda and Tanzania, and a $400 million cash-for-oil loan in Niger.

Notably, Zambia’s President Hakainde Hichilema is expected to witness the signing of a $1 billion investment deal to revitalize the Tazara railway, originally built in the 1970s. This project is likely to rely on the PPP model rather than traditional public debt from Chinese state-run banks.

Why has Africa turned to China?

African nations initially turned to China for financing due to the absence of alternatives, as Western institutions like the World Bank and IMF often imposed strict conditions on loans.

However, the mounting debt has strained national budgets, and many China-backed projects have not met expectations, a situation exacerbated by the COVID-19 pandemic. Zambia’s default in 2020 brought renewed scrutiny to China’s role in Africa, and other countries, including Ghana and Ethiopia, are at high risk of debt distress.

In Angola, which owes China about $17 billion, the largest single debt to any country, the challenges are stark. While some projects like the Kafue Gorge Lower Hydropower Station in Zambia have been successful, others, such as Nigeria’s $823 million Abuja Light Rail project, have faltered, with the rail system barely operational and costing Nigeria $50 million annually in loan repayments.

Economists argue that China has learned from these experiences. “I see China going through a learning process,” Huang Yufan, a fellow at the China-Africa Research Initiative at Johns Hopkins University told Bloomberg. “They realise the way they lent before doesn’t work anymore. They realise these governments can default and that they’re quite risky.”

What does China see for itself in Africa’s future?

China is not retreating from Africa but is recalibrating its approach. The new strategy, focusing on public-private partnerships, allows African governments to continue borrowing without adding to their officially-declared sovereign debt.

However, this shift brings new risks. While speaking to Bloomberg, Brad Parks, executive director of AidData, warned, “What they’re doing is a lot of creative accounting to still borrow but through much more opaque mechanisms.”

Despite these concerns, many African leaders continue to see China as a crucial partner. South African President Cyril Ramaphosa, during a bilateral meeting with Xi Jinping, expressed his desire to narrow South Africa’s trade deficit with China, highlighting the need for better terms for African exports.

Similarly, Kenyan President William Ruto is seeking funding for several infrastructure projects, including the completion of the Standard Gauge Railway (SGR).

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The competition for influence in Africa is intensifying. Western powers and Gulf states are attempting to match China’s presence on the continent. At the 2022 US-Africa Leaders Summit, $15 billion in deals were signed, but many African leaders still see China as a more viable partner for large-scale investments.

As the FOCAC summit unfolds, African leaders will be negotiating not only for immediate benefits but also for long-term stability in their economic relations with China.

With inputs from agencies