In 2013, after assuming power, the incumbent President of China, Xi Jinping, announced the One Belt One Road Initiative, later known as the Belt and Road Initiative (BRI). Through this project, the government of China projects to restore the old silk route for smooth and enhanced trade with Eurasian nations. Not only this, but President Xi also announced a new silk route connecting South East Asia, South Asia, Africa, and Latin America through rails, roads, and a maritime silk route.
After eight years since the project was announced, the government of China has achieved many milestones in Asian, European, and African regions. However, no region benefited from the Belt and Road Initiative like Africa. For centuries, the African continent has been subjected to colonization, dictatorship, aristocracy, and exploitation. However, the BRI seems to be the silver lining for the people and governments operating in Africa.
Since 2013, under the flagship Belt and Road Initiative, the government of China has invested billions of dollars in African land. Furthermore, Beijing has also contributed to aid and grant and the provision of loans from China to Africa on either negligible or no interest rates. For now, the BRI seems to be the only way for Africa to remove the monkey of debt and poverty from its back.
An in-depth insight into the Chinese Belt and Road Initiative and how it can help Africa flourish can be gauged with the following characteristics:
Under the Belt and Road Initiative, the total FDI stock of China in Africa during the fiscal year 2019 amounted to around $110 billion, accounting for 20% of African economic growth. Since 2012, Beijing is continuously overwhelming Washington’s FDI in the African region. Furthermore, most of the FDI rendered to the African region through the Chinese government and its state-owned firms comes with nominal interest rates, helping Africa to grow and flourish shoulder to shoulder with the rest of the world.
In Africa, around 350 million middle-class people inhabit with an urban population of 44.7% as per the statistics of 2019. Following this, Chinese investment in Africa will not only help the people living in the slums of Africa find high-paying jobs, but they will also create an equilibrium between the urban and rural zone as only 25% of irrigable land is irrigated every year and the rest 75% remain barren due to lack of investment, water, and resources.
Furthermore, a large amount of Chinese Outward Foreign Direct Investment in the Sub-Saharan region is directed toward the energy and transport sector with which Beijing aims to provide uninterrupted energy to the industrial sector of Africa and plans to mobilize trade among African Union members.
China has signed a general Memorandum of Understanding with 52 African Nations, out of which 49 have also signed a geographical Memorandum of Understanding allowing access to Chinese trade with royalties reserved for the African nations.
During the year 2020, under the BRI, China signed a Memorandum of Understandings with some key African nations to build roads and railways and connect their ports for mobilized trade. On the 46th bilateral relations anniversary with China, Botswana became the 46th member of African nations to join BRI. The current per annum bilateral trade between Botswana and China accounts for $300 million. With BRI, Beijing plans to aggravate this trade and invest in a development project in Botswana to help the country connect with other African nations for smooth and tariff-free trade.
In 2020, with the Democratic Republic of Congo, the Foreign Minister of China Wang Yi, on his visit, signed low-interest loans worth $28 million to help the country combat Covid-19, and an additional $17 million were provided for financial and development support. Not to forget that during the last two decades, from 2000 to 2018, China rendered a total of $2.4 billion in the shape of low-interest or interest-free loans to the Democratic Republic of Congo. Also, as a friendship gesture, the People’s Republic of China forgave interest-free loans worth $28 million provided to the DRC. The trade between China and the DRC was reported for $3.11 billion in 2020.
Along with Botswana and DRC, Chinese trade and investment with Tanzania exceed like a bullet train. In 2020, the trade volume between Tanzania and the Peoples Republic of China was estimated at around $4 billion. Along with it, the Chinese investment in Tanzania exceeded $7 billion, making China the biggest investor in Tanzania. This investment was rendered for building railroads and upgrading Tanzania’s ports, connecting Tanzania with African nations for easy trade.
With Nigeria, the trade volume of China is enormous. It accounts for $20 billion annually, with a gradual increase yearly. Africa owns a 35,000km coastline, and with some major coastal states on board, China plans to develop a single African market to boast free trade throughout Africa and the rest of the world. With billions of dollars invested in African nations, the government of China plans to interconnect the port countries with land-locked countries and promote intra-continental trade. African intra-continental trade accounts for not more than 17% whereas in Asia and Europe it accounts for 59% and 68% respectively.
Under the Belt and Road Initiative, Beijing projects to connect all African Union members for better intra-continental trade for cheap and easy accessibility to landlocked nations of Africa, which account for more or less 30% of the total population of Africa.
All in all, under the Belt and Road Initiative, there exists a high chance for African nations to flourish: may it be the connectivity through rails and roads or the industrialization of Africa. With BRI and the creation of an African Free Trade Zone, there are higher possibilities than ever for Africa to flourish and shine in global trade.
*The author is a Senior content writer and Certified Neuro Linguistic Practitioner
*The views expressed in this article are the writer’s own and do not necessarily represent those of the institutions