The 9th Forum on China-Africa Cooperation (FOCAC) in Beijing provides key insights into Africa’s evolving strategic thinking and presents opportunities for India to strengthen its engagement with Africa.
China-Africa Cooperation (FOCAC) Overview
- The Forum on China-Africa Cooperation (FOCAC) is an official platform for cooperation between the People’s Republic of China and African states.
- This current meeting comes at a time when African nations face multiple issues such as high inflation, currency depreciation, a heavy debt burden, unconstitutional military takeovers, and geopolitical challenges such as the Israel-Hamas conflict, the Russia-Ukraine war, and attacks by Houthi rebels on commercial shipping in the Mediterranean Sea. Africa must set an agenda regarding what it wants out of this forum.
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| Note: There is a lack of detailed reports and agendas, which may be due to a shortage of experts who fully grasp complex issues such as China’s debt trap and the strategies of the Communist Party of China. Despite many African government officials being fluent in Chinese, this skill is not being effectively utilised. Consequently, China often dictates the agenda, while African countries tend to follow rather than lead. |
African Priorities at China-Africa Cooperation 2024
- Economic Goals
- On the economic front, progress on Beijing’s ambitious goal to import $300 billion worth of goods from African countries between 2022-2024 has been modest.
- According to data from China’s General Administration of Customs, between January and July 2024, China-Africa trade increased to $167 billion, with Chinese exports amounting to $97 billion and African exports to $69 billion.
- This indicates a trade deficit for Africa and a trade surplus for China. About two-thirds of this trade is dominated by raw materials, similar to the colonial period when Britishers imported raw materials from India.
- Agricultural Development
- Africa needs to make its agriculture sustainable and robust. The challenge includes processing agricultural commodities and basic processing tasks such as roasting raw cashew nuts.
- Countries like China and India, which have achieved self-sufficiency through methods such as high-yield seeds and advanced fertilisers, could assist Africa.
- They have the experience and tools to support African agriculture in becoming more climate-resilient, including developing satellite systems for improved weather forecasting.
- Green Energy and Industrial Development:
- Green energy and industrial development are crucial. African countries are encouraging international partners to establish more refining and processing hubs.
- For instance, in Zimbabwe, Chinese companies are required to conduct basic lithium refining to move up the value chain and produce battery-grade lithium.
- However, chronic electricity shortages, lack of power generation, and significant environmental, social, and governance (ESG) costs impede international companies’ ability to refine raw minerals in Africa.
- Debt Sustainability:
- China’s role in African debt sustainability is complex. Some opinions suggest that China is not the main creditor in Africa’s debt.
- According to the Boston University Global Development Policy Center, Chinese loans to African governments and regional institutions amounted to around $170 billion between 2000 and 2022.
- Chinese lenders account for 12% of Africa’s public and private debt. The narrative of Chinese ‘debt trap diplomacy’ is debated, and some Chinese lending patterns require closer examination.
- Many loans are not disclosed in sovereign debt records, complicating the estimation of debt levels. Despite concerns about opacity, transparency, and non-disclosure clauses, China is unlikely to entertain debt forgiveness or cancellation, although it may write off small, interest-free loans.
- Strategic Engagement:
- Previous instances of ad hoc and poorly structured engagements from the African side at FOCAC meetings pushed the continent into a reactive stance rather than driving the agenda.
- Therefore, African governments are now aiming to develop a coherent strategy toward China and harmonise African positions before the FOCAC summit.
- African countries will continue to de-emphasize aid, focus on trade facilitation, and aggressively pursue product value addition, such as exporting roasted cashew nuts instead of raw cashew nuts.
Current Challenges for Africa
- African nations are grappling with high inflation, currency depreciation, a heavy debt burden, unconstitutional military takeovers, and geopolitical challenges such as the Israel-Hamas conflict, the Russia-Ukraine war, and attacks by Houthi rebels on commercial shipping in the Mediterranean Sea.
- Strategic Gaps: Africa’s lack of a clear agenda and expertise in dealing with Chinese strategies could lead to a reactive stance, with China often driving the agenda.
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Lessons for India
- Strengthening Partnerships
- Continuity in Relations: India should emphasise continuity in its relations with Africa. The last India-Africa Forum Summit (IAFS) was held in 2015. While dialogues such as the CII-EXIM Bank Conclave and India-Africa Defence Ministers meetings have been held regularly, hosting IAFS-IV would reinforce ties and maintain momentum.
- Track 1.5 Dialogue: Engaging in Track 1.5 Dialogue involving government ministers, non-government officials, NGO representatives, and academicians could enhance consultation on mutual interests. This should be conducted after consultation with Africa’s eight recognized regional economic communities (RECs).
- Host and Regional Office: Addis Ababa, Ethiopia, being the seat of the African Union Commission, should host IAFS-IV. Additionally, establishing a regional African Union office in New Delhi could strengthen regular consultations.
- Enhancing Economic Integration
- Support for Industrialisation: India can assist Africa by supporting its industrialization and integrating African economies into global value chains, particularly in agriculture, pharmaceuticals, and manufacturing.
- Investment Areas: Key areas for Indian investment include farm mechanisation, food processing, and cold storage infrastructure.
- Encouraging Private Sector Involvement
- Innovative Financing Solutions: India should promote greater private sector involvement through innovative financing solutions such as public-private partnerships and blended finance.
- Financial Trust: The EXIM Bank’s Trade Assistance Programme and rupee-based lines of credit, which are popular in Africa, can expand financial trust and reduce reliance on dollar-based transactions.
- Feasibility Studies: Conducting feasibility studies and detailed project reports is essential to create bankable projects, addressing issues where African countries invest in non-viable projects.
- Technology Use
- Digital Connectivity: India’s digital stack, including biometrics, mobile connectivity, and Jan Dhan technology, could help establish digital and physical connectivity with Africa.
- Unified Payment Interface (UPI): The UPI and RuPay services, already established in Mauritius, could be expanded to Kenya, Namibia, Ghana, and Mozambique, which have shown interest in utilising these platforms.
- Currency-Neutral Transactions: Strengthening Indian banking and reducing forex risk through rupee-based lines of credit could be beneficial, as African nations lose billions annually due to exchange rate fluctuations.
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Conclusion
By analysing African leaders’ interactions with China under the FOCAC framework, India can gain valuable insights to enhance its strategic engagement with Africa. Emphasising trade, industrialization, and technology will help India position itself as a key partner in Africa’s growth and development.
September 5, 2024
