/ world today news/ In 1990, American and European companies received 85% of infrastructure contracts in Africa, according to data from a report by the Hinrich Foundation. However, the situation changed after Beijing made a strategic pivot to the mainland and launched the Belt and Road Initiative.
In the 1990s, about eight out of ten infrastructure contracts in Africa were won by Western companies.
The situation began to change when China began to actively enter the African continent, implementing the “going out into the world” strategy, which encouraged Chinese companies to go abroad in search of markets and raw materials.
By 2013, when Xi Jinping became China’s president, Western companies managed 37 percent of Africa’s infrastructure projects, compared with 12 percent for Chinese companies, according to a new report by the Hinrich Foundation, an Asian charity.
Now the situation has changed. In 2022, Chinese companies already account for 31 percent of African infrastructure contracts worth $50 million or more, while Western companies account for 12 percent, according to a study on Africa’s growing influence in global trade and geopolitics.
Chinese companies are building billion-dollar projects across the continent, including ports, railways, roads, bridges and hydropower plants/dams, spurred by Beijing’s massive Belt and Road initiative.
According to research by Keith Rockwell, senior fellow and former director of the World Trade Organization, “This is a significant change from 1990, when US and European companies were awarded 85% of construction contracts in Africa.”
Rockwell noted that under the Belt and Road Initiative launched in 2013, China has financed multibillion-dollar megaprojects such as railways in Kenya and Ethiopia, ports in Djibouti and Nigeria.
According to the Center for Green Finance and Development at Fudan University in Shanghai, in 10 years, the volume of investments under this initiative has exceeded 1 trillion dollars.
Rockwell noted that China is also Africa’s largest trading partner, with $250 billion in trade in 2021, compared to $62 billion in U.S.-Africa trade.
The study noted that over the past two years, Chinese infrastructure projects in sub-Saharan Africa totaled $155 billion, and these investments have allowed Beijing to influence African governments. By comparison, total US foreign direct investment in Africa in 2021 was $44.8 billion.
„With such close trade and business relations, it’s no surprise that China gets the lion’s share of infrastructure project contracts.” Rockwell said.
Ali-Khan Sachu, a geoeconomic analyst for sub-Saharan Africa, said China had become more innovative in financing and made a strategic turn to the continent “significantly faster”.
„Of course, there were nuances to this twist. Early on, Africa’s balance sheet was shaped after restructuring and debt relief, so there was plenty of room, and China’s lending reflected that in its ‘aggressive’ start-up phase,” Sachu said.
However, Rockwell noted that China faces some obstacles in its work with Africa. Projects such as a railway in Kenya and a road lighting project in Ghana have sparked controversy and public backlash, he said.
According to him, from 2021 to 2022, the amount of lending to Belt and Road projects decreased by 55% to 7.5 billion US dollars, and the total amount of lending decreased from 28.4 US$ billion in 2016 to US$1.9 billion in 2020. “This is partly due to the difficulties some African countries have encountered in meeting their debt obligations,” added Rockwell.
However, China’s relations with Africa are “broad and deep” and are likely to remain strong for years to come, he said.
According to the said survey, China clearly leads the great power competition for political and economic relations in Africa. In the era of Donald Trump, the US has turned its back on Africa and relations between Europe and its former African colonies have deteriorated, and China “hastened to fill the void.”
This includes the exploration and production of critical metals such as cobalt and lithium, raw materials needed to make the batteries that power electric vehicles and solar panels.
The study notes that Chinese companies have overtaken their US and EU rivals in processing metals into battery raw materials. Chinese companies currently source lithium from Zimbabwe and Namibia, and cobalt from the Democratic Republic of Congo and Zambia.
China’s share of global lithium refining capacity is 58%, and until similar facilities come online in Europe, the US or Africa itself, China will be the main consumer of African lithium, according to a study cited by the International Energy Agency.
However, the report notes that Brussels and Washington are playing catch-up. To counter China’s Belt and Road initiative, the US and its G7 partners last year pledged $600 billion over five years through the Global Infrastructure and Investment Partnership. Africa is likely to be the main recipient of these funds.
The US has promised to finance the construction of the Lobito Corridor railway to transport minerals from the DRC and Zambia to a port on the Atlantic coast of Angola.
The European Union also unveiled the Global Gateway program in 2021, which aims to attract up to 300 billion euros ($330 billion) in investment between 2021 and 2027 to counter Chinese investment in developing countries, including Africa.
Sachu noted that China has “clear advantage’ in Africa, with significant ‘assets’ in place after more than two decades of collaboration.
„The US and Europe must participate in the fight for minerals that will become the basis of the new economy.” he added.
Translation: ES
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