Africa Needs China’s Belt & Road Initiative To Assist With Growth & Trade Potential

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UN Economic Commission For Energy Infrastructure Explains The Rationale 

Dr. Robert Lisinge, the United Nations Economic Commission for Africa’s chief for energy, infrastructure has been speaking at a virtual symposium on the impact of China’s BRI on AfCFTA infrastructure development, and has stated that Africa will need China’s involvement if the implementation of the African Continental Free Trade Area’s (AfCFTA) is to be productive.

We discussed issues concerning AfCFTA and explained its functions in the article The Intra African Free Trade Agreement earlier this week.  

According to Lisinge, African economies have huge infrastructural requirements, with the African Development Bank estimating these need to be in the region of between US$130 billion and US$170 billion per year.

“This is a huge amount of money so China’s involvement is definitely welcome. Many associate China’s involvement in Africa’s infrastructure with practical and affordable Chinese technology. In addition, we all know that there is available capital and equipment linked to China’s involvement in Africa’s infrastructural development,” said Lisinge.

He pointed out that the high speed of infrastructural construction associated with Chinese companies and the increase of competition among those who were eyeing Africa for infrastructural investment were some of the benefits and advantages of the BRI scheme.

“This is a good thing from an African perspective because the higher the competition, the lower the cost of infrastructure development,” he said.

“Finally, an advantage of Chinese involvement in Africa’s infrastructure is that it is not associated with conditionalities. Western involvement is sometimes linked to conditionalities like reforms in government.”

He acknowledged that there were, however, red flags raised around China’s BRI initiative, including that it was driven by strategic ambitions and political force, and not economically rational and market forces.

“Presently, with the Covid-19, we all know that African countries are going through serious liquidity crises and many find it difficult to pay their debts, including to China, so this is another critic that is coming up very strongly.”

Lisinge highlighted that African countries would be stronger as a bargaining group, as partners would not want Africa with stronger bargaining power and would prefer to make bilateral agreements with individual states and that despite the scepticism, African countries need China.

“If you want to reap the full benefits of the AfCTA, you need regional infrastructure development and if you want to close the gap in infrastructure development in Africa, you need to bring in all the partners including China through the BRI,” he said.

Lisinge also used the platform to point out that China’s involvement in Africa’s regional infrastructure was not new as it dated back in the 1970s.

“Recently in 2007, they completed the Nairobi to Mombasa railway. In 2018, the Addis Ababa to Djibouti was completed as well, so China’s involvement in Africa’s regional infrastructure projects is not new.” he said.

Dezan Shira & Associates are looking to establish partnerships in Africa and own the portal Africa Briefing, which will be positioned from 2021 to promote Africa-Asia trade flows, legal, tax and related business issues. We are looking to hire an African coordinator to assist with our work in the region. Interested parties may contact us at africa@dezshira.com

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Silk Road Briefing is written by Dezan Shira & Associates. The firm has 28 offices throughout Asia, and assists foreign investors into the region. For strategic advisory and business intelligence issues please contact the firm at silkroad@dezshira.com or visit www.dezshira.com

 

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