THEhe development of the private sector is a major stake for the future of Africa. Chinese President Xi Jinping has understood this well and now seems to be banking on the Chinese private sector to change the paradigm concerning Sino-African cooperation while the Chinese public banks Exim Bank of China and the leading China Development Bank take a cautious approach in lending in a context of over-indebtedness on the continent.
Towards a new paradigm in Sino-African relations
A clear sign that the private sectors of both sides will play a greater role in the next three years, the Chinese leader pledged, at the conclusion of the Forum on China-Africa Cooperation (Focac), $ 30 billion to finance trade in order to increase imports from Africa. He also announced that the Middle Empire was ready to provide credit facilities to African financial institutions to lend to small and medium-sized enterprises and that it would share a portion of the Special Drawing Rights (SDRs) of the International Monetary Fund with the African states.
A strong announcement that comes after the visit of US Secretary of State Antony Blinken, who has made no such statement, even though the United States has obtained $ 79.5 billion in SDRs. And China does not intend to stop there since XI Jingping is also encouraging Chinese companies to invest an additional $ 10 billion on the mainland.
The Dakar joint declaration in detail
China and Africa “both have the right to development,” says the Dakar final joint declaration, touching on widespread concern in Africa of development sacrificed in the fight against global warming. Three years after the previous Beijing meeting, this Focac was preceded by strong expectations from African countries vis-à-vis the continent’s leading trade partner, in terms of development support, funding assistance and investments and debt relief or health response. African economies have been severely affected by the pandemic. While wishing to see China continue its major projects, African leaders hope for less notoriously unbalanced trade and a more profitable business relationship for Africans. China faces the reproach of using the debts contracted with it by African states, in particular to finance major infrastructures, in order to increase its influence over countries unable to honor their commitments or struggling to do so. It is also criticized for its social or environmental practices.
The private sector, at the heart of the battle
Since the creation of Focac, 21 years ago, Beijing has continued to increase funding for African infrastructure. From $ 5 billion in 2005, amounts reached $ 60 billion in 2015 and 2018. As part of the Belt and Road Strategy, China has funded the construction of highways, railways and power plants across Africa.
Deborah Brautigam, professor of international political economy at Johns Hopkins University and founder of the China Africa Research Initiative (CARI), said in an interview with South China Morninng Post that “the huge pledges of loans for infrastructure have completely dried up.” According to her, “Beijing is also reluctant to advance funds from its resources at a time when Chinese citizens are suffering from the pandemic. So no promises of subsidies either ”. According to his analysis, “Everything revolves around the private sector, trade, private investment, small and medium-sized enterprises,” she points out. In this sense, Xi Jingping, spoke of a platform for the promotion of Sino-African private investments which should emerge in the coming months.
Support African exports
Beijing also wants to provide $ 10 billion in financing to support African exports, which are still dominated by commodities. That could change with the opening of what the Chinese leader has called “greenways,” a way to boost African agricultural exports to China. Objective: that imports from Africa reach 300 billion dollars in three years. The challenge is immense as the obstacles to trade between the two parties are numerous, especially with regard to commercial tariffs. This is why, lhen the Focac conference, the Senegalese president, Macky Sall, called for a rebalancing: “We must accelerate the development of African industrial capacities so that the continent facilitates the access of its products to the Chinese market. “