2021: Issues That Will Continue To Shape China-Africa Relationship

2021: Issues That Will Continue To Shape China-Africa Relationship

 

By Nellie Nakitende

 

2020 proved to be a year that put the China-African relations in to the spotlight. With the arrival of the pandemic on the continent, Africa continues to brace itself for the climax. Here are a few issues that will continue shaping the relations between China and Africa in 2021.

 

Vaccines

US, EU on the sidelines, China’s vaccine distribution to Africa could produce geopolitical dividends. China’s building a COVID-19 vaccine and distributing it in Africa including a cold-chain air bridge from Shenzhen to a distribution hub in Addis Ababa, they could have a relatively too large health impact in Africa and produce significant transnational dividends for Beijing, given that both Washington and Brussels are so far not so engaged in this issue.

 

Loans

China will continue to diminish lending to Africa in response to pressure for improved risk management in Beijing. The steady decline in official lending to African countries by China’s two main policy banks, The China Development Bank and the China Exim Bank will continue in 2021. This doesn’t mean that all lending will cease, just that it will be more selective, need far more due diligence and may come from different sources like Chinese state-owned ventures and commercial banks. The days when African countries benefited from relatively easy access to Chinese infrastructure financing are over.

 

Debt

The debt crisis in a selected number of African countries will worsen this year but not because of China. Chinese creditors will likely intensify their efforts to restructure outstanding loans in the 6-10 African countries that face the most acute debt repayment challenges. Just as Chinese policy banks and other leaders allegedly restructured loans in Angola and Zambia 2020. The process will likely extend to Kenya, Uganda, Ethiopia and Djibouti next year. There’s no evidence that Beijing will cancel any of its commercial or concessional loans. Instead it will probably provide interest repayment truce as part of the G20 DSSI, extend repayment terms and renegotiate interest rates.

 

Trade

China’s appetite for African resources will rebound in 2021, but not as much as suppliers want. Two-way trade is likely to return this year from its +20% decline in 2020 due to largely a re-energized Chinese economy but it’s unlikely that it’ll grow beyond 2019 levels due to China’s ongoing drive to variegate its sourcing of raw materials so as to avoid regional reliance for certain resources.

 

Investment

Chinese investors mostly eye distressed companies in Africa and will likely take advantage of the current economic slump to pick up assets at a discount. Look for Chinese M&A activity in the mining industry, oil exploration and stimulate the expansion of China’s already daunting presence in the African tech sector. While there may be more deals in 2021, the overall FDI may not increase.

 

Belt and Road

Further African amalgamation into the Belt and Road initiative will become a much more important priority in 2021 as Beijing seeks to dominate its sizeable prior investments in its vast trading network. There’s growing ardor in Beijing to link the BRI with regional free trade networks in Africa and Asia. The idea here would be for African countries to dominate BRI- financed infrastructure that would move goods duty-free across the continent to customers in BRI member states with China playing a central role providing logistics, technology and setting standards.

 

Technology

Chinese technology companies will build on their already petrified presence in the African tech sector with the expansion of 5G services provided by companies like Huawei and ZTE. There’s no indication that Transsion’s grip on +50% of the African mobile phone market is loosening. After hesitating to enter the market, Alibaba now looks poised to expand its presence in Africa particularly via Aliexpress. It will provide new competition to local players like Jumia and Kilimall.  Its dominance of large swathes of Africa’s tech sector will increase this 2021.

 

Geopolitics

The arrival of the Biden Administration appears interested in making its foreign policy in Africa focus on, well, Africa and not viewing the continent just as another theatre to confront China. Washington will likely forefront broadening economic engagement and promoting good governance with less significance on competing directly with China on the continent. Africa will no longer be the focus of US-China tensions but will instead become a pawn in China’s other conflicts.

 

Sustainability

Seek for Chinese diplomats, official media and other stakeholders to talk more about the merits of the so-called “Green BRI” and sustainable energy development on the continent while at the same time continuing to finance coal power generation and expensive hydro-electric dams in countries afflicted by drought.

 

Forum on China-Africa Cooperation

The summit is expected to take place sometime this year in Dakar, Senegal. But it looks increasingly likely that the event will be moved online due to the heavy COVID-19 presence in West Africa. The key themes that will be discussed are Vaccine delivery, Debt Sustainability, Increased private sector engagement, BRI integration and Reaffirmation of solidarity.

 

 

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