Below is a Viewpoint from Chapter 6 of the Foresight Africa 2020 report, which explores six overarching themes that provide opportunities for Africa to overcome its obstacles and spur inclusive growth. Read the full chapter on bolstering Africa’s role in the global economy.
While China, Europe, and the United States have been intensifying their competition in Africa over the last decade, the next decade is likely to see other players making more prominent moves. Among them, India, Russia, and major actors in the Middle East are already shifting resources and attention to the promising continent.
Chinese financing begins to show downsides
China’s comparative advantage has laid in the large financial resources at its government’s disposal and its state-backed economic engagement model. Although Beijing has indicated a desire to increase private equity investment in Africa, it is unlikely to abandon its overall priority on infrastructure development financed by Chinese loans. But as the frenzy over the large Belt and Road Initiative infrastructure projects in Africa subsides with the existing projects’ loan payments due, African governments have to deal with the sobering financial consequences of projects such as the Addis-Djibouti railway and the Mombasa-Nairobi railway.
The Chinese financing model has been widely criticized by observers, and the debt sustainability problem does not only affect African government borrowers, but also the Chinese banks as creditors. As the Second Belt and Road Forum in April 2019 ushered China into a stage of more stringent and responsible lending mechanisms, the hope is that Chinese financing to Africa will become more disciplined. But this also requires African governments to be more disciplined and cautious in their economic cooperation with China. Instead of indulging in what appears to be easily available funding, African governments will have to recognize and prepare for the consequences of debt to China, both economically and in terms of security and other strategic implications.
India looks to engage through technology
India is also growing its partnership and deepening economic and political relations with Africa. Although the amount of financing may not rival that of China, India’s engagement efforts are comprehensive, including bilateral senior visits, increased trade and investment, development assistance, and trilateral cooperation alongside other countries. Indian technology centers in Africa have the potential to advance high-tech development in the region, an area that other partners have generally neglected. In fact, since 2015, six IT centers have been established in the region, including the Center of Excellence in Information Technology in Morocco, a Center for Advanced Information Technology in Lesotho, and related centers in Madagascar and Zimbabwe. India has also built up vocational training centers in seven nations, including the Gambia and Rwanda.
Russia is reviving its involvement
Although Russia is nowhere near where the Soviets had been in terms of engagement and influence in Africa, Moscow is launching a charm offensive to resurrect old bonds, strengthen its commercial and security presence, and garner support on the world stage. Notably, this relationship is drawing scrutiny, largely from the United States, which is critical of what it calls Russia’s “votes for arms” deals. In the meantime, Russia remains a key player in arms sales to Africa, although investment and other economic activities have a long way to go.
Although Russia’s commercial engagement is lagging, progress is notable, with its trade with Africa jumping from $1.8 billion in 2010 to $4.8 billion in 2018. Given Russia’s strength and Africa’s needs in the energy sector, partnerships and investments in traditional oil and gas as well as nuclear power are arising in Côte d’Ivoire, Egypt, Ethiopia, Ghana, Kenya, Nigeria, Rwanda, Zambia, and elsewhere. Furthermore, in October 2019, Russia hosted the first-ever Russia-Africa Summit in Sochi, during which $12.5 billion worth of deals were struck. Russia also announced the forgiveness of $20 billion in debt.
Turkey is igniting engagement
Turkey has been gradually raising its profile in Africa for the past decade. In the past 15 years, its trade with African countries has quadrupled from $5.4 billion to $20.6 billion. Turkey and Africa have established summits and a formal partnership since 2008, and Turkish President Tayyip Erdoğan has made more than 30 trips to Africa since coming to power in 2003. Under his watch, Turkey has expanded its diplomatic presence to more than 40 embassies in Africa, up from 12 in 2009. Similarly, the state-controlled Turkish Airlines now flies to more than 50 African destinations, up from 14 just nine years ago.
Countries in the Middle East look to bolster their regional presence
The Middle Eastern countries have demonstrated increasing interest in Africa’s economic potential in recent years. As a regional and global trade hub, the United Arab Emirates (UAE) is quickly recognizing the tremendous potential Africa’s emerging markets and industrialization bring, and has become a leader in African investment within the Gulf Cooperation Council, overtaking Saudi Arabia in 2016. Due to the UAE’s geographical proximity to Africa, many large multinational companies have already established their Middle East and Africa headquarters in Dubai. Both Dubai and Abu Dhabi have made considerable investments in African infrastructure, technology, and energy: For example, during President Cyril Ramaphosa’s visit to the UAE in July 2018, the country announced a $10 billion investment in infrastructure and enterprise growth within the South African economy over the next few years.
Partially reflecting the competitive relationship between the UAE and Saudi Arabia, during that same trip, Ramaphosa was able to secure a $10 billion investment commitment—focused on reviving South Africa’s energy sector—from Saudi Arabia. In its quest for food security, Saudi Arabia has also become the top investor in agriculture in Africa.
Africa might just be the new battleground for the feud between the Gulf states and Qatar. Qatar currently has more embassies in Africa than any country other than Turkey. To expand security ties and develop economic relations, including in its quest for food security, the Qatari government has been increasingly active in African peace and security affairs and economic investment. Indeed, Qatar has played the roles of both a mediator and an investor in the Sudan Darfur issue and between Eritrea and Djibouti in their border disputes.
As the world’s fastest-growing continent, Africa is attracting attention and resources from all key world and regional players. This trend will continue to grow in the foreseeable future, resulting in a much more diverse and complex picture in terms of the external players’ roles and impact on Africa. The diversification of Africa’s external partners, which will continue over the next decade, is generally a positive trend, as the involvement of more interested players will reduce the continent’s dependence on any single party. Now, African policymakers and leaders must manage the complex competitive relations among these new partners while maximizing the gains for African society and peoples. Capacity building of African states and civil society is now an even more pressing task.