Over a recent holiday season, I made a trip to the western region of Sichuan province in China. It is at the eastern edge of the Tibetan Plateau and the Hengduan Mountains, with a ground elevation of 4,000-4,500 meters, slightly above Kilimanjaro’s Shira Mountains (3800 meters). That visit cemented for me the importance of infrastructure, such as roads and bridges, for the people living in that area and for local economic development.
Without that infrastructure, locals would never have been able to develop even a small local tourism industry. I was taking advantage of these businesses, but they also bring in crucial income ensuring the sustainable preservation of livelihoods.
This matters on a bigger scale, especially for the African continent – which is three times the landmass of China. I firmly believe that well-established basic infrastructure provides the foundation for a country’s economic development. This reality echoes the Chinese saying, “to get rich, build the roads first” (要致富，先修路).
A careful reading of the recent Forum on China Africa Cooperation (FOCAC) conference held in Dakar last November provides four key indicators that China’s laser-like focus on infrastructure will continue, although with some important shifts.
FIRST: If the levels of foreign direct investment meet the expectations set at FOCAC, China could soon become Africa’s largest investor (China is already Africa’s largest source of FDI measured by the number of projects, according to Ernst & Young, but not in terms of overall value). This is important because, while much Chinese-built infrastructure in Africa has been delivered through concessional loans from the likes of China Exim Bank and China Development Bank, it’s a lesser-known fact that some have also been delivered through FDI. Examples include the building of special economic zones, toll roads, or bridges through Private-Public Partnerships (PPPs). As a result, the construction sector has absorbed the largest proportion of Chinese FDI for five years, accounting for 35% of total investment in 2020.
Currently, at $43.4 billion, FOCAC 8 committed China to another $10 billion by 2024 and a further $60 billion investment by 2035.
SECOND: Increasing trade, both within Africa and with China more broadly, was among the most important outcomes of FOCAC 8. This also highlights the importance of strengthening the continent’s trade-related infrastructure.
Now that the AfCFTA is up and running, infrastructure that facilitates trade, such as roads and railways that link urban and rural areas, will be crucial for the continent’s post-COVID-19 recovery as well as the AU’s 2063 Agenda. Plus, China’s stated goal to open new “green lanes” to expedite agricultural shipments as part of a broader effort to increase African imports to $300 billion within the next three years will no doubt help increase the economic returns of trade-related infrastructure investment on the continent.
THIRD: the FOCAC Action plan had a clear, explicit commitment to the continuation of concessional lending to African countries to help the continent to close its “persistent infrastructure gap”. There was a specific reference to align the AU’s Program for Infrastructure Development in Africa (PIDA). With President Xi Jinping’s commitment last year to terminate all financing for coal-powered energy projects, we can expect to see more renewable energy infrastructure as well as green transport such as rail financed with Chinese support.
FOURTH: FOCAC indicated a stronger emphasis on digital infrastructure development. As the pandemic drags on, digital infrastructure such as new data centers, mobile telecom networks, and satellite internet among other technologies will all help foster the continent’s burgeoning e-commerce sector that is essential for long-term growth in the agricultural sector in particular. For Africa, where the agricultural industry accounts for 15% of the continent’s GDP, and where the rollout of the AfCFTA-linked Pan-African Payments and Settlement System (PAPSS), a platform that facilities instant cross-border payments is just beginning, having better digital platforms to boost sales and services is crucial. This is particularly true amidst the restricted movement and disruptions of daily life brought on by COVID-19.
As an international development practitioner working to help African countries grow in pursuit of the UN’s Sustainable Development Goals and the AU’s own Agenda 2063, my time in the mountains of Southwest China left no doubt in my mind that China’s focus in African countries is based on China’s own experience in infrastructure. But it is a basis that speaks to African needs, and as research by Washington D.C.’s Center for Global Development has just reiterated, other development partners have ignored this need, or hesitated to do the same. Given that FOCAC suggests China will continue this focus, the question is whether the U.S.-led B3W or the EU’s Global Gateway can also be designed to – possibly together – build the 21st-century infrastructure that African residents deserve.
Yike Fu is a policy analyst at Development Reimagined.