The China-Africa forum

Dozens of African leaders and the Chinese leader last weekend (December 4-6) gathered in Johannesburg, South Africa, for the triennial Forum on China-Africa Cooperation (FOCAC). The forum, which started in 2000, is in its 15th year and has seen trade, investment and political cooperation between Africa and China rise to unprecedented levels. When the forum began in 2000, trade volume between China and Africa was a mere $10 billion. However, the volume has greatly increased over the last 15 years and has reached $300 billion in 2015, according to China’s Ministry of Commerce. Similarly, China’s investments in Africa are witnessing unprecedented growth and, according to the Chinese premier, will rise to some $100 billion by 2020.

More concretely, Chinese President Xi Jinping announced a $60 billion funding support, including $5 billion of free aid and interest-free loans, $35 billion of preferential loans and export credit on more favourable terms, $5 billion of additional capital for the China-Africa Development Fund and the Special Loan for the Development of African SMEs each, and a China-Africa production capacity cooperation fund with an initial capital of $10 billion.

For African countries, the intercourse with China has been a huge blessing. Over the last 15 years, China has poured huge resources into large-scale infrastructure projects in most parts of Africa. It has financed and built rail projects, roads, airports, stadiums and other capital-intensive projects – projects for which Western and particularly American companies lack the requisite risk appetite for or charge prohibitive and exorbitant prices for.

Although the Chinese buy mainly commodities from Africa, recently Chinese companies are beginning to diversify their interests into other sectors, such as telecoms where they are the leading suppliers of phones and equipment to Africa. Crucially also, Chinese companies are now helping African countries to expand their manufacturing base. For example, Chinese shoe manufacturers have invested hugely in Ethiopia’s footwear industry, creating more than 4,000 dignifying jobs, and exported over $18 million worth of footwear in 2014, according to the Financial Times.

There is no doubt that China currently benefits more than Africa from the trade relations and cooperation. Its main imports from Africa – commodity – don’t command particularly high prices and are easily obtainable from other sources. Despite that, the trade is hugely beneficial to African countries because they have one more market for their commodities and have access to another market for less expensive imported goods and services on which they depend for their survival. Besides, the huge construction works undertaken by Chinese companies and their diversification into manufacturing in Africa have created millions of badly-needed jobs in Africa.

However, African countries must step up their game to benefit maximally from the trade and cooperation with China. Perhaps that featured prominently in the talks as the Chinese President Jinping announced at the conclusion of the forum that he and African leaders have reached consensus on lifting China-Africa relations to a comprehensive strategic cooperative partnership.

Nigeria was represented at the forum by President Buhari and the ministers of Foreign Affairs, Transport, and Industry, Trade and Investment. They held high-level and fruitful discussions with the Chinese president and business community on how to improve trade and good relations between both countries. Particularly, they discussed how to ensure the quick completion of the 3,050 megawatts Mambila power station, secure favourable loans to construct coastal railway stretching 1,402 kilometres linking Lagos with Calabar (which will create about 200,000 jobs), the Lagos-Kano standard gauge modernisation, and the Kaduna-Abuja rail projects.

We commend the expanding trade and investments between China and Africa as a concrete manifestation of South-South cooperation – an initiative that unites developing countries in their efforts to pursue self-reliance and development. However, we urge Nigeria and other African countries to up their game, diversify their economies and position themselves so that they can benefit maximally from the expanding trade with China rather than being known exclusively as sources of cheap commodities.