China’s prosperity and its interest in Africa and African raw materials are crucial to Africa’s continued economic growth. As Africa’s population surges over the next several decades and Nigeria, Tanzania, and the Democratic Republic of Congo, among many others, swell in size, China’s investments and assistance will become even more valuable than they are already.
Fortunately, China seems poised to strengthen its partnership with key countries in Africa. Last week it pledged to invest unimagined sums of capital in Africa over the next decade. Consequently, Chinese investments may help Africa’s people to continue to achieve high standards of living and much more economic independence.
“We have plenty of money to spend,” said Zhao Changhui of China’s Export-Import Bank. His bank and other central government owned banks will, he reported at an African Investment Summit in Hong Kong last week, supply as much as $1 trillion in financing to Africa over the next dozen years.
As much as 80 percent of that astonishing grand total will come from the Export-Import Bank alone. “We have the budget for major projects,” Zhao said. The plan, still in formation, is for the promised $1 trillion to be used to back the construction of transnational highways, railways, and airports.
China, after all, has $3.5 trillion in foreign exchange reserves. Those huge sums could be used to purchase U. S. Treasury bonds. But another way to deploy the money productively would be to spend it in Africa through direct investments, commercial lending, and soft concessionary loans.
As Zhao correctly explained, “Africa is infrastructure-light right now.” Zhao talked of spending as much as $500 billion, for example, on a rail network which would span the continent and fulfill Cecil Rhodes’ long ago dream of a Cape to Cairo rail link.
The Export-Import Bank is currently negotiating with the Democratic Republic of Congo to upgrade its deficient road system. One way to leapfrog over the problem is to finance what Zhao referred to as “air corridors,” including the establishment of one or more flying companies and a number of airports.
Zhao and his bank also want to focus on agriculture because Africa has “vast” amounts of fertile land. If China and Africa can work profitably and successfully together, he and others working with him in China believe that they can help alleviate hunger in Africa over the next fifteen years. At least that is one of his ambitious and worthy goals.
Echoing Zhao, an officer of Barclays Bank suggested in Hong Kong that Africa could conceivably become the globe’s next breadbasket. Already a $280 billion a year industry, with Chinese backing it could become an $880 billion enterprise in a few years.
Chinese funding could also be employed to tackle sub-Saharan Africa’s glaring lack of electrical energy. Spain’s current electrical capacity could power all of sub-Saharan Africa. A small city in the United States or Canada has more electrical power available than all of Nigeria, Africa’s most populous state.
Since sub-Saharan Africa will be the fastest growing part of the world from now until 2100, anything China can do to help Africa build a better infrastructure, grow its own food, power its grids (some of which will come from the many hydroelectric facilities and dams that China is already constructing), and obtain quantities of clean water for consumption and irrigation, will improve the well-being of Africans and the prosperity of their countries.
Possible project areas are numerous. Already, in the same week as the Hong Kong Summit, the China Machinery Engineering Corporation agreed to expand the power grids throughout Equatorial Guinea. It will also build power systems to supply that nation’s highways. The same firm is further constructing two power plants in Nigeria. Another company has supplied new combination steam/electric locomotives to South Africa.
In nearby Namibia, China is financing the construction of phase two of the National Youth Service College. A major coastal road from Swakopmund north will be upgraded, helping Namibia to realize the fulfillment of its national Vision 2030. In one of Africa’s most arid countries, it is also drilling for water in all fourteen of the nation’s regions.
China thinks that it will be easy to spend $1 trillion in and on Africa. Certainly, Africa needs major infrastructural upgrading, but whether Africa can absorb that amount of money will depend on good governance and high-functioning leadership across Africa.
This was published under the same title on Nov 25, 2013 in China-US Focus, http://www.chinausfocus.com