China-Africa partnership; is it Win-Win or blind allegiance? Part 1

In my article “Strength in Numbers: The Power of Regional Trade”, published in   e-journal USA, Department of State’s publication; December 2009, I discussed with a lot of optimism, the future of the Common Market for East And southern Africa-  COMESA, Free Trade Area (CFTA) and  COMESA Customs Union (CCU). “With a regional population of 400 million and a gross domestic product of almost US $420 billion, ours is an attractive region for investment and trade in this globalized world” I shouted aloud!

A lot of people might have been mused that I found a 400 million Africans working towards a common goal such a big deal.Indeed, despite my optimism, only fourteen out of the 19-member states were already in FTC, and the Customs Union, had only been launched hardly six months before.

One world power however, The People’s Republic of China did not find 400 million African market a negligible number.  Although COMESA was hardly one third of China’s population, China found it a potential serious partner. China’s bold entry into COMESA region, was through a well thought of entry: the PTA bank.  China joined the PTA Bank, known today as the Eastern and Southern African Trade and Development Bank (TDB), one of the major COMESA independent institution, and one of the only two COMESA institutions that were making financial profit.The People’s Republic of China was the first non-regional member state to joinTDB as far back as year 2000. Acquiring, an initial 12.3% shareholding in the Bank. Incidentally, it is in the same year 2000, that COMESA launched the first African Free trade Area (COMESA FTA), starting with 9 core countries being part of the FTA.

Why would then giant China be interested in small COMESA?  Small as it may look vis a vis the People Republic of China, COMESA was, and still is; the largest African Economic grouping in Africa and one of the 5 Regional Economic communities (RECs) that form building blocks for African Union. As a result, China was strongly engaging the REC and its institution.

Prior to partnership with TDB, China had developed a long-standing partnership with the African Development Fund (ADF) and African Development Bank AfDB), It became a member of the ADF and AfDB as far back as 1985. China has supported the concessional funding base of the institution over the years and was the 13th largest contributor to ADF-14. “China has expanded its investments in African countries to support their economic growth and development and has become its principal cooperation partner in trade, investment, infrastructural development and economic cooperation. During the Forum on China Africa Cooperation summit in 2015, China pledged a US $60 billion package to implement a ten-point cooperation plan with Africa”

One would ask. Why would China that was already engaged with a bigger continental bank, AfDB be interested in PTA/TDB?, the question can be answered with a similar question: why would AfDB itself be a member PTA/TDB? The answer lies in a simple structural engineering logic: Despite the fact that the beauty of a building being mainly identified by the roof top; any serious engineer, puts much of his/her effort on the foundation. Thus China’s interest in Africa’s not just in COMESA but also other RECs.

My example above is drawn from China-COMESA cooperation for obvious reason, having spent more than a decade and half at COMESA, I am talking about issues that I am well familiar with. Secondly, I cannot discuss cooperation with each REC in one article. Let me however point out some few examples covering some other building blocks of the African Union. In March 2018 China for example announced it will give the Economic Community of West African States (ECOWAS) a $31.6 million grant to build its new headquarters in Abuja, Nigeria. I ECOWAS  15-member states include   Africa’s most populous and biggest economy, Nigeria. It is worth noting that ECOWAS has one of the strongest regional identities.

China also has strong with Southern Africa Development Community (SADC), particularly in the field of infrastructure. 16 membership of SADC includes Africa’s 2^nd biggest economy South Africa, and the most influential country in the SADC region, in Addition both China and South Africa are members of the BRICS.

Besides the already mentioned China PTA/TDB, as well as the continental AfDB; China is also engaged with other sub-regional trade and development banks in Africa. China’s financing of African infrastructure projects is done through China’s Export and Import Bank (China EXIMBANK) and China Development Bank. China EXIMBANK also has strong cooperation with the Development Bank of Southern Africa and the West African Development Bank. Based on the above described economic partnerships, would any revolutionary African leader who understand Cost and benefits, worthy his/her salt call for its termination? And don’t forget that China gifted a USD 200 million Africa Union Building.

Watch this space for part II of this article.

MweusiKarake is a veteran journalist and former head of Public Relations/Corporate Communication at the Common Market for Eastern and Southern Africa (COMESA).

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