Africa -China Review Africa -China Cooperation and Transformation
Published:April20,2022
African Union Ambassador to China Rahamtalla Mohamed Osman. Image via Global Times.
The 8th Forum on China Africa Cooperation (FOCAC) was held in Dakar, Senegal from November 29th through 30th, 2021. In the headlines that followed, many analysts reported a 33% percent drop in Chinese finance and suggested a deterioration of the relationship. In contrast, we have argued that the 2021 conference did not only adopt the largest numbers of (and longest) outcome documents in a single session (usually only two are adopted), it was also the most African-led to date, and had some significant new commitments – not least on local vaccine manufacturing, a massive African priority.
To test these competing narratives and get insights into what African leaders think needs to happen next, Leah Lynch, Development Reimagined’s Deputy Director visited Ambassador Rahamtalla Osman, the African Union’s (AU) permanent representative to China, at his office in Beijing to discuss. Below is the full interview:
LEAH LYNCH: Thank you very much for speaking with us Ambassador Osman. To start, could you give us your reflections on the recent FOCAC Outcomes?
AMBASSADOR OSMAN: First, as you know I have been in office here in Beijing since November 2018, a few months after FOCAC 7 which was held in Beijing, and was attended by an unprecedented 51 African Leaders. It was before COVID-19 and was certainly a high point! As a result, I came to Beijing expecting China to be a key development partner for Africa, and my expectations have certainly been met over these three or more years. We have seen China continue to support the continent in progressing towards AU’s Agenda 2063 which aims to deliver inclusive and sustainable development. And I see no change in that from my vantage point now. While COVID-19 has been a very challenging time in China and at home in Africa, especially when it comes to flows of people between Africa and China, many efforts have been made on all sides to maintain the momentum, and even increase it.
LEAH LYNCH: Overall what was your biggest takeaway from FOCAC 2021?
AMBASSADOR OSMAN: Overall, I was pleased to see the collective African input expressed throughout the four key documents we agreed is more recognizable than ever. There were references to all six of the ten-year frameworks of the African Union’s Agenda 2063 – an increase since 2018 which only recognized two of the frameworks – alongside numerous references to several of Africa’s 15 flagship projects – from transport to energy and infrastructure planning, as well as the African Unions’ gender and women’s empowerment strategy. While the African Development Bank (AfDB) and Africa Center for Disease Control (Africa CDC) were both referred to in 2018, they were mentioned several times in 2021 alongside some of our newer African-led institutions such as the Africa Vaccine Acquisition Task Team (AVATT), the African Medicines Agency (AMA), and the African Medicines Regulation and Harmonization (AMRH) program. This is all very important as it demonstrates China’s commitment to directly support Africa’s existing development plans on the continental and regional levels.
LEAH LYNCH: Did you feel disappointed by the $40 billion commitment in 2021, compared to the $60 billion commitment back in 2018?
AMBASSADOR OSMAN: Firstly, I think we need to look at the full picture and take into consideration all the commitments announced at Dakar- not just the financial commitments, but the 1 billion vaccine donation with 400 million to be manufactured through joint production, the various commitments to projects across agriculture and poverty reduction, and several commitments to regional infrastructure, including the commitment to establish 10 connectivity assistance projects across the continent, alongside the inclusion of enhancing China-Africa cooperation under the AU’s Program Infrastructure Development for Africa (PIDA). When we look can this full picture we can see that actually the commitments far exceed those in 2018.
Now when specifically talking about finance, especially concessional finance, which is crucial for Africa, Chinese partners have really been very important in supporting our ambitions for infrastructure development in Africa. So of course, when China announces a “smaller number” and does not announce a specific amount of concessional finance the immediate fear is – China is going to stop lending to us. It is an understandable fear.
But let me tell you that from my discussions with government officials here in Beijing, I have been reassured that China is not going to stop lending, including for infrastructure. Yes, China is also willing to provide more flexible and innovative finance, like PPPs, especially if our governments request it, but China is also open to infrastructure finance, and I do not expect this to stop.
LEAH LYNCH: Can you explain this in a bit more detail? Why would regional infrastructure connectivity and PIDA suggest concessional finance from China?
AMBASSADOR OSMAN: The Program for Infrastructure Development in Africa (PIDA) was launched as an initiative of the AU, the NEPAD Agency – the AU’s Think Tank – and the African Development Bank (AfDB) in 2010. In the simplest language, it aims to help prioritize, prepare and monitor the regional and continental infrastructure networks and services in a number of sectors – namely energy, transport, Information and Communication Technologies (ICT) as well as transboundary water resources.
The expected outcomes of PIDA include reduced energy costs and increased access, reduced transport costs and a boost to intra-African trade, water, and food security, and increase global connectivity. Currently, PIDA has on its books an impressive 409 projects across the whole continent – of which 54 (13%) are in the energy sector, 114 (28%) in the ICT sector, 232 (57%) are transport projects, and 9 (2%) are water projects, all at different stages of development, and most of which require concessional finance. Of these, so far, 76 (19%) of the projects have been completed and are operational, and a further 78 (19%) are being constructed now.
This leaves a significant gap, which partners like China can fulfill, and it now looks like China is ready to do this. Although we’ve seen good progress so far, PIDA’s long-term implementation through 2040 is currently estimated at more than US$360 billion. So, we can see there’s still a lot of work to do.
LEAH LYNCH: I guess this shift to regional projects is exciting for the AU, but won’t some countries be unhappy if they can’t get bilateral projects?
AMBASSADOR OSMAN: I don’t think this is the end of bilateral projects with China. But I think it is an opportunity for something more, especially when it comes to concessional finance. The fact is, regional programs can be very transformational for society, more sustainable, and better value for money than projects that are negotiated on a country-by-country basis. This is partly due to the fact most African countries are facing similar infrastructure challenges and therefore seeking funding on similar projects.
Countries will still have to be involved in the negotiation of these projects, and will still see the benefits, but they will also be able to reduce the risks by combining their assets. Funding projects through PIDA also make sure the projects are aligned to Agenda 2063, agreed upon by member states, and already have a robust monitoring and evaluation framework in place.
LEAH LYNCH: With your emphasis on regional projects in mind, could you tell us how the AU will put these plans to China exactly?
AMBASSADOR OSMAN: As I said, countries will still need to be involved in the discussion, prioritization and structuring of regional projects. My feeling is that in order to drive these new FOCAC commitments forward and address existing challenges and concerns, those of us on the African side need to be proactive. We need to put forward our ideas, our priorities to our Chinese counterparts and discuss them. We have no time to waste, three years go past very quickly, believe me, and Chinese stakeholders work fast.
My plan is that the African Union in China, NEPAD, and yourselves – Development Reimagined – are will convene this process. We will start with a special dialogue in the coming weeks to deliver an overview of PIDA’s progress to date and introduce Chinese partners to key PIDA projects. The event will also explore challenges in regional infrastructure implementation, such as coordinating across national regulations and laws as well as addressing questions around project bankability and financial structuring.
Overall, we hope we can build on the progress of the Belt and Road Initiative (BRI) and the outcomes of FOCAC 2021 to generate long-term, sustainable development to support the continent in attaining Agenda 2063, and the United Nations Sustainable Development Goals (SDGs).
LEAH LYNCH: Yes, we are really excited about this Your Excellency, and hope it will make a big difference. Alright, now for my final question, perhaps the trickiest. What would you say to those who are concerned about whether African countries can really take on any more debt – for example, to finance these large regional projects?
AMBASSADOR OSMAN: As I mentioned earlier, infrastructure needs huge amounts of finances. However much we talk about domestic resource mobilization, the fact is African countries do not have the domestic finance to pay for it. But we cannot just abandon our development. We have to borrow from abroad – and if that finance is expensive it may lead to debt risks or inability to repay.
These risks become one of the major accusations leveled at the Africa-China relations by Western circles – who accuse China of lending African countries to burden them with debt. Not all the accusations are untrue – there are examples of projects being financed by China – and others – that have proved to be unfeasible economically and the countries defaulted in paying back those loans. At the same time, the sustainability of debt should be treated objectively if Africa and China cooperation should bear fruits.
Now, the issue of debt sustainability was one of the issues dealt with during the 2nd BRI forum in 2019, and I was here to witness it. China’s finance minister and the governor of the Central Bank of China both vowed to encourage financial institutions of China and other BRI economies to use new policy tools for rating debt risk before making lending decisions, aiming to strike a balance between meeting financing needs, sustainable development and debt sustainability.
But let me also note that I strongly believe that regional infrastructure can achieve this balance even better than national projects because with the former we can pool risk while enhancing more people’s livelihoods, productivity, and poverty reduction. This will be beneficial for the sustainability of long-term debt. We need to invest wisely while capitalizing on the FOCAC announcements.
LEAH LYNCH: Thank you Ambassador Osman for your time.
Leah Lynch is the Deputy Director of Development Reimagined.
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