The New Year has brought a host of new possibilities, and in particular, for Africa. The African Continental Free Trade Area (AfCFTA) agreement went into effect on January 1, 2021. The expectations are high for the continent.
AfCFTA is the largest free trade conglomerate in the world; 55 countries signed on to AfCFTA, consisting of 1.3 billion people and a gross domestic product of $3.4 trillion. Moreover, expectations have determined that 30 million Africans will be able to improve their income, leaving poverty behind. The move could remake Africa as a new power for trade, both internally and externally. However, the agreement is contingent on some key workings to reach the full potential of AfCFTA’s reach.
China and AfCFTA
The contingencies are large and focus on infrastructure, policy and eliminating tariff and non-tariff obstacles to improve and enhance continental trade. Some of these contingencies require funding beyond continental borders.
China, the burgeoning world power, is making its presence known in Africa, folding the continent into its monolithic project, The Belt and Road Initiative (BRI). The initiative would give incentives for Chinese investors to support infrastructure, trade and industrialization in Africa.
The BRI pivots on the ancient “Silk Road,” which were the trade routes that flowed in and out of China to the West and beyond. The Han Dynasty established the road in the year 220 B.C.E. It was over 4,000 miles long, connecting the Middle East to Central Asia and eventually, Europe.
The updated Silk Road Economic Belt and the Maritime Silk Road combine to make the BRI. The initiative invests in railways, highways, energy pipelines and benefits from streamlined border crossings. Folding in over a billion African workers and consumers is tantamount to its success. Through the initiative, China and AfCFTA have a great interest in working with each other.
Africa is receiving funding for infrastructure already. In fact, China is the top investor in the African infrastructure of any foreign country. This is a much-needed economic boost for the continent.
The United Nations Economic Commission for Africa’s chief for energy and infrastructure, Dr. Robert Lising, placed a price estimate on what would allow AfCFTA work. He pointed to estimates the African Development Bank put forth amounting to $130-$170 billion per year.
He stated that “This is a huge amount of money so China’s involvement is definitely welcome… In addition, we all know that there is available capital and equipment linked to China’s involvement in Africa’s infrastructural development.” He also pointed out that China’s competitive involvement would lower prices, benefitting Africa. Additionally, he mentioned that while Western involvement is welcome as well, Western forces often come with conditions, whereas China does not.
He said that “If you want to reap the full benefits of the AfCFTA, you need regional infrastructure development… If you want to close the gap in infrastructure development in Africa, you need to bring in all the partners including China through the BRI.” He reminded others that Chinese involvement in African infrastructure is not a new thing, happening for the last five decades. Citing the completion of Nairobi to Mombasa rail lines and the Addis Ababa to Djibouti line to support his claim.
A Partnership of Need
A round table discussion that the Center for China & Globalization organized and held in December 2019 further supports Dr. Lising’s thoughts. Isabel Domingos, ambassador from Sao Tome and Principe at the conference lays out a plan for mutual benefit. She stated that “China has needs and Africa also has needs; China has potentialities and Africa also has potentialities. We have the African Continental Free Trade Area that can be one place to promote both sides, and find a place to deepen the cooperation between China and Africa.”
While there remain anxieties over the confluence of Chinese involvement in AfCFTA, the consensus is clear; the involvement of foreign capital in AfCFTA is crucial. China stands to gain from its involvement and has the capital available that the African continent needs.
China and AfCFTA are a strong match. As Africa continues on its current trends of globalization, China can heed the call. The entire world will watch the results as a blueprint for international involvement.
– Christopher Millard