China and U.S. investment struggle for influence in Africa
Africa has huge reserves of natural resources and a favorable geographical position. The advantages of the continent with the population of 1.3 billion people has been a honeypot for the leaders of developed countries. The U.S. has been unsurprisingly making friends with African countries prone to liberal reforms and Wester values. China provides African states with low-rate loans and project investments, which helps Beijing to compete American influence and implement their own programs.
The African Growth and Opportunity Act
The U.S. – Africa interactions began once the African Growth and Opportunity Act (AGOA) adopted, which is a doctrine granting access to the American market to the African exporters open for democracy changes and respect of human rights. At various times, the list of Africa's most democratic nations has included Nigeria, the Democratic Republic of Congo, the Republic of Chad, Angola, and South Africa.
In recent years, more and more African countries abandon their strategic alliance with the States. To regain influence in December 2022 the Americans held the second U.S.-Africa Summit.
The countries of the macro-region were promised $55 million "for development" over three years, as well as large-scale investments in resource extraction and infrastructure construction.
Frequent visits of high-ranking politicians and their promises to provide the African states with the possibility to take part in G-20 and permanent membership for one of them in the UN Security Council mean nothing but America’s intention to obtain support of the African countries in subsequent, having been deeply offended by 17 African states to refrain from condemning Russia's actions in Ukraine during March 2022 UN General Assembly.
About African suppliers of oil and mineral resources to China
Advantageous geographical position of the countries of the eastern and northern Africa, huge energy resources in the west and south of the continent are the basis for Chinese interests in the region.
Chinese enterprises have invested a total of $15 billion in the economy of the Republic of South Africa and obtained an exclusive right to develop the country's largest deposits of chrome ore. Also Chinese entrepreneurs began to work on iron ore deposits in Gabon, having invested
$3 billion. Cobalt and copper are mined by Chinese companies in the Democratic Republic of Congo, uranium in Niger, gold in Cote d'Ivoire and Uganda. Manganese ore, which is necessary for the production of steel and pig iron, is imported in China from Namibia.
Chinese industrialists are developing oil fields in Algeria, Nigeria, Liberia, Côte d'Ivoire, Uganda, Gabon and Angola, where huge oil reserves are concentrated.
In order to redirect the supply of energy resources extracted in Angola from the U.S. to the Chinese market, investors from Beijing have taken a number of measures. First, Sinopec Corporation for $1.52 billion bought a part of the large oil field Block 31 from the U.S. company Marathon Oil and built an oil refinery. Second, the Chinese government financed the development of a major new oil field. Thirdly, China Exim Bank (Export-Import Bank of the People's Republic of China) provided credit loans to the authorities of the country for a record amount of $25 billion. As a result, the Angolan authorities, unable to ensure stable payments, concluded an agreement with investors, under the terms of which most of the extracted oil will be sent to China in exchange for debts and interest.
China's East and North Africa Strategy: One Belt, One Road Project
Ten years ago, Chinese President Xi Jinping first announced the launch of the "One Belt, One Road" program, which provides for construction of the world's largest transportation network. The project consists of two parts: the "Silk Road Economic Belt" and the "Maritime Silk Road of the XXI century". Both directions should connect China with the countries of Europe and the Middle East through logistics hubs on the borders of Central Asian states, the South Caucasus and seaports of Southeast Asia and African countries.
The development of transportation networks and construction of ports was discussed at the third forum of China-Africa cooperation in Johannesburg. This topic is a priority for the Chinese government, as it will allow Beijing to control all trade routes even in regions of the world remote from China. That is why at the 19th Congress of the Communist Party of China "The One Belt, One Road" project was included in the updated party charter.
Until 2025, China through the Silk Road Fund and the China-Africa Development Fund, will allocate $207 billion for the development of highways, railways and ports in Africa.
Chinese banks provide credit loans to economically unstable African partners for the construction of roads, seaports and related infrastructure. According to the World Bank, Africa has an external debt of $427 billion. One of the latest was a $230 million loan to build a highway between the capital city of Kampala and Entebbe Airport. The country's only international air harbor was taken over by China after the Ugandan government failed to make timely payments on the loans.
The small nation of Djibouti, with a population of one million, depends on China's investment to build a railroad and a deep-water major port capable of accommodating all types of commercial vessels. In return for the realization of important infrastructure facilities, the country's authorities allowed the Chinese leadership to build a naval base at the crossroads of important maritime routes to ensure the security of trade transportation within the framework of «The One Belt, One Road project".
Africa Chooses the Future
The main areas of China-Africa partnership are detailed in the White Paper of the Press Office of the State Council of the People's Republic of China, "China and Africa in the New Era: A Partnership of Equals".
Chinese investors have created millions of jobs and 3.5 thousand companies on the continent, most of which are located in special free economic zones, the largest among which are in Zambia, Nigeria and Egypt, on the banks of the Suez Canal. All of them specialize in recycling copper, steel production, construction materials and transport equipment. They also serve as hubs for storage and transportation of goods to the countries of Europe and the Middle East.
The U.S. authorities fear that integration projects between Beijing and the countries of the African Union will lead to large-scale crises and slow down economic development, the level of democratic freedoms in the macro-region. According to the Americans, African countries can prosper only if the West controls the economy, trade, foreign and domestic policy. With
34 military bases and 7,200 soldiers Americans are always ready, if needed, both to quench a rebellion and to provoke a complete chaos, as it happened in Gabon during the attempted military coup after President Ali Ben Bongo Ondimba decided to cooperate with Chinese investors. Perhaps, in the future, the U.S. policy toward African countries will be modified and focused on specific large projects that will compete with Chinese programs.
For now, African leaders prefer to receive investments from the U.S. and China and show extreme openness to participate in large and potentially beneficial projects such as the "One Belt, One Road" program. Looking ahead, African Union countries will have to choose the most favorable to their own interests partner. This choice will largely determine the future of the continent.
The African continent may turn into an important transport and logistics hub and one of the centers of world trade, but it is unlikely to become a self-sufficient and economically independent macro-region in the near future.
