Editorial of the Day (3rd Sep): Forum on China-Africa Cooperation- Lessons for India

Context: The 9th edition of the Forum on China-Africa Cooperation (FOCAC) is scheduled to take place from September 4-6, 2024, in Beijing.

More in News

• African nations are grappling with multiple issues, including high inflation, currency depreciation, heavy debt burdens, unconstitutional military takeovers, and geopolitical challenges (such as the Israel-Hamas and Russia-Ukraine conflicts, along with attacks by Houthi rebels on commercial shipping in the Mediterranean Sea).
• There is also a sense of “summit fatigue” among African leaders due to numerous recent Africa+1 summits with countries like Türkiye, Russia, South Korea, and the U.S.

Centralization of Agenda and Knowledge Asymmetry

• The utility of the FOCAC process for Africa depends on Africa’s ability to set the agenda and take ownership of its strategic thinking.
• A significant knowledge asymmetry exists, with extensive Chinese strategies and papers on Africa, while African strategies on China are lacking.
• This disparity is attributed to the limited capacities, expertise, and political will of African states to understand China and the Communist Party of China (CCP).
• The lack of cultural and linguistic expertise in Africa regarding China further constraints African agency, leading to a reactive stance in negotiations.

African Priorities at FOCAC 2024

• Economic Front: Progress on Beijing’s goal to import $300 billion worth of goods from African countries between 2022-24 has been modest.
  • From January to July 2024, China-Africa trade increased to $167 billion, with Chinese exports at $97 billion and African exports at $69 billion.
    • About two-thirds of this trade involves raw materials.
  • Developing a sustainable and robust agricultural industry in Africa remains a challenge.
    • Countries like China and India could support African agriculture by developing crops, fertilizers, and pesticides suited to African conditions and improving weather forecasting through satellite systems.
• Green Energy and Industrial Development: African countries are encouraging international partners to establish more refining and processing hubs.
  • In Zimbabwe, Chinese companies are required to do basic lithium refining to move up the value chain.
  • However, challenges such as chronic electricity shortages, lack of power generation, and significant environmental, social, and governance (ESG) costs hinder the ability to refine raw minerals locally.

China and African Debt

• Chinese loans to African governments and regional institutions amounted to around $170 billion between 2000-22.
• China is not the main creditor in Africa, accounting for 12% of Africa’s public and private debt.
• Concerns over Chinese lending patterns include opacity, lack of transparency, and non-disclosure clauses.
• Despite these issues, China is unlikely to cancel or forgive debts, though it may write off small, interest-free loans.

Lessons for India

• Continuity in Engagement: India should emphasise continuity in its engagement with Africa, considering the last India–Africa Forum Summit (IAFS) was held in 2015.
  • To capitalise on the momentum from the inclusion of the African Union in the G-20.
  • India must hold IAFS-IV at the earliest and consider setting up an India-African Union Track 1.5 Dialogue.
• Integration into Global Value Chains: India can play a central role in integrating African economies into global value chains and supporting industrialization.
  • Indian companies should invest in sectors like agriculture, pharmaceuticals, and manufacturing, setting up manufacturing bases in African countries to create employment and serve local markets.
  • Investments in farm mechanisation, food processing, irrigation, and cold storage infrastructure are crucial to prevent food wastage and promote ‘Triple A’ (affordable, appropriate, and adaptable) technologies.
• Innovative Financing Solutions: India should encourage greater private sector participation and find innovative financing solutions, including public-private partnerships and blended finance.
  • Indian banks and entrepreneurs need support with low-cost credit to conduct feasibility studies and create bankable projects.
• Technology Use: India’s digital stack (including UPI and RuPay services) could help establish digital and physical connectivity with Africa.
  • To reduce forex risk, India should promote rupee-based lines of credit instead of dollar-based ones, as African nations lose billions of dollars annually in exchange rates.

Conclusion

• African countries are increasingly taking ownership of their strategic thinking and are repositioning the continent as an investment destination.
• By observing how African leaders engage and negotiate with China under FOCAC, India can derive valuable lessons to enhance its own partnership with Africa.

Sharing is caring!