The ninth edition of the Forum on China-Africa Cooperation (FOCAC) is to take place from September 4-6, 2024, in Beijing. The event comes at a time when African nations are facing multiple issues such as high inflation, currency depreciation, a heavy debt burden, unconstitutional military takeovers and geopolitical challenges such as the Israel-Hamas and Russia-Ukraine wars, and attacks by Houthi rebels on commercial shipping in the Mediterranean Sea. Moreover, a sense of ‘summit fatigue’ has seeped into the mindset of African leaders following multiple recent Africa+1 summits with Türkiye, Russia, South Korea, and the U.S.-Africa Leaders’ Summit. Rather than having 54 leaders attend, following the Banjul format of 15 countries plus the African Union Commission (AUC) is more prudent.
The utility of the FOCAC process for Africa is increasingly contingent upon Africa’s ability to set the agenda and take greater ownership of its strategic thinking. There has been no dearth of statements and papers on Chinese strategies in Africa. But there is a glaring absence of corresponding papers or strategies from the African side. This knowledge asymmetry is primarily attributed to the lack of African state capacities, expertise, and the political will to understand how China and the Communist Party of China (CCP) work. African governments have been unable to tap the vast amount of cultural and linguistic expertise of China that exists on the continent. Consequently, African agency gets constrained, which results in the agenda being driven by the Chinese side and African negotiators being on the back foot.
African priorities at FOCAC 2024
On the economic front, progress on Beijing’s ambitious goal to import $300 billion worth of goods from African countries between 2022-24 has been modest. As in data from “China’s General Administration of Customs, between January to July 2024, China-Africa trade increased to $167 billion, with Chinese and African exports amounting to $97 billion and $69 billion, respectively.” About two-thirds of that trade is dominated by raw materials.
Developing a sustainable and robust agricultural industry is an imperative. In Africa,the task of processing agricultural commodities and even doing basic processing at home such as roasting raw cashew nuts remain a challenge. Countries such as China and India which have similar experience of small-scale farming could step in to develop crops, fertilizers and pesticides that are suited to African conditions. They have the right experience and tools to support African agriculture to become more climate resilient. Developing satellite systems to improve weather forecasting is one way.
Green energy and industrial development are also important. African countries are encouraging their international partners to establish more refining and processing hubs. In Zimbabwe, Chinese companies are compelled to do basic lithium refining in order to move up the value chain and produce battery-grade lithium. However, chronic electricity shortages, lack of power generation, and significant environmental, social and governance (ESG) costs hamper the ability of international companies to refine raw minerals in African countries.
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China and African debt, lessons for India
China’s role in African debt sustainability is highly complex. According to data from the Boston University Global Development Policy Center, Chinese loans to African governments and regional institutions amounted to around $170 billion between 2000-22. However, China is not the main creditor in Africa’s debt. Chinese lenders account for 12% of Africa’s public and private debt. Although the narrative of Chinese ‘debt trap diplomacy’ has been hotly disputed, some of Chinese lending patterns require closer examination.
A 2022 study by AidData showed that half of Chinese loans to sub-Saharan Africa are not disclosed in sovereign debt records, which complicates the estimation of debt levels. Notwithstanding concerns of opacity, lack of transparency and non-disclosure clauses, China is unlikely to entertain debt forgiveness or cancellation. Instead, Beijing is more likely to write-off small, interest-free loans.
In previous instances, ad hoc and poorly structured engagements from the African side at FOCAC meetings pushed the continent into a reactive stance rather than driving the agenda. Therefore, African governments are now looking to develop a coherent strategy towards China and harmonise African positions before the FOCAC summit. African countries will continue to de-emphasise aid, focus on trade facilitation, and aggressively pursue product value addition.
Observers often point out that Indian engagement in Africa tends to mimic Chinese patterns of engagement. But such simplistic characterisation fails to consider the standalone nature of Indian engagement. India is not influenced by the actions of any third country. The Indian model and way of doing business has its own comparative advantages in sectors such as ICT, human resource development, agriculture and pharmaceuticals. However, the way African leaders negotiate with their Chinese counterparts under FOCAC could offer some crucial lessons for India’s own engagement.
First, India must emphasise continuity in its engagement with Africa. The last India–Africa Forum Summit (IAFS) was in 2015. Dialogues such as the CII-EXIM Bank Conclave, and India Africa Defence Ministers meeting have been held regularly. But if India wants to capitalise on the momentum following the inclusion of the African Union (AU) in the G-20 under the Indian presidency, it must hold the IAFS-IV at the earliest. Meanwhile, an India-African Union Track 1.5 Dialogue could be set up to deliberate on issues of mutual interest. This must be done after due consultation with Africa’s eight recognised regional economic communities (RECs). On the African side, the host of IAFS-IV should be Addis Ababa, Ethiopia which is the seat of the African Union Commission. Additionally, the AU should look to establish a regional office in New Delhi to strengthen regular consultations.
Second, India could play a central role in strengthening the integration of African economies into global value chains and supporting Africa’s industrialisation. Indian companies must look for higher value-added investments in sectors such as agriculture, pharmaceuticals, and manufacturing. The idea is to set up manufacturing bases in African countries that will help to create employment and serve local markets. Indian companies working in Africa should look to invest in farm mechanisation, food processing, irrigation, establish cold storage infrastructure to prevent food wastage, and continue to promote the use of ‘Triple A’ (affordable, appropriate and adaptable) technologies.
The third lesson pertains to encouraging greater Indian private sector participation and finding innovative financing solutions. While India’s lines of credit remain a popular instrument for financing projects, African countries are apprehensive about taking newer loans after the COVID-19 pandemic. Subsequently, innovative ways of financing such as public-private partnerships, and blended finance are the way forward. Indian strategic and business interests in Africa need to be clubbed together with the government supporting Indian banks and entrepreneurs with low-cost credit. This would help Indian firms conduct feasibility studies and detailed project reports to create bankable projects. Other forms of financing such as the EXIM Bank’s Trade Assistance Programme could help to augur trust and expand India and Africa’s banking relationship.
Technology use
Finally, India’s own digital stack, which includes biometrics, mobile connectivity and Jan Dhan technology, could help establish digital and physical connectivity with Africa. The Unified Payment Interface (UPI) and RuPay services are already established in Mauritius. Kenya, Namibia, Ghana and Mozambique have shown interest in utilising the UPI platform. Additionally, to strengthen Indian banking and reduce forex risk, rupee-based lines of credit must replace dollar-based ones. African nations lose billions of dollars annually in exchange rates. Therefore, making transactions that are currency-neutral is in the interest of both India and Africa.
African countries are increasingly taking greater ownership of their strategic thinking. Their citizens are demanding accountability from their governments to ensure that their economies move up the value chains. They are trying to change the narrative surrounding Africa by repositioning the continent as an investment destination. By gauging how African leaders engage and negotiate with China under FOCAC provides important lessons for bolstering India’s own partnership in Africa.
Abhishek Mishra is Associate Fellow at the Manohar Parrikar Institute for Defence Studies and Analyses (MP-IDSA), New Delhi
