Africa’s Agenda 2063, adopted by the African Union in 2013, clearly outlines Africa’s priority areas for economic growth and development, and the implementation plan to be achieved in a 50-year period. The framework provides a blueprint of the opportunities for continued cooperation with global development partners such as China. Of Africa’s 54 states, 53 have subsisting bilateral relations with China, under the Forum on China-Africa Cooperation (FOCAC).
Pushing for win-win development, China views its Africa ties as indispensable and important to the attainment of its Belt and Road Initiative (BRI) which was launched in 2013 as a strategic policy for global engagement. Under the auspices of the BRI, China has conscientiously made a detailed case for mutual cooperation to facilitate mutual development agenda between China and Africa. As of April 2019, 37 African countries and the AU Commission had signed BRI cooperation agreements with China.
Both the BRI and Agenda 2063 are playing out in a rapidly evolving global context. Notably, there are ongoing trade consultations on tariffs between the US and China that are of significance to each of these leading economies with ramification on the global economy. The African Development Bank has recently cautioned that US-China tensions could trigger a potential 2.5 percent reduction in GDP for resource-intensive exporters and also a 1.9 percent reduction for oil exporters by 2021. A significant portion of African countries are resource intensive exporters. In Europe, Britain continues to explore Brexit, which likewise has significant implications for Africa’s developing economies.
Against these global dynamics, China is doubling up its African investments and positioning itself as an alternative, if not preferred, investment partner for Africa’s development agenda. Shifting from predominantly trading with Africa in natural resources, China is moving to invest in African industry. In 2015, 46.5% of Chinese investments in Africa were reported to be in manufacturing, 44.5% in mining, 24.2% in construction and 7.7% in agriculture. Through the China-Africa Development Fund, China has extended debt financing in the form of development aid and commercial, export and supplier of credit to the African continent, progressively growing from $1billion in 2002 to $142B in 2019.
In 2018, Chinese President Xi Jinping launched eight major initiatives for engagement with African countries, focused on inter alia: industrial promotion, trade facilitation and infrastructure connectivity. China’s laser focus on Africa and the prevailing global circumstances signals an opportunity for African countries, including Ghana, to review respective resource endowment and economic comparative advantage to facilitate a strategic and mutually beneficial engagement with China. Indeed, African countries are already positioning themselves for balanced and sustainable trade with China. The recent 3rd Edition of China Trade Week (CTW) in Ghana exemplified a platform on which to showcase and explore more opportunities for mutual engagement between China and Ghana.
While diplomatic relations between Ghana and China date back to the sixties, it is the 1983 cooperation agreement that kicked off more formal strategic partnership and trading links between the countries. Trade between the countries has grown upwards of $6.7 billion from $100 million, over the last two decades. China is now Ghana’s largest trade partner. In 2018, trade between Ghana and China amounted to $5.976 billion. China’s imports from Ghana were approximately $1.305 billion, and exports to Ghana were $4.671 billion. China's non-financial direct investment inflows into Ghana, amounted to $2.511B in 2018.
The just concluded CTW in Ghana provided a learning platform for government and business actors from both countries. The CTW Ghana provided an opportunity for Ghanaian entrepreneurs to develop strategic partnerships and trading links with Chinese manufacturers. This is particularly important for Sino-Ghana bilateral relations even as President Nana Akufo-Addo taps on China’s industrial promotion initiative to position Ghana as a manufacturing hub of West Africa. CTW Ghana also provided retailers, wholesalers, distributors of exports and imports an avenue through which to understand how to begin trade relations by providing information about China and effective trade with China.
To further facilitate trade, China has in line with its infrastructure connectivity initiative invested in Ghana’s infrastructure - notably in the construction of the Shenzhen Energy Group operated 200 MW Sunon Asogli thermal plant and the Sinohydro Corporation operated Bui Hydropower Station. The Bui station is expected to generate up to 400 MW of electricity to Ghana’s national grid, allowing potential export to neighboring countries. The oil reserves in Ghana signify a further energy and trade collaboration between the two countries.
Culturally, China has demonstrated itself to be a long-term partner. This augurs well for Ghana’s longer-term development agenda. To this end, the continued teaching of business Chinese at the University of Ghana’s Confucius Institute is further facilitative to trade ties between the two countries.
China has reaffirmed and demonstrated its readiness to work with Africa, including the intentional adoption of eight measures for Sino-African relations. As outlined above, much has been done to this end, but there also remains much potential for continued mutual cooperation for win-win development.
By George Nyongesa,
Senior Associate at Africa Policy Institute, Nairobi, Kenya
Twitter: GeorgeNyongesa Email: email@example.com