China’s President Xi Jinping has offered $60billion in financial support to African countries.
Xi, who announced this figure while speaking at the opening of a major summit with African leaders in Beijing yesterday, also wrote off debts owed his country by the continent’s poorer nations.
Xi said the figure included $15bn in grants, interest-free loans and concessional loans, a credit line of $20bn, $10bn for “development financing” and $5bn to buy imports from the continent.
Chinese companies will be encouraged to invest no less than $10bn in African countries in the next three years, he added.
Government debt from China’s interest-free loans due by the end of 2018 will be written off for indebted poor African countries, as well as for developing nations in the continent’s interior and small island nations, Xi said.
“China-Africa cooperation must give Chinese and African people tangible benefits and successes that can be seen, that can be felt,” he said.
China will carry out 50 projects on green development and environmental protection in Africa, focsusing on fighting climate change, desertification and wildlife protection, the Chinese leader said.
Xi pledged, without giving details, that China would set up a peace and security fund and a related forum, while continuing to provide free military assistance to the African Union.
The offer of more funds comes after a pledge of a similar amount at the previous Forum on China-Africa Cooperation (FOCAC) in South Africa three years ago.
Chinese officials say this year’s summit will strengthen the continent’s role in Xi’s “Belt and Road” initiative, which has already seen billions of dollars, loaned to countries in Asia and Africa for roads, railways, ports and other major infrastructure projects.
However, economists and some international financial institutions have expressed concern that Chinese loans are plunging some countries into a massive debt burden.
Beijing loaned around $125bn to the continent from 2000 to 2016, according to data from the China-Africa Research Initiative at Washington’s Johns Hopkins University School of Advanced International Studies.
Every African country is represented at the business forum apart from Swatini (Botswana), Taiwan’s last African ally that has so far rejected China’s overtures to ditch Taipei and recognise Beijing.
African leaders in attendance include President Muhammadu Buhari, South Africa’s Cyril Ramaphosa, Egypt’s Abdel Fattah el-Sisi, Zambia’s Edgar Lungu and Gabon’s Ali Bongo.
Ramaphosa defended China’s involvement on the continent, saying FOCAC “refutes the view that a new colonialism is taking hold in Africa as our detractors would have us believe.”
Before FOCAC, Rwandan President and current chair of the African Union, Paul Kagame, had also dismissed the concerns, telling the official Xinhua news agency that the talk of “debt traps” were attempts to discourage African-Chinese interactions.
However, Aly-Khan Satchu, an economic analyst based in Kenya’s capital, Nairobi, said the concerns over “debt-trap diplomacy” were “real”.
“There are worries that this infrastructure has been inflated in price, and that it is highly unlikely to make a return on investments that is necessary for these countries to get in order to pay back the debt,” he said.
“The future of China-Africa relations is going to depend entirely on how China manages this debt situation, which is now spiralling out of control,” he added.
But speaking yesterday, Xi said China’s investments on the continent had “no political strings attached”.
Chinese funds are not for “vanity projects” in Africa but are to build infrastructure that can remove development bottlenecks, he said.
“China does not interfere in Africa’s internal affairs and does not impose its own will on Africa,” Xi told his African counterparts and business leaders at a forum before the FOCAC meeting.
Meanwhile, President Muhammadu Buhari will oversee the signing of a telecommunication infrastructure deal backed by a $328m loan facility from China’s Exim bank during his visit, according to his office.
China has provided aid to Africa since the Cold War period, but Beijing’s presence in the region has grown exponentially with its emergence as a global trading power.
Chinese state-owned companies have aggressively pursued large investments across the continent, whose vast resources have helped fuel China’s transformation into an economic powerhouse.
While relations between China and African nations are broadly positive, concerns have intensified about the impact of some of Beijing’s deals in the region.
Djibouti has become heavily dependent on Chinese financing after China opened its first overseas military base in the Horn of Africa country last year, a powerful signal of the continent’s strategic importance to Beijing.
Locals in other countries have complained about the practice of using Chinese labour for building projects and what are perceived to be sweetheart deals for Chinese companies.
Chinese National Oil Firm To Fund $2.8bn Nigerian Gas Pipeline Project
Meanwhile, the Nigerian National Petroleum Corporation (NNPC) said yesterday that it had gotten full assurance from its Chinese counterpart, China National Petroleum Corporation (CNPC), on funding for the successful financing and subsequent execution of the Ajaokuta-Kaduna-Kano (AKK) pipeline project.
Financing for the 40-inch x 614km AKK gas pipeline is expected to cost about $2.8bn. Of this amount, 85 per cent is expected to come from Chinese financial institutions, which include Industrial and Commercial Bank of China (ICBC), Bank of China, and Infrastructure Bank of China with Sinosure, China’s Export Credit Agency (ECA) providing insurance cover. The balance of 15 per cent will be provided by the contractors, which include Oilserve/Oando consortium and Brentex/China Petroleum Pipeline (CPP) Bureau consortium.
A statement by NNPC spokesman, Ndu Ughamadu, disclosed that the guarantee was given during a high-level meeting between the NNPC and CNPC management held on the side lines of the Forum on China-Africa Cooperation (FOCAC) Summit in Beijing, China, yesterday.
According to Ughamadu, the assistant president and board member of the CNPC, Mr. Wang Shihong, who spoke on behalf of over six CNPC subsidiaries at the meeting, said his company placed a very high premium on the AKK Project, describing it as the beginning of several collaborations between both corporations.
“We are in full support of Nigeria’s quest to deliver the AKK project. We are working relentlessly towards securing funding for the project based on regulations and policies of Chinese financial institutions,” Shihong stated.
Shihong, who said that the CNPC cherished its relationship with the NNPC, also pledged to fully support his company’s subsidiary, CPP Bureau, partner in the AKK Project, to ensure success of the initiative.
In his response, the group managing director (GMD) NNPC, Dr. Maikanti Baru, stated that the AKK Project was dear to Nigeria, adding that, while at the FOCAC Summit, President Buhari had reiterated the potential of the project to strengthen Nigeria-China relations.
He added that the NNPC was looking forward to a successful closeout of the project’s financing towards official groundbreaking ceremony in October, this year.
“We want to maximize the construction work before the end of the year. We are hoping for the quick resolution of the financing agreements so that we will kick-start the project in October when the dry season begins,” Baru added.
On his part, the executive vice chairman of Brentex, one of the contractors handling Lot 3 of the project, Mr. Sani Abubakar, said that since signing the Engineering, Procurement & Construction (EPC) contract, tremendous progress had been made towards securing financing for the project.
He particularly commended Dr. Baru for driving the project, adding that following his leadership some of the elements that were not part of the process were brought in, including providing financing for early works.
The chairman of Oilserve, one of the contractors handling Lot 1 of the project, Dr. Emeka Okwuosa, said they had already gone into some agreements with Brentex/CPP consortium on financing, which, in the end, will bring the project under a single financing arrangement.