On June 27, 2019, the China-Africa Dialogue on Infrastructure and Financing Cooperation opened as one of the thematic seminars of CAETE. The seminar attracted nearly 1,000 participants from Chinese and African government agencies, financial institutions both bilateral and multilateral, industry associations, international contractors and supply-chain enterprises. African countries represented in the seminar include the Republic of Congo, Cameroon, South Sudan, Ghana and Kenya. Discussion was centered around two themes: investment and financing innovations, and sustainable development of high-quality infrastructure in Africa. A ceremony was held for the signing of 13 infrastructure cooperation programs involving a sum of $2.6 billion.
Infrastructure: highlight in China-Africa cooperation
For many, the most visible and predominant aspect of China-Africa cooperation is nothing else but infrastructure. Chinese companies are building railways, highways, port facilities, stadiums and conference halls all over the African continent, and over 50% of the African construction market is occupied by Chinese actors. On the demand side, Africa is indeed in dire need for infrastructure, the lack of which poses one of the most important challenges for intracontinental trade. In 2017, intra-region trade represented only 17% of Africa’s total trade volume, whereas the same number in Europe, Asia and North America was 69%, 59% and 31% respectively. As the African Continental Free Trade Area was officially established and trade barriers on paper were expected to be teared down, trade barriers on the ground – the lack of roads, bridges and ports – also need to be removed.
This process will necessitate only more demanding work, as infrastructure development is faced with unique challenges originating from its characteristics. Infrastructure projects often require a huge bulk of fund, whose return is protracted over a long period of time, accompanied by many risk factors faced by both the constructor and the funder. On the other hand, African governments are often warned by western observers against the risk posed by excessive government and overall debt burdens. Therefore, it is in the interest of all stakeholders to explore innovative and sustainable financing and other practices in infrastructure development.
From government drive to market orientation
In the discussion section, participants reached a shared understanding that China-Africa infrastructure cooperation is transitioning from a government-guided model to a market-oriented one. Consequently, new ideas need to be developed about how government, financial institutions and contractors should join forces to ameliorate investment environment, develop investment and financing mechanisms and innovate models and services. Representatives from CREC, a major Chinese railway constructor, and from the Zambian government placed great hope on the PPP model as the direction in which financing and project implementation will advance. The head economist from China Development Bank recommended the three-party cooperation model, stating that the CDB is currently discussing with the French Development Agency about potential collaboration, and that it is also considering cooperating with the World Bank and the African Development Bank.
Sustainability was another key point of discussion, as participants emphasized the need to keep infrastructure project conception in line with the host country’s long-term goals in economic development, social progress and environmental protection.
Besides the lively discussions, the seminar also witnessed the signing of 13 cooperation projects, including phase 2 of the Blue Sea International Ibom power plant in Nigeria, package program of power grid construction in rural areas of Ghana, the Amaria hydropower plant in Guinea, and the Ishu hospital program in Uganda.
Ruoyu Chen, NYU Business and Political Economy
China-Africa Stories Contributor
Written from sources: