The long term economic and political implications of the Belt and Road Initiative (BRI) have been articulated, and debated extensively by scholars, strategic analysts, and policy makers, from different parts of the globe. Western analysts and policy makers have expressed their concerns with regard to the long-term consequences of the project on more than one occasion. Recently, Alice Wells, Principal Deputy Assistant Secretary of State for South and Central Asia at the U.S. Department of State during an interaction at the Woodrow Wilson Centre (Washington DC) argued, that the BRI lacks transparency, and large borrowings from China, are likely to lead not just to unsustainable debts, but excessive dependence upon Beijing. To bolster her argument, Wells cited examples of BRI projects in South Asia, Africa and South East Asia. An earlier report published by the Center for Global Development in 2018, titled ‘Examining the Debt Implications of the Belt and Road Initiative from a Policy Perspective’ highlighted the above facts in great details.
Countries have tried to frame an alternative narrative to the BRI. For instance, Japan which for long has been funding infrastructure projects in Asia and Africa has come up with Partnership for Quality Infrastructure (PQI), Tokyo is also working with India for building the Asia-Africa Growth corridor. In 2018, the Trump Administration went ahead with The Better Utilization of Investment Leading to Development (BUILD) Act. Through this act, the U.S. International Development Finance Corporation (DFC) was created. DFC (with a budget of 60 Billion USD) would help in promoting private sector investment in the Indo-Pacific – especially Africa.
China’s engagement with Africa
During the course of any discussion, the China-Pakistan Economic Corridor (CPEC) and Hambantota Port (which Sri Lanka has given on lease to Beijing for a period of 99 years) get more attention, there are projects in Africa too which have been controversial. China is the largest infrastructure spender in Africa currently helping develop or upgrade ports, rail lines, and power plants from Nigeria to Djibouti. But in Africa, China’s debt trap diplomacy has been under siege with countries like Sierra Leone scrapping projects. According to the China-Africa Research Initiative African countries owe China about $130 billion.
China has sought to address some of these criticisms. For instance, Xi Jinping in 2018 made it clear, that Beijing wants Africa to benefit from the Belt and Road Initiative as well. Said Xi Jinping, “… it is for both China and Africa to pursue win-win cooperation and common development….China will continue to improve institution building, develop new ideas and expand areas of cooperation with Africa to bring our cooperation to greater heights.” Xi also made a significant point, China would re-examine projects which may be unsustainable and which do not have any-long term benefit for Africa.
Ethiopia is a perfect instance of how China is investing in big ticket projects, and there are concerns but due to lack of alternative, Addis Abbaba has to fall back on Beijing. Ethiopia has taken massive loans from China, estimated to be more than $12.1 billion since 2000. According to a report published in 2017, Chinese investments in Ethiopia have been growing at a rate of 52%. Furthermore, half of Ethiopia’s external debt is owed to China with government debt standing at 59%. The $4bn Ethiopia-Djibouti railway hailed by many, has been criticised by a number of commentators for only contributing towards Ethiopia’s rising debts vis-à-vis China. Ethiopia has been working with Beijing to manage the debt.
Ethiopian Prime Minister Abiy Ahmed Ali (a Noble Laureate) is considered to be a reformer, and was perceived to be pro-west. Abiy however, has realized the importance of the China-Ethiopia economic relationship. Ethiopia participated in the BRI Forum, and the Ethiopian Prime Minister met with Chinese President Xi Jinping on the side lines of the forum, and discussed key issues related to the relationship, especially the progress of key projects pertaining to the BRI, and the economic relationship between both countries.
In April 2019, Ethiopian PM’s spokesperson, Billene Seyoum, in an interview with Chinese media hailed the BRI, saying “it has also become a critical element in facilitating the relations between the two countries.”
Focus on human resource development and capacity building
China has begun to invest in human resource development and other areas which could benefit the Ethiopian economy. In September 2019, while speaking at a reception organized by the Chinese embassy, the Ethiopian PM hailed China for its efforts towards the promotion of Human Development. He also pointed to the fact that over 200 students had been provided scholarships. It would be pertinent, to point out that China is not just providing scholarships for degree programs, but also inviting Ethiopian officials to attend short-term seminars, training courses and workshops. At the event, The Chinese Ambassador to Ethiopia also made an interesting point, that Human Resource Development is a key component of the BRI and China-Africa cooperation.
Recent China-Ethiopia Dialogue
During a recent Beijing-Ethiopia dialogue at Addis Ababa, two important Memoranda of Understanding were signed which could play an important role in economic cooperation between both countries. One was signed to improve the manufacturing capacity of Small and Medium Enterprises (SMEs) in Ethiopia. The MOU was signed by Ethiopia’s State Minister of Trade and Industry (MoTI), Teka Gebreyesus, and Vice Minister of Industry and Information Technology of China, Wang Jiangping. According to a senior Ethiopian official, “the MOU will serve both countries to work together in developing small and medium scale enterprises.” Not only would the MOU enhance market linkages between Chinese SMEs and their Ethiopian counterparts, but this would also provide a chance to Ethiopian small scale enterprises to learn from China.
An MoU was also signed between Ethiopian Innovation and Technology State Minister, Sisay Tola and Chen Kuan, the founder and CEO of Chinese firm Infervision Technology Corporation in Ethiopia’s capital Addis Ababa. The aim of the MoU was to boost the technological capacity in areas like education and healthcare as also to enhance the exchange of information between private sectors of both countries. Chinese e-commerce giant Alibaba Group and Ethiopia signed an MoU for the creation of Electronic World Trade Platform (eWTP). After Rwanda, Ethiopia happens to be the second African country to join the EWTP. Ethiopia would benefit immensely from being a part of the EWTP as it will result in trade facilitation and open up new markets for the SMEs.
In conclusion, Beijing’s engagement with Africa cannot be examined only from the lens of the Debt Trap. China is exhibiting flexibility, and a willingness to address some of the key criticisms of the BRI. However, there still exist some problems in the economic links between China and Africa. Beijing on it’s part is trying to send out a message, that it believes in win-win cooperation, and is keen to invest in human resource development and capacity building in Africa.
Image credit: Xinhua/Yao Dawei
The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of The Geopolitics.
About the Authors
Tridivesh Singh Maini is a New Delhi-based policy analyst associated with the Jindal School of International Affairs, OP Jindal Global University, Sonipat, India. One of his areas of interest is the Belt and Road Initiative.
Mahitha Lingala is a student at the OP Jindal Global University