What can Africa expect from FOCAC 2021?

By David Thomas

The Forum on China-Africa Cooperation (FOCAC) is a triennial high-level forum between China and all of the states of Africa, with the exception of Eswatini, which continues to recognize Taiwan.

Modeled on Japan’s Tokyo International Conference on African Development (TICAD), it provides an organizing mechanism for Chinese foreign policy toward Africa. Typically attended by the incumbent Chinese president and many of his counterparts across the continent, FOCAC has frequently played host to eye-catching Chinese policy announcements and financial commitments. The forum is alternately hosted in Beijing and major African capitals, and the 2021 edition is due to be held in Dakar, Senegal.

The forum looks to build on the increasingly close economic relations that have been forged between China and Africa over the last 20 years. According to the China-Africa Research Institute at Johns Hopkins University, the value of China-Africa trade in 2019 was US$192 billion, up from US$185 billion in 2018. In 2019, the largest exporter to China from Africa was Angola, followed by South Africa and the Republic of Congo. In 2019, Nigeria was the largest buyer of Chinese goods, followed by South Africa and Egypt.

China is also Africa’s biggest source of foreign direct investment – investment surged from US$75 million in 2003 to US$2.7 billion in 2019. Chinese foreign direct investment (FDI) flows to Africa have exceeded those from the US since 2014.
Between 2013 and 2018, 45 percent of China’s foreign aid went to Africa. The number of Chinese workers in Africa by the end of 2019 was 182,745, according to official Chinese sources.

How has FOCAC impacted the financial relationship between China and Africa?

The first official FOCAC was held in Beijing in 2006, following two major ministerial conferences in Beijing and Addis Ababa in 2000 and 2003. Between 2000 and 2019, the China-Africa Research Institute at Johns Hopkins University estimated Chinese financiers signed 1,141 loan commitments worth US$153 billion with African governments and their state-owned enterprises.

In 2015, China unveiled its largest commitment of the conference series, a US$60 billion package of aid, subsidized lending, and state-backed investment, a commitment repeated in 2018.

Chinese financial support has proved crucial to African countries over the last two decades. Loans from government and state-owned banks have enabled the construction of major infrastructure projects across the continent, including highways, ports, airports and government buildings.

But much of that support has been relatively opaque. According to a research paper released in late September by the China Africa Research Institute, Zambia’s outstanding external debt to Chinese financiers is approximately US$6.6 billion, almost double the US$3.4 billion revealed by the previous Zambian government. The estimates do not include substantial arrears to Chinese contractors for unpaid projects, part of an estimated domestic arrears pile amounting to US$2 billion.

What was promised at FOCAC in 2018?

For the first time in the history of the FOCAC meetings, China’s commitments to Africa stayed flat in 2018, with US$60 billion pledged over 3 years. Prior forums had seen an exponential growth in commitments, starting from around US$5 billion in 2006. According to Annalisa Prizzon, a senior research fellow at the UK-based ODI, the 2018 commitment was more weighted towards aid than previous instalments, with 25 percent of these commitments – or US$5 billion a year – in the form of grants, interest-free loans and concessional loans.

In a May speech, Chinese finance minister Wang Yi said that over 85 percent of the eight major initiatives announced at the 2018 Beijing Summit have been implemented, 70 percent of the US$60 billion supporting funds have been disbursed or earmarked, and a large number of cooperation projects have been launched or completed.

Other analysts are less enamored of the track record of FOCAC in delivering benefits to Africa. Writing for African Business, former Liberian public works minister Gyude Moore says that a vast economic chasm has opened between Africa and China. He argues that this year’s forum presents an opportunity for African states to recalibrate and correct their courses using lessons from China’s past.

What will be on the agenda at this year’s FOCAC?

The COVID-19 pandemic has had a catastrophic financial impact on many African countries, leading to fears of debt defaults on the billions of dollars that China has lent the continent over two decades. The World Bank estimates that Africa’s funding gap stood at US$290 billion in 2020.

Without debt support, unaffordable payments on the vast portfolio of loans from China and other wealthy nations could lead to a series of chaotic defaults by individual African countries. That has led many analysts to predict that an era of ‘easy’ Chinese credit in Africa is drawing to a close in favor of political and strategic relationships underpinned by infrastructure.

For its part, China says it is a participant in the G20 Debt Service Suspension Initiative, and says it has signed debt suspension agreements or similar understandings with 19 African countries. It has also cancelled interest-free loans due to mature by the end of 2020 for 15 African countries. Yet African countries concerned by their fiscal situation are likely to push for much more generous debt renegotiation and forgiveness.

According to Wang Yi, the conference will also focus on joint efforts against COVID-19, including the provision of more vaccines for the continent. Africa’s share of China’s total global vaccine distribution remains at 8 percent compared to 61 percent for Asia, according to a Chinese vaccine tracker report from @BridgeBeijing.

There will also be talks on deepening cooperation on China’s Belt and Road global infrastructure plan and adopting adopt sector-specific cooperation measures for priority areas such as health care, investment, trade, industrialization, agricultural security, climate change, peace and security, human resources and digital economy. China will release a report on its private sector investment in Africa in the second half of the year.

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