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China’s Belt and Road Initiative: Boosting trade opportunities for Sub-Saharan Africa

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China’s Belt and Road Initiative: Boosting trade opportunities for Sub-Saharan Africa

China’s Belt and Road Initiative: Boosting trade opportunities for Sub-Saharan Africa
Photo credit: Bloomberg

Despite the recent discourse about ‘Africa rising’, the continent’s growth and development prospects remain challenging.

Optimism about Africa’s future was based largely on aggregate pre-2008 growth rates of 5.5 per cent, and this owed mainly to robust global commodity demand, principally from China. Now, the contagion effects of the 2008 global financial crisis continue to haunt African countries in the form of volatile currencies, reduced inward investment flows, shrinking remittances from abroad and declining commodity prices. These effects point to several causal factors that still hamper Africa’s growth and development and underscore its vulnerability.

Poverty is a major factor, affecting close to 400 million Sub-Saharan Africans who continue to survive on less than US$1.25 a day. Levels of poverty are exacerbated by joblessness, particularly among 200 million youth aged between 15 and 24. However, there is also the collateral impact of other factors, such as rising levels of inequality, mortality, food and energy insecurity, destructive conflicts, religious extremism, ethnic and gender violence, environmental degradation and migration.

These vulnerabilities intersect with a harsh external environment in which Africa’s marginalisation has hardly been ameliorated, even during the pre-2008 boom. The continent’s share of global gross domestic product (GDP) has remained stagnant as a whole, at 2.4 per cent, and Sub-Saharan Africa’s share is barely above 1 per cent. Low growth is rooted in low or declining manufacturing output, domestic savings and investment, and trade and financial flows. Moreover, and as a whole, Africa represents a mere 1.3 per cent in global stock market capitalisation (most of which is concentrated in South Africa); 0.2 per cent of debt securities; and 0.8 per cent of bank assets; and the continent attracts a paltry 4 per cent of foreign direct investment (FDI). Most perniciously, unregulated finance has resulted in capital flight and illicit financial flows. The think-tank Global Financial Integrity estimates losses for both at US$854 billion between 1980 and 2009.

It is against this rather bleak backdrop that we can locate two promising developments for the countries of Sub-Saharan Africa. The first is the African Union’s Agenda 2063, which is an ambitious 50-year vision to achieve an integrated and prosperous continent, guided by 5- to 10- year plans. Here, the regional and international cooperation agenda will focus on the themes of inclusive growth and sustainable development; political and economic integration; good governance, democracy and human rights; peace and security; and building global partnerships.

The second concerns China’s Belt and Road Initiative (BRI). This is represented by land corridors that connect China to Europe and Africa, through Central Asia and Russia and West Asia; South Asia; and Southeast Asia; this is also known as the New Silk Road Economic Belt. Another strategic component of this connectivity infrastructure and its vast spatial geography are the sea corridors, or the 21st Century Maritime Silk Road, which links the South China Sea, the South Pacific Ocean, the Indian Ocean, the Persian Gulf, the Mediterranean Sea and the eastern coast of Africa.

Africa could receive significant reprieve with regard to its endemic development challenges through the building of synergies between Agenda 2063 and the BRI. This issue of Commonwealth Trade Hot Topics explores the linkages and the opportunities the BRI presents for Sub-Saharan African countries. This takes on added importance since China not only is Africa’s largest trading partner on a country basis but also has established a critical geopolitical presence across the continent.

Dr Garth le Pere is Visiting Professor at the University of Pretoria, South Africa, and a Senior Associate of the Mapungubwe Institute for Strategic Reflection. Any views expressed in this article are those of the author and do not necessarily represent those of the Commonwealth Secretariat.

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