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It is risky for the South African economy to rely so heavily on higher commodity prices for its recovery, the South African Reserve Bank (SARB) has warned. The bank on Tuesday released its Monetary Policy Review for October 2021. Commodity prices had increased strongly since 2020. This helped support tax revenues- mainly corporate income tax off gains made by mining companies.
Commodity exports - particularly of rhodium, palladium and iron ore - had also bolstered the trade account and assisted in lifting the current account from a deficit to a surplus during the third quarter of 2020. During the second quarter of 2021, South Africa's current account surplus widened to its largest on record at R343 billion, Fin24 previously reported. The current account balance has been in a surplus for four consecutive quarters - and this is the longest sustained surplus in nearly two decades, the review read. The Reserve Bank expects the current account to revert to a deficit in 2023. Higher commodity prices also supported South Africa's growth performance, according to the SARB.
Investment in the mining industry is crucial to ensure its continued contribution to the South African economy, says PwC in its thirteenth edition of SA Mine 2021, a series of publications that highlights trends in the South African mining industry. In a year of doom and gloom on so many fronts, the mining sector delivered a sterling performance with value delivered to all stakeholders, PwC Africa energy, utilities and resources leader Andries Rossouw stated.
Namibia exports improve in August (Namibian)
NAMIBIA recorded an increase in the value of exports during August 2021, which grew by 41,5% to N$7,1 billion up from its July 2021 level of N$5 billion. The country's import bill, on the other hand, amounted to N$10 billion (up by 18,5% on a monthly basis), resulting in a trade deficit of N$2,9 billion. This is contained in the August issue of the Namibia Trade Statistics released by the Namibia Statistics Agency (NSA).The agency, however, said when compared to the N$7,5 billion level of August 2020, exports had declined by 6,2% year on year. On an annual basis, imports had recorded growth of 12,1% from their August 2020 level of N$8,9 billion, the NSA stated. The N$2,9 billion deficit recorded in August 2021 was lower than the deficit of N$3,5 billion recorded in July 2021, the decline emanating from increases in the imports of copper, petroleum oils, motor vehicles, ores and concentrates of base metals; and the manufacture of base metals and telecommunication equipment, NSA added.
Drop in SACU revenue leads to budget deficit (The Voice Newspaper Botswana)
A sharp drop in Southern African Customs Union (SACU) revenue will see Botswana recording a massive P8.50 billion in the budget deficit for the next financial year. This is according to the 2022 Budget Strategy Paper (BSP) prepared by the Ministry of Finance and Economic Development. The BSP serves as a precursor of upcoming government financial years and makes projections on budgets taking into consideration prevailing conditions. The 2022/2023 fiscal deficit is anticipated to reach P8.50 billion or 4.0 percent of GDP, compared to P7.22billion or 3.7 percent of GDP in 2021/2022. The main reason for the reversal is the sharp drop in SACU revenues, which was expected due to the overpayment in 2020/2021; however, this drop is anticipated to be a once-off.
Lorries crisis talks ongoing: minister (The Citizen)
The government said yesterday that discussions were in progress to end the stalemate involving hundreds of lorries from Tanzania that had been seized in Zambia over illegal logging. However, lorry owners said yesterday that they were immediately suspending the transportation of cargo to the DRC via Zambia until their vehicles and drivers are released. Transporters say about 400 Tanzanian registered lorries had been seized in Zambia since June over illegal logging claims. In 2016, Zambia banned the felling and transporting of a tree known locally as mukula - Pterocarpus chrysothrix, a relative of rosewood - in a bid to curb its rapid loss fuelled by growing demand in Asia. Authorities in Zambia say the lorry drivers get the logs in their country (Zambia) but they use falsified documents to claim that they [the logs] had been obtained in the DRC. But the Minister for Industry and Trade, Prof Kitila Mkumbo, told The Citizen that the government was aware about the issue, and that discussions were at an advanced stage,
Increased freight charges slapped on importing coal and clinker have reinforced the case for local production to shield cement manufacturers from steep costs that have kept cement prices on the roofs. Onset of Covid-19 elevated charges as importers of commodities such as coal, clinker and steel compete for airline spaces with transportation of health essentials such as personal protective equipment, masks and vaccines. Bamburi Cement is among companies that have felt the impact of increased freight charges and expects them to remain high going into next year. “We have seen costs increase on input products such as coal and imported clinker mainly driven by higher freight charges,” said Seddiq Hassani, Bamburi Cement chief executive in an earlier interview with Smart Business. “There is very high demand for freight services, especially for Covid-19 supplies and so the rates for freight have increased,” he said.
Ghana is positioning its busiest port to become a hub in West Africa with a $1.5 billion expansion project. The project to nearly quadruple the container capacity from 2017 of the port of Tema, which now handles more than 70% of Ghana’s container traffic, was spearheaded by Meridian Port Services, a joint venture between Bollore, APM Terminals and the Ghana Ports and Harbours Authority. The Port of Tema aspires to overtake regional peers such as the Port of Abidjan, providing a point of transshipments for cargo, Mohamed Samara, MPS Chief Executive Officer told journalists last month. The expansion is set to leverage an Africa-wide trade deal, which came into effect in January and seeks to boost intra-continental commerce from the current 14.5% of trade, according to the African Export-Import Bank. That share compares with more than 50% in Asia and 72% in Europe. The Africa Continental Free Trade Area is creating the world’s biggest free trade zone by area, encompassing a combined economy of $2.5 trillion and a market of 1.2 billion people.
‘Fed Govt at implementation stage of AfCFTA’ (The Nation Newspaper)
The Minister of Industry, Trade and Investment, Adebayo Adeniyi has said the government is at the implementation stage of the Africa Continental Free Trade Agreement (AfCFTA). Adebayo made this known at the 16th Abuja International Trade Fair, with the theme, ‘Exploring opportunities of the Africa Continental Free Trade Area’. He said there was the need for collaboration among relevant agencies while reaffirming the readiness of the ministry to partner the Abuja Chamber for Commerce and Industry to ensure that Nigeria benefits optimally in trade.
The Abuja Chamber of Commerce and Industry (ACCI) says it has embarked on activities to strengthen capacity of the Organised Private Sector to participate actively in the African Continental Free Trade Area (AfCFTA). Dr Al-Mujtaba Abubakar, ACCI President, on Monday in Abuja at the opening of its 16th Abuja International Trade Fair, described it as a major gathering platform for businesses all over Africa. The News Agency of Nigeria (NAN) reports that the fair, holding at Abuja Trade and Convention Centre has its theme as “Exploring Opportunities of the African Continental Free Trade Area (AfCFTA) and will end on Oct. 9.
“The private sector must be ready to capitalise on the readiness of the government to deploy all state apparatus in support of Nigeria’s participation in AfCFTA. “The importance of AfCFTA is underscored by the full support of government towards preparing the nation to exploit the opportunities the
“Nigeria Operates Port System That Negates Growth” (Thisday Newspapers)
The President, National Council of Managing Directors of Licensed Customs Agents (NCMDLA), Mr. Lucky Amiwero has said the nation operates a port system that is negative to growth. This, according to him is because the various charges and rates paid across ports in the country remain highest in the world as governments do not sell their port or concession it to private entities.
Speaking to journalists in Lagos on the sideline of activities to mark his 68th birthday, the astute technocrat noted that Nigeria is fast losing its position in the industry to Cameroon, Benin, Ghana and Côte d’Ivoire who are deliberately positioning themselves to take the advantage of the lack of favourable maritime business activities in the sub region.
“In regulation, the economy and the nation’s interest is not taken into cognizance. If you look at the rates we are paying in the ports you do not pay that anywhere in the world. If you look at the days you spend in the ports you do not do that anywhere in the world. So you have a system that is negative to growth and a port system that is negative to growth.
“There is no regulation in Nigerian ports, nobody regulates; so the economic interest is not covered. It is the importers and agents that are paying the cost and if you look at the cost in Nigeria it is quite high and huge, everyday you see it goes up which is because of the kind of system we operate within the port,” he said.
Although GDP grew by 2.7% in 2021 compared to a -2.18% contraction in 2020 in the first few months of 2020, if we look at it quarter by quarter, Nigeria’s economy slowed by nearly 1%. The trade sector, of course, can take a lot of credit for the economic recovery, but Nigeria isn’t out of the woods yet. Indeed, the real GDP figure shows they are still quite a way off meeting future GDP targets. Inevitably, there will be a note of caution sounded over GDP figures. There has been a catalogue of poor business errors made over the past few years, which has stunted economic growth. Among these included a border closure that stymied cross-border trade between Nigeria and their West African neighbours. Also, there is an increased fear among business owners will be double taxed, as the government seeks to recoup VAT in what is still a challenging economic climate.
Nigeria Must Improve Ease Of Doing Business To Remain Biggest Economy – ACCI (Leadership Newspapers)
Nigeria has been asked to improve its ease of doing business record to be able to maintain its prime place as the country with the largest economy in Africa with the advent of the famous African Continental Free Trade Area (AfCFTA). President of the Abuja Chamber of Commerce and Industry (ACCI) Dr Al-Mujtaba Abubakar, gave the advice during the opening ceremony of this year’s Abuja international trade fair, holding at the Abuja convention centre. The fair is titled: ‘Exploring Opportunities of the African Continental Free Trade Area.’ While the agreement has the potential to reduce poverty, create significant opportunities for member countries, there are concerns that unprepared countries could lose positions to others considering the fact that it is a competitive venture for all. Dr Abubakar said the private sector must be ready to capitalise on the readiness of the government to deploy all state apparatus in support of Nigeria’s participation in AfCFTA.
"Like other countries, Algeria has been hit hard by the Covid-19 global pandemic. The IMF mission would like to express its solidarity with Algerians affected by the health crisis and those who have worked tirelessly to support the population. The mission is pleased to see that timely sanitary measures and an accelerated vaccination campaign since July have helped to recede the third wave that hit the country last summer.
The pandemic and concomitant decline in oil production and prices have seriously impacted the economy last year, leading to a sharp contraction in real GDP of 4.9 percent in 2020. In addition to measures to stem the spread of the pandemic, the authorities have implemented a comprehensive set of actions to cushion the impact on the economy, including tax deferrals, increased health spending, allowances for the unemployed, a one-off transfer to low-income households, reductions in the central bank policy rate and reserve requirement ratio and relaxation of prudential rules for banks.
“These measures have helped protect the economy, but the pandemic has further exposed the vulnerabilities of the Algerian economy.
Senior experts and high-level policy makers expressed confidence that the African Continental Free Trade Area (AfCFTA) can and should be implemented so as to maximize the achievement of environmental objectives through adoption of relevant environment-friendly policies and enforcement of environmental standards. At a virtual session convened on the sidelines of the WTO Public Forum on 1 October 2021, the experts considered how AfCFTA implementation strategies can support the development of green and blue economy value chains and deliberated on the actions required by African policymakers and businesses to fully harness the AfCFTA and further the environmental agenda. “The AfCFTA provided the continent with an opportunity to tackle climate change by supporting a shift in production patterns away from a reliance on extractives and commodities,” Mr. Stephen Karingi, Director of the Regional Integration and Trade Division at the Economic Commission for Africa (ECA), said.
The Covid-19 pandemic has both exposed and made worse the critical infrastructure deficit in developing countries. At the Paris Infraweek on Monday, African leaders, investors, lenders, multilaterals, and other players of the infrastructure finance community from around the world made a case for investment in the continent's economic and social infrastructure. "Communications, telecommunications, energy, water, these are very high priority areas for us and obviously the social aspect of health and education," said Abdel Aziz Ould Dahi, the Mauritanian Minister for Digital transition and Innovation. But there's also climate change. With severe weather events expected to become more frequent in the coming years, countries face a race against time to invest in resilient and bankable infrastructure.
Three days to the Africa-France Summit to be held on 8 October, Havas Horizons - the Havas group’s service dedicated to new emerging countries – is publishing the 5th edition of its annual barometer in partnership with the United Nations Economic Commission for Africa (ECA).
“International investors are embracing the establishment of AfCFTA, a larger and more integrated African market whose trade barriers will ultimately disappear. It will boost intra-African trade and should serve as a springboard for the continent’s industrialization as well as for the much desired diversification of its economy.” Vera Songwe, United Nations Under-Secretary-General and Executive Secretary of the Economic Commission for Africa “International investors remain confident about the continent’s future and, throughout our study, they reaffirmed their commitment to keep supporting growth in Africa over the long term. Such renewed confidence, in a period of uncertainty, is above all a recognition of the underlying economic dynamics that have driven African markets for nearly two decades, a conviction that Africa is today resolutely committed to the path of prosperity.” Antoine Hillion, Associate Director, Havas International Consulting
The top three most attractive countries this year are Rwanda (48%), Nigeria (24.3%) and Ethiopia (21.6%). Côte d’Ivoire and Kenya are out of the top three compared with the studies of 2015 and 2018. Worthy of note is Rwanda’s meteoric rise from the 12th position in 2015 to the 1st in this edition.
Be transparent and accountable on Covid-19 pandemic funds – IMF (Daily Monitor)
The International Monetary Fund (IMF) has asked African governments to be transparent and accountable on the financial resources they are receiving from the institution to help them mitigate the negative impacts of Covid-19 pandemic. The managing director of IMF Ms Kristalina Georgieva, over the weekend met with African Ministers of Finance and representatives from the United Nations Economic Commission for Africa (UNECA) to discuss Africa’s response to the Covid-19 pandemic and the efforts for a sustainable, green, and inclusive recovery. After the meeting, Ms Kristalina said financial support to African countries reached an unprecedented SDR 26.2 billion ($36.5 billion), of which low-income countries received SDR 12.8 billion ($17.8 billion), during this period, adding that the IMF has recently boosted its capacity to provide financial support to Africa. It has increased the capacity for concessional financing under the Poverty Reduction and Growth Trust (PRGT).
An African Development Bank delegation led by Abdul Kamara, Deputy Director General of the East Africa Region, is taking part in a validation workshop for the African Union's (UA) second Biennial Continental Report on Agenda 2063, held from 20 September to 6 October in the Zimbabwean capital Harare. The aim of this meeting is to monitor, examine and consolidate national reports on Agenda 2063 for preparation and finalization of the report, which will be presented to Member States and the next AU summit, in February 2022.
Agenda 2063, adopted in 2015, pursues the objective of a "prosperous Africa based on inclusive growth and sustainable development", with agriculture that contributes to collective food security, with natural endowments valued and preserved and with climate-resilient economies and communities. It is strongly aligned with the Bank's High 5 strategic priorities. According to the United Nations Development Programme, implementation of the High 5s will contribute to achievement of around 90% of Agenda 2063 and the Sustainable Development Goals.
The African Development Bank has played a major role in implementing the African Continental Free Trade Area (AfCFTA), in operation since January 2021, for an intensification of intra-African trade in goods and services with a potential market of 1.2 billion consumers. In 2021, the Bank increased its investments in climate adaptation to 63%. It is the executing agency of the Programme for Infrastructure Development in Africa, led by the AU Commission, the NEPAD Secretariat and the Bank. In 2019, 1,417 kilometres of roads, including 974 kilometres in low-income countries, were built, renovated or maintained with African Development Bank support. Lastly, at the outbreak of the Covid-19 pandemic, the Bank mobilized a fund of $10 billion to strengthen the resilience of African economies and mitigate the impact of the pandemic on populations.
African agri incentives coming (Namibian)
THERE is an emerging trend across Africa, where special agro-industrial processing zones are being set up, however, Namibia is still absent from this hype. The dream is to see more incentivised value addition to agricultural produce. According to the African Development Bank (AfDB), if rolled out well, incentives in agriculture can trigger a fundamental change in Africa's economic transformation
“The value of the agribusiness sector is expected to reach US$1 trillion by 2030… Those of us working in the economic zones sector will work closely with the African Development Bank initiative on this huge opportunity,” said Ahmed Bennis, secretary general of the Africa economic zones organisation.
KEPSA, EABC plans to issue EAC vaccination certificates to SMEs (Capital Business)
The Kenya Private Sector Alliance (KEPSA) in conjunction with the East African Business Council (EABC) Tuesday announced plans to roll out East African Community (EAC) vaccination certificates which will aid Small and medium-sized enterprises (SMEs) have easier access to other countries while trading. The decision was reached during a National Focal Point Roundtable meeting held at KEPSA offices where the two bodies listed the certificates alongside other recommendations, it said would support the quick recovery of the region’s economy which is still reeling from the effects of the coronavirus. KEPSA Chief Executive Officer (CEO) Carole Kariuki said the vaccination certificate will be handed out to countries in the EAC region, by December subject to approval by the respective governments. “EABC has direct interaction with EAC so it can take the proposal to the council of ministers and heads of state. However, we are hoping it is something that can be solved by the council of ministers and our timeline is that we hope it is out by December, “she added.
African Development Bank President Dr Akinwumi A. Adesina has said that a concerted effort to change the narrative on Africa in the United States is necessary to attract increased investments into the continent. He said the need for advocacy in the United States made having an African Development Bank office in Washington a matter of importance, and that he would be pursuing approval with the Board of the African Development Bank Group. Meeting with African ambassadors at the chancery of the Embassy of the Republic of Congo in Washington on Friday 1 October, Dr Adesina said: “We are a responsive and solutions bank at the heart of Africa's development, and at the core of our work as a multilateral development bank, there is a very clear strategy to fast-track Africa's development.”
Virusha Subban of Baker McKenzie looks at the Biden administration’s approach to Africa and its shift away from concerns about Russia and China, towards shared interests. The United States administration announced in July 2021 that the Prosper Africa initiative, launched in 2019 under the Trump administration, would be renewed and reinvigorated to increase reciprocal trade. The initiative will focus on improving trade and investment in sectors such as infrastructure, energy and climate solutions, healthcare and technology. An additional USD 80 million will reportedly be requested to support its projects. The 17 US government agencies working as part of this initiative have a mandate to, among other things, empower African businesses, offer deal support and connect investors from the US with those in Africa. Also noted at the renewed Prosper Africa launch is the intention to focus on trade projects that support women, and small and medium enterprises in Africa.
Once the dust of the COVID-19 crisis settles, it will be time to build a new foundation for Europe-Africa relations. As the EU searches for allies in a post-COVID world, a group of seven European think tank leaders looks at how to build a stronger Europe-Africa axis in the multilateral system.
In the United Nations General Assembly at the end of September, European Council President Charles Michel called for effective multilateralism in tackling today’s global problems. He stressed the EU’s role in building back better after COVID, contributing to a safer world and leading the race against climate change. But how credible is the EU on the global scene, particularly when it comes to the partnership with Africa, our “closest neighbour” and key to our future? On paper, the EU disposes of a wide range of political, diplomatic and financial instruments to play a prominent role. It is well equipped as a global norm setter and advocate of a rules-based international order and offers an attractive model of regional integration, democracy and social market economy. In practice, however, the complex, slow and divided EU often fails to meet the high expectations it raises. Nowhere is this clearer than with Africa, where ambiguities on both sides damage mutual trust and the scope for cooperation among “equal partners”.
Sub-Saharan Africa is set to emerge from the 2020 recession sparked by the COVID-19 pandemic with growth expected to expand by 3.3 percent in 2021. This is one percent higher than the April 2021 forecast according to the latest edition of Africa’s Pulse. This rebound is currently fueled by elevated commodity prices, a relaxation of stringent pandemic measures, and recovery in global trade, but remains vulnerable given the low rates of vaccination on the continent, protracted economic damage, and a slow pace of recovery. According to analysis in the Pulse, the World Bank’s twice-yearly economic update for the region, growth for 2022 and 2023 will also remain just below 4 percent, continuing to lag the recovery in advanced economies and emerging markets, and reflecting subdued investment in SSA. “Fair and broad access to effective and safe COVID 19 vaccines is key to saving lives and strengthening Africa’s economic recovery. Faster vaccine deployment would accelerate the region’s growth to 5.1 percent in 2022 and 5.4 percent in 2023—as more containment measures are lifted, boosting consumption and investment,” said Albert Zeufack, Chief Economist for Africa at the World Bank.
Africa is home to much of the world’s mineral resources, which are mostly exploited by multinationals. Governments in Sub-Saharan Africa need to attract foreign direct investment, but they also need to capture a fair share of the value of those mineral resources to support revenue collection and fund development goals.
But there is growing concern that aggressive tax planning by multinationals results in the erosion of the tax base and lower tax revenue. This event will focus on mining in sub-Saharan Africa, its contribution to fiscal revenues, and how tax arrangements by multinationals could be undermining countries’ much-needed revenue mobilization efforts. A recently published IMF paper suggests profit shifting in African mining suggests the loss in tax revenue could be between $470 and $730 million per year.
This event brings together some key actors who are dealing with the loss of tax revenue due to tax planning and also by a member of civil society intimately familiar with the issues this raises.
President Uhuru Kenyatta has called for enhanced multilateral cooperation in addressing pressing global challenges such as climate change, financial crises and global security. At the same time, the President expressed his misgivings on the unequal access to Covid-19 vaccines saying true multilateralism should fully embrace the principles of inclusivity and equality applied on the basis of the uniqueness of every nation. “We, therefore, need more multilateral cooperation that includes everyone because none of us is safe until all of us are safe. But as the Covid vaccine distribution experience has demonstrated, simply saying everyone is included is insufficient to guarantee inclusivity,” the President said.
He underscored the need for more cooperation at the regional level, saying when people sharing common challenges and similar aspirations come together, the impact is greater. “Region specific issues such as the impact of climate change on small island states are more effectively addressed through regional cooperation frameworks. Such cooperation helps to create economies of scale for smaller nations on issues such as trade and investment, and amplifies their voice at the global level,” President Kenyatta said.
UNCTAD's quadrennial conference, UNCTAD15, opened on 4 October in Bridgetown, Barbados, with calls for vaccine equity and greater solidarity to tackle trade protectionism, debt distress, the climate crisis and other pressing global challenges. UN Secretary-General António Guterres described the conference as the “Olympics of trade, development, investment, policy and technology discussions” and reiterated his call to world leaders to tackle “the cascade of crises” facing humanity. He said the COVID-19 pandemic had wreaked havoc across the global economy, disrupting the three powerful economic engines of trade, manufacturing and transportation. Mr. Guterres decried the uneven economic recovery unfolding across the world. “In all, more than eight out of every ten dollars in recovery investment is being spent in developed countries — not in the countries in greatest need,” he said. He warned that the uneven recovery was leaving much of humanity behind. “And until we get serious about vaccine equity, recovery will be stuck at the starting gate,” he said.
Secretary-General Guterres pointed out four glaring challenges, which if not addressed would make any notion of prosperity for all a distant dream. “Debt distress. Systems starved for investment. Unfair trade. And a climate emergency that leaves small island developing states like Barbados perilously vulnerable,” he said.
Rich countries fall $10bn short in climate finance pledges (Engineering News)
Rich countries are racing to close a climate-finance shortfall of at least $10-billion, with a handful of European nations planning to increase their pledges this month ahead of crucial talks in Glasgow, Scotland, according to people familiar with the plans. Over a decade ago, developed countries promised to mobilize $100-billion a year by 2020 to help poor countries deal with the worst impacts of global warming and invest in green energy sources. But they almost certainly missed their goal last year amid a pandemic that upended economies and as former President Donald Trump pulled the US out of the Paris accord.
At its seventy-seventh annual general meeting this week, the global representative body for the airline industry, the International Air Transport Association (Iata), reported that its latest calculations indicated that the world’s airlines would, over the period 2020 to 2022, suffer total net losses of $201-billion. These losses would be the result of the Covid-19 pandemic and attempts by the governments of the world to contain it. However, the trend has been an improving one, even though Iata has revised its estimates of total global net losses for airlines in 2020 upwards from the previous $126.4-billion to the latest figure of $137.7-billion. Net loss estimates for 2021 have also been revised upwards, from the previous figure, released in April, of $47.7-billion, to the current $51.8-billion – either way, a significant reduction on the losses for 2020, although still severe. For next year, Iata expects net losses to again reduce significantly, to $11.6-billion.
Cross-border opportunities: Leveraging e-commerce for business growth (Global Banking And Finance Review)
As many parts of the world begin to emerge from the COVID-19 pandemic, one thing is certain: e-commerce is here to stay. In fact, reports have shown that by the end of this year, global online sales may reach upwards of $4.2 trillion. As such, many retailers the world over have naturally switched focus to online channels since the onset of the pandemic. But in order to truly leverage the boom in e-commerce, retailers must ensure that digital solutions remain at the heart of any growth strategy.
China’s ‘Belt and Road’ ambitions have escalated the conflict to gain control of global trade routes in ways that will have consequences for all. A few years after the work began on China’s transnational project, aspects of this simmering conflict have taken shape. The ferocity has become apparent after investments by large funds and the joining of dozens of countries in the Chinese project. While other countries and blocs are not standing by and letting the Chinese dragon has its way, what we see is the China firming up its influence to take control. This has created sharp differences even between allies, as in the case of the US and France over a submarine deal the US struck with Australia. The US sees that the Belt and Road initiative is turning into the cornerstone of Beijing’s foreign policy strategy. The initiative guarantees China an abundance of raw materials, access to preferential trade routes and ample political influence. In Pakistan alone, China is investing $60 billion into the project, compelling the Biden administration to compete head on with China.