Context: The ninth edition of the Forum on China-Africa Cooperation (FOCAC) is set to take place from September 4-6, 2024, in Beijing.

The Forum on China-Africa Cooperation (FOCAC) 2024

FOCAC Amidst African Challenges and Summit Fatigue

The Forum on China-Africa Cooperation (FOCAC) occurs during a period of significant challenges for African nations, including high inflation, currency depreciation, heavy debt burdens, unconstitutional military takeovers, and various geopolitical crises such as the Israel-Hamas and Russia-Ukraine wars, along with Houthi rebel attacks on commercial shipping in the Mediterranean Sea. Furthermore, a sense of ‘summit fatigue’ has emerged among African leaders due to the numerous Africa+1 summits with countries like Türkiye, Russia, South Korea, and the U.S.-Africa Leaders’ Summit. A more practical approach, following the Banjul format of 15 countries plus the African Union Commission (AUC), may be preferred over the attendance of 54 leaders.

The Utility of FOCAC for Africa

The effectiveness of the FOCAC process for Africa increasingly depends on the continent’s ability to set the agenda and take greater ownership of its strategic thinking. While there has been no shortage of discussions on Chinese strategies in Africa, there is a noticeable lack of corresponding strategies from the African side. This knowledge gap stems largely from the limited capacities, expertise, and political will within African states to comprehend the workings of China and the Communist Party of China (CCP). African governments have struggled to utilize the extensive cultural and linguistic knowledge of China that exists on the continent, leading to constrained African agency and allowing China to dominate the agenda during negotiations.

African Priorities at FOCAC 2024

Trade and Agriculture

Progress on Beijing’s ambitious goal to import $300 billion worth of goods from African countries between 2022-24 has been modest. According to data from China’s General Administration of Customs, China-Africa trade reached $167 billion between January to July 2024, with Chinese and African exports amounting to $97 billion and $69 billion, respectively. Notably, around two-thirds of this trade involves raw materials.

Developing a sustainable and robust agricultural industry remains crucial. Africa faces significant challenges in processing agricultural commodities and even in performing basic processing tasks, such as roasting raw cashew nuts. Countries like China and India, with their experience in small-scale farming, could play a pivotal role in developing crops, fertilizers, and pesticides suited to African conditions. Their expertise could also support African agriculture in becoming more climate resilient, with initiatives such as the development of satellite systems to enhance weather forecasting.

Green Energy and Industrial Development

Green energy and industrial development are equally important. African nations are encouraging international partners to establish more refining and processing hubs. For instance, in Zimbabwe, Chinese companies are required to conduct basic lithium refining to move up the value chain and produce battery-grade lithium. However, persistent issues like electricity shortages, insufficient power generation, and significant environmental, social, and governance (ESG) costs hinder the ability of international companies to refine raw minerals in Africa.

China and African Debt Lessons for India

Complexities of China’s Role in African Debt

China's involvement in African debt sustainability is multifaceted. Between 2000 and 2022, Chinese loans to African governments and regional institutions amounted to approximately $170 billion, according to the Boston University Global Development Policy Center. Despite popular narratives, China is not the primary creditor in Africa, holding only 12% of the continent’s public and private debt. While the concept of Chinese ‘debt trap diplomacy’ remains contested, certain aspects of China’s lending practices deserve closer examination. A 2022 study by AidData highlighted that half of Chinese loans to sub-Saharan Africa are not recorded in sovereign debt databases, complicating accurate debt assessments. Despite concerns over opacity and lack of transparency, China is unlikely to offer widespread debt forgiveness or cancellation, typically opting to write off only small, interest-free loans.

Shifting African Strategies in FOCAC Engagement

Historically, African countries have found themselves in a reactive stance during FOCAC meetings due to disorganized and poorly structured engagements. However, there is now a concerted effort among African governments to develop a coherent strategy towards China, aiming to harmonize their positions before the upcoming FOCAC summit. This strategic shift is likely to move away from an emphasis on aid, instead focusing on trade facilitation and the aggressive pursuit of product value addition, reflecting a more proactive approach in their dealings with China.

India’s Engagement in Africa

●      Lessons from FOCAC for India-Africa Relations

Observers often note that Indian engagement in Africa tends to mimic Chinese patterns. However, such characterizations overlook the distinct nature of Indian engagement, which operates independently of third-country influences. India’s approach has its own comparative advantages, particularly in sectors like information and communication technology (ICT), human resource development, agriculture, and pharmaceuticals. Nonetheless, the way African leaders negotiate with their Chinese counterparts under FOCAC can offer valuable lessons for India’s engagement with Africa.

●      Continuity in Engagement

India must prioritize continuity in its engagement with Africa. The last India–Africa Forum Summit (IAFS) took place in 2015, and while dialogues such as the CII-EXIM Bank Conclave and the India-Africa Defence Ministers’ meeting have been held regularly, there is a need to capitalize on the momentum created by the inclusion of the African Union (AU) in the G-20 under India’s presidency. Organizing the IAFS-IV at the earliest is essential.

An India-African Union Track 1.5 Dialogue could also be established to discuss issues of mutual interest, with consultations involving Africa’s eight recognized regional economic communities (RECs). Ethiopia’s capital, Addis Ababa, as the seat of the African Union Commission, could serve as the host for IAFS-IV. Additionally, the AU should consider establishing a regional office in New Delhi to facilitate regular consultations.

●      Strengthening African Economies

India can play a central role in integrating African economies into global value chains and supporting the continent’s industrialization. Indian companies should focus on higher value-added investments in sectors such as agriculture, pharmaceuticals, and manufacturing. Establishing manufacturing bases in Africa can create employment opportunities and serve local markets. Indian businesses operating in Africa should invest in farm mechanization, food processing, irrigation, and cold storage infrastructure to prevent food wastage, while continuing to promote the use of ‘Triple A’ (affordable, appropriate, and adaptable) technologies.

●      Encouraging Private Sector Participation

Encouraging greater participation from the Indian private sector and exploring innovative financing solutions is crucial. While India’s lines of credit remain popular for financing projects, African countries are increasingly hesitant to take on new loans following the COVID-19 pandemic. Innovative financing methods, such as public-private partnerships and blended finance, are the way forward. India should align its strategic and business interests in Africa, with government support for Indian banks and entrepreneurs through low-cost credit. This would enable Indian firms to conduct feasibility studies and create bankable projects. The EXIM Bank’s Trade Assistance Programme could also help build trust and expand banking relationships between India and Africa.

●      Leveraging Technology

India’s digital stack, which includes biometrics, mobile connectivity, and Jan Dhan technology, could be instrumental in establishing digital and physical connectivity with Africa. The Unified Payment Interface (UPI) and RuPay services are already operational in Mauritius, and countries like Kenya, Namibia, Ghana, and Mozambique have expressed interest in utilizing the UPI platform. To further strengthen Indian banking and mitigate forex risk, rupee-based lines of credit should replace dollar-based ones. African nations lose billions of dollars annually due to unfavorable exchange rates, making currency-neutral transactions beneficial for both India and Africa.

Conclusion

African countries are increasingly taking ownership of their strategic direction, with citizens demanding greater accountability from their governments to ensure economic progress up the value chains. By observing how African leaders engage and negotiate with China under FOCAC, India can gain valuable insights for enhancing its own partnerships in Africa. The stance of African leaders at the FOCAC summit in Beijing could provide crucial guidance for India as it seeks to develop stronger and more effective partnerships with the continent.

Source: The Hindu