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1. VACCINES: With the US and the EU on the sidelines, China’s vaccine distribution in Africa could pay huge geopolitical dividends
China is building a COVID-19 vaccine distribution pipeline in Africa that includes a cold chain airlift from Shenzhen, a distribution center in Addis Ababa, and manufacturing capabilities in Cairo.
READ MORE Will COVID-19 vaccines in Africa prove promising or problematic?
With rich countries stockpiling vaccines, China’s supply could have a disproportionate impact on Africa’s health and yield significant geopolitical dividends for Beijing, given that both Washington and Brussels, so far, are not committed to this issue.
2. LOANS: China will continue to restrict lending to Africa in response to pressure to improve risk management in Beijing
The steady decline in official lending to African countries by China’s two major political banks, the China Development Bank and the Exim Bank of China, will continue in 2021. This does not mean that all lending will cease, only that they will be more selective. They require much more due diligence and can come from alternative sources such as Chinese state-owned companies and commercial banks.
READ MORE China will cut lending to Africa in the post-COVID-19 era
The days when African governments enjoyed relatively easy access to Chinese infrastructure finance are over.
3. DEBT: The debt crisis in a select number of African countries will get worse this year, but not because of China.
Chinese creditors will likely step up efforts to restructure outstanding loans in the 6 to 10 African countries facing the most acute debt repayment challenges. Just as Chinese political banks and other lenders reportedly restructured loans in Angola and Zambia this year.
That process is likely to spread to Kenya, Ethiopia and Djibouti next year. There is no evidence that Beijing will cancel any of its commercial or concessional loans. Instead, it will likely provide interest repayment moratoriums as part of the G20 DSSI, extend repayment terms, and renegotiate interest rates.
4. TRADE: China’s appetite for African resources will rebound in 2021, but not as much as suppliers want
Two-way trade is likely to rebound next year from its + 20% drop in 2020, due in large part to a revitalized Chinese economy. But it is highly unlikely to grow beyond 2019 levels (roughly $ 208 billion) due to China’s continued drive to diversify its raw material supply to avoid regional dependence on certain resources.
For example, the purchase of oil will continue to move to the Gulf countries, America and Russia. The notable exception, however, will be coltan, cobalt, and other strategic minerals found in the Democratic Republic of the Congo. Chinese imports to Africa are likely to remain strong, especially as many local suppliers of processed products across the continent have struggled to stay in business.
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5. INVESTMENT: The volume, not necessarily the value, of Chinese FDI in Africa is likely to increase in 2021.
Chinese investors are looking at struggling companies in Africa and are likely to take advantage of the current economic downturn to recover assets at a discount. Look for more M&A activity from China in the mining industry, oil exploration, and further expansion of China’s already formidable presence in the African tech sector.
READ MORE China may reduce investment in Africa, says new report
Chinese firms, venture capital firms and private equity firms are likely to be as selective as their government counterparts and will become much more disciplined about which companies and industries to invest in next year. While there may be more deals in 2021, the overall value of FDI may not increase.
6. BELT AND ROAD: China will push harder in 2021 to entwine the BRI with vast new free trade areas in Africa and Asia
Further African integration into the Belt and Road Initiative (BRI) will become a much higher priority in 2021 as Beijing looks to leverage its previous considerable investments in its vast trade network. There is growing enthusiasm in Beijing to link the BRI with regional free trade networks in Africa (AfCTA) and Asia (RCEP). The idea here would be for African countries to take advantage of BRI-funded infrastructure that moves goods duty-free across the continent (thanks to AfCTA) to customers in BRI member states, with China playing a central role by providing logistics, technology and environment. Rules.
7. TECHNOLOGY: Chinese dominance of large sectors of Africa’s technology sector will increase in 2021
Chinese tech companies will build on their already formidable presence in the African tech sector with the expansion of 5G services provided by companies like Huawei and ZTE. There is no indication that Transsion’s control over + 50% of the African mobile phone market is loosening. After hesitating to enter the market, Alibaba now appears poised to expand its presence in Africa, particularly through Aliexpress. It will provide new competition to local players like Jumia and Kilimall. The expanded use of Chinese surveillance technology is also likely to become a more contentious topic next year among African and international civil society stakeholders.
8. GEOPOLITICS: Africa will no longer be the focus of tensions between the United States and China and will instead become a pawn in other Chinese conflicts.
The incoming Biden administration seems interested in making its foreign policy in Africa focus on, well, Africa, and not see the continent as another theater to confront China. Washington is likely to put expanding economic engagement and promoting good governance to the fore, with less emphasis on competing directly with China on the mainland.
READ MORE USA / China / Africa: Dear Mr. Coming Soon President Elect …
But since China’s international relations are deteriorating in many parts of the world (Australia, parts of Europe, Brazil, the US, etc.), African countries are likely to be asked to reinforce Chinese positions on issues. controversial as Xinjiang, Taiwan and southern China. Mar. Furthermore, Beijing may turn to African suppliers of raw materials to pressure governments in places like Canberra and Brasilia, which are seen as a challenge to China’s core interests.
9. SUSTAINABILITY: China will speak with both sides of its mouth about sustainable energy development in Africa.
Seek out Chinese diplomats, official media and other stakeholders to talk much more about the merits of the so-called “Green BRI” and sustainable energy development on the mainland, while at the same time continuing to fund coal power generation and expensive energy. hydroelectric. -electric dams in countries affected by drought.
READ MORE Africa: climate change and sustainable development must be a two-way street
To be sure, Chinese lenders and state-owned enterprises have steadily increased their support for solar power generation in countries like Zambia and Kenya, but it is only a small fraction of the more environmentally damaging power generation methods than the Chinese. they are building in other parts of the continent.
10. FOCAC: The China-Africa Triennial Leaders Summit will likely move online because of COVID-19 and that’s a good thing for China.
The Forum on the China-Africa Cooperation Summit is expected to take place next year in Dakar, Senegal. But it seems increasingly likely that the event will move online, due to the persistent presence of COVID-19 in West Africa. Chinese President Xi Jinping has not traveled abroad since the outbreak began, and one doubts that he would go to a region where the outbreak has not been fully contained.
That is probably a good thing for China because if FOCAC takes place online, there will be less media attention, allowing them to better control the messages from the summit. Key issues to consider: 1) Vaccine delivery, 2) Debt sustainability, 3) Greater involvement of the private sector, 4) Integration of BRI and 5) Reaffirmations of solidarity (a passive-aggressive dissent against the US). and the EU).
This article was first published in The China-Africa Project.
