A cross-section of the business sector on Wednesday gathered at the St Regis Beijing to set in motion a wide-range discourse on promoting African industrial chain and how the continent’s products can be increased in quality to attract more customers.
Attended by diplomats, investors, members of the chamber of commerce and tech companies, the forum presented an opportunity to have a diverse discussion on China-Africa cooperation and the potential to make the continent’s products competitive.
First to take the floor was Wu Peng, the director general at the African Affairs Department, Ministry of Foreign Affairs, who reviewed China’s cooperation with Africa, having been strengthened after President Xi Jinping’s first visit to Africa a decade ago.
Mr Peng said: “Agenda 2063 of the African Union proposes to promote Africa’s economic transformation through industrialization, raise the added value of African resources, and expand the share of African manufacturing industry in the global value chain, which has been recognized as a strategic choice for Africa to achieve independent and sustainable development. As Africa’s staunchest and most reliable partner, China is committed to connecting the Belt and Road Initiative with Agenda 2063 and the development strategies of African countries, and helping Africa translate its resource advantages into development advantages through industrialization cooperation so as to achieve mutual benefit and common development.”
Mr Peng said despite shocks across economies in the world, China-Africa cooperation has weathered the storm and opportunities are there for the two sides to make breakthroughs in policy, industry and capital.
“As the largest developing countries and continents with the largest number of developing countries, development remains a shared historical mission for China and Africa. At a time when the global economy remains sluggish and industrial and supply chains are under impact, China-Africa cooperation is at a critical stage of climbing uphill to a higher level. To promote cooperation transformation and upgrading and high-quality development is the task of the times for both China and Africa. To advance China-Africa industrialization cooperation is the only way to meet current and future needs. In this sense, the topic of our discussion today is a new topic that conforms to the general trend of China-Africa relations. China is ready to work with Africa to overcome the problems and challenges in cooperation, innovate cooperation ideas and diversify cooperation models, and continue to deepen China-Africa industrial cooperation under the framework of the Forum on China-Africa Cooperation,” he said. “In my view, in the new era, the two sides should adhere to the principles of government guidance, business ownership, market operation and win-win cooperation, and make breakthroughs in policy, industry and capital.”
No AfCFTA unless Africa is fully connected
Central to the African Continental Free Trade Area, AfCFTA, is value-added production across the continent. In an inspiring speech at the forum, the United Nations resident coordinator in China, Siddharth Chatterjee, said the ambitious African Union flagship project can only be realised if the continent is digitally connected.
“When the UN Secretary General said Africa is a source of hope for the future, it is just not meant as a trivial statement. Many of us who served in Africa see that potential. So let’s look at the African Continental Free Trade Area. You would agree that there can never be an African continental free trade area unless and until Africa is fully physically and digitally connected. It is impossible. There would have been no European Union and no common market in the European Union post-Second World War had Europe not been connected. And I feel that is perhaps the most urgent requirement of making sure that Africa is fully connected. Yes, if you want get rich, you build the roads, you have to build the infrastructure. If China did not have the kind of infrastructure it built, how would we have seen 700 million people getting lifted out of poverty? Infrastructure was key to what I would term as ‘poverty emancipation’,” Mr Chatterjee noted.
According to the World Economic Forum, more than 60% of Africa’s population is under the age of 25 and young Africans are expected to constitute 42% of global youth. Despite the potentials, Mr Chatterjee believes only creating jobs can make such a high youthful population advantageous.
“Everybody spoke about the demographic divided. That was one of my major areas of focus when I worked in Kenya but demographic dividend will only be reached when there are jobs. Today, 35,000 young Africans are looking for work every 2hrs; that translates to 10-12 million Africans looking for work every year. The point is we have not tapped into that capacity of young people because that will define the 2.5 billion people that will be in Africa by 2050, will define the future market, the future production and consumption. When the rest of Asia is aging, most of Europe is aging, you are seeing the development of a completely young, entrepreneurial, highly-spirited, innovative youthful population coming up in Africa. Therefore, the UN system will also be working with the host countries to make sure that we are providing the best capacities to build precisely the skillsets that are needed in order to make FOCAC outcomes implemented,” he noted.
The UN representative said China utilised its youthful population three decades ago and that was cardinal in the country’s stunning growth, adding that Africa equally needs to put youths at the forefront of development endeavours.
“The youths therefore become absolutely central to this conversation. We have to bring young people into this dialogue because their jobs will define Africa’s trajectory. It is simple economics; when people have work, there is more disposable income, children can be planned and as a result you will have better education, better health outcomes. Precisely the kind of demographic dividend that China reaped through the 70s, 80s and 90s and that is why we saw this massive exponential growth. Had it not been for the demographic dividend, there is no way China could have achieved what it has. Africa is the real lion which is waiting out there to come up and be seen and recognised but we have to invest in the young people,” he urged.
Huge continent but still colonial trade patterns
Hannah Ryder, CEO, Development Reimagined, reiterated a pattern barrier to trade growth in Africa as a result of notable structural problems which would require a collective effort to surmount.
“I want to start off by encouraging everyone in this physical and virtual to focus your minds on two images. The first image is the map of China. Think about how large China is and how long it takes to travel from Beijing to Guangzhou, for example. Then multiply this by three or four times. That will give you the African continent. This might seem surprising because usually on maps, the African continent is shown quite small relative to the rest of the world; relative to its true size.
We must remember this real size because it illustrates the opportunity but also the challenge.
The second image I would like us to focus on is the map of Africa itself. Think about not only the borders between countries but a border of the continent. It is around these borders in countries that see borders that most of Africa’s infrastructure is concentrated, not just the ports but railways, power-stations, roads. So few roads pass through the continent. One of Africa’s largest countries, the Democratic Republic of Congo, has a so-called national route across the country and into the capital Kinshasa. Yet, this route requires unloading and loading of goods eight times; from rail to waterway to road and so on,” she revealed.
She said infrastructural problems have derailed Africa’s potential in boosting trade within itself as well as with other continents.
“It is this lack of infrastructure that exacerbates the cost of trade; it exacerbates the challenge and even leads to vulnerability to climate change, for example. These patterns are legacies of slavery and colonial trade patterns which have not yet been broken. And the patterns have three key consequences. The first consequence is that African countries have low value trade patterns with each other to some degree and in particular with the rest of the world. Development Reimagined analysis in 2019 found out that on average just 3% of all products imported by the G20 come from Africa. Twenty-nine African countries each export less than 1% of Africa’s total export to the G20, including countries that have significance industrial aspirations such as Rwanda, Senegal, Sierra Leone, Lesotho. Across the continent we have aspirations but we have very little.
The second consequence is the lack of sovereignty or control over production. The kind of control that China has managed to ensure for essential commodities. For instance, as another Development Reimagined analysis showed, each and every African country is currently a net importer of pharmaceutical products. This was a major problem of course when it came to Covid-19 vaccines but it is a case also for other vaccines and medicines such as for cholera.
The third consequence is that infrastructure investment tends to be justified on business cases and feasibility studies that are highly linked to commodities rather than the manufacturing potential and African human capital,” she posited.
China is Africa’s most sincere partner
China is now Africa’s main trading partner, providing the largest foreign direct investment and supporting hundreds of thousands of African jobs.
The Senegalese ambassador to China and co-chair of FOCAC, H.E Ibrahima Sory Sylla, paid tribute to China’s longstanding development support to the African continent.“I would like to stress once again that China is Africa’s most reliable and sincere partner,” the ambassador said. “We will never forget the tremendous help you have provided to us in the past.”
He said it is time for Africa to invest in industrial development, adding that the continent should grab the investment opportunity China offers rather than ones that come with conditions.
“There are still countries that are reluctant to invest in heavy industry because it was not considered a very productive investment in the past. But now is the time to really launch an industrial development project, with a clear plan for industrial development. For us, China is a very important partner, and investment from China may be more beneficial to us than financing from the World Bank. Because when China invests in us, it is really to help the development of our country, not to set any setting or conditions. So that’s a model of industrialization, or another model is that Africa comes up with their idea of industrialization, and some countries think that services or energy should be developed first, rather than basic industries. Does this model work in Africa? I think that’s up for discussion because at the entire value chain level, each country can only find the model that works for it according to its own situation,” he proffered. “As African governments, it is our responsibility to create a favorable business and investment environment so that the African market as a whole and African investment will be competitive in the world. But I also acknowledge that we have a lot of room and need to improve in order to attract foreign investment and create jobs for young people.”
Finding common ground first before higher ground
Among the nearly 20 speakers at the high-level forum was H.E Allan Joseph Chintedza, the Malawian ambassador to China, who lectured that African countries ought to first identify the common bottlenecks and solve them before progressing to the next stage of development.
“We have to find a common ground. We cannot go to the higher ground in terms of a value-addition when the common ground is not properly identified. The common ground entails that we have food security. We cannot export when we cannot feed our people. And if we are going to have food security, we do need the relationship and partnership with China.
It is so difficult to move goods within the African continent because of the borders. You own reports have said it takes 51 days just to cross from one border in one country to another but internally, within our countries, it is equally difficult. These are the things that are delaying access to the markets. These are the things that are delaying development of our own local supply chains. So we need to find the common ground first before we move on to the higher ground. I mention corruption, if we do not invest our fiscals properly then we will not be able to invest in our priority areas. I think we should use the expertise of the Chinese companies.
The higher ground tells us that China has invested in research and development a big budget. Our African budgets do not invest in research and development, so how do we innovate? It means we will be playing catch-up for ever,” he said.
Ambassador Chintedza believed that capacity development is paramount to Africa’s future and enjoined the continent to cherish the relations it has with China.
“We have to judiciously guard and protect the relationship we have with China. We have a chance to partner with China not just the financing but the expertise. I think the capacity development that is needed in Africa is a game changer, including the innovativeness that we are seeing. So if we are going together into the higher ground, I think there are aspects that we have to learn from but there are certain things we have to directly deal with,” he said.
The forum, ably moderated by Zhou Yufang, director of CABC Duo-language Service Centre, was organised by China-Africa Business Council.
