From a “project of the century” to “small is beautiful”: The changing face of the BRI in Africa
In September 2023, China’s Belt and Road Initiative (BRI) will be 10 years old. Launched by Chinese President Xi Jinping during an official visit to Kazakhstan in September 2013, the BRI was quickly billed as the most ambitious development project in human history and the world’s largest-ever transnational infrastructure program. The Chinese leader himself had once hailed the project as “the project of the century” and “a road for peace, prosperity, opening-up, and innovation, connecting different civilizations” that will “build a broad community of shared interests.” He also framed it as “a new option for other countries and nations who want to speed up their development while preserving their independence” (Xi 2017).
For many commentators, Xi’s ambitious claims seem not to have aged well. Instead of “the project of the century,” commentators argue that the BRI may have already reached a dead end in less than a decade. This piece briefly discusses that position with a particular focus on the BRI in Africa and the broader China-Africa relations; but, its central argument is built around the view that Xi’s BRI is changing face, not dead. Indeed, for all of its problems and challenges, I argue that the initiative is here to stay regardless of its actual form and content, given how deeply intertwined it is with Xi himself and how it has come to define China’s global development engagement, especially with Africa and other developing regions.
BRI: The project of the century that may not be?
Cobus Van Staden (2023), the managing editor of the China Global South Project and a senior researcher at the South African Institute of International Affairs, recently argued that some China observers expect the 10th anniversary of the BRI program to be more like a funeral procession than a birthday celebration. To those observers, the BRI has reached a dead end in less than a decade. In a piece for Foreign Policy, for instance, Lu (2023) specifically claims that Xi’s BRI has run “out of steam” and become a “shadow of its former self.”
Available data seem to support that view. Financing for BRI projects has been in freefall since 2016, according to Rebecca Ray (2023) of Boston University’s Global Development Policy Center. Between 2008 and 2021, the two powerful Chinese banks, namely the Exim Bank of China and the China Development Bank (CDB), provided $500 billion dollars to support over 1,000 projects, with the vast majority of these loans taking place between 2013 and 2016, marking the heyday of the BRI. Fast forward to 2020 and 2021, the two banks provided 28 loans for overseas projects, worth only $10.5 billion.
That global trend is also observable in Africa. According to Nedopil (2023), the BRI investment fell by 55% to $7.5 billion from $16.5 billion in 2021 in sub-Saharan Africa. This is well in line with the above-mentioned research from the Global Development Policy Centre of Boston University, which shows that the region drew $4.5 billion in construction in 2022, compared to $8.1 billion in 2021 (Bociaga 2023).
In addition to waning finances, there is an increasing “BRI backlash” in a growing number of countries across many regions (Malik et al. 2021). The COVID-19 pandemic has also put Beijing on its back foot, as many BRI projects have encountered implementation challenges and a growing number of borrowers have struggled to repay their Chinese debts. Many African governments are also accused of undertaking monstrous white elephant BRI projects just for political expediency—Kenya’s Standard Gauge Railway (SGR) and Uganda’s Kampala-Entebbe Expressway (KEE) are some of the legendary examples. Today, these projects face unsurmountable debt repayment issues, along with an uncertain/unfavorable global environment.
The current picture surrounding China’s BRI has long been in the making and should thus be unsurprising. It is the result of various critical junctures. Indeed, there is little doubt that the initiative has faced multiple challenges since its inception. For instance, the fall in overseas lending from the mentioned two Chinese banks has been a long-term trend that has followed China’s (domestic) economic cycles and political priorities, including the relative economic slowdown after 2013, the 2015 financial crisis, internal regulatory tightening in 2017 (Boulter 2018), and the COVID-19 pandemic since late 2019, along with the major disruptions it brought about. Also, as Xi continues to consolidate political power in the face of mounting challenges, both at home and abroad, domestic stability is now even more important in terms of a priority area.
Moreover, many BRI projects were executed in haphazard ways across multiple settings, including in Africa, with little concern for issues related to economic feasibility and social and environmental risks. This gave the program the image of a scandal-ridden initiative and widespread allegations of corruption are usually plentiful. According to a major recent study, some 35 percent of BRI infrastructure project portfolios have encountered major implementation problems such as corruption scandals, labor violations, environmental hazards, and public protests (Malik et al. 2021).
These political and economic challenges have converged to force Beijing and the Chinese leadership to rethink its foreign development policy through the BRI. As indicated, although the decline in financing for BRI projects started well before the COVID-19 pandemic, it has definitely been exacerbated by the multiple successive global crises since the outbreak of the heath emergency. Whether by design or not, therefore, it seems undisputed that BRI is dramatically changing as Beijing continues to respond to some of the mentioned critical junctures.
BRI and China’s strategic vagueness
Nevertheless, in keeping with various Chinese foreign policy experiments, this aforementioned vagueness is actually strategic in the sense that it provides Beijing with much flexibility in regard to actual implementation processes through trials and corrections on the ground. It also allows individual actors (Chinese or otherwise) to pursue their own agendas under the vague umbrella of the official policy—in this case, the BRI program. As Xi’s vague claims attest, for instance, the BRI was always nebulous from the outset, which allows it to constantly change face, including the name of the initiative itself. Moreover, despite persistent claims to the contrary, many (BRI) projects were largely uncoordinated and unplanned, with credit being offered by competing Chinese lenders while receiving actors mostly pursued their own agendas.
This is the reality with which African countries have to contend, especially with regard to the ongoing shifts in both the scale and scope of the BRI program in the region. As a result of the changing dynamics, for example, there is a considerable shift in both priority areas and actors involved in BRI projects across the African continent.
So, what for Africa?
Many African countries are actually bracing for the shifting dynamics of the BRI, including the pullback in Chinese finance for mega-infrastructure projects in the face of the shifting priorities in China as well as the surging debt crises in various African states. As Rotimi Amaechi, former Nigerian Minister of Transportation, pointed out, many African countries “are stuck with lots” of mega-project proposals but “the Chinese are no longer funding [them]” (Chiedu Onochie 2022).
In Kenya, for instance, China appears to be really turning off the lending tap to the country, with financing this year plunging to just 5% of what it was in 2022. More specifically, Chinese financing for development projects in the East African country is expected to drop to just $12.7 million from $216.5 million in 2022 and $522.5 million in 2017, according to new data from the Kenyan Treasury (Okafor 2023). This means that China's lending to the country will hit a 16-year low, as Beijing adopts a more cautious approach to lending to African countries.
In 2020, the IMF identified over 20 African countries, including Kenya, as being in or very susceptible to debt crises, the restructuring of which has become a complex and contentious issue with no end in sight. Also, in the wake of rising global interest rates, capital flows are unlikely to return to previous levels anytime soon, even if African countries were hypothetically able to successfully manage their looming debt crises. Thus, while China’s current account surplus has rebounded, providing it with capital that can be mobilized abroad, its policy priorities have clearly been directed inward in response to the COVID-19 pandemic and its devastating economic impacts.
That puts the African continent at yet another critical juncture, given its persistent infrastructure gap and the potential implications, for its young population, of the resulting development delays. The African Development Bank estimates that the continent could need up to $170 billion per year for infrastructure by 2025, with an estimated annual shortfall of about $100 billion. The likely short-term impact will be more debt because African governments will likely have to shift from Chinese funding to more expensive private capital markets once again, as Rotimi Amaechi suggested in his declaration to the media (Chiedu Onochie 2022).
The recent decision by Ugandan government to cancel a 2015 contract with China Harbor Engineering Co. (CHEC) (Biryabarema 2023), which was set to build a rail line linking the capital of the landlocked country and Kenya’s Mombasa port via the Chinese-built Standard Gauge Railway (SGR), can be seen through that prism. This follows an eight-year lag as the contractor failed to get Chinese policy bank funding for the $2.3 billion project. Uganda has now signed an MoU with Yapi Merkezi, a contractor from Turkey, and is reportedly considering a syndicated loan to finance the 273 km project (Ojambo, Burhan, and Liu 2023). Chinese funders reportedly delayed the confirmation of the loan to track the SGR’s progress in order to determine its commercial viability. As the SGR faced increasing questions about its loan impact, business plan, and possible corruption, Chinese funders also declined to fund its third phase. However, Uganda’s President Yoweri Museveni remains committed to turning Uganda into a regional logistics hub, either by linking it to Kenya’s SGR or to a similar network being built in Tanzania, where Yapi Merkezi is also a major contractor.
Uganda is not the only African country to be affected; very similar dynamics have delayed Nigerian mass-transit projects, to which Rotimi Amaechi alluded in his declaration mentioned above. This points to diverging views between multiple African governments and their Chinese counterpart. Basically, Xi’s BRI now appears to be unable to meet the demand for continued investment in mega-infrastructure projects in Africa.
“Small is beautiful”: The shifting face of BRI in Africa
The decline in Chinese lending for BRI projects has concrete ramifications for Africa, where China is banking on smaller projects while shifting its attention away from oil and gas in favor of the telecom, transport and power sectors. As mentioned above, in the early days of the BRI, gargantuan projects were being financed, often with less regard for environmental and social risks. In that regard, three major trends are notable and, therefore, briefly discussed here. They include the shift towards smaller projects, the growing diversity of Chinese actors to meet new priority areas, and the embrace of green and digital projects.
- When small is more beautiful: While in the early days of the BRI gargantuan projects were being financed, smaller projects seem to be the new priority in the last few years. Exim Bank of China, for example, has turned much of its attention to the telecom, transport and power sectors in Africa. Reflecting the new trend, whereby telecom has emerged as a top priority, the bank committed financing to 10 African countries—including Angola, Burkina Faso, the DRC, Ghana, Lesotho, Madagascar, Mozambique, Rwanda, Uganda, and Zambia—between 2020 and 2021. At the same time, the mining sector has received no publicly available financial commitment from the bank in the past few years and finance for the transport sector has obviously decreased.
- More diverse Chinese actors to meet the new priorities: It is important to note that the pullback of China’s top financiers does not mean that Chinese creditors have altogether stopped lending money to African countries for infrastructure projects still under the broader umbrella of Xi’s BRI. Rather, there are new actors and new priorities that have reshaped Chinese infrastructure finance on the continent, which is well in line with the Declaration and Action Plan of the latest FOCAC gathering in Dakar, Senegal. First, as suggested above, Chinese creditors now have very little appetite for costly projects. Instead, they are more interested in smaller and economically more viable ones. In that sense, fee generating projects like toll roads and data centers are prioritized since these kinds of initiatives generate revenue once operational. Second, while both Exim Bank of China and CDB are increasingly tightening their purses, state-owned enterprises, private companies, provincial banks, and even Chinese VC firms are increasingly actively financing development projects in many African countries. The landscape of Chinese financiers in the African infrastructure sector is now far more diverse than it was even just a few years ago. Third, there is also an emerging shift from traditional loans to equity models and public-private partnerships with Chinese actors to support infrastructure development projects in a growing number of African countries.
- Greening and digitalizing the BRI: In line with the outcomes of the latest FOCAC meeting, China is now prioritizing new development projects that mainly focus on digital and green infrastructure rather than the large-scale transportation projects that shaped so much of the early stages of Chinese engagement in Africa. Thus, Chinese overseas development finance is increasingly taking on the new “small is beautiful” approach to lending in Africa, and elsewhere, by prioritizing smaller and targeted projects that are economically more viable (Ray 2023). Interestingly, the Chinese tech giant Huawei has announced a $300 million investment in Africa’s data centers and cybersecurity industries (Garowe Online 2023). This is in response to the glaring need for African stakeholders in computing power and built-in systems against cyber threats, which Huawei hopes to partner on. Beijing is now one of the largest investors in African tech infrastructure as it intensifies its efforts toward smaller and targeted financing of BRI projects (Mackinnon 2019). Moving away from buildings and roads to hardware and software potentially creates new trade opportunities for Chinese firms. For example, in June 2021, Senegal’s president, Macky Sall, opened the Diamniadio National Datacenter, about 20 miles outside Dakar. The facility cost 46 billion CFA francs ($18.2 million) (Reuters 2021). It was built by Huawei and financed through a Chinese loan.
The BRI is dead, long live the BRI!
True, Xi’s overambitious claims about what the BRI is and what it is set to achieve seem not have aged well. But the expected death procession of the initiative at just 10 seems equally premature. As this piece argues, Xi’s BRI is just changing face, rather than being dead. Indeed, for all of its problems and challenges, the initiative is here to stay regardless of its actual form and content, given how deeply intertwined it is with Xi’s persona and political capital, as well as how it has come to define China’s global development engagement, especially with Africa and other developing regions. The initiative was enshrined in the party constitution in 2017, further closely tying it to Xi Jinping’s personal political legacy. No wonder that a third BRI forum has been floated by Xi himself for this year (2023) (Reuters 2022).
The changing dynamics also suggest that China still has a lot to offer for African countries in the development efforts, regardless of whether or not this year marks the funeral of BRI. The onus, however, is on African governments to make the most out of the arising opportunities.
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