by Edward Kusewa
The Belt and Road Initiative (BRI) is an ambitious trade policy introduced by President Xi Jinping in 2013. It is aimed at strengthening the trade profile of China and the rest of the world. BRI makes a radical departure from the past system of controlled trade by not only giving more control of the markets to the trading partners along the corridor but by also encouraging more financial integration of various currencies of governments along the route as well as more people-to-people exchanges of culture and education.
But the Belt and Road Initiative offers a window of opportunity in Africa for sustainable development across different sectors, not just economic. BRI envisions that grassroots initiatives and participation should be made key elements in improving education, literacy, health, family planning and other areas of daily life. For this purpose, the initiative has laid down the tasks of building and strengthening key institutions with which people are directly involved.
Initially, Africa can take certain advantages of the opportunities on offer, through crystal clear strategies for dealing with the challenges of the region. These countries must first of all deal with cultural and regulatory limitations which not only exist between China and Africa but also within Africa. The manifestation of business risks and emerging opportunities in Africa and the large number of bureaucratic encounters not only include legislation but also variances in how different countries set up their legal systems. There is a tremendous amount of fragmented regulatory and cultural dimensions within Africa. But if Africa is to truly compete on the global level a certain amount of economic, legal and cultural cohesion is crucial.
Noting that some African jurisdictions have already initiated some policy changes in these areas, BRI encourages African economies to integrate with the global economy by the deregulation of industrial activities, by giving the private sector more freedom in making commercial decisions and improving the ease of foreign direct investments. For this to come to fruition, there must be strong fiscal and monetary systems within individual nations in Africa. These strong monetary policies will provide a better balance between aggregate demand and supply and will force public enterprises to become more efficient.
The BRI has the potential to further solidify the economic value China and Africa represent to each other. It is believed that China’s investment in Africa soared to 40 billion in 2017. It was announced at the 2018 FOCAC that China would directly invest another $60 billion. China pledges to invest a total of $175 billion in Africa over the next ten years. The investments are in the form of loans and infrastructure development. State-backed investments accounts for about 75% of deals by value in 2018. Output capacity and trade volumes expanded and increased by 45% to $166 billion in 2016. This growth of imports from Africa to China is largely concentrated on mineral ores, gas and petroleum, agriculture raw material. Total exports from China to Africa is about $93 billion.
China and Africa have co-launched credit guarantee schemes with state-owned enterprises to boost infrastructure development and resource optimization in the region. There is a significant collaboration for scientific surveys with regard to potential benefits of vital resources like water, minerals, forests and other ecologically important features of African economies. There is tremendous development of technology and technologically sound transfers.
The BRI approach for African economic growth includes a pipeline of structured objectives to increase the rate of growth in industrialization, setting up of new industries and the optimization of a modern industrial system. But more importantly a pattern of development that encompasses objectives like the stimulation of advanced technologies and a redistribution strategy that is directed to the eradication of poverty in Africa.
The article reflects the author’s opinion, and not necessarily the views of CGTN.
