Will Africa Benefit from the China-US Battle for Dominance in Africa?

It is no longer news that Africa is in the middle of a struggle between the West and China. Is there a way in which Africa can gain from this battle especially in the area of infrastructure?

You will agree that there is a major infrastructural shortage, especially in sub-Saharan Africa and it doesn't look like this will change anytime soon.

According to reports by the World Bank, sub-Saharan Africa alone will need approximately $93 billion a year till 2030 to get the region to where it needs to be.

The African Export-Import Bank says power shortages alone subtract 2% to 4% a year from GDP in African countries every year.

The ever increasing population in Africa and the rapid rural-urban transformation have made the need for improved infrastructure an urgent one. African leaders need  funding to carry out these massive projects and need to be disciplined in its execution so that the funding are channeled to areas for which they are meant.

Experts say that Africa can benefit immensely from the rivalry between China and the West, as they battle for dominance and influence on the continent. This is because in a bid to win Africa over, these world powers continue to provide loans and undertake the construction of massive projects across the continent.

Although they are adopting different approaches, China and the United States are aware that infrastructure is a major problem in Africa and that improving this will go a long way to win African leaders over to their sides.

China loaned African countries $19 billion for energy and infrastructural projects alone from 2014 to 2017, and reports claim that the China Exim Bank has been “the largest policy lender by far in the region” from 2008 to 2017. 

Just recently, the Chinese president pledged $60 billion to African leaders who attended a summit in Beijing.

The rise of China’s “win-win” financing and the US's decision to double its development finance budget to $60 billion means bilateral finance, which already means multilateral finance will become even more dominant globally, at least for the foreseeable term. 

The problem however is the attitude of African leaders who are not transparent in the award and executions of these projects.

Baker McKenzie analysts think the battle for dominance in Africa will benefit African countries over the next decade, and they explain it by focusing on three key priorities which need to be addressed.

According to Jen Stolp, global head of project finance at Baker McKenzie in a statement:

“First, a move away from traditional funding, and recognition that alternative structures and new financial instruments are needed.

“Second, increased focus on project preparation funding and the creation of credible and predictable regulatory environments; and third, increased support for private equity investment.”

What are your thoughts?

Header Image Credit: China News