Africa missed its Industrial Revolution and today it depends on international trade for the majority of finished goods. All African countries are full of natural resources, raw materials, and primary goods. However, the lack of infrastructure limits their industrial progress. In 2012, the African Union proposed the African Continent Free Trade and Cooperation (AFCFTA). The main objective of this organization is to pull more and more people out of poverty through structural economic change and cooperative legislation. With the establishment of AFCFTA, there is a hope of changes. Post-AFCFTA, Africa will emerge as the largest free trade zone in the world. After few months of the establishment of AFCFTA, it became evident that the benefit of its deals is being ripped by China. Africa is exporting raw material to China from where they began processing and then they are being re-imported as a finish good to Africa. China has always portrayed itself as a nation that boosts the economy through infrastructure. In the current scenario, China is the biggest trade partner of sub-Saharan African countries. With the help of new loans and trade deals, military agreements are expanding and with these deals, only China is making a profit. Chinese companies are dominating transportation and infrastructure development projects in Africa. More than 50% of continent engineering projects and construction were allocated to Chinese companies.
The first step of development for any country is natural resource exploitation. Nearly every country has some level of natural resources that they can use to kick start growth but first, they need enough money to build the infrastructure for using these resources optimally. As we all know it takes money to make money and China has money. According to reports, China loans Africa around 12 billion dollars. China kept investing in mining and farming thus making a profit from the growth of African countries. Chinese companies are also looking to set up their firms in Africa. Economic development in China is good and it pushed a large segment of its population into the middle class. This caused an increase in labour cost for Chinese firms and Africa comes with one of the cheapest labour markets in the world. For this reason, most of the Chinese firms are looking forward to moving to African countries.
There is an estimate that around 10,000 Chinese businesses shifted to Africa and about 90% of them are privately-owned. The Chinese companies have made money in Africa so the Chinese government provides a push to the industrialization. Now economic forces are moving forward and Chinese businesses are starting to grip the continent very strongly to gather resources and use their labour. This sounds familiar to colonialism. The motives behind European powers expanding their territory to less-developed nations in the 15th century to 20th centuries are similar to the motivation behind China growing influence in the developing countries. It is not to develop them but to exploit them. Some say that China is doing this to affect worldwide politics. If an African country recognizes Taiwan as an independent country, they receive on average 2.7 billion fewer Chinese infrastructure projects within their border each year. Conversely, if African country votes overwhelmingly along with China in the United Nation general assembly they receive 1.8 billion more infrastructure project per year.
China built a 3.2-billion-dollar railway in Kenya, they built a 526-million-dollar Dam in Guinea which helps the country to make more energy. China also built a light rail system worth 475 million dollars in Addis Ababa in Ethiopia designed as a way to combat the capital crippling traffic. These are only examples there are hundreds of other Chinese infrastructure projects in Africa each year. All across the continent, China is playing a part in the projects both big and small that are transforming African economies. It's important to note that these projects were financed by loans granted by China and these loans do of courses need to be paid back. Assuming cooperation between the Chinese and governments in these African countries, the bank will give low interest or no-interest loans to these countries. So, they can build trains or dams or other projects. These loans are therefore considered a form of Foreign Direct Investment and since China doesn't expect to get their money back they at least adjusted for inflation. As they are not charging much interest, there is a high risk of not getting their money back. In return for Chinese Investment, African countries provide Economic concessions to Chinese companies. For example, Zimbabwe has permitted Chinese companies for coal mining in the Hwang National part area, the Republic of Congo also provided a similar concession to Chinese miners, and because of these deals, the coal capacity of Africa is reduced today. Africa is not able to develop business in their nation because many companies do not possess the ability to reap benefits of the new trade blocks only China is making money with this development.
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