On June 26, the seven member states of the G7 met in Germany to launch a massive investment project worth 600 billion dollars (nearly 570 billion euros) dedicated to the development of infrastructures in the world. This program, by 2027, unofficially aims to counter the stranglehold of China and its “new silk roads” in developing countries, especially in Africa. Although none of the leaders of the seven most developed countries mentioned the name of China, several allusions were made to it.
Thus, Ursula von der Leyen, President of the European Commission, stressed that the partner countries of the West “have a choice”, a choice which is similar to that of the democracies against Beijing. Joe Biden, President of the United States, clarified that le G7 “offers a better option”, based on “shared values” such as “transparency”, respect for workers’ rights, the environment, gender equality.
How China and the United States are fighting over Africa
The transparency advocated by the White House is a sizeable argument in the face of Chinese loans that are often deemed too “opaque”, at “unfavorable” rates, and whose conditions exacerbate the vulnerability of developing countries. Many countries that have received funds or investments from China’s Belt and Road Initiative (BRI) program are now much more indebted than before, with a GDP that has not grown enough, and investments that are not have not significantly improved people’s quality of life.
Debt: who are Africa’s creditors?
Moreover, China only joined the “common framework” put in place by the G20 countries to restructure, or even cancel the debt of poor countries that request it, in April 2022 – more than two years after the launch of the initiative. “We got a very concrete commitment from China to join the committee, more generally, to work constructively,” said Kristalina Georgieva, Managing Director of the IMF, on April 21. To date, only three African countries – Chad, Zambia and Ethiopia – have applied to benefit from this framework. Despite China’s late introduction to this initiative, Chinese banks have done their best to blur the distinction between public and private debt, and have backed the repayment of some of these debts with the natural resources of the African countries concerned.
Sub-Saharan Africa as a priority
A senior US executive said after the the G7 meeting that “sub-Saharan Africa will clearly be a top priority. In the space of twenty years, China has become its main creditor. In 2020, the Middle Kingdom held 62.1% of its bilateral external debt, compared to 3.1% in 2000.
African debts: the pace of moratoriums is accelerating
During this same period, according to Boston University, Chinese financiers have signed more than 1,188 loan commitments for a total value of 160 billion dollars with 49 African governments. According to the same source, the biggest borrowers were Angola, Kenya, Egypt, Nigeria, Cameroon, Ethiopia, Zambia, South Africa, Congo and Ghana.
Reverse the trend
According to the “Banking on the Belt and Road” report, dated September 27, 2021, $350 billion in “hidden” debt has slipped off the radar of the World Bank’s official reporting system. In all, 26 African States would be concerned, for an amount representing approximately 40 billion dollars over the period 2000-2017.
China-Africa: when will trade be rebalanced?
To succeed in countering the Chinese offensive which has existed for years, the G7 countries say they are ready to put in the necessary means. The United States alone plans to inject some $200 billion over five years into developing countries. A sum made up of loans, public financing and private financing encouraged by the American executive. In all, the G7 indicates that it is capable of dedicating 600 billion dollars to this program. The amount allocated to Africa is currently not not defined.