December 23rd, 2022
Via the South China Morning Post, an article on the growing US/China investment “race” in Africa:
The US is “having to play catch-up” against China when it comes to investment in Africa, an official in President Joe Biden’s administration said on Monday, just ahead of a high-profile gathering of African leaders in Washington.
American companies considering Africa need more support from Washington to reduce their investment risk, Deputy Commerce Secretary Don Graves said in a conference in Washington organised by the news outlet Semafor, at which his comments contrasted with those of China’s top envoy to the US.
“What we’ve seen over the last five to 10 years is … a huge opportunity for the US private sector [in Africa], but it’s incumbent upon the federal government to find ways to make sure that we’re making that pathway easier for US companies,” he said. “We took our eye off the ball, so to speak, and US investors and companies are having to play catch-up.”
Speaking shortly before Qin Gang, Beijing’s ambassador to Washington, Graves knocked China’s approach to investment on the continent, which he characterised as importing “tens of thousands” of Chinese workers.
The US is “the partner of choice” among African governments, he said, because of the technologies and knowledge transfer that US companies would bring, and because of their efforts to build the domestic workforce needed to maintain their operations in those nations.
Graves acknowledged, however, that the US needed to use federal agencies – including the US International Development Finance Corporation (IDFC) and the Export-Import Bank of the United States (Exim) – more to reduce the operational risk that has kept much private-sector investment away.
Exim was given new life in 2020 under former president Donald Trump because of Washington’s growing concern over Beijing’s efforts to integrate with economies worldwide through its Belt and Road Initiative.
Exim’s programme provides loans, guarantees and financing insurance to foreign governments for infrastructure projects that US companies would need to start on terms competitive with China.Also under the Trump administration, IDFC was given an expanded role with its lending budget more than doubling to US$60 billion, and a new authorisation to make equity investments to support US exports.Coordinating with an array of US government bodies including the DFC, EXIM, the US Trade and Development Agency and the Millennium Challenge Corporation, “we have to make [efforts to transfer technology and build workforce capacity] more seamless”, Graves said.
“We have to make them more flexible, we have to be able to move more quickly. That’s one thing that some of our competitors have been able to do, like China,” he said. “They are able to galvanise tens of billions of dollars very, very quickly, and don’t require the types of approvals that we do.”
Today, USTDA convened its African finance industry partners, with whom we are driving infrastructure development on the continent. Our 30-year record of success in Africa is rooted in the strength of these partnerships.@EXIMChair @wallyadeyemo pic.twitter.com/HE4gFxY11v — USTDA (@USTDA) December 12, 2022
These debt loads have become a focal point for critics of the Belt and Road Initiative, with many portraying its projects as “debt trap diplomacy”.
While Graves chided China’s approach to investment, Qin defended his government’s practices by asserting that BRI projects have given many African countries badly needed roads and other infrastructure.
He also said that Beijing has cancelled the most debt among countries participating in a so-called Debt Service Suspension Initiative, which the Group of 20 launched during earlier stages of the Covid-19 pandemic to help developing countries cope with the pandemic’s devastating fallout.
Amid growing criticism about “debt traps” that some countries on the continent are facing, China announced in August plans to cancel a series of interest-free loans to 17 African countries.
“Over the past decade, China provided loans to help Africa with economic and social construction works everywhere, in every capacity. Hospitals, highways, airports, stadium,” Qin said. “In all of this, there’s no such trap. It’s not a plot. It is transparent.”
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