PPP model: China offers PPP model to revitalise BRI in Africa

In a major policy shift, China is offering private sector participation to revitalise the Belt and Road Initiative (BRI) — covering various sectors including infrastructure and manufacturing in resource rich Africa — due to rising debt faced by several countries in the continent. The initiative was launched at a recent meet organised in Beijing with participation of Chinese and African officials.

The meet last month brought together high-level stakeholders from China and Africa to discuss financing the next stage of Africa’s infrastructure development, ET has learnt. The China-Africa Special Dialogue was co-hosted by the African Union’s (AU) mission in Beijing and the ‘Development Reimagined International Consulting (DRIC)’ of China. The event co-hosted by AU’s representative to China Ambassador Rahamtalla Mohamed Osman and CEO of DRIC, Rui Wanjie, was attended by of more than 20 China-based African diplomats, representatives from African Development Bank, China Development and Reform Commission, Ministry of Commerce, China International Development Cooperation Agency, Representatives of business chambers of commerce and other African stakeholders.

The event took off with a keynote address by Kenyan presidential hopeful, Raila Odinga. He spoke of the need for transition from bilateral to regional infrastructure development as part of the AU’s ‘Program for Infrastructure Development for Africa Initiative.’ Director-General Wu Peng of the Department of African Affairs in the Chinese Ministry of Foreign Affairs, who also addressed the dialogue reiterated that China has always accorded priority to infrastructure development in Africa, according to persons familiar with the proceedings of the meet.

He further emphasized for a speedy implementation of the outcomes of the 8th Ministerial Conference of the ‘Forum on China-Africa Cooperation (FOCAC)’ held in Dakar, Senegal, last November. The conference explored new models of infrastructure financing and promotion of China-Africa infrastructure development including private sector participation in BRI in Africa. It may be recalled that in 2020 Wu Peng had expressed China’s willingness to encourage Chinese-funded enterprises to adopt models like Public Private Partnership (PPP) and “construction-operation-transfer” to invest in African industry for more localized production of African brands while attending a video meet on China-Africa ties.

While adopting the Dakar Action Plan (2022-2024) at FOCAC, it was noted that there was an infrastructure divide in Africa and such infrastructural disparities would be addressed through China-Africa cooperation with participation of Chinese enterprises by way of implementing connectivity projects through PPP as well as tripartite and multi-party cooperation models. These projects would include integrated high-speed rail network, single African aviation market, pan-African electronic network and cyber security related areas.

Besides, China will promote enterprises to invest about $ 10 billion in Africa, especially in manufacturing, agriculture and the digital economy. ET has learnt that Beijing is willing to encourage the China-Africa Development Fund and China-Africa Capacity Cooperation Fund to support Chinese enterprises for investing in African industries and projects through PPP/tripartite/multi-party to implement the plans, investment and financing needs of projects in Africa. However, no concrete details are available. Beijing, for the first time, at the last FOCAC meeting cut down on its investment pledges for Africa. President Xi Jinping, during his speech, committed $40 billion to Africa, a 33.3 percent drop from the $ 60 billion in the last two FOCAC summits.

The new ‘avatar’ of investments in Africa by way of encouragement to PPP has been created due to the ‘cautionary’ lending practices of Chinese banks in recent years, according to experts on the Chinese financing model. Earlier, the Chinese banks financed infrastructure in resource-rich countries by securing loans against resources such as oil and minerals. However, the rising debt of the African countries due to Chinese investments forced Chinese banks to adjust their lending practices. The investment through encouragement to the private sector is therefore sought in this backdrop, according to one of experts quoted above.

China has been facing criticism for its exploitative policies in Africa. For instance, the Chinese mining companies have particularly left the locals with a devastated environment and poverty, while the Chinese companies repatriate profits back home. Besides, the locals have been left homeless and displaced at the hands of Chinese companies, disrupting their livelihoods.

China aims to set-up AU’s Permanent Mission in Beijing later this year as part of the new plan. But the PPP model may not reduce debt burden on the African economies but and could further exacerbate problems of African countries and alienate the locals.

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