China Stops Short of Africa Debt Relief as it Pledges More Cash

Syllabus: GS2/International Relations, GS3/ Infrastructure

Context

• At the ninth edition of the Forum on China-Africa Cooperation (FOCAC) China stopped short of providing the debt relief sought by many African countries, but pledged 360 billion yuan ($50.7 billion) over three years in credit lines and investments.

About

• The new funds will go towards 30 infrastructure projects to improve trade links.

• China also said it will launch 30 clean energy projects in Africa, offer cooperation on nuclear technology and tackle a power deficit that has delayed industrialisation efforts.
• Ethiopia and Mauritius announced new currency swap lines with China’s central bank. Kenya will reopen the lending taps for key projects like its modern railway to link the region.

Concerns for India

• China’s investments in infrastructure, energy, and other sectors in Africa can give Chinese companies preferential access to African markets.
• China’s deepening ties with African nations can be seen as an expansion of its geopolitical influence, which could challenge India’s strategic interests, particularly in the Indian Ocean region.
• The debt-trap diplomacy gives China additional economic and political leverage in Africa, making it harder for India to compete for investments and influence.
• China’s growing military presence in Africa, including its base in Djibouti, poses security concerns for India. 
• India’s partnerships, like the India-Africa Forum Summit, are smaller in scale compared to China’s FOCAC and BRI initiatives. This limits India’s ability to counterbalance China’s influence effectively.

Opportunities for India

• Africa has an annual infrastructure funding deficit estimated at $100 billion, and needs transport links to make the African Continental Free Trade Area (AfCFTA).
  • AfCFTA is a trade agreement that aims to create a single market for goods and services across Africa. India can capitalize on AfCFTA by increasing trade and investment in the region. 
• China has in recent years cut funding for such projects as it shifted focus to small projects, mainly due to its own domestic economic pressures and an increase in debt risks among African countries.

• India can offer expertise in hospital management, medical training, and digital health solutions. Collaboration on COVID-19 vaccine distribution has shown the potential of such partnerships in the past.
• India can scale up its capacity-building programs under the Indian Technical and Economic Cooperation (ITEC) initiative, offering more scholarships and training opportunities to African students and professionals.
• India’s leadership in solar energy and its initiatives under the International Solar Alliance (ISA) provide a significant opportunity to support Africa’s renewable energy goals. 

Way Ahead

• India’s approach should be based on capacity building, sustainable development, and people-centric partnerships, and offers an alternative to China’s debt-driven model. 
• Through strategic investments and partnerships, India can not only counterbalance China’s dominance but also foster long-term, mutually beneficial relationships with African nations, reinforcing its role as a reliable development partner in the region.

Source: THE PRINT