The Forum on China-Africa Cooperation´s (FOCAC) new Dakar Action Plan is “more detailed and wide-reaching” than previous ones, although it sidestepped the issue of African debt sustainability, according to Standard Bank.
“FOCAC 8 in fact reflects the further maturation and deepening of China-Africa ties”, the bank´s analysts write in a comment on last week´s event in the senegalese capital, Dakar, which brought together African leaders and Chinese officials.
“The key issue that was sidestepped was African debt sustainability but, unlike in the past, no targets were set for concessional lending, which had tended to spearhead the pledges in previous FOCACs. That said, already by FOCAC 7 it was apparent that China’s own domestic de-risking and rebalancing, coupled with the erosion of debt sustainability, had meant this pillar had lost its shine”, the analysts add.
In Dakar, there was no commitment for grant and interest-free loans (in 2018, the pledge was USD 15 billion) and no commitment for development financing (in 2018, the number was USD 10 billion), according to the bank.
The Dakar Action Plan, it adds, “serves as a policy anchor in the China-Africa corridor, and this one is more detailed and wide-reaching than any other preceding Action Plans, covering nine areas: medical and health; poverty reduction & agricultural development; trade promotion; investment promotion; digital innovation; green development; capacity building; cultural & people-to-people exchange; and peace and security”.
During the event, China pledged to increase the availability of Covid vaccines to one billion, and it includes 400 million doses to be manufactured in Africa.
To combat Africa’s rising trade deficits, President Xi statedly would want to triple the value of African exports to China – expected to be USD 95 billion in 2021 – before 2024. To help jumpstart the process, China has committed USD 10 billion of export credits to support African traders seeking to access the China market, which is double the equivalent pledge made in 2018.
Related to this, China has emphasized the importance of expanding agricultural exports to China and the creation of new “green lanes” that aim to reduce red tape. Also, China confirmed its desire for broader use of the CNY in trade and investment, directing funds for a cross-border RMB hub.
“Looking ahead, fundamentally, in terms of economic sustainability, African economies must diversify, and urgently so. Again, China has statedly committed to ‘encourage’ Chinese businesses to invest USD 10 billion in Africa over the next three years. (China committed the same amount in 2018 to this end). And, China proposes establishing an ‘expert group on economic cooperation’ with the Secretariat of the African Continental Free Trade Area – a potential catalyst for boosting intra-Africa trade and manufacturing”, Standard Bank adds.
Again, echoing the White paper released on 26 November, the overarching policy tilt has pivoted towards the greater promotion of cooperation with Africa in social fields. To this end, an array of initiatives has been announced.
“China’s embrace of Africa – as framed, fortified and exemplified by FOCAC – has ushered in a period of exponential growth in bi-directional commerce. Just 21 years since the first FOCAC, China has emerged as Africa’s largest commercial partner. The fruits of China-Africa cooperation can be seen across the African continent”, Standard Bank writes.