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China’s One Belt One Road: What does it Mean for African Natural Resources?

February 13, 2018

 

 

China's “One Belt One Road” Initiative (OBOR), or Belt and Road Initiative, has dramatically affected natural resource sectors in Africa, and will continue to do so. The initiative was first proposed by China’s President Xi Jinping in 2013. “One Belt” stands for the Silk Road Economic Belt and “One Road” stands for the 21st Century Maritime Silk Road. OBOR aims at building two zones of economic cooperation through multilateral mechanisms. Its impact can already be seen: in 2017 alone, trade volume between China and its partners in OBOR increased by 17.8%. A few notable outcomes of this initiative are the Asian Infrastructure Investment Bank, the Nairobi-Mombasa Railway in Kenya, and the Karot Hydropower Project in Pakistan. While OBOR can be seen as a more recent development, cooperation between China and African countries has long been established, and was institutionalized by the Forum on China-Africa Cooperation (FOCAC) in as early as 2000. The importance of China-Africa relations is also demonstrated by bilateral exchange. For 28 years, the first country that the Minister of Foreign Affairs of China would visit in the beginning of the year has always been in Africa.
 

As a national strategy, OBOR will deepen and expand the existing connections between China and African countries. It will have an impact on all sectors, especially energy, mining and agriculture.

 

Energy

China’s involvement in the energy and power sectors has grown throughout the years, resulting in a significant presence in the energy sector in Africa today. Chinese investment accounts for 30% of power capacity growth in Sub-Saharan Africa from 2010 to 2015. This capacity is derived from several sources, including oil. In 2000, Chinese oil companies were mainly active in Sudan. But by 2014, Sinopec alone expanded its operations into 16 African countries. This is not to say that China’s presence is limited to hydrocarbons: one of the 10 cooperation goals from FOCAC 2015 is to support development of photo-voltaic, biomass and other renewable energy systems in Africa. To this end, Chinese companies have invested heavily in the renewable energy sector in Africa, turning the African continent into an emerging market for Chinese photo-voltaic devices. The continued focus on the energy sector will both help African countries increase their production capacities and help diversify China's energy imports.    

 

Mining 

The mining sector has received the largest amount of Chinese FDI in Africa. Copper from Zambia and the DRC and uranium from Namibia have attracted major interest. Namibia in particular is the best example of Chinese investment in the mining sector in Africa since the Namibia Lake Mountain uranium mining project is the largest tangible investment by China in Africa. Chinese investment in the mining sector can be seen in a multitude of projects around the continent where Chinese companies are junior partners. Under the influence of OBOR, China has not only participated in mining expos including Mining Indaba, but has also established a platform specific to the mining sector: the China-Africa Mining Investment Partnership Forum. Such forums should accelerate further Chinese involvement in this sector in the form of both private and state enterprises investing across the continent.

 

Agriculture

Similarly, in the agricultural sector, there is a tendency of institutionalization of cooperation between China and African countries. The first China-Africa Agricultural Investment Partnership Forum will be held in 2018 and will highlight the significant figures associated with China’s engagement in this sector: over $1 billion invested, 1,500 local jobs created, and 100,000 farmers trained. Investment in this sector could prove to be the most significant in the China-Africa relationship considering the fundamental role that increasing farm productivity plays in economic development and poverty reduction.

 

 

Since the beginning of OBOR, Kenya, Ethiopia, Egypt, Djibouti, and now Morocco have become official partners of the initiative. Starting from East Africa, OBOR will spread across the continent and continue to influence energy, mining, and agricultural sectors. The cooperation between China and African governments in these sectors will also become increasingly institutionalized. In addition to FOCAC, we are likely to observe emergence of forums and other official regional cooperation mechanisms specific to each sector. Both state and private enterprises are likely to take further part in implementing OBOR on the continent of Africa. Although China claims that like other partnerships, OBOR will create a “win-win” situation, the actual impact on African countries remains ambiguous for now. This impact will be explored in CID's coming research report on this topic. 

 

 

Note: some sources are in Chinese. These pages can be translated with the Google Translate plugin for Chrome.

 

 


Chelsey Cao is an International Studies scholar with a focus on international development and Africa at American University. She has experience in U.S. Congressional offices as well as in several think tanks in Washington, DC. Chelsey is deeply intrigued by China-Africa relations and is interested in the impact of Chinese FDI in the Global South. 

 

 

 

 

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