Forum on China-Africa Cooperation (FOCAC)

Why in the news?

China is hosting the ninth Forum on China-Africa Cooperation (FOCAC) Summit, a diplomatic event aimed at bolstering relations with African countries. This summit in Beijing offers valuable insights into Africa’s shifting strategic perspectives and presents opportunities for India to enhance its engagement with the continent.

 About the Forum on China-Africa Cooperation (FOCAC):

• Established in 2000, FOCAC was created to formalize the strategic partnership between China and African countries.
• The summit is held every three years, with hosting duties alternating between China and an African member country.
• Member Countries: FOCAC includes 53 African nations, representing the entire continent except Eswatini, which maintains diplomatic relations with Taiwan, contrary to Beijing’s “One China” Policy.
• The African Union Commission, responsible for promoting cooperation and economic integration among African nations, is also a member of FOCAC.
• Current Theme: “Joining Hands to Advance Modernization and Build a High-Level China-Africa Community with a Shared Future.”

• The ongoing summit is expected to focus on topics like state governance, industrialisation, agricultural modernisation, and enhanced cooperation on China’s infrastructure financing through the Belt and Road Initiative (BRI).

China-Africa Cooperation (FOCAC) Overview:

• The Forum on China-Africa Cooperation (FOCAC) serves as the official platform for collaboration between the People’s Republic of China and African countries.

The current meeting takes place against the backdrop of numerous challenges faced by African nations, including high inflation, currency depreciation, significant debt burdens, unconstitutional military coups, and geopolitical issues such as the Israel-Hamas conflict, the Russia-Ukraine war, and Houthi rebel attacks on commercial shipping in the Mediterranean Sea are significant geopolitical issues. Africa needs to clearly define its goals and establish a clear agenda for what it hopes to achieve from this forum.

African Priorities at China-Africa Cooperation 2024

Economic Goals:

• In terms of economic objectives, progress has been modest toward Beijing’s ambitious target of importing $300 billion worth of goods from African countries between 2022 and 2024.
• According to data from China’s General Administration of Customs, China-Africa trade totalled $167 billion between January and July 2024, with Chinese exports accounting for $97 billion and African exports for $69 billion.
• This reflects a trade deficit for Africa and a trade surplus for China, with approximately two-thirds of this trade still dominated by raw materials, reminiscent of the colonial era when the British imported raw materials from India.

Agricultural Development:

• Africa must focus on making its agriculture more sustainable and resilient, addressing challenges like processing agricultural commodities and basic tasks such as roasting raw cashew nuts.
• Nations like China and India, which have achieved agricultural self-sufficiency through the use of high-yield seeds and advanced fertilizers, could play a supportive role for Africa.
• With their experience and technology, they can help African agriculture become more climate-resilient, including the development of satellite systems for enhanced weather forecasting.

Green Energy and Industrial Development:

• Green energy and industrial development are vital areas of focus, with African nations urging international partners to set up more refining and processing facilities.
• In Zimbabwe, for example, Chinese companies are mandated to perform basic lithium refining to advance along the value chain and produce battery-grade lithium.
• However, persistent electricity shortages, limited power generation capacity, and high environmental, social, and governance (ESG) costs hinder international companies’ ability to refine raw minerals within Africa.

Debt Sustainability:

• China’s involvement in African debt sustainability is complex, with some arguing that China is not the primary creditor in Africa’s debt landscape.
• According to the Boston University Global Development Policy Center, Chinese loans to African governments and regional institutions totaled about $170 billion between 2000 and 2022.
• Chinese lenders represent 12% of Africa’s public and private debt. While the concept of Chinese ‘debt trap diplomacy’ is debated, certain Chinese lending practices warrant closer scrutiny.
• Many loans are not fully reflected in sovereign debt records, complicating the accurate assessment of debt levels. Despite concerns over opacity, transparency, and non-disclosure agreements, China is unlikely to offer large-scale debt forgiveness or cancellation, though it may write off small, interest-free loans.

Strategic Engagement:

• In the past, Africa’s ad hoc and uncoordinated approach at FOCAC meetings often left the continent in a reactive position rather than leading the agenda.
• As a result, African governments are now striving to formulate a cohesive strategy towards China and align their positions ahead of the FOCAC summit.
• African countries plan to shift their focus away from aid, prioritizing trade facilitation and actively pursuing value addition in their products, such as exporting roasted cashew nuts instead of raw ones.

Current Challenges for Africa:

• African nations are currently facing several challenges, including high inflation, currency depreciation, heavy debt burdens, unconstitutional military coups, and geopolitical issues such as the Israel-Hamas conflict, the Russia-Ukraine war, and attacks by Houthi rebels on commercial shipping in the Mediterranean Sea.
• Strategic Gaps: Africa’s lack of a defined agenda and expertise in navigating Chinese strategies may result in a reactive approach, with China often setting the direction in their engagements.

Lessons for India

1. Strengthening Partnerships

• Continuity in Relations: India should prioritize maintaining continuity in its relationship with Africa. The last India-Africa Forum Summit (IAFS) took place in 2015. While events like the CII-EXIM Bank Conclave and India-Africa Defence Ministers meetings have been held regularly, hosting IAFS-IV would further strengthen ties and sustain momentum.
• Track 1.5 Dialogue: Engaging in Track 1.5 Dialogue, which includes government ministers, non-governmental officials, NGO representatives, and academics, could improve consultation on shared interests. This dialogue should follow consultations with Africa’s eight recognized regional economic communities (RECs).
• Host and Regional Office: Addis Ababa, Ethiopia, as the headquarters of the African Union Commission, should host IAFS-IV. Additionally, setting up a regional African Union office in New Delhi could facilitate regular consultations.

2. Enhancing Economic Integration

• Support for Industrialization: India can aid Africa by promoting its industrialization and integrating African economies into global value chains, with a focus on sectors such as agriculture, pharmaceuticals, and manufacturing.
• Investment Areas: Important sectors for Indian investment include farm mechanization, food processing, and cold storage infrastructure.

3. Encouraging Private Sector Involvement

• Innovative Financing Solutions: India should encourage increased private sector participation by leveraging innovative financing solutions, such as public-private partnerships and blended finance.
• Financial Trust: The EXIM Bank’s Trade Assistance Programme and rupee-based lines of credit, which are well-regarded in Africa, can enhance financial trust and lessen dependence on dollar-based transactions.
• Feasibility Studies: Performing feasibility studies and developing detailed project reports are crucial for creating bankable projects, addressing the issue of African countries investing in non-viable ventures.

3. Technology Use

• Digital Connectivity: India’s digital infrastructure, including biometrics, mobile connectivity, and Jan Dhan technology, could be instrumental in establishing both digital and physical connectivity with Africa.
• Unified Payment Interface (UPI): The UPI and RuPay services, currently available in Mauritius, could be expanded to Kenya, Namibia, Ghana, and Mozambique, which have expressed interest in using these platforms.
• Currency-Neutral Transactions: Enhancing Indian banking services and minimizing foreign exchange risk through rupee-based lines of credit could be advantageous, as African countries incur significant losses annually due to exchange rate fluctuations.

Conclusion

• Examining African leaders’ interactions with China within the FOCAC framework provides India with valuable insights to refine its strategic engagement with Africa. By focusing on trade, industrialization, and technology, India can establish itself as a crucial partner in Africa’s growth and development.

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