An initiative of China in 2013, the Belt and Road Initiative
(BRI) is one of the largest global development plans of the twenty-first
century. Intended to reactivate and establish new supply chains, the plan
covers Asia, Europe and Africa through infrastructure corridors. For Africa
which has long suffered from infrastructure gaps and delayed infrastructure
development, the BRI brings about opportunities for transformation. But how
does it exactly change the face of business in Africa?
For instance, while it is easy to see that the BRI entails
infrastructure investments in Africa such as investment in business and trade,
it also seeks to change the existing African economy – China trade relations.
Countries like Nigeria, Kenya, South Africa, and Egypt are experiencing drastic
changes in their economy, business and leadership. In the following section, we
will explore how the BRI is economically benefiting Africa through
infrastructural investment and economic cooperation, investment approaches, and
strategic economic captures.
The Economic Impact of the Belt and Road Initiative on Africa
1. Infrastructure as the Cornerstone of Development
- This goal is at the core of the BRI in Africa: an
acknowledgement of the continent’s historical infrastructure deficits. Some of
the African infrastructure finance include the Nairobi-Mombasa Standard Gauge
Railway in Kenya and the Lekki Deep Sea Port in Nigeria. These projects are
designed to liberate economic value by removing obstacles which increase the
cost of delivery.
- Increased Trade Efficiency: He noted that new transport axes
speed up the movement of cargoes, provide access to seaports for landlocked
countries and give quicker access to the worldwide market. The construction of
the Ethiopia-Djibouti railway is an example whereby the time taken to transport
goods from one point to the other was cut down from two days to twelve hours
easily.
- Job Creation and Economic Multipliers: The BRI being an
initiative in construction projects, various infrastructure developments create
thousands of employment opportunities in other areas apart from construction
such as manufacturing and logistics industries.
Nevertheless, such rewards are due, but concerns over the
stability of the debt and other impacts on the environment have occurred.
Scholars and critics opine that the Belt and Road investment strategies,
therefore, require frameworks on appropriate profit sharing and development.
2. China-Africa Trade Relations and Economic Cooperation
Trade between Africa and China has risen significantly in
the last decades to a value of more than $254 billion in 2021. Out of the BRI,
trade is being transformed into the African trade channels. These enhance the
ease of flow of goods including raw materials, textiles and electronic
products.
- Export Diversification: African nations are gradually moving
away from the intersectoral reliance on the exports of raw materials and
semi-processed products due to BRI booster trade corridors.
- Import Benefits: Chinese products are cheaper for African
consumers increase living standards and offer variety for businesses seeking
industrial equipment at a cheaper price.
But, trade balances are still not balanced. The figure
highlights that African Nations export $1 of goods for every $3 of Chinese
imports. Such strategic visions as AfCFTA could complement BRI projects to
ensure balanced growth would be the key driver.
3. Boosting Strategic Economic Partnerships
It is also refashioning strategic economic relations with
Africa through the Belt and Road Initiative. Unlike the old-fashioned
donor-recipient relationship, sister institution partnerships are built on the
principle of quid pro quo and lasting partnership.
- Nigeria’s Role as a Regional Hub: Nigeria is one of the key
countries in the BRI because the country is the largest economy in Africa.
Spending on ports, railways, rolling stocks, and energy improve Nigerian
capability as a West African import-export center.
- Egypt’s Strategic Position: Evaluating Egypt at the
intersection of Africa and the Middle East, the country has used BRI to develop
the Suez Canal Economic Zone to attract international investors.
- South Africa’s Infrastructure Modernization: South Africa as
a gateway to the sub-Saharan region applies the BRI proposition to upgrade its
transport infrastructure to enhance the experience of local and regional
enterprises.
In the case of the BRI, such improvement of partnerships is
contributing not only to Chinese economic predation in Africa but also to the
African Union's exemplary development agenda.
Challenges and Critiques of the BRI in Africa
Despite the promise, the BRI in Africa faces criticism and
challenges:
- Debt Sustainability: In Zambia, for example, officials have
been sweating to repay Chinese loans that were associated with the BRI
projects. The narrative of the debt trap is still to some extent debatable even
though studies differ across countries.
- Economic Dependency Risks: Critiques respond that such
extensive use of Chinese contractors and technology will undermine the
development of local capabilities.
- Environmental Concerns: Infrastructure projects are usually
subject to criticism for their sustainability considerations for instance
deforestation among others.
These challenges are an indication that agreements must be
open and project development and implementation must involve local
stakeholders.
Transformative Potential: Business Opportunities in the BRI
Nonetheless, it is impossible to ignore Belt and Road
business opportunities in Africa despite existing hurdles. For entrepreneurs
and businesses, the BRI opens doors to:
1. Infrastructure-Driven Growth Sectors: Infrastructure
construction, transportation, logistics and real estate industries are always
on the receiving end when it comes to enhanced transport corridors and city
planning.
2. Renewable Energy Expansion: Harnessing of renewable
electricity, mainly from solar and wind sources associated with the BRI boosts
Africa’s option value of electric power supply, and balances cost and
reliability.
3. Tech and Digital Ecosystems: Currently, through the
Digital Silk Road, the BRI is developing digital infrastructure in Africa. In
Kenya, Chinese technology companies have thereby formed partnerships to enhance
broadband rights for the delivery of efficient solutions in e-commerce and
fintech.
4. Manufacturing and Industrialization: If the facilities
are developed, more manufacturing investment can be made in the African nations
thus making it a strong contender to Asia.
Conclusion
The BRI has brought a new form of interaction between Africa
and China in terms of economic cooperation which has changed the business model
altogether. From Nigeria’s infrastructure construction to Kenya’s African trade
corridor construction, BRI lays the basis for economic upgrading. However, the
way forward is not plain sailing.
Currently, the African governments need to find the right
balance of relying on Chinese investment whilst at the same time protecting
their future. Cosmopolitan sunk costs, that is, transparency, development of
local capacities and regional goals such as AfCFTA will define the ultimate
impact of the BRI. Similarly, to sustain the trust, China needs to follow
inclusive development and invest in sustainably developed social structures.
As it stands, the prospects are enormous for businesses
attempting to sail through the African horizon. It is through the African
infrastructure financing by China or through the investment proposal being laid
out by the Belt and Road, the process is bringing out yet undiscovered
potentials in various fields. In the context of Africa rising to a new
position in the global economy, the BRI is at once an enabler and a driver that
seeks to make the continent achieve its development agenda.
Only in this way can African nations and businesses
translate this global phenomenon – the BRI – into a sustainable development
agenda for the current and future generations.
