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As China cuts Africa fair deals, America flounders

By Simon Mwebaze 

Editor’s note: The opinions expressed here are those of the authors. View more opinion on ScoonTV. 

China has been aggressive across the world, especially in infrastructure projects and trade, but no more so than in Africa. African countries have been primary beneficiaries of China’s infrastructure deals, but does this mean they’re going to abandon America and the US dollar? 

For over 100 years, the world has conducted trade and investment transactions using the US dollar since it’s the world reserve currency. But with increasing Chinese influence, we may see a slow but steady change toward a new world reserve currency. There are a couple of reasons why this may sound like an attractive bargain for Africa.  

The US has dominated aid to Africa. This has been to cater to challenges like education, health, and poverty. Much of this aid usually comes with conditions that African countries have to fulfill to keep aid coming in. This often finds the US interfering in the social issues of many African countries. One notable example is the lack of LGBTQ rights in many African countries. Countries such as Kenya, Uganda, and Malawi have been clear on their stance against LGBTQ issues but have sometimes paid the consequence of losing aid. For example, Uganda has recently lost some cancer funding as a result of passing a law criminalizing LGBTQ activity. 

Africa is well known for its huge debt borrowed from the West. It’s not only known for the debt, but its inability to service the debts which have unfriendly terms like high interest rates. The average interest rates from the West (including the US) are 5 percent while Chinese loans are lower at 2.7 percent. China is also on record for forgiving 17 African countries that have interest free loans. The 23 loans matured at the end of 2021 were borrowed under the Belt and Road Initiative focused on infrastructure developments. With such glowing terms, it makes more sense for African countries to work with China instead of the West’s International Monetary Fund or the World Bank.  

Political interference has been a significant part of the US Dollar dominance. Many countries have suffered invasions from US troops and their partner countries under the guise of eliminating terrorists or dictators. These campaigns have negatively affected the victim countries. Some of the primary examples are in Arab countries like Iraq and Afghanistan. Africa has also had its fair share of this in Somalia. Most infamously, however, was in Libya,  which has been unstable since 2011 when American forces in the country led to Gaddafi’s murder. 

Terrorist groups like ISIS and al-Shabbab have taken advantage of the leadership vacuum left in these countries, causing pain to millions while spreading further. 

Social incompatibility has also led to a desire for change of the world dominating currency. Many African countries are traditional and have conservative values that disagree with the US liberal view. Some of the areas where the US continually has friction with Africa is LGBTQ rights. Several African countries shun LGBTQ people even without any laws against them in place. Besides LGBTQ, feminism is another value promoted by the West that some African countries have resisted. Africa is predominantly patriarchal with family leadership belonging to the father and the mother mostly catering to the home and children. China is similar to Africa to a greater extent; therefore, it makes sense that the African continent would be more inclined to work with them. Even when they aren’t similar in values, the fact that China has so far been less likely to impose such social demands speaks volumes to the African nations who need aid. 

The US has ignored infrastructure issues in Africa for a long time, too. African roads, ports, and railways have had no focus on aid from the US. US aid has primarily focused on issues like poverty, health, and education. As important as that aid is, it’s also easier for citizens to immediately see the results of infrastructure projects being completed. China has used the opportunity of ignored infrastructure to initiate the Belt and Road Initiative which is currently undertaking multiple infrastructure projects in many developing nations within Africa. China is responsible for over 31% of infrastructure projects in Africa. These include massive undertakings such as the Entebbe International Airport in Uganda, the Standard Gauge Railway going through East Africa, and the East African Crude Oil Pipeline (EACOP). While this may seem like China is getting a raw deal here with interest-free loans, the truth is that China is playing the long game. These infrastructure projects are setting the tone for bilateral trade between the continent and China. In 2021, bilateral trade between Africa and China grew by 35.3 percent.  

China has been Africa’s largest trading partner since 2009. With increased trade between the two continents, it may make more sense to trade in the Yuan. 

The final nail in the coffin may be BRICS which currently consists of Brazil, Russia, India, China, and South Africa. BRICS is working toward an international currency that may overtake the US Dollar as the world reserve currency. This is because several countries have already applied to join BRICS, and many are interested. These include Algeria, Argentina, Egypt, Iran, Mexico, Saudi Arabia, Turkey, and many more. Several currency swaps to bypass the US dollar in trade transactions are already in place as well.  

While these factors may seem like the US Dollar is in an unfavorable position as a world reserve currency, it will take some time to execute. The BRICS countries are also not totally united on all issues so it will take time to effect these changes. Countries in BRICS like China and India are known to be economic enemies, with Chinese and Indian military getting in skirmishes almost monthly on the border. With the war in Ukraine raging, Russia isn’t exactly in the economic space to be a powerhouse. And the countries looking to apply to BRICS are as diverse politically as they could be. 

Either way, the change is a possibility that Africa would probably favor given the declining relationship with the US. The question remains on what the West will do to win Africa back to their side.

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Simon Mwebaze

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