LONDON — Britain is eying investment in Africa as a way to boost trade and influence after Brexit — but it faces stiff competition from China.
The U.K. has, to date, announced one significant project as part of its new strategy — more than £100 million for a road in the West African state of Benin.
China, on the other hand, plowed $683 million into the country in borrowed funds between 2000 and 2018, according to the China Africa Research Initiative. The Asian powerhouse has invested $148 billion in infrastructure and other developments across the continent as a whole during the near-two decade period, making China the dominant single investor in Africa as part of what became its Belt and Road initiative, creating lucrative openings for Chinese firms and serving as a vital soft-power tool.
But some British Conservatives hope the U.K. can position itself as a more attractive partner.
Conservative MP Tom Tugendhat, the chair of the House of Commons foreign affairs committee, said countries learned the “real price” of Chinese investment after signing deals. Risible working conditions, environmental breaches, corrupt practices and clashes between local populations and incoming Chinese communities are among the issues reported, he said. A diplomatic row broke out in Zambia over the running of Chinese-built copper mines, for example.
One attraction was that Chinese investment comes with few strings attached at the outset, critics argue, as well as fewer regulatory hurdles, compared with loans from high-regulation western nations.
However, debt arrangements for loans can be crippling — such as in the case of a Chinese-backed rail line in Kenya — giving Beijing greater power over its debtors. “You thought [the investment] was free but it turns out it’s not free,” Tugendhat said. “It turns out that although the Brits and Americans have strings up front, the Chinese have small print.”
Prime Minister Boris Johnson echoed a similar sentiment back in January, when he told a U.K.-Africa investment summit that Britain was a “reliable” partner and “the people you should be doing business with.”
In a thinly-veiled attack on rivals, he pointed out that a $53 million British investment to help build a port in Mombassa, Kenya, had not been “arranged on extraordinarily one-sided terms and delivered by a vast imported workforce.”
China, on the other hand, insists there is no “abusive” element to its cooperation with Africa, and that it sticks to “the principle of mutual benefit and win-win results.” Zeng Rong, a spokesperson for the Chinese Embassy in the U.K., said China responds to development demands from African states, approaches the continent with mutual benefit and never attaches “political conditions.” He said financing support must undergo “careful feasibility studies and market-oriented assessment.”
Rule-abiding or not, observers expect clashes with China in the race for Africa.
“It was inevitable that western and Chinese competition with Africa would escalate over the coming decades, as Africa finds itself at a crossroads in its pathway to development,” said Sophia Gaston, director of the British Foreign Policy Group (BFPG.) “It is certain that China will not be happy at the prospect of Britain undercutting its efforts to solidify its position in Africa, however, these tensions are inevitable, and should be anticipated and prepared for.”
But Rong insisted China was open to the competition. “It is a common responsibility for the international community to support peace and development in Africa,” he argued. “We are glad to see Africa developing diversified cooperative partnerships, and we welcome the international community, including the U.K., to help Africa achieve development and prosperity by attaching greater importance to and increasing input in the continent while respecting its own will.”
Road to friendship
African states have been eager to soak up Chinese money, after western nations lost interest in recent decades. “The Chinese have largely taken advantage of the fact that Africa was desperate for investment and there wasn’t enough competition,” said Nick Westcott, director of the Royal Africa Society.
That’s now changing, with the EU and the U.S. pushing to up their influence and increase trade with the continent.
And Britain is getting in on the action too. U.K. Export Finance, Britain’s export credit agency, is investing more than £100 million to improve the link between the cities of Bohicon and Parakou, boosting trade lines between Benin and neighboring nations.
The benefits to Britain, as well as expanding its soft power and development credentials, are that construction firm Sogea-Satom U.K. will undertake the works using some British materials and services, while ministers hope the two-year project will boost U.K. exports to Benin, which were worth £29 million in 2019.
The project marks the first push into Benin through U.K. Export Finance and carries significant symbolic value, coming just as the U.K. finalizes the terms of its departure from the European Union.
“This deal will bring significant benefits to U.K. construction exporters and suppliers at a time when we need to keep trade flowing,” said Minister for Exports Graham Stuart when the project was announced last summer. “It shows that U.K. businesses, with the right support from government, can continue to export anywhere in the world.”
Benin is already well cultivated by China, which has worked with the nation since 1972, after it declared opposition to Taiwanese independence. China has invested heavily in infrastructure investment in Benin, including almost $23 million for a 5 kilometer overpass in Cotonou, and $4 billion for a rail line. It built a hospital, a stadium and a trade development center, among numerous other projects, and has established a “China Cultural Centre” in Cotonou, where locals learn to speak Chinese.
“Having the attention of key foreign investors and official partners — such as Britain and China — highlights our credibility and attractiveness, and more broadly the improvement in the business climate in Benin,” Romuald Wadagni, Benin minister of economy and finance told POLITICO. “The U.K. and China are and will be two important partners, among others, for the development of Benin.”
Wadagni insisted Benin remains politically and economically autonomous, and said debt to China amounted to less than 5 percent of total public debt at the end of 2019.
“Investment opportunities in Benin are numerous as one of the fastest growing economies in Africa,” he added. “We therefore have the will, and the capacity, to cooperate with all countries willing to take part in the development of our country in a mutually beneficial manner.”
Streets of rage
U.K. officials insist the Benin road project was not signed off with diplomacy toward China in mind.
Britain — unlike the U.S. — has not stated explicitly that Africa is a battleground in the cold war with China. United States Assistant Secretary of State for African Affairs Tibor Nagy told a Congressional hearing in 2019 that Washington was “weaponizing” its African embassies “to confront China on a whole range of issues, most prominently a commercial one.”
Westcott, from the Royal Africa Society, pointed out that Britain was so far aiming to maintain its own influence in Africa rather than reduce Chinese influence — but that it could take a more aggressive approach in future, for example attempting to outbid China for projects.
That could be a struggle for London, which does not have the economic clout Beijing can wield. “It will be extremely difficult for the U.K. to practically match China’s efforts to make these economic inroads into Africa, as the sheer sale of its resources, and the competitive pricing of its infrastructure, are second to none,” said Gaston from the BFPG.
Instead, experts believe, African leaders who have their citizens’ interests at heart will prefer to do business with open states that offer strong regulations and no hidden catches — especially those with existing diplomatic links.
“Many African nations would instinctively prefer to develop partnerships with Britain,” said Gaston. “We just need to make sure that we can develop a compelling and competitive offer.”