African Reserves Loans

Promoting sustainable growth in Africa in the post-COVID-19 era

Children warmed by a fire in a camp for displaced people in Yemen, January 11, 2022. /CFP

Children warmed by a fire in a camp for displaced people in Yemen, January 11, 2022. /CFP

Editor’s note: Hamzah Rifaat Hussain, a former visiting scholar at the Stimson Center in Washington and a former research assistant at the Islamabad Policy Research Institute, is a television presenter at Indus News in Pakistan. The article reflects the views of the author and not necessarily those of CGTN.

After marking the 20th anniversary of the transformation of the Organization of African Unity into the African Union, the continental organization claimed in its message that the 2022 Russian-Ukrainian crisis is eroding the economic achievements seen in recent months. A closer look at existing China-Africa relationships, frameworks and institutions, however, shows how it is possible to promote sustainable growth in the post-conflict and post-COVID-19 era.

The African continent was the target of global and geopolitical shocks in 2022 that negatively impacted sovereign economies and tested the resilience of political leaders.

While the Ukrainian crisis shows no sign of abating so far, Africa cannot be overlooked as its gains of previous years risk being swept away.

In light of this, the historical foundation of the continent’s relationship with China gives cause for optimism in the post-colonial era where investments in infrastructure, energy, power generation, entrepreneurship and development programs poverty reduction in 2022 and beyond remains a possibility.

One can be assured that in the post-COVID-19 era, the continent can protect itself from the deleterious effects of global hegemonic behavior. This is imperative given that nearly 12-14 million people in the first quarter of 2022 and at least 15-16 million projected in the second will experience severe food insecurity due to drought in areas such as the Horn of Africa that only got worse in April 2022.

As a result, geographic regions facing the worst effects of climate change and international neglect require significant investments, including regional connectivity.

Chinese Premier Li Keqiang has repeatedly stressed the need to promote high-quality cooperation under the Belt and Road Initiative, which includes the construction of railway projects linking eastern seaports. from the mainland to inland areas such as Mombasa to Nairobi or Addis Ababa in Ethiopia to Djibouti.

A solid infrastructural base is essential for intercontinental trade to continue in the face of supply-side shocks and soaring global oil prices.

According to the United Nations Conference on Trade and Development, the combination of low commodity prices and the pandemic led to a contraction of foreign direct investment in Africa by 16% in 2020, announcements of international financial projects are contracting an additional 74%.

In 2022, the continent faces more pressing issues such as the effects of the crisis in Eastern Europe on global grain production, food insecurity, declining foreign exchange reserves and rising poverty. world.

To ensure that economic disparities do not materialize on the continent, it is imperative that a robust financial system is available at all levels to meet the growing demand for project finance in 2022.

The cross-border interbank payment system, which provides settlement and clearing services, is an ideal initiative in this regard, in which 42 indirect participants from 19 African countries have been secured in 2021.

Likewise, as infrastructure needs grow in 2022, the interbank payment system offers relief benefits to states, especially given that the People’s Bank of China signed a total of $11.5 billion in debt. currency swap agreements with countries such as Egypt, Nigeria, South Africa and Morocco.

African students come to China to learn e-commerce under the Belt and Road educational cooperation program, May 28, 2022. /CFP

African students come to China to learn e-commerce under the Belt and Road educational cooperation program, May 28, 2022. /CFP

Moreover, for the continent to weather the decline in economic activity in 2022, governments need to prioritize multilateralism over protectionism. In this regard, assisting African multilateral funding agencies such as China’s membership of the African Development Bank alongside the Trade and Development Bank for Eastern and Southern Africa makes available nearly $996 million dollars of contributions to the African Development Fund.

On debt servicing, Chinese loans continue to be aimed at filling energy gaps and providing infrastructure projects to facilitate the African Continental Free Trade Area, which is contrary to US narratives that the Debt trap diplomacy and economic colonialism are realities that African nations have to deal with due to the Chinese crisis. investments.

In accordance with the five principles of coexistence, the assistance provided is not normally accompanied by non-financial demands, including political interference in the internal affairs of sovereign States. Nor is there a politics of regime change in a continent that has experienced severe political instability.

As heartbreaking realities unfold in 2022 and the International Monetary Fund estimates that Africa needs $285 billion in additional financing in 2025 to finance an adequate response to COVID-19, Africa needs benign, sincere and meaningful investments to stay afloat.

Capitalizing on the gains of the historic China-Africa relationship in 2022 and beyond is a step in the right direction.

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