- U.S. and EU seek the kind of influence Beijing has spent decades building
According to Nikkei Asia article published on March 25, 2023, China's Belt and Road investment in sub-Saharan Africa fell to a new low last year, showing that increased U.S. and European spending could reduce the region's need to rely on Beijing for funding.
China's investment in the region related to Beijing's global infrastructure development strategy dropped 55% to $7.5 billion last year, according to a recent report from the Green Finance and Development Center at Fudan University in Shanghai.
"While China has maintained a substantial presence on the continent for over two decades, the growing interest of Western powers in Africa could impact China's BRI strategy," said Alicia Garcia-Herrero, chief economist for Asia-Pacific at French investment bank Natixis.
Also, the inability of many African governments to take on additional loans has dampened demand in the construction and infrastructure sectors, while Chinese foreign investments have gone to less risky and higher-yielding areas.
China continues to be one of the major financiers of infrastructure projects in sub-Saharan Africa, with a total investment of $155 billion over the past two decades. As a result, Beijing has gained enormous influence and contacts with several African nations. This has prompted some observers to see the BRI, launched in 2013, as a vehicle for Chinese geopolitical expansion.
"The decrease in funding could provide an opportunity for the U.S. and the EU to increase their engagement with the region," said Uche Igwe, a Nigerian political economist.
The U.S. and European Union have recently announced intentions to enhance investments on the continent. Last year, the U.S. joined other Group of Seven nations in a $600 billion Partnership for Global Infrastructure and Investment (PGII), and Brussels announced a new Africa policy.
The BRI is on the minds of American policymakers who favor greater investment on the continent. Since December 2019, Congress has been funding a Countering Chinese Influence Fund, which instructs the executive branch to challenge Chinese influence in Africa and elsewhere.
In recent weeks, the House Foreign Affairs Committee approved legislation authorizing $325 million a year for the fund over the next half-decade.
"The increased interest in Africa by the United States and the European Union reflects a shift in the global economic order," Garcia-Herrero said. "With China's economy weakening, the United States and the European Union are seeking to diversify their assets and extend their influence in emerging nations. Africa represents a massive opportunity for expansion, and both areas are eager to capitalize on it."
Other analysts warn that competing with China's established presence and infrastructure on the continent will be difficult.
"China has a head start in Africa," Igwe said, "and its investments in infrastructure and communication have given Chinese enterprises operating on the continent a substantial edge."
Africa has become an investment hot spot in recent years, with a growing number of countries looking to attract foreign investment. However, some experts are concerned that the U.S. and EU might resort to unhealthy competition in Africa, which could have wider implications.
"If the competition is healthy, for example, China and the U.S. jockey for influence by providing infrastructure loans with better terms than the competitor," Beijing-based Africa expert Kai Xue said, "then the tripartite competition leads to trade, investment, development and even security in Africa."
The need for Chinese-funded infrastructure has not abated, since African countries want transportation projects to speed commerce across the continent as part of the African Continental Free Trade Agreement.
After displacing the U.S. as Africa's main trading partner in 2009, "China aims to take $300 billion in African goods between 2022 and 2024," Igwe said. "China is not giving up Africa just yet."
