In 2013, China launched the “One Belt One Road” initiative also known as the Belt and Road Initiative (BRI). This China’s initiative which is envisaged to cover about 65 percent of the world’s population and one-third of the world’s Gross Domestic Product aims to create viable economic belts:
- a land belt that includes neighbouring countries surrounding China, especially countries on the original Silk Road through Central Asia, West Asia, the Middle East and Europe;
- a maritime belt that links China’s port facilities with the African coast, pushing up through the Suez Canal into the
The Belt and Road Initiative involves billions of Chinese-led investment programs covering a series of infrastructural projects, such as roads, railways, telecommunication systems, energy pipelines, ports and so on, to enhance China’s economic interconnectivity with the rest of the world. The BRI projects are notably largely driven through Public Private Partnerships, with the standard financing model being the provision of Chinese credit for Chinese contractors.
As the Belt and Road Initiative enters its 10th year in 2023, more than 130 countries have so far signed agreements with China to cooperate in BRI projects like railways, ports, and highways. Uganda joined the initiative in 2018, after Kenya in 2017. However, some countries like Bangladesh, Sierra Leone and Malaysia have cancelled or backed away from previously negotiated BRI commitments due to high project costs, and fears triggered by the Sri Lanka experience, which had to hand over a strategic Hambantota port to Beijing in 2017 having failed to pay off its debt to Chinese companies.
China has recently become slow to lending to Africa. It pulled a plug on Uganda’s SGR project.
Since the inception of the Belt and Road Initiative, the Western powers especially United States have viewed BRI as China’s strategic tool to burgeon its global influence, following its rise as a global power in recent years. As a result, they have made several attempts to discourage other countries from joining the initiative, that it would land them into China’s debt trap, but these efforts have proven to be counterproductive. It is worth noting that China’s economic influence also whittles down the monopolised interests gained by the Western powers, especially in Africa for hundreds of years.
To counter China’s growing influence, the G7 countries (Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States) led by the United States launched the “Build Back Better World” (B3W) initiative in June 2021.
According to the White House fact sheet, the initiative aims to narrow the over $40 trillion infrastructure need in the developing countries, which has been worsened by the COVID-19 pandemic. The B3W initiative seeks to leverage the private sector for the $40 trillion investment in infrastructure by 2035, under four pillars: (1) healthcare, (2) gender equality and equity, (3) climate and environment, and (4) digital technology. The funds will be channelled through United States development finance tools such as the Development Finance Corporation, USAID, the Millennium Challenge Corporation, and the U.S. Trade and Development Agency, and complementary bodies such as the Transaction Advisory Fund.
Similarly, the European Union (EU) unveiled the Global Gateway in December 2021 to rival China’s Belt and Road Initiative. Through this initiative, EU will provide €300 billion ($340 billion) for investments between 2021 and 2027, much of which is expected to come from the private sector. The Global Gateway notably marks a paradigm shift in operations of the European Union, shifting from proving aid to developing countries to making strategic investments, involving identifying Europe’s needs, involving the private sector and a mindset to actively compete with other powers like China. The initiative focuses on ‘hard and soft’ infrastructure including digital, energy, transport, health, education, and research systems.
Worthy to note, Africa is a key regional priority of the Global Gateway, and EU has earmarked €150 billion, potentially half the amount for the Global Gateway Africa – Europe Investment Package. South Africa has already tapped into the initiative, it recently partnered with the European Union (in January 2023) to invest €280 million in its Just and Green Recovery, including €87.75 million from the EU budget to support policy reforms on green recovery, unlock green investments and build a knowledge-based transition in the framework of the Just and Green Recovery Team Europe Initiative for South Africa.
The Western initiatives come at a time when there are reports that Beijing is slowing investment approvals due to the sluggish global economy, thus providing reliable alternatives for infrastructure development in Africa, and Uganda should take advantage of the initiatives. Interestingly, the EU funding model is a mix of grants, soft loans and guarantees aimed at crowding-in private sector investments unlike China’s BRI that exclusively focuses on loans.
In addition, the Global Gateway has a strong focus on expertise, alongside financial assistance, which is important for creating an enabling environment to attract investment in partner countries with support for reform of regulatory frameworks, or technical support for the development of infrastructure projects, and for ensuring the scale and long-term durability of development actions, beyond individual infrastructure projects.
While these Western initiatives seem to provide a more reliable alternative for infrastructure development to African countries, their partnership principles such as democratic values and high standards, good governance and transparency may have to be relaxed to contend with China’s successful track record of getting no-strings projects funded and built. Short of that, China investments will remain appealing to most African countries, including Uganda because the Chinese government sticks to the basic principle of ‘non-interference of internal affairs’ in its relations with African countries.
Contrary to the African adage that states that when elephants fight, it is the grass that suffers, the competition for investment in infrastructure in Africa between China and Western powers presents a golden opportunity that must be seized. Uganda through the Ministry of Finance, Planning and Economic Development must therefore strategically position itself to reap big from these initiatives to meet the current infrastructure needs.
Source: Timothy M. Shaw (2019). Mapping China’s ‘One Belt One Road’ Initiative