Africa Wisens Up To China's Neo-Colonialism

Africa Wisens Up To China's Neo-Colonialism

Africa may have found its voice by standing up to a power like China.

tippinsights Editorial Board

Another significant component of China's ambitious plans, the RFI, is running aground after the much-touted Belt and Road Initiative (BRI) scheme. If the BRI was about laying down a transport network with China at its center, the RFI was meant to procure crucial raw materials to keep the "world's factory" running at low costs.

While BRI extended commercial loans to finance infrastructure development projects in developing and underdeveloped countries, Resource Financed Infrastructure (RFI) model secures mineral rights as collateral against financial assistance.

According to the World Bank, "Under a Resource Financed Infrastructure (RFI) agreement, a loan for current infrastructure construction is securitized against the net present value of a future revenue stream from oil or mineral extraction." That is, resource-rich developing countries use "their natural resources as collateral to access sources of finance for investment, countervailing the barriers they face when accessing conventional bank lending and capital markets."

China's Interest In Africa

China needs vast quantities of raw materials and rare earth metals to keep up with the insatiable global demand for everything from Smartphones to steel to rechargeable batteries. Fuelling many of the manufacturing units are raw materials and minerals like uranium, cobalt, iron, bauxite, platinum, etc., from mines situated thousands of miles away in the continent of Africa.

Africa is a gold mine. Literally! It produces about a fifth of the gold and more than half the diamonds in the world used for many industrial purposes besides jewelry. The land is also blessed with considerable deposits of oil and natural gas.

Tragically, despite being mineral-rich, most African countries are poor and underdeveloped, trailing behind the first world countries by years, if not decades. According to the UN, 33 of the 54 countries in the continent fall under the "least developed" category.

Dearth Of Options

Due to the political and economic instability prevalent in most countries, they suffer poor credit ratings and are considered high-risk investment destinations. Coupled with a shortage of power and skilled labor, in addition to frequent reports of systematic embezzlement and deep-rooted corruption, some of the world's poorest nations are forced to seek financial support from whoever is willing to offer.

While institutions like the Development Assistance Committee (DAC) of the Organization for Economic Co-operation and Development (OECD) insist on transparency, legitimacy governing bodies, environmental and labor standards, etc. Chinese firms are often willing to turn a blind eye.

Chinese Inroads Into Africa

Gluttonous for a cheap and steady supply of raw materials, Beijing internationalized its state-owned enterprises by facilitating and aiding national companies to expand overseas. Chinese firms from sectors as wide-ranging as railways and mining have made inroads into many countries across Eastern Europe and Africa.

China may have looked like a savior to many African countries desperate to catch up with the developed nations. Chinese companies have entered into massive RFI agreements with Ghana, the Democratic Republic of the Congo, Angola, Guinea, and many others with Beijing's blessings. According to some estimates, before the pandemic hit, Chinese Foreign Direct Investment (FDI) to Africa was at around USD 44 billion, almost 2 percent of all Chinese FDI.

Harsh Reality

But the honeymoon is over. Benefactors of the RFI agreement now realize the high price of doing business with the Chinese. The common sentiment is that Chinese firms are looting minerals and precious metals from Africa and the locals and natives reap no benefits. Partners in the RFI agreement find themselves turning into exporters of raw materials and importers of finished goods. The trade imbalance is one of the key reasons China's foray into Africa is being termed neo-colonialism.

As with the BRI, there have been reports of corruption and mismanagement of the RFI projects. Many governments now realize that RFI initiatives only add to their debt burden without helping local economies as expected. Often the governments at the receiving end of the financial aid are unable to negotiate favorable terms with a power such as China.

Countries have started paying attention to the environmental costs and pollution caused by the mining activities carried out by Chinese firms. Many Chinese firms' environmental records are being called into question. The anti-Chinese sentiment is brewing. Not just among those in power but among the locals as well. Three Chinese nationals were reported missing after clashes erupted in a gold-mining region of the northeastern Democratic Republic of the Congo.

Taking Control

The DRC, Sierra Leone, Ghana, and Kenya have begun canceling Chinese projects. Kenya and Tanzania have scrapped BRI projects altogether.

President of the Democratic Republic of the Congo recently ordered the renegotiation of a US$6 billion deal between state-owned commodity trading and mining company Gecamines with a consortium of Chinese firms led by Sinohydro and China Railway Engineering Corporation to develop a copper and cobalt mine. There are more talks of renegotiating terms and scrapping projects being voiced by various governments.

By standing up to a power such as China, Africa may have found its voice. The continent has what the world needs desperately – minerals and metals. How it is extracted, by whom, and who benefits are the prerogative of the resource-rich nations.


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Putin
Russian President Vladimir Putin takes part in a virtual summit of leaders from the Commonwealth of Independent States at his Novo-Ogaryovo residence outside Moscow on October 15.

Earlier this week, Putin warned of the threat of veteran fighters from Iraq and Syria with IS links crossing into Afghanistan.

Russian President Vladimir Putin has said the Islamic State (IS) militant group has thousands of fighters in northern Afghanistan, as Moscow prepares to host international talks next week on the situation in the country.

The Russian leader claimed the alleged IS fighters planned to move between ex-Soviet Central Asian countries disguised as refugees to stir religious and ethnic discord. He did not give details.

Putin's special envoy to Afghanistan, Zamir Kabulov, said on October 15 that next week's talks would focus on trying "to work out a common position on the changing situation in Afghanistan."

The United States, China, and Pakistan will join talks scheduled for October 19, Kabulov said, adding that the Taliban and other regional actors will join the meeting a day later.


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Talks really picked up since August when spot prices touched $15/mmbtu, said a Beijing-based senior industry source briefed on the talks. (AFP)
Talks really picked up since August when spot prices touched $15/mmbtu, said a Beijing-based senior industry source briefed on the talks. (AFP)

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At least five Chinese firms, including state major Sinopec Corp and China National Offshore Oil Company (CNOOC) and local government-backed energy distributors like Zhejiang Energy, are in discussions with U.S. exporters, mainly Cheniere Energy (LNG.A) and Venture Global.

The discussions could lead to deals worth tens of billions of dollars, marking a surge in China's LNG imports from the United States in coming years. At the height of a Sino-U.S. trade war in 2019, gas trade briefly came to a standstill.

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Apple Censorship - a website that monitors apps on Apple's App Store globally  first noticed the deletion of the app.

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"Our knowledge of dogs' sense of direction is mainly anecdotal," says Hynek Burda, a zoologist at the Czech University of Life Sciences.  Burda says we've assumed in the past that dogs rely on a sense of smell to find their way. But that is starting to change, as he and his team have a compelling theory.

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