Chinese investment in Ethiopia continues despite COVID-19

The Addis Ababa Light Rail, the first light rail system in sub-Saharan Africa, built with Chinese assistance. Wikimedia Commons.

Dr Messay M Tefera, Addis Ababa University, Ethiopia
Visiting Research Fellow, CACS  /  15 May 2020

China’s involvement in Africa has grown exponentially since the 1990s. Its investment in Africa has increased particularly sharply since the 2015 Forum on China-Africa Cooperation (FOCAC) Summit, where China announced a commitment of US$60 billion in financial support to the continent in the form of aid as well as development finance. China announced a further commitment of US$60 billion at the 2018 FOCAC summit, comprising US$20 billion for extended credit lines; US$15 billion for grants, interest-free loans and concessional loans; US$10 billion for investment financing; and $20 billion for related outlays. These sums are to be spent over the three-year period of the FOCAC Beijing Action Plan, from 2019 to 2021.

China’s engagement with African countries as well as pan-African institutions, notably the African Union (AU), has created unparalleled opportunities for people across the continent. Countries benefiting from Chinese aid and investment include Nigeria, Angola, Ethiopia, Kenya, Zambia, South Africa, South Sudan, the DRC, Congo, Cameroon, Mozambique and Uganda. In line with China’s principle of non-interference in the internal affairs of African countries, restated in the Beijing Action Plan, its assistance to African countries has not been affected by changes in forms of government or national leadership.

Focus on Ethiopia

Ethiopia has benefited hugely from Chinese engagement. Given that the AU is based in the Ethiopian capital of Addis Ababa, this developmental relationship has major implications for the whole of Africa as well.

While assistance to Ethiopia started long before, it has burgeoned since Dr Abiy Ahmed became prime minister in April 2018, following the unexpected resignation of Hailemariam Desalegn. Since then, the two countries have signed agreements for numerous megaprojects. In May 2018, according to the Ethio-China Development Co-operation Office (ECDCO), China provided Ethiopia with a $225 million loan for the Mekelle City Water Supply Development Project (MCWDP). Mekelle – the capital of the Tigray region in northern Ethiopia — is a rapidly growing and fast-paced city, and the project is aimed at providing its residents with an adequate and sustained supply of clean water.

China has cancelled a loan for financing the Kebena Square-Arat Kilo Road Project in Addis Ababa, co-financed with the Addis Ababa City Administration (AACA). It has also agreed to restructure a loan for the US$4 billion railway linking Addis Ababa with Djibouti, the US$2.5 billion Addis Ababa-Sebeta-Mieso-Dewale road project, and the US$290 million Omo No 2 & No 3 Sugar Projects. The rescheduling of the loan for the railway project alone has saved Ethiopia more than $430 million in marginal interest and the grace period obtained.

According to ECDCO, the Chinese government attaches great importance to the Beautifying Sheger Project, and has provided it with significant financial assistance. The project, an initiative of the Ethiopian premier, Dr Ahmed, involves developing green belts along the rivers running through Addis Ababa, from Entoto Hill in the north to the Akaki waste water treatment plant in the south east. The project includes residential parks, bicycle paths, walkways, recreational spaces, an artificial lake, a wedding venue, trees and urban farms. The first phase, comprising 12 kilometres of the 56-kilometre project, was launched in October 2019

China is also funding numerous other projects in Ethiopia via commercial, concessional and interest-free loans as well as grant funding. These include the Addis Ababa Electrical Service Rehabilitation Project; the $98 million Bole-Lemi and Kilinto Industry Zone power transmission project (under construction by a Chinese company TBEA Contractors); the $45 million Meles Zenawi Leadership Academy (under construction by China Wuyi), the Kaliti roundabout-Tulu Dimtu and Kaliti-Bulbula-Kilinto road projects (co-financed by the Ethiopian government and the EXIM Bank of China); the Dire Dawa-Dawale road project; several other sugar projects (Kesem, Wolqait and OmoKuraz no 5); and terminals at Bole International Airport.

Sino-Ethiopian cooperation is also playing a vital role in sustainable human resource development. At a reception held in Addis Ababa in September 2019, the Economic and Commercial Counsellor’s Office of the Chinese Embassy in Ethiopia outlined progress made with the Training Fellowship Programme under the Beijing Action Plan. More than 5 500 Ethiopians have been trained in China in the fields of engineering, education, health, governance, agriculture and manufacturing. At this event, the Counsellor’s Office announced scholarships in China for 228 Ethiopian MSc and PhD students.

Emergency food aid

China is also making a major contribution to emergency response in Africa – notably its massive aid to all African countries, via the Jack Ma and Alibaba foundations, to fight the COVID-19 pandemic. Among other things, bulk medical supplies were delivered in three rounds in March and April 2020.

In August 2019, China sent 7 987 metric tons of emergency food aid worth about $7 million to Ethiopia destined for internally displaced people (IDPs) as well as people affected by El Nino-induced drought. Humanitarian food assistance began with the onset of the weather-induced disasters in 2015 when China provided around $60 million worth food assistance to Ethiopia, both bilaterally and via the World Food Program (WFP).

Following the COVID-19 outbreak in China, many feared that Chinese investment in Ethiopia would slow down. However, these fears have proven to be unfounded. Current data from the Ethiopian Investment Commission (EIC) shows that at least 30 Chinese investment projects have been licensed in Ethiopia between 2 January 2020 and 16 April 2020, involving total registered capital of more than $2 billion. All except one are at the pre-implementation stage, and the remaining project has entered the operational stage. Eighteen are located in Addis Ababa, nine in the Oromia region, two in the Amhara Region, and one in the Tigray Region.

Chinese investment in Ethiopia has continued unabated even during the COVID-19 pandemic, thereby further dispelling the skepticism in some quarters about Chinese engagement with Africa

The newly licensed companies are active in textiles, plastics, food, compact transformers and switchgear, diapers and sanitary pads, metal, oxygen and acetylene gases, basic precious and other non-ferrous metals, medical instruments and appliances, wearing apparel (including sport wears and shoes), domestic appliances, baby food, yeast, vinegar, mayonnaise, iodized salt and similar food products, paper and wood products, starches and starch products, and chemical products (such as propellant powders, explosives, photographic films and similar products). Others are engaged in medical services, rail engineering consultancy services, real-estate development, construction engineering, and data centre services. When fully operational, these projects are expected to create about 7 600 jobs.

To conclude, Chinese investment in Ethiopia has continued unabated even during the COVID-19 pandemic, thereby further dispelling the skepticism in some quarters about Chinese engagement with Africa. Certainly, based on their first-hand experiences, the Ethiopian government and the Ethiopian people do not believe that Chinese involvement in their country constitutes a form of neo-colonialism, or that China is seeking to establish an African hegemony.

For its part, China is scrupulously upholding its commitment to support Africa’s sustainable development while allowing African countries to explore their own development paths, formulate their own development strategies, and improve their own governance, as spelled out in the FOCAC Beijing Action Plan.

On the Ethiopian side, relevant leaders and government institutions should bear in mind that getting the best out of its relationship with China and the opportunities on offer will require effective, efficient and accountable planning and governance.

The views expressed in this article are those of the author, and do not necessarily represent the views of the CACS.

COVID-19 and Sino-African relations: new challenges and opportunities

Volunteers walk door-to-door in Valhalla Park, Cape Town, with government health questionnaires, April 2020. People with Covid-19 symptoms were directed to nearby testing centres. Ashraf Hendricks/GroundUp

Dr Messay M Tefera, Addis Ababa University, Ethiopia
Visiting Research Fellow, CACS /  12 May 2020

Africa and China have nearly equally sized populations; together, they comprise about 36% of the global population. These two regions have maintained socioeconomic relations since ancient times, during difficult periods as well as good ones. Bilateral trade, for example, dates back to the 10th century BC when the Egyptian city of Alexandria started trading with people settling in present-day China. More recently, China has been a leading investor, developer and provider of humanitarian aid in Africa. Strengthened Sino-African relations have brought greater opportunities, but also renewed challenges and greater responsibilities. This is true of Chinese assistance to Africa in respect of the COVID-19 pandemic as well.

Since the first case was reported to the World Health Organisation (WHO) just five months ago, COVID-19 has rapidly grown into a global pandemic. This essentially means that the world community is experiencing a shared public health crisis. On 18 March, China — the first country that suffered an outbreak — announced zero new coronavirus infections after a long and intensive fight waged since January. As such, its experiences and lessons learnt in fighting the pandemic are vitally important to other countries. This has led to African leaders (notably the premier of Ethiopia, Dr Abiya Ahmed, appealing to China to bolster Africa’s fight against the pandemic.

African people and governments are well aware that China is the world’s largest developing country, which has moved steadily up the value chain to become a major new player in the global economy, and has consolidated and expanded its relations with other world regions – notably Africa – in the process. They are also well aware of China’s growing role in Africa as benefactor, investor and developer. In building out its relations with Africa, China has sought to integrate the interests of Chinese people with those of the people of Africa, providing assistance within the broader framework of South-South Cooperation.

Traditionally, most of Africa’s development aid and emergency responses came from the western industrialised countries, especially members of the Organization for Economic Co-operation and Development (OECD). However, in recent years, the economic and political influence of western countries in sub-Saharan Africa has waned, gradually making way to non-OECD countries, notably China. Therefore, African people and governments understand and appreciate that China has become a vital source of investment and humanitarian assistance.

The basic principles that China upholds in providing development assistance are mutual respect, equality, mutual benefits and win-win. In this framework, its current strategy is to undertake complete projects, providing goods and materials, conducting technical cooperation and human resources development cooperation, dispatching medical teams and volunteers, offering emergency humanitarian aid, and reducing or rescinding the debts of African countries.

In the course of doing so, China has adhered to the principles of not imposing any political conditions, not interfering in the internal affairs of African states, and fully respecting the rights of African people to choose their own paths and models of development. Evidence across the continent confirms that it has succeeded in adhering to these principles.

Despite China’s massive contribution to African development, Sino-Africans relations are not without its challenges. Some scholars and Western media outlets have sought to characterise China’s interest in Africa as a form of ‘neocolonialism’ or ‘China’s hegemony in Africa’. This is an unwarranted generalisation — there is no actual evidence of Chinese economic dominance or cultural hegemony in Africa. On the contrary, its relations with Africa are based on the principle of mutual benefit. The people and governments of Africa know that China has no intention of undermining African identity, sovereignty and independence.

A few Western media outlets have tried to undermine Sino-African relations by highlighting cases of alleged xenophobia in the treatment of African students and others in the city of Guangzhou. Following initial complaints, China acted swiftly to redress the situation.

In Mid-April, a spokesperson for the Chinese foreign ministry, Zhao Lijan, said action would be taken to address the alleged poor treatment of African expatriates in the region. Referring to them as ‘our African brothers’, he said: ‘In response to some African countries’ concerns about their citizens in Guangdong Province, the authorities have conducted an investigation and adopted a series of new measures. We believe that with the joint efforts of both China and Africa, the issue will be properly resolved.’

These issues have been dwarfed by the scale of China’s assistance to Africa to help it fight the COVIC-19 pandemic. China is donating medical supplies to Africa mainly through the Jack Ma and Alibaba foundations. The donations are being made to the African Centre for Disease Control and Prevention (CDC) and the African Union (AU), to be distributed to all 54 African countries.

This far, the African CDC and AU have received three rounds of donations. The first round of more than 6 million items arrived in Addis Ababa on 22 March, the second round on 7 April, and the third on 27 April. Additional consignments are due to arrive over the next few weeks. The third round comprised 4.6 million face masks, 500 000 swabs and test kits, 300 ventilators, 200,000 sets of protective clothing, 200,000 face shields, 2,000 temperature guns, 100 body temperature scanners, and 500 000 pairs of gloves.

The COVID-19 pandemic has presented Sino-African relations with new challenges and responsibilities. The challenges are significant, but can be overcome by strengthening existing patterns of collaboration.

Besides the medical supplies, the Jack Ma and Alibaba foundations are connecting African medical professionals with doctors from China and around the world to collaborate online and exchange hard-earned lessons in the treatment and prevention of COVID-19.

To conclude, the COVID-19 pandemic has presented Sino-African relations with new challenges and responsibilities. The challenges are significant, but can be overcome by strengthening existing patterns of collaboration. The pandemic has also provided China and Africa with an important opportunity to understand each other better, even under difficult conditions. Africa can also learn vital lessons from China about sustainable development as well as fighting COVID-19.

At the same time, this does not mean that Africa should slavishly follow China’s example. First, Africa’s experience of COVID-19 differs from China’s in that local infections have started with relatively small numbers of imported cases rather than a massive simultaneous outbreak. As a result, mass community transmission of COVID-19 has not happened in most African countries.

Second, African societies are less able than China’s to withstand the social and economic consequences of a total lockdown. Therefore, despite the fact that infection rates may still rise, it may well be inappropriate for most African countries to lock down completely, thereby bringing their economies to standstill. Hunger and deprivation may lead to social instability, which would undermine state efforts to fight COVID-19 as well. Therefore, as in the case of economic development paths, African countries should appropriate the space to determine their own strategies for dealing with the COVID-19 pandemic.

The views expressed in this article are those of the author, and should not be taken to represent the views of the CACS.