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China recently established a military base in Djibouti. Little is known about the base except that it may have capacity to house up to 10 000 troops. The military base has attracted much international attention, with little understanding of either Djibouti or China’s motives.

Hot on the heels of China’s US$1tn Belt and Road Initiative (BRI) Conference earlier in May, Indian Prime Minister Narendra Modi launched an equally ambitious ‘Asia-Africa Growth Corridor’ (AAGC) at the India-Africa Summit in Ahmedabad. The continental project, unmistakably a challenger to the BRI’s forays in Africa, will be developed in consultation with think tanks from India, Japan, Singapore and Africa, and will draw funding from India and Japan. The wooing of Africa and the range of options now available to African economies demonstrate their growing leverage on the global stage.

‘Once upon a time several routes led from China to central Asia and to Europe. It was called the Silk Road. People put things on camels and crossed the desert to trade with other people. Then later, ships travelled through Southeast Asia to Africa and they would bring things back to China, like giraffes.

‘A few years ago China’s President Xi Jinping proposed making new routes like the old routes. But even bigger. It’s called the Belt and Road Initiative.’

It is undeniable that there is a correlation between a country’s business environment, foreign direct investment inflows and international trade performance. Countries that make setting up businesses easy, allow clearance of goods at ports with little hassle, grant entry and exit visas to investors and visitors alike in quick time, enable the registration of property with little trouble, provide reliable electricity, and make documentation like construction permits easy to acquire, attract more foreign direct investment (FDI).

More than 640 million Africans, or about 60% of the continent’s population, don’t have access to reliable and affordable grid-connected electricity, and are therefore dependent on energy sources such as kerosene, charcoal and diesel. Likewise, many businesses also suffer from poor power supply. For example, it is estimated that some 95% of the mobile tower sites in the continent’s off-grid regions run on inefficient diesel generators, which significantly drive up costs.

Africa is the world’s second-largest and second-most-populous continent with 54 different countries, consisting of a large diversity of ethnicities, cultures and languages. After the end of apartheid more than two decades ago, South Africa is an economic powerhouse in Africa. Though South Africa is still the largest economy in Southern Africa, Nigeria surpassed it as Africa’s largest economy in early 2014. The rapid rising economies of other African countries threaten South Africa’s position as a gateway to Africa.

Former Ethiopian prime minister Meles Zenawi didn’t like it when the African Union (AU) set tight deadlines that might never be achieved. At a debate about intra-African trade at the AU summit in January 2012, the late Zenawi berated the AU Commission for stating that a Continental Free Trade Area (CFTA) would be established by 2017. It was far too short a deadline for such a complicated and immensely difficult achievement, he said.

 

 

 

NTU-SBF Centre for African Studies

 

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Singapore 639798

 

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