EU asked to view Africa as a trade partner not a beneficiary of aid

A survey dubbed 'Clash of Systems' conducted by IREN shows China has edged out Europe in the scramble for the continent

In Summary
  • Chinese firms have dominated infrastructure construction projects in Africa.
  • Kenya had taken large loans of at least h1043. 77 billion from China directed to infrastructure between 2006 and 2017.
IREN and FNF team during the survey launch on African Perceptions of the European Union and China Engagement on July 19,2022
IREN and FNF team during the survey launch on African Perceptions of the European Union and China Engagement on July 19,2022

The European Union(EU) has been challenged to shift its perception of the African market amid its scramble with China for trading and investing grounds.

In a survey dubbed 'Clash of Systems' conducted by Inter Region Economic Network(IREN), China is edging out Europe as a major trading partner and investor mainly in areas of large infrastructure projects and exploitation of raw materials.

Chinese firms have dominated infrastructure construction projects in Africa.

In 2020, nearly one-third of infrastructure projects worth at least $50 million(Sh5.9 billion) were built by Chinese companies.

Speaking during the launch of the report, Friedrich Naumann director Stefan Schott said that Europe’s romantic view of Africa and its superiority belief in values contrasts the practical view of the continent on performance.

“A road completed in record time by the Chinese is considered a value in the perception of Africans and more concrete as compared to abstract European projects to promote democracy, human rights or sustainability,” Schott said.

The practical view of Africans has seen the Chinese market gain more ground in the African market over the years.

In Kenya, over the last couple of decades, China's infrastructure investments and loans have been rapidly expanding.

China is now by far Kenya’s largest lender accounting for 72 per cent of bilateral debt by the end of March, according to the National Treasury.  

In a decade to 2017, the country had taken at least $9.8 billion (Sh1043. 77 billion) loan from China.

This was to fund the infrastructural projects in the country in realizing its sectorial agenda.

The project to upgrade the Standard Gauge Railway (SGR) is one of China’s flagship investment projects in Kenya.

The Export-Import Bank of China financed 90 percent of the project while the China Road and Bridge Corporation led the installation process.

It cost $3.6 billion (Sh385.2 billion) by the time it was launched. This was above the initial planned budget of Sh55 billion.

The SGR created around 30,000 new jobs for locals and in the first year, it transported 5.4 million passengers and 1.3 million twenty-foot equivalent units of shipments across the country.

The Nairobi Expressway, also China's infrastructural investment in Kenya, was budgeted at Sh65. 2 billion by the Kenya National Highways Authority (KeNHA).

Upon its completion, the budget had risen to Sh87. 9 billion.

This created more than 6,000 direct jobs and benefited 200 sub-contractors and hundreds of other local suppliers of building materials.

In terms of trade, the Economic Survey 2022 puts the value of imports from China at Sh2.15 trillion in 2021 up from Sh1.64 trillion in 2020.

This signals a 30.9 per cent import trade growth. Although, Kenya's export to China is valued at Sh10 billion.

Kenya as a net importer from China, a lower export value compared to the import value, occasioned a trade deficit of $3.4 billion (Sh398. 71 billion) as of 2019.

This accounts for the volatile trade relationship between Kenya and China over the past five years.

Despite that, recently, imports have contracted by 9.3 per cent while exports have grown by 43.5 per cent.

Therefore, outlining the general outlook of the competitive nature between the EU and China, the survey rates China highly with regard to quick decision-making and timely project completion.

China has an approval rate of 75.2 per cent over the EU which is at 55.8 per cent.

On project completion time, China is still rated higher at 81.1 per cent compared to a 69.4 per cent of the EU.

However, China is seen to have fewer scruples with regard to employing corruption as a tool of the trade.

The survey results show that 55.2 per cent of the policymakers believe that China uses corruption as a tool compared to 32.5 per cent who think the same of the EU.

However, according to the perception results, the EU retains dominance in various aspects of cooperation with Africa.

In delivering quality products or services, the EU is rated at 93.5 per cent compared to China at 67.9 per cent.

The EU is perceived also to be ahead of China in the provision of good working conditions for Africans.

It's rated at 70.5 per cent against China's 55.7 per cent.

China has been perceived to be behind the EU in rates of employing local workers and creating jobs for Africans.

The policymakers furthermore perceive the EU as a high scorer at 82.5 per cent in upholding environmental standards in its operations.

They score China at 58.5 per cent.

The survey also noted that Africans are treated much as equal partners by the EU with a 61.3 per cent score as compared to China who's rated at 51.4 per cent.

Relating Kenya with the EU, the trade in the past five years has seen Kenya as a net importer of goods.

The value of imports and exports as of 2019 reached $1.9 billion (Sh193.6 billion) and $916 million (Sh93.3 billion) respectively.

The survey was conducted over the period October to December 2021 and involved more than 1,600 African policymakers drawn from Africa’s 8 Regional Economic Blocs (RECs).

The policymakers urge African states to leverage on opportunities that come about with the competition between the EU and China.

Although, they warn them against debt traps and expensive tradeoffs that might come as a result of trading partnerships.

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