By Conor Gallagher
US Vice President Kamala Harris was in Africa last week visiting Ghana, Tanzania, and Zambia. She’s the fifth member of the Biden administration to visit Africa this year following in the footsteps of UN Ambassador Linda Thomas-Greenfield, Treasury Secretary Janet Yellen, first lady Jill Biden, and Secretary of State Antony Blinken. Biden himself also plans to visit sometime later this year.
During her trip she talked about the US wanting to boost African youth, the US helping Africa prepare for climate change, women’s empowerment, and about race.
But the underlying motivation for the renewed push in Africa is the sudden awareness that China dominates the critical mineral trade on the continent.
These minerals – everything from copper and cobalt to rare earths and coltan – are crucial to the US plan to become the world’s cleantech superpower. The problem is that China, for all intents and purposes, already is.
The RAND Corporation explains just how much ground the US needs to make up:
Starting up a new mine and processing facility can cost up to $1 billion and take more than a decade. Scientists have developed more environmentally friendly ways to separate and process rare earths, but there will still be impacts that need to be addressed. And while China has entire labs devoted to rare earth mining and processing, the U.S. now has only a handful of scientists who truly focus on rare earths.
Processing rare earths and other critical materials—not just digging them out of the ground—is the real bottleneck. If every proposed processing plant outside of China were to somehow come online by 2025, researchers found, they could produce around 134,000 tons of usable rare earth material every year. Projected demand by 2025, outside of China: 140,000 tons and growing fast.
Additionally, a recent BloombergNEF study estimated that half of global spending on low carbon energy technology is happening in China, totaling more than the combined efforts of the EU and US. While a Politico report on Harris’ trip blames Trump for China’s overwhelming presence in Africa, the fact is US companies have been selling off interests there to the Chinese for the better part of twenty years.
Ken Opalo writes at An Africanist Perspective about how the US cannot compete with China economically in Africa:
The fact of the matter is that if you want to do anything serious in the region within a tight political business cycle and need financing, calling Beijing is typically the smart option. This is especially true if you happen to be an incumbent in a competitive electoral democracy like Kenya or Zambia (I hope Washington sees the irony here). According to Nikkei Asia, China has invested 2.5 times more in African infrastructure development than all Western countries combined. The same dynamics obtain in the private sector. Whether you are looking for machinery or cheap imports (and increasingly markets), China is often the best option. Trends in trade volumes demonstrate this fact (see below). In 2022 Africa-US trade (under $40b) was less than a fifth of Africa-China volumes.
From an African perspective, this is not optimal. Whilst the rise of China has had an unambiguous net positive effect on African economies, it is also true that, if managed well, real competition between the US and China would incentivize faster improvements in the quality of African countries’ bilateral commercial relations with either power.
On the latter point, I’m not so sure. The US seems to prefer other tools rather than fair competition, and those tools can often prove disastrous for the country in question. So what did Harris offer on her trips?
In Ghana:
In Tanzania, from Reuters:
They included a new memorandum of understanding between the Export-Import Bank of the United States (EXIM) and the government of Tanzania.
That will facilitate up to $500 million in financing to help U.S. companies export goods and services to Tanzania in sectors including infrastructure, transportation, digital technology, climate and energy security and power generation.
Harris also mentioned a new partnership in 5G technology and cybersecurity, as well as a U.S.-supported plan by LifeZone Metals to open a new processing plant in Tanzania for minerals that go into electric vehicle batteries.
We’ll see. On Dec.13, the US signed deals with the Democratic Republic of the Congo and Zambia that would see the US support the two countries in developing an electric vehicle value chain. US Secretary of State Antony Blinken said the US Export-Import Bank and the International Development Finance Corporation will explore financing and support mechanisms, and the US Agency for International Development, commerce department and Trade and Development Agency will provide technical assistance.
Aside from a potential Jeff Bezos and Bill Gates-backed copper-cobalt mine in northern Zambia, details have been sparse, and Biden administration is reportedly struggling to get American companies to invest. There has been no new news about the Bezos and Gates mine since the announcement at the US – Africa Leaders Summit in December.
Speaking of Zambia, though, which is the world’s sixth-largest copper producer and second-largest cobalt producer in Africa. On her final stop, Harris announced new “democracy programs” in the country, but Zambia’s opposition leader, Fred M’membe, was having none of it:
Like Yellen before her, Harris mainly called for a speedy resolution to Zambia’s IMF bailout.
More than a third of the country’s $17 billion in debt is owed to Chinese lenders. Zambia worked out a deal with the IMF for a $1.3 billion bailout package but can’t access the relief until its underlying debt is restructured – including Chinese debts. But the IMF prescription for Zambia is a blow to Beijing. Here are some details of the arrangement from The Diplomat:
Zambia will shift its spending priorities from investment in public infrastructure – typically financed by Chinese stakeholders – to recurrent expenditures. Specifically, Zambia has announced it will totally cancel 12 planned projects, half of which were due to be financed by China EXIM Bank, alongside one by ICBC for a university and another by Jiangxi Corporation for a dual highway from the capital. The government has also canceled 20 undistributed loan balances – some of which were for the new projects but others for existing projects. While such cancellations are not unusual on Zambia’s part, Chinese partners account for the main bulk of these loans…
While some of these cancellations may have been initiated by Chinese lenders themselves, especially those in arrears, Zambia may not have needed to cancel so many projects. Since 2000, China has canceled more of Zambia’s bilateral debt than any sovereign creditor, standing at $259 million to date.
Nevertheless, the IMF team justified the shift because they – and presumably Zambia’s government – believe that spending on public infrastructure in Zambia has not returned sufficient economic growth or fiscal revenues. However, no evidence is presented for this in the IMF’s report.
Zambia will also cut fuel and agriculture subsidies. So instead of infrastructure investment and social spending, the country gets austerity. The IMF deal also relegates China to the backseat, as it allows for 62 concessional loan projects to continue, only two of which will involve China. The vast majority of the projects will be administered by multilateral institutions and involve recurrent expenditure rather than infrastructure-focused projects.
While the IMF deal might eventually slow China’s influence, it will also be a blow to Zambia. When Harris arrived in Zambia on Friday for the final stop of her trip across she landed at an airport that’s doubled in size in recent years with brand new terminals. China financed the project. Beijing also built a 60,000-seat stadium in Lusaka, as well as roads and bridges across the country.
The US can issue warning after warning about the debunked Chinese debt trap and try to use the IMF to sideline Beijing, but it’s hard to beat something with nothing as Nigerian Vice President Yemi Osinbajo explained during his March 27 remarks at King’s College in London:
China is Africa’s largest bilateral trading partner and about $254 billion in trade in 2021. China is the largest provider of foreign direct investment, supporting hundreds of thousands of African jobs. This is roughly double the level of U.S foreign direct investment and China remains by far, the largest lender to African countries.
Chinese companies have also taken the lead in exploiting minerals in Africa, many now in lithium mining in Mali, Ghana, Nigeria, DRC, Zimbabwe and Namibia. Most African countries are in my view, rightly unapologetic about their close ties with China. China shows up where and when the West is reluctant to show up. And many African countries are of the view that the “beware of the Chinese Trojan loans” advice from the West is wise, but probably self-serving.
Africa needs the loans and the infrastructure and China offers them. In any case, the history of loans from Western institutions is not great. The memory of the destructive conditionalities of the Breton Woods loans is still fresh and the debris is everywhere. And the preoccupation of Western governments and media with the so-called China debt trap might well be an overreaction.
In the arguments about the Chinese death traps (as it is called sometimes) and the large amounts of loans to African countries, I think that what is clear is that the Chinese have proven to be quite responsible in the giving out of these loans. There are always arguments about whether you get the best deal all the time, but the real question of Africa and African governments is who else is offering these loans? Who else is offering the support? It is not a question of here or there, it is really a question of what is available and it seems to me to make sense to take what is available.