Africa needs China’s help to embrace a low-carbon future
Beijing can offer hope to the continent but debt is a cause for concern
Ngozi Okonjo-Iweala, Global Commission on the Economy & Climate SEPTEMBER 21, 2018 2
At the Forum for China-Africa Cooperation in Beijing in early September, Chinese President Xi Jinping pledged $60bn to African nations, giving China and Africa an important opportunity to build a lasting partnership for a sustainable future.
China’s pledge includes new credit lines, foreign aid, and special funds for development financing and financing imports. China is already Africa’s largest trading partner and source of infrastructure finance, but last week it strengthened its commitment to the region with a new finance package.
China’s offer, consolidated with the reassurance of Mr Xi’s “five no” approach to China’s relations with Africa, gives African countries and the African Union an opportunity to work with China to seize the initiative to establish a strong and sustainable development path.
The new investments should be used to establish a network of clean, resilient infrastructure, like solar and wind farms, such as we have in Morocco, Burkina Faso and Kenya, and sustainable public transportation projects like in Ethiopia, Rwanda and Nigeria.
The concern about Africa’s rising debt profile is real. According to the IMF, sub-Saharan Africa’s debt to GDP ratio has risen from 26.3 per cent in 2009 to 48.1 per cent today. This ratio is far higher and in dangerous territory for a handful of countries. Whilst Chinese debt may not be the biggest contributor to this, African countries need to seek a good balance of concessional loans, grants and foreign direct investment, individually and collectively to sustain their development. China is open to this.
During my time as Finance Minister of Nigeria (2011-2015), China worked with us to get a balanced package of assistance that has helped build the light rail system in Abuja and four new airport terminals in Lagos, Port Harcourt, Kano and Abuja, among other projects. Directing Chinese assistance to build sustainable regional infrastructure projects that can unlock the continent’s vast potential is key.
Two thirds of the continent’s infrastructure is yet to be built and Africa can lead with clean, low-carbon sustainable infrastructure. This approach can lay the foundation for a new growth story, one that creates millions of jobs for our youth, one with efficient and liveable cities, restoration of degraded agricultural lands including a halt to deforestation, and clean energy and water resources.
A new report from the Global Commission on the Economy and Climate, which I co-chair, has found that bold climate action could yield economic benefits worth $26tn between now and 2030. Bold climate action could also generate more than 65m new low-carbon jobs in 2030, equivalent to the entire workforces of the UK and Egypt today combined.
These benefits would extend to countries big and small, including those in Africa. Tthis is supported by other research by the Global Commission focusing on Uganda. This found that green growth approaches could increase the country’s GDP by around 10 per cent compared to business-as-usual by 2040, while also reducing greenhouse gas emissions by 28 per cent.