Going Viral.

• Author: Lagon, Mark P.
• Position: China's unorthodox inroads into Africa - Report

Africa is rising and shaking up the global balance of power. The continent's fifty-four countries are growing in wealth and population faster than ever before, prompting a race among global superpowers to invest, build goodwill, and in some cases, acquire strategic assets.

In this domain, the People's Republic of China (PRC) is making unparalleled and unorthodox inroads into the continent. Since 2003, the country has deployed a thirty-fold increase in investments in Africa and begun to distribute almost eight times as much annual development financing. In the PRC's pursuit of its Belt and Road Initiative (BRI)--an estimated $6 trillion global infrastructure project engaging seventy countries that account for 30 percent of the world's gross domestic product (GDP)--new partnerships are being established that pave the way for long-term influence on the continent.

While there is considerable demand for infrastructure investment in Africa, the PRC's investment practices are not exactly selfless. In order to receive BRI loans, governments are expected to offer collateral in the form of strategic assets such as oil, airports, or land rights. National governments are then free to disburse the BRI funds practically without oversight. If the funds are squandered, countries find themselves in what has been referred to as a "carefully laid debt trap." In May 2019, for his part, U.S. secretary of state Mike Pompeo went so far as to pointedly characterize the BRI as "corrupt infrastructure deals in exchange for political influence."

These developments highlight the extraordinary level of investment and pace of change in Africa today, and the urgency with which the United States must reconsider its own security-related, financial, and diplomatic investments in Africa. The dueling efforts of global actors to engage in Africa, both through aid and trade, will influence the political, strategic, and economic landscape beyond the confines of the African continent.

Since the United States does not intend to match the level of foreign direct investment offered by the PRC, new diplomatic and economic strategies are imperative. As such, in addition to replacing the Overseas Private Investment Corporation (OPIC) with a more robust International Development Finance Corporation (DFC), the United States should meet the PRC's growing influence in Africa by scaling an existing comparative advantage that will demonstrably promote well-being, prosperity, and goodwill: strategic health diplomacy.

According to the PRC, BRI loans are meant to "support Africa's capacity-building for internally-driven development" in sectors such as infrastructure, trade, and public health. The outputs of BRI loans, such as high-speed trains and ports, are highly-publicized and considered "positive" by almost three-quarters of African beneficiaries. In turn, the PRC derives increased financial, diplomatic, and military benefits in a rapidly-developing continent.

BRI investments are widely appealing to African governments; funds are distributed without external monitoring or accountability other than loan repayment, leaving governments to determine exactly where and how they are spent. This model contrasts starkly with traditional models of development assistance, such as those funded by the United States, which generally prioritize transparency and require detailed project documentation, social and environmental safeguards, procurement and implementation oversight, and monitoring and evaluation. Many leaders have capitalized on this freedom by directing China's funds to priority healthcare initiatives and potential trade opportunities. Others have used the funds uneconomically by increasing their debt burden rather than their economic growth. And some may have even used funds to facilitate state-sponsored violence and support international terrorist groups.

The PRC has much to gain from its engagements in Africa. Financially, it is positioning itself to capitalize on rapidly-emerging markets. Investments in health and education are expected to increase the size of sub-Saharan economies by 90 percent by 2050, and the continent will host more than 1.52 billion consumers in the next ten years. The PRC's favorability in public opinion also strengthens its diplomatic ties to major African countries and its influence over their major economic sectors. Finally, given the continent's proximity to both Europe and the Middle East, the BRI enables strategic military investments that may affect American trade relationships and counterterrorist efforts.

Many African countries have prospered from BRI investments, but others are at risk of falling into "debt traps." For example, international attention has been drawn to the possibility that Kenya--with an amount of debt to the PRC equaling 60 percent of its GDP--will have to hand over its largest port as it defaults on its loan for an ambitious railway project. Although Kenyan president Uhuru Kenyatta has vehemently denied these "rumors," twenty state agencies were suddenly removed from the port in June 2019, and a Sino-Kenyan contract leaked in early 2019 mandates that no deals be made public "without prior written permission of the lender." Adding insult to injury, the contract also states that the country has no immunity to its terms even "on the grounds of sovereignty."

Other nations rapidly building up BRI debt that could create similar difficulties. In 2015, these investments accounted for one-third of new debt taken on by African governments. In Ethiopia alone, PRC investments have constituted 30 percent of the country's new public external debt and 90 percent of its new bilateral debt since 2015. Egypt and Djibouti, the latter of which hosts the PRC's first overseas military base, also face high risks of debt distress due to BRI financing. If these countries default on their immense loans and their collateral assets are seized, said assets will be owned or controlled by the Chinese until the governments honor their financial obligations.

Therefore, one must ask: who truly benefits from the PRC's investments in Africa? Indeed, even beyond Chinese influence, how might these investments and governance practices affect U.S. interests?

The PRC's multifaceted investments in Africa pose a variety of threats. The direct and indirect consequences of unmonitored loans, emerging military infrastructure, and increased political instability are likely to compromise the safety and prosperity of the United States and its allies, and in some cases, already have.

The most tangible threats to American interests lie in Djibouti, a small country in the Horn of Africa that owes half of its public debt to the PRC and is critical to a variety of...