FORUM ON CHINA–AFRICA COOPERATION (FOCAC)

TAG: GS-2: INTERNATIONAL RELATIONS (IR) 

THE CONTEXT:

The 9th edition of the Forum on China-Africa Cooperation (FOCAC) is set to take place from September 4-6, 2024, in Beijing.

Explanation: 

About the Forum on China–Africa Cooperation (FOCAC):

• Forum on China–Africa Cooperation (FOCAC) is an official forum between the People’s Republic of China and African states. It was established on October 10, 2000.
• Member Countries: Currently 53 African countries (Swatini is not a member).
• Representation: Each African state represents itself in FOCAC and all activities are implemented bilaterally between China and African countries.
• Theme of 2024 Summit: ‘Joining hands to promote modernization and build a high-level Chinese African community of destiny’

African countries’ demands

• African leaders want quick financing solutions to the growing debt crisis on the African continent in the Beijing Action Plan of the Forum on China-Africa Cooperation for 2025-2027.
• Also, new job creation investment pledges proposed at the Dakar Summit in 2021 and China’s assured purchase of $300 billion worth of African goods should be fulfilled.

China’s influence in Africa

• China, the world’s second-largest economy, is Africa’s largest trading partner. It wants to exploit the continent’s vast natural resources, such as copper, gold, lithium and rare earth minerals.
• For more than a decade, China has invested more than $120 billion in African infrastructure projects through its Belt and Road Initiative (BRI), funding hydropower plants, railways and roads across the continent.
• China has also provided billions of dollars in loans to African countries, helping to build much-needed infrastructure there. However, this has also led to controversy in some countries due to excessive debt burden on governments.

China and African Debt Lessons for India:

• Sustainable Debt Financing: India should emphasize sustainable financing models when extending loans or investments abroad. Domestically, India must avoid unsustainable borrowing that can strain its fiscal stability. Projects should be assessed for long-term viability and repayment capacity.
• Focus on Local Needs and Benefits: India’s approach in Africa and globally should emphasize the mutual benefit, promoting local capacity-building and ensuring projects address local developmental needs. Domestically, infrastructure projects should prioritize employment generation and inclusive growth.
• Avoiding a Debt Trap: India should be cautious about over-reliance on foreign loans, ensuring its projects are aligned with fiscal health. India can explore blended financing, such as combining grants, public-private partnerships (PPPs), and foreign investment, to avoid overwhelming debt.
• Risk Diversification: Diversification of India’s foreign relations and investment partners, both in Africa and elsewhere, is essential to reduce risks. Domestically, India must ensure a balanced approach to investments across sectors and regions, reducing dependence on a few sectors or sources of finance.
• Collaborating with Multilateral Institutions: India should engage with multilateral institutions for global projects and domestic initiatives, leveraging international expertise to enhance project outcomes and reduce risks. Collaborating with institutions like the Asian Development Bank (ADB) can also provide greater oversight and sustainable financing options.
• Long-Term Development Focus: India’s development focus, both domestically and internationally, should prioritize long-term sustainability over short-term political or economic gains. The focus should be on projects that can uplift local economies and contribute to long-term growth.

Source:

https://indianexpress.com/article/explained/explained-global/focac-china-africa-9551476/