How will Rwanda benefit from China's $60bn aid to Africa?

At a time when the Chinese economy is experiencing an unprecedented growth slowdown, President Xi Jinping made a rather ironical announcement, last week, in Johannesburg that his government is to double its aid to Africa, to US$60 billion over the next three years till 2018. It was the biggest announcement to come out of the historical summit of the Forum on China-Africa Cooperation (FOCAC) held in South Africa under the theme, ‘…progressing together: win-win cooperation for common development.’ The Johannesburg summit was the second of its kind to be held under the 15-year-old framework of FOCAC, which brings China, 50 African countries that have established diplomatic ties with China, and the Commission of the African Union, together. Recent commentaries in mainstream western media have been predicting that the flow of Chinese money flowing to Africa in form of inexpensive loans and grants will allow the Asian tiger focus more on addressing home affairs in its turbulent economy. But when President Xi, Jacob Zuma’s co-chair at the summit, took to the floor to deliver the summit’s keynote address in Johannesburg, it was not to confirm those fears but rather to cement the Sino-Africa relationship from ‘courtship’ to something akin to a marriage. Like a fiancé’, Xi, in his speech, made a proposal, to upgrade ties with Africa to a ‘comprehensive strategic cooperative partnership.’ In his speech, Xi proposed a new Sino-African partnership that will be shaped by five major pillars, including political equality founded on mutual trust, mutual economic cooperation, cultural exchange, security cooperation and solidarity in international affairs. The proposal was unanimously endorsed by over 40 African heads of state that attended the summit; they also welcomed a ten-point cooperation plan that places industrialization, agriculture modernization and infrastructural development at the forefront. Other areas of development focus include investment in financial services, green development, trade and investment facilitation, poverty reduction, public health, people-to-people exchanges and peace and security. Manna from China To walk the talk, China announced a huge package of US$60 billion that it will make available to support African countries over the next three years, from 2016 to 2018. Commentators on Sino-Africa relations have noted that the new commitment, which is being doubled from the US$30 billion in aid over the last three years, reaffirmed China’s commitment to Africa. The Sunday Times Kenneth Agutamba with Amb Pan Hejun during the press conference. (Faustin Niyigena) At a time when many countries are experiencing current account deficits due to imbalances of payment resulting from poor commodity prices, the US$60 billion cake could be seen by many a country as ‘manna from China.’ The manna includes US$5 billion package that African countries will access in form of grants and zero interest loans, US$35 billion in form of concessional loans and export credit lines as well as another US$5 billion to boost the China-Africa Development Fund and support for SMEs. China also announced that it is to commit another US$10 billion as initial contribution for the establishment of a China-Africa Fund for production capacity cooperation. The main criticism leveled against Chinese support to Africa is the failure to include democracy, good governance and human rights among the areas of cooperation. However, Chinese leaders insist that such matters are of internal nature and that the sovereignty of African countries to address such concerns should be respected. Rwanda to gain Pan Hejun, is the new Chinese ambassador to Rwanda, a few days after arriving in the country, he headed to South Africa to attend the Johannesburg summit; on Thursday this week, the diplomat addressed his first press conference at the Chinese embassy in Kigali. During the press conference, the diplomat was asked how Rwanda could position itself to benefit from the US$60 billion Chinese case announced during the summit, in South Africa. “The Rwanda government is very efficient; they know how to act very fast and I am sure they are well placed to get their share of the cake,” he said. Hejun also noted that the Chinese embassy in Kigali will be on hand to support Rwanda to pursue its development agenda. “Our intervention will be guided by the priorities of the Rwanda government,” he added. The Sunday Times understands that the government has already indicated its priorities to the Chinese government and plans on implementing major projects are in advanced stages. One of those projects includes the expansion and up-grading of Masaka hospital. According to the Ambassador, a Chinese team to carry out the feasibility study of the works will be coming to the country very soon. “We expect that sometime in March next year, the two sides will sign the agreement for the works to begin,” he said. The Chinese government is also going to bankroll the construction of a 54km road network in Kigali city and the envoy revealed that all relevant documents have been assembled ready to be presented to the Chinese Export and Import bank in Beijing, which is to provide the funds. “We expect that by March or April next year, the final agreement will be signed and the money will be allocated to enable the construction to begin,” he said. Another major project to be bankrolled by the Chinese government over the next three years is the construction of a state of the art government office complex that will house the Prime Minister’s office and four other ministries. “We expect the ground breaking ceremony for the complex in March next year, and once we have started construction, you know the Chinese speed, we are very fast,” the diplomat mused. The expansion of Masaka hospital, the 54km road network in the city and the modern government office complex are the major projects among many smaller interventions through which Rwanda is to gain from the pledged US$60 billion. But more than aid, Ambassador Pan observed that there is need to boost trade relations between the two countries to a level where Rwanda is sending more exports to China and progressively overturn the payment imbalance. “This calls for more investment in value addition, technology transfer or exchange to help Rwanda develop a robust manufacturing base,” he said adding that Rwanda, like other African countries can benefit from the new US$10 billion fund to enhance production capacity. In 2014, bilateral trade between the two countries was US$207 million with imports from China to Rwanda dominating the exchange. Currently, in a bid to boost Rwanda’s nascent export sector, China extends duty-free treatment to 95 percent of Rwandan products in the Chinese market. Rwandan companies have also been facilitated to participate in various Chinese Import and Export Fairs so that they can directly promote their products in the Chinese market. editorial@newtimes.co.rw

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How will Rwanda benefit from China's $60bn aid to Africa?