China’s presence in African ports: investment across the ocean

In March 2013 China announced a $ 10 billion investment in East Africa, for construction of a new port at Bagamoyo, Tanzania, northwest of the capital Dar es Salaam. Scheduled for completion by 2017, Bagamoyo is to become by far the biggest port in Africa. With a planned cargo of 20 million containers per year, it will be 20 times larger than the current port of Dar es Salaam. Beyond Tanzania, the ambitious port investment project has the potential to boost China’s economic relations with the entire region, notably with the landlocked countries Malawi, Zambia, Democratic Republic of the Congo, Burundi, Rwanda and Uganda.

China’s investment in the port of Bagamoyo is not an isolated act, but rather reflects a recent trend in Sino-African relations. Up to now, China has gained presence in the ports of several African countries, such as Guinea, Ghana, Togo, Nigeria, Cameroon, Djibouti or Egypt. Huge infrastructural investments have tended to increase, as was reflected by a set of new million dollar deals that have been signed recently with the Republic of the Congo, South Africa and Tanzania during the last visit by Chinese President Xi Jinping to the continent.

Why do African ports matter for Beijing?

Triggered by its escalating economic and trade growth over the last decades – it has become the world’s leading export nation – China has heavily invested in recent years in the modernisation of its domestic port infrastructure. It now aims to expand its capacities for containerized trade as well as its capacities to acquire and operate port infrastructures all over the world.

Investing in the development of African ports can generate many advantages for China: Large scale and modern high tech ports allow for a great increase in exporting Chinese manufactured goods to Africa, and, in turn, in shipping raw materials and natural resources from Africa to China. Investment in ports is also expected to attract more Chinese foreign investment to other sectors.

In fact, the intensified economic ties between China and Africa have been accompanied by huge investment in the construction of transport infrastructure in many African countries, notably roads, airports and railways. This trend was enshrined in the Beijing Action Plan (2013-2015), which sets the framework for future China-Africa cooperation: “The two sides will continue to encourage and support more flights and shipping links to be set up by their airlines and shipping companies, and capable Chinese companies will be encouraged to invest in ports, airports and airlines in Africa.” (point 4.8. Transportation)

With regard to Chinese geopolitical interests in the Persian Gulf, ports with Chinese influence on Africa’s east coast, can also be useful for Chinese warships to obtain fuel, supplies or repairs. The military importance given by Beijing to the Persian Gulf is related not only to the role it plays in Chinese internal policy regarding energy, diplomatic and economic issues, but also in the international political scene.

And what about Africa?

The Tanzanian Government welcomed the Bagamoyo deal as an opportunity that could not be wasted and a long-term investment which is hoped to spill over to other sectors.

China’s presence in Africa is in general positively perceived, not least as a counterbalance to Western influence. Africa has high hopes for positive effects from Chinese engagement in African ports, which should allow for port expansion, attract industries and investment and create jobs. Foreign investors or operators can contribute to tackling some persisting concerns relating to the poor efficiency ofAfrican ports, such as low capacity, poor inland links, high tariffs, costly and inefficient administration, and security problems. At present, African countries rank low in indexes on the ease of business and trading across borders.

However, there are some voices against Chinese investment who consider it another kind of colonialism by taking out commodities and selling manufacturing goods in exchange. Another concern is related to the fact that Chinese investment is concentrated in the resources sector while crucial areas like education and skills development have been left behind, though in recent years China has started to invest in areas beyond its core economic interests.

The European Parliament is watching

Since its critical assessment of China’s policy and its effects on Africa in 2008, the European Parliament has kept a keen eye on Sino-African relations. In 2012, the report on unbalanced EU-China trade drafted by MEP de Sarnez (ALDE, FR) raised concerns about the “political, economic, social and environmental impact” of increasing Chinese investment in Africa. Most recently, in March 2013 the EP adopted a report by MEP Bastiaan Belder (EFD, NL), which acknowledged that China’s presence in Africa has contributed to economic development, mainly due to infrastructure projects, and welcomed the diversification to areas other than commodities and infrastructure.