“Ethiopian Seaport is Win-Win for East African Nations”: Physical Economic Analyst Freeman

November 19, 2023

In my interview above with OBN (11/6/2023), I discuss the importance of understanding the concept of physical economy to competently analyze the future of the Horn of Africa. Sadly, the vast majority of Africans, like Americans, do not chose to look into the future. It is only by knowing what physical economic inputs are necessary to sustain an expanding population 20-40 years into the future that one can determine the best policies of their nation in the present. Claims of “my nation first” or “my ethnicity first,” express a short sighted mentality that is detrimental to the interests of the nations of the region. Full economic integration of the Horn of Africa, driven by investments in infrastructure, is the most reliable path to achieving peace, stability, and economic growth, and avoiding conflict.

Read my comments in the Ethiopian Herald: Why Ethiopia CDjian No Longer Ignore Interests On the Red Sea – allAfrica.com

Read my earlier posts:

Ethiopia Access to Seaports Benefits All People of East Africa

Economic Development Can Bring Peace to the Horn of Africa

Lawrence Freeman is a Political-Economic Analyst for Africa, who has been involved in economic development policies for Africa for over 30 years. He is a teacher, writer, public speaker, and consultant on Africa. Mr. Freeman strongly believes that economic development is an essential human right. He is also the creator of the blog:  lawrencefreemanafricaandtheworld.com

Ethiopia Access to Seaports Benefits All People of East Africa

Potential Ports for Expanded Ethiopian Trade

November 4, 2023

In his new article, Ethiopia needs a reliable seaport and a navy, Ken Opalo provide a great deal of useful information on the necessity for Ethiopia to have access to a sea port to continue its progress towards of industrializing its economy. It is imperative for all the nations in the Horn and East Africa to understand, it is in their self interest for Ethiopia, East Africa’s largest and fastest growing economy, to have access to a reliable port. A prosperous Ethiopia benefits the African continent.

Excerpts below from Ethiopia needs a reliable seaport and a navy

Ethiopia’s economic case for reliable and cost-effective seaport access is strong. In order to secure its economic future, the country must minimize or completely erase the economic costs associated with being landlocked. Overall, landlocked countries tend to be 20% less developed than they would be if they had access to the sea. This is partially due to cost of trade, with transportation costs being between 50%-262% higher for landlocked countries.Subscribe

Given the significant economic costs associated with being landlocked, it is a no-brainer that for Ethiopia to achieve its ambitious developmentalist agenda — which will necessarily require export-oriented industrialization and improved agricultural productivity — it needs to have more control over trade-related costs and policy (or procure stability on both fronts from its neighbors). According to the Ethiopian government, transportation costs gobble up 16% of the value of international trade (which seems really high). Foreign trade currently amounts to 24% of GDP, and needs to grow by orders of magnitude. With an annual output of US$127b, Ethiopia is already Eastern Africa’s biggest economy (Kenya is second at US$113b) but with lots of low-hanging opportunities for even bigger trade-driven output.

Last year Djibouti cut stay of cargo days from 45 to 8 days. In addition, the port is more expensive relative to neighbors, often lacks storage space, and suffers from untimely availability of empty containers for exports. These factors have are the motivation behind Ethiopia’s aggressive port diversification initiative. As of early last year, Djibouti City’s share of Ethiopian trade cargo had declined from 95% to just under 86%, with the Kenyan border Moyale dry port (0.02%), Somaliland’s Berbera (5%), and Djibouti’s Tadjoura (9.6%) emerging as alternatives. These latter routes, however, lack the infrastructure (roads, petrol stations, service and repair stops, etc) to support bulk haulage logistics.

His careless bluster notwithstanding, Abiy has significant leverage over Djibouti (population 1.1m). Ethiopia is Djibouti’s leading revenue generator, ahead of the naval base leases by China, France, the United States, Saudi Arabia, Italy, and Japan. Ethiopian trade reportedly generates more than US$1b each year for the Djiboutian economy. Rents from foreign military bases estimated to be at least US$120m per year. The service sector accounts for nearly 80% of Djiboutian GDP (US$3.5b in 2022), much of it related to ports and logistics. Ethiopia accounts for upwards of 85% of all cargo passing through Djibouti.

Source: World Bank data

II: The economic case for securing reliable seaport access

As shown below, over the last decade Ethiopia has quintupled its industrial output and is quickly catching up with its regional neighbors. If these trends are to continue and if Ethiopia is to attract both domestic and foreign investments into its manufacturing sector, the state must guarantee investors that they will be able to access global markets at reasonable prices. The same goes for investments in the agricultural sector, which still has a commanding share of exports. Agriculture accounts for nearly 38% of GDP (including 50% of manufacturing production), 80% of employment, and about 90% of forex earnings.

Ethiopia’s planned rail network (see below) reflects the country’s industrialization agenda (the same goes for the overall transport masterplan, including road infrastructure). The proposed lines are all designed to serve specific industrial parks. Currently the main rail network (red) terminates at Djibouti City (Doraleh Multipurpose Port), with a planned alternative route to the opposite side of the Gulf of Tadjoura (in Tadjoura). While the rail network will certainly serve domestic production and distribution of goods once completed, an equally important objective should be to guarantee high-enough international traffic volumes to pay for its construction and ongoing maintenance.

As revealed by the planned railway network below, Ethiopia’s seaport options are largely limited to Djibouti — which is cause for believing that Abiy’s comments, if he really meant them and was not just carelessly thinking out loud that he is the latter day Ras Alula Abanega, were a negotiating tactic vis-a-vis Djibouti. Given its importance for Ethiopia’s maritime trade, is also likely that Djibouti is Addis Ababa’s first choice for the location of the planned naval base.

Ethiopia’s industrial parks are in Jimma, Hawassa, Adama, Dire Dawa, Bole Lemi, Debre Birhan, Semera, Kombolcha, Bahir Dar, and Mekelle. Source: Wikipedia

Read my earlier post: Economic Development Can Bring Peace to the Horn of Africa

Lawrence Freeman is a Political-Economic Analyst for Africa, who has been involved in economic development policies for Africa for over 30 years. He is a teacher, writer, public speaker, and consultant on Africa. Mr. Freeman strongly believes that economic development is an essential human right. He is also the creator of the blog:  lawrencefreemanafricaandtheworld.com

Exciting News for Africa! Djibouti Will Build Africa’s First Spaceport

Courtesy of qz.com/africa

The spaceport, expected to include seven satellite launch pads and three rocket testing pads, will be the first orbital spaceport on the continent.

Africa is entering a very exciting period in which it is asserting its scientific and engineering capabilities. Humankind’s exploration of space is the highest form of human discovery of the universe, and introduces into society new advanced technologies. With the completion of Ethiopia’s Grand Renaissance Dam in 2025, a scientific-engineering marvel, and the creation of Djibouti’s spaceport in five years, Africa is demonstrating its leadership for the 21st century, and creating the scientific foundation  for economic growth. This is true sceintific-econimic progress for the nations of Africa, whcih should make all poeple, of all nations happy. 

 Janary 23, 2023, Quartz Africa Weekly

Excerpts follow:

Africa could soon get a new spaceport after Djibouti signed a partnership deal with Hong Kong Aerospace Technology to build a facility to launch satellites and rockets in the northern Obock region.

According to the preliminary deal, the Djibouti government will “provide the necessary land (minimum 10 sq km and with a term of not less than 35 years) and all the necessary assistance to build and operate the Djiboutian Spaceport.”

The $1 billion spaceport project will also involve the construction of a port facility, a power grid and a highway to ensure the reliable transportation of aerospace materials.

The deal’s signing was presided over by the president of Djibouti, Ismail Omar Guelleh, and the project is set to be completed in the next five years.

The spaceport is a massive milestone for Africa, making it the first orbital spaceport on African soil.

The Djibouti spaceport project

According to Victor Mwongera, Head of the Department of Mechanical Engineering at Kenyatta University, the projection will avail a launch base that will serve all Africans.

“It will push eastern Africa off the sleeping state as far as active development of space-based innovations are concerned,” he explained.

Trial and small-scale launches have been executed in Africa in the past, including the Italian-operated Broglio Space Centre (San Marco) in Malindi, Kenya and Algeria’s Reggane.

Mwongera sees the expansion of Africa’s space industry—with a number of African countries already building and operating their own microsatellites—as a growing trend.

“It has taken time but we needed time as a continent to be ready for this age. Now that we are ready, you are seeing the number is increasing and it is bound to increase further,” he said.

Africa’s space industry is a billion dollar sector

According to the 2022 annual sector report of research firm Space in Africa, the value of the African space and satellite industry has risen to more than $19.6 billion.

The charge is fuelled by 14 countries that have launched 52 satellites into space.

South Africa, Egypt, Algeria, and Nigeria have the highest number of satellites in space as of 2022, each having launched more than five satellites.

Mwongera explained that east African countries are well positioned to harbor more spaceports, due to their proximity to the equator.

“At the equator… there is minimal energy required,” he said.

The original version of this article was published by bird-Africa no filter.

Read entire article: Africa Will Get A New $1 Billion Spaceport in Djibouti

Read my ealier posts below:

GERD: Utilizing the Blue Nile to Create Energy for Development in Ethiopia & The Horn of Africa

Science and Space Exploration Essential For Africa’s Economic Growth

Science and Technology Will Transform Africa: Ethiopia to Launch New Satellite in 2019

China & the US Can End Poverty by Exploring Space: Africa Gains

Lawrence Freeman is a Political-Economic Analyst for Africa, who has been involved in economic development policies for Africa for over 30 years. He is a teacher, writer, public speaker, and consultant on Africa. He is also the creator of the blog: lawrencefreemanafricaandtheworld.com. Mr. Freeman’s stated personal mission is; to eliminate poverty and hunger in Africa by applying the scientific economic principles of Alexander Hamilton

PM Abiy Ahmed Raises the Bar for Human Rights in Ethiopia and the Horn of Africa

Ethiopians celebrate Thanksgiving Festival in Addis. Image : IOL

My colleague, PD Lawton, creator of African Agenda-africanagenda.net, confirms in her insightful article below, what I have known for many years. The most important and fundamental human right, is the right to economic development. Without economic growth, human beings suffer and die. It is the lack of economic development in Africa that is the most serious human right violation. It is about time that all advocates of human rights recognize this indisputable reality. Through Ethiopia’s aggressive economic development policy, the government is addressing human rights more seriously than its attackers.

Lawrence Freeman is a Political-Economic Analyst for Africa, who has been involved in economic development policies for Africa for over 30 years. He is a teacher, writer, public speaker, and consultant on Africa. He is also the creator of the blog: lawrencefreemanafricaandtheworld.com. Mr. Freeman’s stated personal mission is; to eliminate poverty and hunger in Africa by applying the scientific economic principles of Alexander Hamilton

Will The U.S. Support Egypt’s Violation Of Ethiopia’s Sovereign Right to Operate The GERD?

Countries of the Nile River Basin-World Bank (Courtesy of researchgate.net)

Will The U.S. Support Egypt’s Violation Of Ethiopia’s Sovereign Right to Operate The GERD?

Lawrence Freeman

June 5, 2021

Is the United States’ continued escalation of hostile policy towards Ethiopia preparing the groundwork to support Egypt’s “colonial rights” over the Nile River? As the White House and Congress threaten more sanctions against Ethiopia, their sovereign right to generate electricity for its people through the operation of the Ethiopian Grand Renaissance Dam (GERD) is being linked to the conflict in Tigray. Is the Biden administration and the Democrat controlled Congress ominously following in the footsteps of President Trump, who shockingly gave a “green light” for Egypt to bomb the GERD? This would be a grave mistake, with more disastrous consequences than the Obama’s administration’s bombing of Libya and overthrowing President Kaddafi. While U.S. foreign policy in the region is aligning itself more closely to Egypt, it continues to undermine Ethiopia’s Prime Minister Abiy Ahmed’s sovereign authority to prevent the Balkanization of his nation.

Sanctions Are Not For Allies

Secretary of State, Antony Blinken’s still unproven, but often repeated March 30th allegation of ethnic cleansing by the Ethiopia government in Tigray, has provided the impetus for the crescendo of group-think Congressional voices to attack Ethiopia, America’s foremost ally in the Horn of Africa. On May 23rd, Blinken intensified U.S. aggression towards Ethiopia by:

  • Issuing sanctions.
  • Cutting off funds for security and economic growth.
  • Pressuring multi-lateral institutions to cease funding programs in Ethiopia.
  • altering U.S.-Ethiopia defense accords, which have been essential in the war against terrorism and providing security for East Africa.

(Read: New U.S. Hostilities Against Ethiopia Threatens Horn of Africa)

Addis Ababa February 5/2021 (ENA) Prime Minister Abiy Ahmed held phone conversation with United States Secretary of State Antony J. Blinken on Thursday.

Both the U.S. Senate and House of Representatives support Secretary Blinken’s sanctions against Ethiopia. Sanctions are a very poor and crude tool for conducting foreign policy, and I have opposed their implementation except in the most unique cases. However, it is unheard of to apply sanctions against a long-standing ally, and it is utterly counterproductive. The government of Prime Minister Abiy should be supported in defeating the insurrectionists, the Tigray People’s Liberation Front (TPLF). This is contrary to calls from the U.S and United Kingdom for a cease fire and reconciliation between the Ethiopian National defense Forces (ENDF) and the TPLF.

TPLF, not the Tigrayan community, is intent on tearing apart Ethiopia, and weakening the government of Prime Minister Abiy.  Ethiopia’s future existence as a sovereign nation-state depends on quelling this insurrection.

Pause for a moment, think, then ask yourself; how did President Lincoln personally conduct the war against the southern rebels? He summarily shunned all calls for peace and reconciliation, until the anti-Union, insurrectionist movement was defeated.

The Biden administration and the U.S. Congress are contributing to the potential dismemberment of the most vital nation in East Africa by sanctioning, threatening, and punishing the government of Prime Minister Abiy.  If these officials, actually had any knowledge of the dynamic of ethno-nationalism in Ethiopia, they might come to realize that their actions could encourage more ethnic regions to attempt separation from the nation of Ethiopia.

Senate Recklessness Led by Bob Menendez

A new level of belligerence towards Ethiopia was on display at the May 26th,  Senate Foreign Relations Committee hearing on the conflict in Tigray.  It is interesting to note that all but one of the speeches and accusations against Ethiopia were uttered by liberal Democrats. Ranking Member, Frank Risch, was the only Republican to join the anti-Ethiopian crusade.

Chairmen Bob Menendez referenced Secretary Blinken’s allegations of ethnic cleansing and other alleged crimes by the Ethiopian government. He demanded that Ambassador Godec, Acting Assistant Secretary of State for African Affairs, who was testifying, provide the proof that Ethiopia has “committed war crimes and crimes against humanity” in Tigray. Appallingly, the other Democrats on the committee followed Menendez in lock-step, demanding “action now” against Ethiopia.

Senator Bob Menendez (D. NJ) Chairman of Senate Foreign Relations Committee (Courtesy foreign.senate.gov)

Sarah Charles, testifying from USAID Humanitarian Assistance, further inflamed the hearings by projecting that Ethiopia will experience another “man-made famine,” reminiscent of 1985, if actions are not taken immediately. The potential for a new famine became the mantra of the senators at the hearing.

Allegations of hunger, and atrocities committed during the conflict must be fully investigated.  However, to compare the current situation in Tigray to the famine of 1983-1985 that caused over one million deaths in Ethiopia, is contemptible. That famine was exacerbated by the destructive policies of Mengistu Halle Mariam, leader of the fascist-Marxist Derg. Likely unbeknownst to the uninformed senators, Mengistu, from 1976-1978  launched the “Red Terror,” murdering over half a million Ethiopians, in a genocide against his own people. To equate the famine of 1983-1985 and Mengistu’s policies to Ethiopia today and Prime Minister Abiy, is beyond reprehensible.

Senator Menendez opened the hearing by claiming that the conflict in Tigray echoes what happened in Darfur, Sudan. I travelled to Sudan many times from 1996 to 2012, including two tours of Darfur. Between that and my own extensive research, I am very familiar with Sudan and its history.  I can assert unequivocally that there is no resemblance between Darfur, Sudan, and Tigray, Ethiopia.

Tragically, the behavior by the U.S. Congress, is shameful and reflects an acute superficiality in understanding the complex history of Ethiopia.

Overturn Geo-Political Thinking

While the U.S., led by Secretary Blinken, is reversing decades of friendship between Ethiopia and America, and endangering the Horn of Africa, the Biden administration is enhancing its rapport with Egypt.

On May 26th, while the Senate was ratcheting up the pressure on Ethiopia, Secretary Blinken was in Cairo conveying:

“President Biden’s appreciation to President Sisi for Egypt’s critical mediation efforts in support of a cease fire between Israel and Hamas…”

“The Secretary affirmed the strong strategic partnership between the United States and Egypt, and President Biden’s commitment to this relationship.  He reiterated the United States’ commitment to Egypt’s water security and to the urgent resumption of substantive and results oriented negotiations under the leadership of the African Union to resolve the dispute over the Grand Ethiopian Renaissance Dam (GERD).”

The sovereign right of Ethiopia to fill and operate the GERD for the general welfare of its citizens has become linked to the conditions in Tigray.

Democrat Senator Mendez, at the hearing ostensibly on Tigray, made the same veiled threat on the GERD as President Trump, who infamously suggested that Egypt might try to blow-up the GERD. Mendez blurted out, that Egypt has told him more than once, “if the GERD issue is not dealt with in a way that assures their water needs…they will do what is necessary…They have red lines…”

Ethiopia and its seven neighboring countries

On May 27, Egyptian President Sisi, traveled to Djibouti, whose port provides access to the Gulf of Eden and Indian Ocean for its neighbor and major trading partner, Ethiopia. This was the first visit ever of an Egyptian head of state to Djibouti. According to African Intelligence, the two leaders discussed new security relations between their nations. African Intelligence further reports that Egypt’s defense minister and army chief of staff, who also visited Djibouti, “would like to see the creation of an Egyptian base in Djibouti not far from the Ethiopian border.”

At his news conference in Djibouti, President Sisi said:

“I stressed Egypt’s rejection of any attempt to impose a fait accompli through unilateral measures that disregard the interests and rights of the two downstream countries.”  

Egypt has made repeated military threats against Ethiopia, has formed a military alliance with Sudan, and last month, carried out joint military exercises with Sudan labeled “Guardians of the Nile”.

Since Egypt is the second largest recipient of U.S. aid next to Israel,  it would not be difficult for the U.S. to convince Egypt to stand down.

According to a knowledgeable expert on the region, the Biden administration is preparing to relocate the hub of its anti-terrorism  deployment in the Horn of Africa, from Ethiopia to Kenya.  The U.S. is trying to persuade Gulf nations, who support Ethiopia, to leverage their relationship in an effort to pressure Ethiopia to abandon its commitment to the GERD.

President Biden may or may not be aware of the implications of his decision to undermine Prime Minister Abiy’s government and support Egypt in their brinkmanship with Ethiopia regarding the GERD. His administration, filled with personnel from the Obama and Clinton presidencies, is following the same warped geo-political doctrine of his predecessors. Rather than responding to the fixed contours of the contentiousness surrounding the GERD, a true statesman would desire to shift the discussion to a higher level of potential resolution. Instead, the U.S., dominated by geo-politics, is fixated on seeking partners, who serve their narrow immediate interests, such as Egypt’s role in mitigating the Israel-Palestine crisis.

In fact, there is no danger of Ethiopia depriving downstream nations (Egypt and Sudan) of water for their people.  This was admitted by Egyptian Foreign Minister, Sameh Shoukry himself: Egypt Foreign Minister Says Water Safe Despite Ethiopian Dam Threat.

The GERD will actually help both Egypt and Sudan by regulating the Nile, preventing deadly floods, reducing evaporation, and providing a water bank to draw on in emergencies. However, the GERD is not even the fundamental cause of Egypt’s water problem, as Yaniv Cohen explains: Egypt has a water problem and it’s not only the GERD

 

Eskom’s Koeberg nuclear power station today turned on its temporary mobile groundwater desalination plant, which will ease the pressure on the City of Cape Town’s water supply. Courtesy esi-africa.com)

The real issue concerning the Nile River is strategic; the Nile does not have enough water to provide for the hundreds of millions of Africans living in the nations of the Nile Basin.

For the economic growth and well being of the nations of the Nile Basin, more water is needed than the Nile can deliver. The equivalent of a second Nile has to be created by human beings. This is the discussion that should take place among the Nile Basin nations and the larger international communities. It requires creative and visionary  thinking, outside of the box, not confined to geo-politics. To alleviate nations from quarreling over a limited supply of Nile water, let us be bold in our imagination. Instead, conceive of the New Nile Project by constructing nuclear powered desalination plants along the Mediterranean and Red Sea to create large amounts of new potable water. These nuclear plants in additional to efficient desalination, and supplying abundant energy, would become nuplexes– manufacturing hubs for industrial and agricultural development.

Some addicted to the narrow thinking of geo-politics today, will object and say it cannot be done, it will take too long and cost too much. To those naysayers, I would respond by asking, is it better to have water wars among emerging nations that are struggling to feed their people laden by poverty? As populations expand, and economies grow, more water will be required. Why not use the urgency of resolving today’s combative dispute over the filling of the GERD, to prod our lazy minds to create a solution for the future of the Nile Basin?  Overcoming all the many engineering and scientific impediments to achieve our New Nile Project will be challenging, but this is the very reason we human beings were put here on earth.

President Lincoln delivering his Second Inaugural Address March 4, 1865. (courtesy hisotyplace.com)

A Just End To A New Beginning

The fighting in Tigray, the ancient birthplace of Ethiopia, must come to end as soon as possible to prevent the loss of more lives and further suffering. This laceration in the fabric of Ethiopian society should be healed, and not allowed  to propagate. Following the government’s safeguarding of the Tigray region, an all-out mobilization must be launched, with vigorous international support, to rebuild the province, upgrading economic conditions to guarantee that every person living in Tigray, a productive and dignified life.

When the conflict in Tigray is concluded, it would be appropriate for Prime Minister Abiy to emulate the spirit of President Lincoln’s Second Inaugural Address. It was delivered  on March 4, 1865, almost four years after the war began, which killed hundreds of thousands of Americans, and six weeks before his enemies assassinated him. After President Lincoln affirms his commitment to defeat the southern rebels at all costs, he compassionately pleads for peace.

“With malice toward none, with charity for all, with firmness in the right as God gives us to see the right, let us strive on to finish the work we are in, to bind up the nation’s wounds, to care for him who shall have borne the battle and for his widow and his orphan, to do all which may achieve and cherish a just and lasting peace among ourselves and with all nations.”

Let Prime Minister Abiy use this overture as a prelude to lead a healthy dialogue with the Ethiopian people; to unite the nation around the preeminence of an Ethiopian identity, one that supersedes ethnicity.  Reformulation of the Ethiopian Constitution of 1995 to emphasize Ethiopian citizenship, which transcends ethno-regionalism, should follow.

It is in the shared, common, and self-interest of all Ethiopians to participate in the development of their society and increase the wealth of their economy for the benefit of themselves and their posterity. With the near future generation of 6,200 megawatts of electricity from the GERD, Ethiopia will bring light and prosperity to all its citizens. This is cause for all Ethiopians to join together in joyous celebration.

Read my earlier posts:

New U.S. Hostilities Against Ethiopia Threatens Horn of Africa

Prime Logue/Media Interviews Lawrence Freeman in Addis Ababa: “Without the Elimination of Poverty, There Will Be No Democracy in Africa”

U.S. Senators’ Call for Postponing Ethiopian Election Is Foolish & Very Dangerous

Lawrence Freeman is a Political-Economic Analyst for Africa, who has been involved in economic development policies for Africa for over 30 years. He is the creator of the blog: lawrencefreemanafricaandtheworld.com. Mr. Freeman’s stated personal mission is; to eliminate poverty and hunger in Africa by applying the scientific economic principles of Alexander Hamilton

Ethiopia’s Addis Ababa to Djibouti Railway: A Model for the Role of Infrastructure in Fighting Hunger

Below is a useful article from EIR magazine that correctly emphasizes the role of infrastructure in providing food for Africa. The authors highlight Ethiopia, an East African nation that has aggressively pursed the expansion of infrastructure to advance their economy.

November 16, 2020

Click to access 19-25_4745.pdf

No More Lies, No More Anti-China Propaganda: There is No China-Africa ‘Debt-trap’

June 20, 2020

China-Africa Research Initiative-(CARI) presented an interesting and useful webinar entitled : Debt Relief with Chinese Characteristics, using research presented from a Working Paper #39 and Policy Brief #46. View: CARI: Debt Relief With Chinese Characteristics

In response to China’s growing economic and political influence in the world, especially on the African continent, various propaganda outlets located in the West have launched a new assault on China. Their line of attack is to malign China and African leaders with the false narrative that China is intentionally luring African nations into a ‘debt-trap’ in order to seize control of their natural resources. This cynical view of China’s alliance with African nations flows from the age old doctrine of “geo-politics” that only perceives nations as either winners or losers in a fixed zero-sum view of the world.  In this evil world view, stronger powers, hegemons believe they can only maintain their supremacy by having their foot on the neck of weaker nations. The “geo-political” doctrine rejects the notion that all nations share a common interest.

Misinformation or Disinformation

As Deborah Brautigam, director of CARI has stated before, there is no evidence, none, not one single case of China using debt to seize control of an African nation’s assets. “We found no “asset seizures” and despite contract clauses requiring arbitration, no evidence of the use of courts to enforce payments, or application of penalty interest rates.” Despite no substantiation of China using debt as a weapon against African nations, the ‘debt-trap’ mantra is repeated by either misinformed individuals, including Africans, or by those who are deliberately disseminating disinformation with malice.

The CARI working paper reports the following:

“The rating agency Moody’s warned that countries ‘rich in natural resources, like Angola, Zambia, and Republic of the Congo, or with strategically important infrastructure, like ports or railways such as Kenya, are most vulnerable to the risk of losing control over important assets in negotiations with Chinese creditors.’ These assumptions of a malign China were repeated in publications like The New York Times, which contended that Chinese loans “frequently use national assets as collateral” and require refinancing ‘every couple years’ (our Africa data supports neither of these statements).” (emphasis added)

If there is any honesty or integrity left in our duplicitous culture, all claptrap about China’ alleged ‘debt-trap’ as a nefarious attempt to gain control of Africa’s wealth should cease immediately! If one examines the long history of China’s relationship with Africa and the more recent twenty year period, it is clear that China desires to resolve issues with African nations through consultation. China may choose other means of responding to payment difficulties, but there is no evidence that they want to take over African holdings, contrary to prevalent popular opinion. Read: Chinese ‘debt-trap’ Propaganda Exposed-Time to End Ignorance & Prejudice Against China in Africa

Debt Cancellation

As COVID-19 spreads in Africa, nations are struggling to survive economically and simultaneously defeat the deadly virus.  Debt service is onerous and must be suspended indefinitely or cancelled, as leaders of many Africans nation have rightly insisted. According to Dr. Brautigam, from 2000-2018, China has made loan commitments of $152 billion, and of Africa’ total external debt, China holds 17%, while the World Bank hold 18%, and private lenders 31%.  Thus, China will and has already engaged in debt relief, but will do it differently than western institutions like the Paris Club and World Bank.

“Our [CARI] study found that between 2000 and 2019, China has cancelled at least US$ 3.4 billion of debt in Africa. There is no “China, Inc.”: for interest-bearing loans, treatment for inter-governmental debt and Chinese company loans are negotiated separately, and often loan-by-loan rather than for the entire portfolio. While rescheduling by increasing the repayment period is common, changes in interest rates, reductions in principal (“haircuts”), or refinancing are not. We found that China has restructured or refinanced approximately US$ 15 billion of debt in Africa between 2000 and 20190…Chinese lenders prefer to address restructuring quietly, on a bilateral basis, tailoring programs to each situation.”   

China, up this point has only cancelled zero interest loans, which represent only 5% of loans from China, and are issued from China’s Ministry of Commerce. It is unlikely that there will be unilateral debt suspension.  Thus, we can expect that China will negotiate debt relief bilaterally with each nation, and each loan reviewed separately.

Even if debt cancellation is continued into 2021, which has not yet been agreed to, it will be insufficient. The level of investment required to meet Africa’s’ minimal infrastructure needs is in the trillions of dollars, which belies the “geo-political” nonsense of zero-sum assumptions.  Debt relief must be accompanied by issuance of credit for infrastructure and related sectors of production, otherwise Africa and the world will suffer from the spread of COVID-19 and future zoonotic diseases. Poverty is a co-factor for all diseases. Lack of electricity is a co-factor for the spread of disease and hunger, as is the lack of clean water, and inadequate transportation.

China’s Belt and Road Initiative over recent years has begun to address Africa’s infrastructure deficit, but much, much more is required. Collaboration between the U.S. and China on the development of Africa would be consequential for the continent.

I have addressed this issue in earlier posts: World Needs New Economic Platform to Fight COVID-19, New Economic Order Required to Combat COVID-19 in Africa

ViewCARI: Debt Relief With Chinese Characteristics

Lawrence Freeman is a Political-Economic Analyst for Africa, who has been involved in the economic development policy of Africa for 30 years. He is the creator of the blog: lawrencefreemanafricaandtheworld.com

China Investing in Africa’s Future, Why Isn’t the US?

January 5, 2019

In the article below you can read about China’s strategic investment in making Djibouti’s port a major port in Africa and the Middle East. The West can criticize as much as it likes, but China, not the US and Europe, is building vitally needed infrastructure in Africa. Without infrastructure Africa will not develop and progress. U.S policy known as  “Prosper Africa” is cynical joke.

NEWS

In strategic Djibouti, a microcosm of China’s growing foothold in Africa

By Max Bearak
December 30, 2019

Excerpts:

DJIBOUTI — Above ground in this tiny but strategically located country, signs of China’s presence are everywhere.

Chinese entities have financed and built Africa’s biggest port, a railway to Ethiopia and the country’s first overseas naval base here. Under the sea, they are building a cable that will transmit data across a region that spans from Kenya to Yemen. The cable will connect to an Internet hub housing servers mostly run by China’s state-owned telecom companies.

Beijing’s extensive investments in Djibouti are a microcosm of how China has rapidly gained a strategic foothold across the continent. Western countries, including Africa’s former colonizers, for decades have used hefty aid packages to leverage trade and security deals, but Chinese-financed projects have brought huge infrastructural development in less than a generation.

The construction is fueled mostly by lending from China’s state-run banks. Spindles of Chinese-paved roads have unfurled across the continent, along with huge bridges, new airports, dams and power plants as part of Chinese President Xi Jinping’s 152-country Belt and Road Initiative.

Overall, Chinese companies have invested twice as much money between 2014 and 2018 in African countries as American companies, spending $72.2 billion, according to an analysis by Ernst & Young.

“The Chinese are thinking far into the long-term in Djibouti and Africa in general,” said David Shinn, a former U.S. ambassador to Ethiopia who was also the State Department’s desk officer for Djibouti as far back as the late 1960s. “Djibouti is one node in an economic chain that stretches across the northern rim of the Indian Ocean, from ports in Cambodia to Sri Lanka to Pakistan. They have a grand, strategic plan. We don’t.”

In Djibouti, that strategic plan is all the more evident because of the country’s location at the entrance to the Red Sea, where about 10 percent of oil exports and 20 percent of commercial goods pass through the narrow strait right off Djibouti’s coast on their way to and from the Suez Canal.

That location has made it a crucial way-point for undersea cables, which transmit data between continents. China’s investment in Internet infrastructure here comes as the region surrounding Djibouti is just starting to come online, including some places that are entirely reliant on Djibouti as a transit point for data transmission…

“Yes, our debt to China is 71% of our GDP, but we needed that infrastructure,” Mahamoud Ali Youssouf, Djibouti’s foreign affairs minister, said in a phone interview on the sidelines of a meeting in New York earlier this month, where Djibouti was pushing to gain a non permanent seat on the United Nations Security Council.

“It was quite natural that we raise our partnership with China. Neither Europe nor America were ready to build the infrastructure we needed. We’re projecting our country into the future and looking after the well-being of our people. Even the United States has trillions of dollars in debt to China, you know,” Youssouf said.

The most significant investment China has made in Djibouti is Doraleh Port, Africa’s biggest and deepest. As with Internet through the data center, a full 90 percent of landlocked Ethiopia’s imports now transit Djibouti, giving the minuscule country, with a population of less than a million, leverage over its gigantic, 100-million-strong neighbor.

Read the full article

Chinese ‘debt-trap’ Propaganda Exposed-Time to End Ignorance & Prejudice Against China in Africa

(Courtesy of Quartz Africa)

December 24, 2019

Deborah Brautigam, an expert on China-Africa relations, exposes the fraud of China’s debt-trap diplomacy in her report: A Critical look at Chinese ‘debt-trap diplomacy’ Brautigam, who is director of the Johns Hopkins Center for China-Africa Research Initiative, writes unequivocally that there is no evidence of an intentional effort  to trap African nations into owing debt to China. China is not manipulating African nations in an attempt to control their resources. Ironically this is what the Western institutions did to African nations  following their independence from colonialism. Whether out of ignorance and/or prejudice, Africans and Westerners have been repeating unfounded propaganda that China is the new colonizer of Africa. It is time to finally end this malicious mantra.

Excerpts:

“The Johns Hopkins School of Advanced International Studies curates a database on Chinese lending to Africa (Brautigam & Hwang, 2016). It has information on about more than 1000 loans and, so far, in Africa, we have not seen any examples where we would say the Chinese deliberately entangled another country in debt, and then used that debt to extract unfair or strategic advantages of some kind in Africa, including ‘asset seizures’. Angola, for example, has borrowed a huge amount from China. Of course, many of these loans are backed by Angola’s oil exports, but this is a commercial transaction. China is not getting huge strategic advantage in that relationship. Similarly, others have examined Chinese lending elsewhere in the world – some 3000 cases – and while some projects have been cancelled or renegotiated, none, aside from the single port in Sri Lanka, has been used to support the idea that the Chinese are seizing strategic assets when countries run into trouble with loan repayment (Kratz, Feng, & Wright, 2019).

The evidence so far, including the Sri Lankan case, shows that the drumbeat of alarm about Chinese banks’ funding of infrastructure across the BRI and beyond is overblown. In a study we conducted using our data on Chinese lending and African debt distress through 2017, China was a major player in only three low-income African countries that were considered by the IMF to be debt distressed or on the verge of debt distress (Eom, Brautigam, & Benabdallah, 2018). A similar country-by-country analysis that included use of our data shows that the Chinese are, by and large, not the major player in African debt distress (Jubilee Debt Campaign, 2018). Therefore, the role of China in African debt distress was limited when one remembers that there are 54 countries in Africa.”

Read: A Critical look at Chinese ‘debt-trap diplomacy’

Fruitful Cooperation: Ethiopia and China’s Belt and Road

Celebrating the inauguration of the new Addis Ababa to Djibouti railway on October 6, 2016, which I attended

 

China-Ethiopia dialogue highlights sustainable investment under BRI

BEIJING, Dec. 1 (Xinhua) — Ethiopia is hoping to attract more sustainable investment from Chinese enterprises as fruitful cooperations have been carried out under the Belt and Road Initiative (BRI).

At the China-Ethiopia High-Level Dialogue on Sustainable Investment held in Beijing on Friday, both Chinese and Ethiopian officials expressed their hope to consolidate collaborations to boost the achievements of sustainable development goals (SDGs).

Aschalew Tadesse Mecheso, a senior official with Ethiopian Investment Commission (EIC), said Ethiopia looks forward to more investment in the sectors of information and communication technology and light industries so as to create more jobs for young people who account for around 70 percent of the country’s population.

Aiming to facilitate knowledge exchanges and build networks to promote sustainable investment in Ethiopia, the event attracted over 200 participants from governments, industries, development agencies and think tanks.

Guo Xuejun with the Ministry of Foreign Affairs took the Addis Ababa-Djibouti Railway as an example of the fruitful cooperations between the two countries under the BRI.

Apart from the railway that has significantly shortened the time of transporting goods from Ethiopia to Djibouti, he also mentioned a new economic cluster that is emerging along the railway with the construction and development of several industrial parks.

China looks forward to working with Ethiopia to initiate more connectivity projects that are high-quality, sustainable, resilient, affordable, inclusive, accessible and broadly beneficial, Guo said.

The country is also dedicated to promoting trade and investment liberalization and facilitation, opposes protectionism and aims to make greater contributions to the implementation of the 2030 Agenda for Sustainable Development, he said.

Beate Trankmann, Resident Representative of the United Nations Development Programme (UNDP) in China, said the BRI’s key projects, which focus on connectivity and integration, could help unlock the funding and know-how to fulfill the SDGs, if relevant investments follow sustainability criteria and principles of the SDGs.

At the event, organized by the UNDP and supported by the Ministry of Foreign Affairs, China’s embassy in Ethiopia and the EIC, investors also discussed the opportunities and challenges to invest in Ethiopia