The beat goes on . . .

12th June 2020 By: Tara O’Connor

As South Africans emerge blinking into the winter sunlight, they do so to a ‘new normal’, including an emerging new order. Great plagues throughout history have accelerated fundamental changes that have a long-lasting, often multigenerational, impact. One accelerator is the global tilt towards China confirming its rising political and economic prowess. Another is the decline of the American empire.

President Donald Trump has unilaterally given up the US’s century-old place as the world’s leading democracy, economy and the moral power behind a rules-based multilateral system. Trump threatens to send in the US army to quell a week-long outbreak of protest, unrest, violence and looting across 40 US cities and 23 states. This after an unarmed black man, George Floyd, died of asphyxiation when a police officer knelt on his neck for nine minutes in Minneapolis, Minnesota. The violence comes on the back of Trump’s chaotic, slow and ineffectual response to Covid-19, which has resulted in the world’s highest number of deaths, and economic chaos that has left 39-million unemployed. Trump’s response to his own shortcomings has been to cast blame – first, on the World Health Organisation (WHO), whose simple and effective antidote to Covid-19 to “test, trace, isolate, treat” he failed to heed, and, secondly, on China.

China, meanwhile, has gone back to work, opened up its economy, made an audacious play to absorb Hong Kong into its system and launched a diplomatic offensive across Africa. This ‘Covid-19 diplomacy’ marks a new phase in China-Africa relations. It is immediately designed to appease African trade partners that are angry at China’s failure to contain the virus outbreak to its Wuhan province and to cool popular anger following a wave of racist attacks on African nationals – mainly Nigerians and Kenyans – in China during its virus outbreak. So, in March, the Chinese billionaire and discreet member of China’s ruling Communist Party, Jack Ma, arranged for the delivery of millions of testing kits, millions of masks, and hundreds of thousands of personal protective equipment units to several African countries. There followed official government support, with Chinese medical teams deployed to Angola, Nigeria and Zimbabwe and the supply of some 30-million test kits per month, as well as 10 000 ventilators and 80-million masks.

As G20 nations – including China – scrambled into action to grant a debt standstill on May 1, the move raised Africa’s need of going beyond standstill to large-scale debt relief. To date, China has not been forthcoming in granting debt relief or agreeing to concessional terms on the debts – sometimes undeclared – that African countries owe to China. In Angola, for instance, debt to GDP is 115%, of which 25% is held by China. With the crashing oil price thanks to the Covid-19 demand shock, Angola is now unable to meet its debt commitments. This debt entrapment has raised fears across Africa that China will use debt to take control of key infrastructure assets such as ports and toll roads, besides others, on long leases, as happened in Sri Lanka in 2017, when government leased its Hambantota Port to China’s State-owned China Merchant Port Holdings for 99 years in a move that sent shock waves across Africa and the world.

However, a veteran Beijing watcher dismisses this fear. In a discussion over the Zambian government’s extreme nationalist hostility to miners Vedanta and Glencore, the issue of whether China was waiting in the wings to scoop up key Zambian Copperbelt assets cheaply as companies tire of this prolonged government bruising, she said this was unlikely and that China’s strategy in international relations has become more sophisticated and is focused on building global influence. China now seeks to use debt to garner influence and support at the very same multilateral bodies – the WHO and the World Trade Organisation (WTO) – that the US President has determined to destroy. There is nothing new in this – it is part of the raison d’etre behind the Commonwealth and West Africa’s 14-country CFA currency zone that binds user countries to France – but it is a shift for China.

So, as China holds firm over its debt forgiveness, multilateralism’s last stand is the International Monetary Fund (IMF) and the World Bank – themselves part of the Bretton Woods system that the US set up in July 1944 to rebuild the global economy after World War II! These institutions have mobilised funds of $57-billion of an estimated need of $144-billion for front-line health services, to support the poor, and to keep Africa’s economies afloat. The IMF responded to requests for support with uncharacteristic lightning speed. In less than a month, the IMF approved $3.4-billion in budget support to Nigeria and emergency funding for Egypt, and provided catastrophe relief funds to 23 of Africa’s and the world’s poorest countries.

As economies re-emerge, it will be up to Africa’s existing institutions to ensure that its interests are at the forefront of the new world order. Much will rest on the African Union (AU) special envoys team that AU chair President Cyril Ramaphosa has drawn from Africa’s great and good to solicit and channel G20 and multilateral economic support: Ngozi Okonjo-Iweala, Nigeria’s formidable former Finance Minister; Donald Kaberuka, former head of the African Development Bank; Tidjane Thiam, former CEO of Prudential and Credit Suisse; and South Africa’s former Finance Minister, Trevor Manuel. What happens next will determine whether that world is a bipolar one or a multipolar one in which Africa – as a more developed and united continent than ever before – has an opportunity to shape in its interests.