Does Malawi need China’s Belt & Road Initiative?

Tom Sangala June 30, 2017

546 4 minutes read

The Belt and Road Initiative (B&R), a development strategy proposed by Chinese President Xi Jinping, is billed to provide new alternatives of development finance and break the ‘donor cartel’ in Africa, among others, supporters of the project state.

It is said to be the most important feature of China’s foreign policy that aims to interconnect countries in Asia, Europe and Africa through an ambitious and long-term vision for infrastructure, economic and political cooperation.

But that is not a conclusion to be accepted without some deeper scrutiny, especially considering that no nation has the welfare of another more than it has for its own progress. Well, China agrees that the strategy should benefit both sides: itself and the rest of the world.

Studies indicate that at 50 percent, synchronisation of sub-Saharan Africa’s economy with China is higher than with any other region or country, and still increasing.

In fact, Africa is said to be the first destination for “going-out” for China and still one of the most important markets for the Asian nation.

So, with the China-Africa trade and economic cooperation, spanning several years ago and growing stronger, which direction will the B&R further take such ties? Do countries like Malawi, which may not directly benefit from the initiative really, need it?

Haggai Kanenga of the School of Development Studies at the University of Zambia views the initiative as one which will complement the African Union (AU) agenda 2063 aspiration which includes improving infrastructure development.

“Although I know that not all African countries will directly benefit from this initiative, I think Africa will do well to support it because of the spill-over effects that are expected to come with the project,” Kanenga states.

Several other development experts in Africa and elsewhere support the initiative as a development strategy that will improve the economic statuses of all nations and that “that should be the most important thing for humanity – that everyone is happy regardless of their geographical location”.

At the Belt and Road Forum which took place at the International Conference Centre in Yanqi Lake, North of Beijing, in May this year, Ethiopian Prime Minister Hailemariam Desalegn said the B&R falls perfectly in line with Africa’s vision to achieve industrialisation and sustainable development.

And at the Malawi Investment Forums that have been conducted before, the message from Minister of Industry, Trade and Tourism, Joseph Mwanamvekha, has been that the pursuit of sustainable industrialisation is Malawi’s biggest economic endeavour.

Every African country, including Malawi, will have its own ways of benefiting from the B&R because the moment it connects one or two African countries, the continent will be connected to the rest of the system, an associate fellow at the Chongyang Institute for Financial Studies, Renmin University of China, Cheng Cheng says.

But what does the initiative really bring to Africa and to Malawi, in particular?

“It will improve infrastructure in Africa and this will lower transaction cost, with global leading capacity. In this case, African countries will improve their development and this will also provide new alternatives of development finance,” Cheng says.

He adds: “The initiative will improve industrialisation for Africa and the continent’s countries will join the global value chain by adding value. Additionally, it will be easy to share development experiences, especially in poverty reduction.”

United Nations Secretary-General Antonio Guterres also looks at the B&R Initiative as a development strategy that will ensure effective access to markets and new opportunities.

He says “it is far-reaching geographically and in terms of ambition” and that participating countries and regions should ensure that its benefits reach beyond cities to urban areas, where the majority of the world’s population is.

A Ugandan journalist Ronald Kato quotes Xi as saying China is not seeking to make geo-political manoeuvres through the initiative, but to promote economic interdependence between countries to achieve prosperity and economic inclusiveness.

“China will also speed up momentum in the initiative by contributing $14.5 billion to the Silk Road fund and $18.8 billion to support cooperation on infrastructure, industry capacity and financing.

“Russian President Vladmir Putin said the initiative is an innovative approach to building a future based on inclusive growth and integration without interference in the affairs in other countries. He said the initiative falls in line with the values of the United Nations,” Kato writes in Uganda’s leading daily, New Vision.

With countries like Malawi, which are still in the infancy of industrialisation, the initiative, according to experts, provide an opportunity to tap knowledge from others and boost sectors like agriculture, which remains the country’s economy’s mainstay.

According to Cheng, the International Poverty Reduction Centre in China (IPRCC), the Agricultural Technology Demonstration Centres (ATDCs) and the Special Economic Zones (SEZs) can help reduce poverty in countries like Malawi through the B&R Initiative.

The SEZs are areas in which foreign and domestic companies can trade and invest without the same control and regulations from Beijing as other parts of China, according to Britannica.com.

The site says these areas are designed to encourage overseas investment in China and boost a country’s economic growth.

On the other hand, the ATDCs are considered as an alternative model to pursue sustainability of Chinese foreign aid to African countries in the new era.

During a lecture to 35 African journalists from 10 African countries including Malawi, who attended a training seminar from June 6 to 19 in Chinese capital, Beijing, Cheng stressed that industrialisation for Africa “should be ultimate”.

And since under the Framework of Forum on China-Africa Cooperation, the Asian country has constructed an ATD in Salima, and China having granted tariff-free treatment to 97 percent of Malawi’s exports to the country, the B&R could boost trader far much more than things are today.

“With our economy still relying on agriculture, tobacco in particular, Chinese tobacco companies continue being some of our major trade partners since they come every year to buy the leaf,” the Ministry of Agriculture, Irrigation and Water Development says.

Chief Director in the ministry, Bright Kumwembe, says China’s assistance in Malawi’s agriculture sector will improve the African country’s exports. And with the B&R, trade will even be more meaningful since value addition will be encouraged and trade tariffs will be minimised, resulting in maximum returns.

But, on the other hand, Cheng also admits that China will not push itself to the periphery of benefits as far as the B&R Initiative is concerned.

“What does the B&R bring to China? It brings structure reform and upgrade because we believe reform has to be continuous. It does not have to end. It will also diversify the supply of resources and energy, especially medal.

“The initiative will also bring about coordination of policies upon critical issues such as climate change and sustainable development. These are things that the whole world is concerned about,” Cheng says.

So, with Malawi, and Africa at large, still struggling to industrialise itself to impressive levels, an initiative which is broad enough and supports the African Union agenda for development seems attractively essential.

And with a global economy that seeks that the world should be easily connected, the B&R Initiative will perhaps help poor countries increase their development momentum and in the process break the ‘donor cartel’ which “will never develop any country”.