Djibouti & Zambia: Victims of Chinese grand strategy in Africa

Chinese inroads and grand strategy in Africa may not be as smooth as it seems on the paper when it comes to the future of Beijing’s partners in the continent.

France leading media house France24 recently conducted case studies of Chinese inroads in Djibouti as well as Zambia. “In many ways the relationship between Djibouti and China is a case study in how Beijing is using its global infrastructure investment strategy, the Belt and Road Initiative, to aggrandise its economic influence and strengthen its position as the top investor in Africa – a major geopolitical priority, with its booming economies and populations,” according to the France 24 report.
It is no secret that Djibouti has opened itself to international powers in order to profit from its strategic location at the Red Sea.

“The opening of China’s military base in Djibouti in 2017 – the People’s Liberation Army’s only permanent base outside of China – provided a clear sign of the strong ties between the two countries. The 400 Chinese soldiers there are located just seven kilometres from the US military base, which hosts around 4,000 American troops. Japan and Italy also have troops in Djibouti and France, the country's imperial ruler from 1883 to 1977, has its biggest military base in Africa there, with some 1,500 soldiers. Beijing already had its sights set on Djibouti in the early 2000s – investing in the construction of schools and stadiums and renovating roads and official buildings, including the foreign ministry. Chinese investment intensified after President Xi Jinping took power in 2012 and inaugurated the Belt and Road Initiative the following year,” according to the report.

The three Chinese flagship projects are the large multipurpose Doraleh port, the railway line between Djibouti and Ethiopia and the gas pipeline between the two countries. Djibouti also hosts the Chinese-built International Free Trade Zone, where businesses can operate without paying income tax, property tax, dividend taxes or VAT. China has spent $14 billion on investments and loans for Djibouti between 2012 and 2020, according to the France24 report.

The reason Beijing has invested so much in Djibouti is that it “gives China an African component in its large network of so-called ‘maritime Silk Roads’, in one of the region’s few politically stable countries”, a British expert on the Horn of Africa who asked to remain anonymous told France24.

“Djibouti is a bridgehead towards inland African countries, including much more economically promising nations like Ethiopia,” added Gérard Prunier, a historian at the Institut des Mondes Africains (Institute of African Worlds).

Djibouti saw obvious benefits in the influx of Chinese investment and loans. The country had a clear need for funding and “there was no one else to turn to”, Thierry Pairault, an expert on Sino-African relations at Paris’s CNRS think tank, told France24.

“Djiboutian elites believe Chinese finance, technology, and trade volume can propel their country to become the ‘Singapore of Africa’,” Zach Vertin, now a senior advisor to the US ambassador to the UN, wrote in a report for The Brookings Institution published in June 2020.

But debt is a major issue. “China holds more than 70 per cent of Djibouti’s debt, which some observers say threatens the African country’s sovereignty. They fear that Djibouti will suffer the same fate as Sri Lanka, which had to cede control of a port to Chinese companies because it could not repay the loans it had signed with China,” alleged the France24 report.

In another report, France24 claimed that Chinese presence is visible all over Africa but Zambia tops the list. China has one-third of Zambia’s national debt and some Zambians denounce the Chinese presence as neo-colonialism. Zambia’s GDP has halved to just 2 per cent over the past three years, according to France24. Several road projects contracted to Chinese firms were suspended in late 2019. Analysts have been cautioning against the Chinese loan which is susceptible to debt distress.