The 2015 launch of China’s Digital Silk Road — and subsequent concerns around the cybersecurity risks associated with Chinese vendors’ network gear — have prompted US and European policymakers to turn their eyes to China’s footprint in Africa’s digital infrastructure. The hack into the African Union (AU)’s headquarters from 2012 to 2017 is, to this day, one of the few ‘smoking guns’ indicating a correlation between Huawei’s lax cybersecurity practices and the Chinese government’s intelligence collection. Meanwhile, Chinese exports of surveillance tools to African governments have fueled concerns about the spread of digital repression.
Although the west has only now begun to pay attention, China’s Information and Communication Technology (ICT) engagement with Africa is no new venture. Since the late 1990s, China has financed and built much of Africa’s digital infrastructure. Having conquered markets thanks to low price points, Chinese firms – some backed by the state – are now increasingly well positioned to shape the digital ecosystems through which Africans communicate, do business, make payments, and access public services.
With a rapidly growing population and sheer demand for broadband coverage, Africa is set to be one of the most important digital stories of this century. It is therefore crucial to understand China’s role in the digitalization of the continent, how it is changing and its implications, potentially beyond China-Africa relations.
Building network infrastructure
China’s digital footprint in Africa started with the “infrastructure layer” – the fiber optic cables and mobile broadband systems that provide the Internet to people. A recent study on Chinese ICT aid[1] to Africa identified projects across 44 countries between 2000 and 2014. Half of them were in Nigeria, Ethiopia, and Zimbabwe. In 2015 and 2017, Chinese ICT infrastructure financing (not limited to development assistance) surpassed the combined funds from multilateral agencies, G7 nations, and African governments. Typically, Chinese policy banks fund the projects through credit to recipient governments or carriers and, afterwards, Chinese firms implement them.[2] These investments have often brought connectivity where there were few to no alternatives. One estimate suggests 70 percent of the continent's 4G networks were built by Huawei.
Through these projects, Chinese firms have gained experience and built relationships, entrenching themselves deeper in Africa’s information societies. Take Kenya, where Huawei is working with Safaricom for the carrier’s 5G network rollout, training ICT talent and civil servants, and operating public safety platforms – which the company brands “Safe Cities” – for police surveillance in Nairobi and Mombasa. The company also advised the Kenyan government on its national ICT plan. Given Huawei’s close ties with the Chinese Communist Party (CCP) and provisions in Chinese law that make it – and other tech firms – susceptible to state influence, the line between commercial interests and the government’s geopolitical objectives is difficult to draw.
The Covid-19 effect
The Covid-19 pandemic has given new impetus to Chinese tech giants’ penetration into African digital economies. DJI’s commercial drones were deployed to enforce curfews, spray disinfectants, and make public announcements in Morocco, Kenya, and Rwanda, among others. Genomics giant BGI sold or donated rapid testing kits, gene-sequencing equipment and laboratories. Huawei supplied thermal scanners for access control, diagnostic systems powered by cloud computing and artificial intelligence (AI), and communication platforms for hospitals.[3]
Chinese companies already played a role in the digitization of public services and other government functions prior to the outbreak. For example, the AU launched a Smart Health Monitoring Room with ZTE in 2017. As the tech sector developed products and services to fight the virus in China, companies saw an opportunity to export or donate their solutions to foreign governments.
The pandemic could give Chinese companies a foothold in Africa’s e-health market, which may further boost their role in the digitalization of public services through solutions often branded as smart city projects. According to data compiled by the Center for Strategic and International Studies (CSIS), Huawei alone already has 23 deals for e-government and cloud services in Africa. Senegal is the latest country to migrate its government data to a national data center which will be built by Huawei with a Chinese government loan.
Exporting smart cities to Africa has been among the Chinese government’s ambitions for a few years. During a special Coronavirus-focused China-Africa summit in June 2020, President Xi Jinping once again mentioned smart cities, along with clean energy, 5G, and the digital economy as an area where cooperation should be deepened.
Alibaba’s eWTP and the future of Africa’s digital trade
The pandemic has also given a boost to cross-border e-commerce, including between Africa and China. A centerpiece of such interconnection is Alibaba's electronic World Trade Platform (eWTP), a one-stop solution for small and medium-sized enterprises (SMEs) encompassing e-commerce, mobile payments, logistics, cloud computing, and digital entrepreneurship training. With regional hubs in Ethiopia and Rwanda, the eWTP was set up by Alibaba’s founder Jack Ma to break barriers within digital trade and foster financial inclusion. As economist Lauren Johnston explains, Alibaba did not just use the eWTP to deliver its medical supply donations during the outbreak: the focus was on promoting Africa’s exports to China.
Chinese companies are therefore positioning themselves to play a central role in Africa’s digital trade, which ties nicely with the government’s vision of building a China-centric global infrastructure and supply chain network. Such a goal has underpinned the Belt and Road Initiative (BRI) from the outset, but Beijing is now doubling down on it to boost China’s economic resilience amid growing geopolitical tensions with the U.S. and other trading partners. In fact, the digital economy and “industrial and supply chain connectivity” both feature in the BRI cooperation plan China signed with the AU Commission last December.
Headsets and apps: mediating online interactions
It is not just in accessing public services and trading goods that Africans increasingly rely on Chinese digital technology: hardware and software from China are mediating online communications and transactions. The African smartphone market is dominated by Chinese players, which have been very successful at tailoring their products to consumers’ needs. For instance, since selling its first smartphone in Nigeria in 2008, Shenzhen-based Transsion has risen to control around 40 percent of market share as of 2019.
Africa’s young population and rapidly growing mobile phone penetration rate also make it an attractive market for Chinese social media apps. In Sub-Saharan Africa, the Global System for Mobile Communications Association estimated that over half of the population will be subscribed to a mobile service by 2025, up from 45 per cent in 2019. Bytedance’s video-streaming app TikTok is focusing its market entry on Kenya, Nigeria, and South Africa, but it is not the only or even leading player: Vskit, an app from the joint venture between Transsion and NetEase (another Chinese company), counts over 10 million users.
For now, most African mobile subscribers use Google’s Android operating system (OS), but geopolitical tensions and the resulting digital decoupling between the United States and China could change this. As Henry Tugendhat at SAIS-CARI points out, if US or Chinese government actions forced Chinese smartphone makers to migrate to Huawei’s self-made OS, Harmony, African consumers might switch to Chinese social media platforms and apps.
In Africa’s fast-growing fintech sector, Chinese companies are increasingly present through local partnerships that allow them to bring their digital payment services. As of 2017, four percent of the world’s unbanked adults lived in Nigeria alone. Lack of access to traditional financial services has led to the widespread adoption of mobile money in Sub-Saharan Africa. Given their edge in mobile payments, Chinese firms are uniquely positioned to tap into this market. Alipay, for example, partnered with Vodacom last year to create a super-app in South Africa. Chinese venture capital funds have meanwhile poured money into African fintech startups, including the Chinese-owned Nigerian fintech platform OPay.
In the future, China might seek to influence the standards of African digital currencies. Since one of the goals behind the People’s Bank of China’s digital yuan (DCEP) is to set global fintech and digital currency standards, the potential integration of China’s sovereign digital currency into BRI payments cannot be ruled out. Beijing is already enlisting tech firms like Alibaba’s Ant Group (the company behind Alipay) and Huawei to integrate the digital yuan.
Implications
Chinese tech firms have gone from bringing affordable connectivity to gradually shaping digital ecosystems across Africa. While this has the potential to spur growth and development,
Chinese companies’ competitiveness may also give Beijing more economic and political leverage. Given the opaque boundaries between corporate behavior and state interests, which China’s ongoing crackdown on Big Tech and promulgation of the Data Security Law are further blurring, the Chinese government could gain influence over the architectures, rules and norms underpinning Africa’s digital transformation. From smart city systems to e-payment platforms, convenient services provided by Chinese firms are also likely to give the Party-State access to vast amounts of data.
For African governments, economic opportunities will have to be weighed against the risk of new dependencies which may affect their countries’ sovereignty, security, civil liberties, and emerging technological capabilities. To European firms and governments, China’s digital footprint in Africa presents a two-level challenge: a competition challenge and a foreign policy challenge. If they are serious about competing with China on the continent, European actors must offer alternatives. The Chinese government’s emphasis on closing the digital divide in the Global South may sound rhetorical, but it is certainly matched by actions.
[1] It is important to caveat that the authors classify projects funded by Huawei and ZTE as “aid,” although these are commercial actors and their financing, therefore, falls outside the scope of overseas development finance. The authors posit that state agencies, state-owned enterprises (SOEs), and large private firms with strong ties to the state together should be seen as constituting Chinese state capital.
[2] Chinese government financing also comes through a range of direct and indirect subsidies that facilitate and support ICT firms’ expansion in foreign markets. In Africa, these loans to Huawei, combined with loans to its customers, totaled USD 4.661 billion between 1997 and 2019, according to the Center for American Progress. See Center for American Progress (2020). “There Is a Solution to the Huawei Challenge.”
[3] These examples are taken from the author’s dataset of Chinese tech firms’ provision of solutions for fighting Covid-19 to African public authorities, which was last updated in July 2020. For a recent mapping of Chinese companies’ Covid-19 donations, including relevant data points on Africa, see Australian Strategic Policy Institute (2021). “Mapping China’s Tech Giants.” https://chinatechmap.aspi.org.au/#/homepage/.
