It’s a big year for African elections, with 19 African countries holding major elections in 2024 alone. Eight elections have already occurred, with some more unpredictable than others. If you found yourself in South Africa on election day this year, you’d witness a nation teeming with hope for change, albeit unsure where it might originate. Meanwhile, in Rwanda, the president of 30 years experienced immense support from his people with a landslide win. With varying political situations come varying economic influences. As one of the largest trade partners for many of these African countries, the Chinese are deeply invested in the outcomes of African politics as a result of their economic engagement in Africa.
Economic Landscapes
South Africa's economy has been on a tumultuous path in recent years. After recording the worst year of electrical blackouts in 2023, with over 6,700 hours of power outages, the country narrowly avoided a technical recession. Real GDP growth was a sluggish 0.6% in 2023, driven by investments in self-generation and rooftop solar power as businesses and households sought to mitigate the effects of energy shortages.
South Africa’s economic challenges extend beyond power outages. High operational costs, disrupted economic activities, and sluggish global demand have further strained the economy. Rail and port infrastructure inefficiencies, exacerbated by high borrowing costs and policy uncertainty, have also hindered investment and growth.
Rwanda, however, while facing similar problems like high electricity costs and interest rates, experienced significantly more growth. Having just survived a Covid-19 recession, the country has made a comeback in the last couple of years with GDP growing 8.2% in 2022.
Government Initiatives and Structural Issues
The South African government has launched numerous initiatives to address unemployment and economic stagnation. Employment Minister Thulas Nxesi attributes chronic unemployment to historically structural issues linked to education and skills development. The apartheid era left deep economic scars, embedding wealth disparities and inequalities within education and skills training.
Efforts to bridge the skills gap have led the government to run job fairs and training programs. However, there is a consensus that aligning educational outcomes with labor market needs remains a significant need. According to a 2019 World Bank report, insufficient skills are a major constraint on South Africa's economic transition. Some experts say many graduates lack work readiness, hampering their integration into the workforce. Many graduates, however, claim that they’ve done their job, but the government hasn’t delivered on their promises.
Political Context and Future Outlook
This year, South Africa’s African National Congress (ANC) faced its toughest election since it came to power in the first democratic elections in 1994. ANC's share of the vote fell below 50% for the first time, a loss which highlights the public's growing disillusionment with the party's handling of the economy.
This loss forced ANC to form a coalition with other parties, including the Democratic Alliance (DA), once ANC’s biggest political opponent. Going forward, it is hard to tell how the coalition will work out with so many differing ideologies, but these parties must find a way to collaborate and govern their country.
Rwanda’s political scene is much simpler compared to South Africa. Paul Kagame, Rwanda’s president of 24 years, was easily reelected, which may be attributed to critics’ claims that Kagame barred competitors from entering the race. Kagame’s supporters, however, retain hope that he will continue to bring the economic growth that he has since he became president.
Enter the Dragon: China's Role in Africa
Over the past few years, China's presence in South Africa has grown significantly. From infrastructure investments to trade partnerships, China has become a key player in the South African economy. In 2018, during the BRICS summit in Johannesburg, China pledged $14.7 billion in investments. By 2021, trade between the two nations had reached an all-time high, with China becoming South Africa's largest trading partner.
China is also Rwanda’s largest trading partner. China provides $170 million in grants to Rwanda and is working on nearly 40 projects. China also regularly invites Rwandans to China to learn from experts about advanced agricultural technology. This year marks the 53rd anniversary of close Rwanda-China relations.
On the one hand, Chinese investments have been a boon for both Rwanda and South Africa’s economy. Projects like the Mombasa-Nairobi Standard Gauge Railway and the Modderfontein New City have created jobs, boosted local businesses, and improved connectivity. But on the flip side, critics argue that China’s involvement is a double-edged sword. Yes, there are jobs, but many are filled by Chinese nationals. Yes, there's investment, but it's often accompanied by hefty loans that could plunge these countries into a debt trap. Environmental degradation and labor rights violations further cast a shadow over these developments.
Election Fever: What's at Stake?
This year’s South African election outcome could significantly influence the future of its relationship with China. With the new coalition of 11 different parties, perspectives are bound to differ. Let’s break it down into two viewpoints: the rosy and the thorny.
The ANC secured another term, meaning the Sino-South African honeymoon is likely to continue. The ANC has historically been pro-China, welcoming investments with open arms. In this scenario, expect more grandiose projects, increased trade, and deeper diplomatic ties. South Africa could benefit from more infrastructure improvements, technology transfers, and even greater influence within the BRICS consortium.
Conversely, parties like the DA could shift dynamics dramatically. The DA has been vocal about its concerns regarding Chinese influence, advocating for more stringent regulations and better labor practices. This could lead to a cooling of relations, renegotiation of trade agreements, and even a rollback of certain projects.
Meanwhile, Rwanda’s election outcome will likely strengthen its relationship with China. President Kagame has made it clear in the past that he welcomes further developments with China, defending Rwanda’s partnership with China from the pressures of the Biden Administration. Furthermore, in March of this year, the governments of both Rwanda and China pledged to strengthen bilateral cooperation. With President Xi Jinping publicly congratulating President Kagame on his win, it is safe to say that China-Rwanda relations will remain as strong as ever.
The Freakonomics of It All
So, what does this mean for the average South African or Rwandan, or the curious global observer? From a Freakonomics perspective, it's a fascinating study of unintended consequences and complex incentives. China's investments are like a high-stakes poker game: they bring the potential for significant rewards but also carry substantial risks.
For some African countries, this year’s elections aren’t just about choosing a leader; it's about charting the course for the nation's economic future. Will they embrace China's deep pockets and rapid development, or will they seek a more cautious approach, prioritizing sovereignty and sustainable growth? Only time will tell, but one thing's for sure: the dance between China and Africa is far from over.
While governments have made strides in addressing structural issues, economies remain fraught with challenges. This year’s elections will not only determine the political landscape but also set the course for nations’ economic recovery. Voters’ top concerns—unemployment, load shedding, corruption, and crime—will be pivotal in shaping future administrations’ priorities. The road ahead is challenging, but with sustained reforms, effective governance, and a careful balancing act with international partners like China, Africa can navigate these turbulent times towards a more prosperous future.
