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South Korea eyes major new role in Africa

Publish date: 10 June 2024
Issue Number: 1080
Diary: IBA Legalbrief Africa
Category: Trade

South Korea will raise $14bn for Korean businesses that want to invest in Africa and in increased aid to the continent. China, Russia and the US are all keen to secure scarce minerals on the African continent. Legalbrief reports that it has offered an alternative to partnering with China, Russia or the US – and the delegates from 48 African nations who attended the inaugural Korea-Africa Summit in Seoul last week were very receptive. The Asian powerhouse leads in ‘advanced industries’, and Africa is ‘a globally significant region for critical mineral reserves’, according to a declaration from the summit. News24 reports that the summit communique called for ‘mutually beneficial cooperation and knowledge sharing’. South Korea has almost no investments on the continent, but the summit, under the theme ‘The Future We Make Together: Shared Growth, Sustainability, and Solidarity’, attracted numerous Cabinet Ministers and a splattering of presidents and kings. This included Kenyan President William Ruto, who last year said he was against African leaders being summoned to world capitals, but made the trip to Seoul. The summit agreed to establish a Korea-Africa Critical Minerals Dialogue – just as the US seeks to remodel its African Growth and Opportunity Act to include a critical minerals agreement. The US is looking to incentivise non-Chinese investments in both mining and processing in eligible African countries which have key reserves of the minerals the US and others currently have to source from China.

Full News24 report

Dr Akinwumi Adesina, President of the African Development Bank (AFDB), said that South Korea has contributed close to $793m to the banks' projects since 1982, but more should be done. ‘To show solidarity with Africa, for the 'future we make together', I wish to request that Korea solidifies this Korea-Africa Summit by agreeing to re-channel special drawing rights to the AFDB,’ he said. Among other demands from the AFDB is that South Korea should contribute to the 17th replenishment of the African Development Fund. According to an AFDB statement, Adesina also asked South Korea to support the Alliance for Green Infrastructure in Africa, developed by the bank, Africa50 and the AU to mobilise $10bn of private capital for green infrastructure in Africa. Seoul and Tanzania agreed on a $2.5bn concessional loan, with the funds to finance major improvements to Zanzibar's healthcare system. A $1bn agreement of a similar nature was made with Ethiopia to finance science and technology, urban development, infrastructure and health projects. Rwanda’s President Paul Kagame said Korea’s experience had shown that a country could be radically transformed in the course of a generation. Then pricking the conscience of the African leaders on why the continent has remained poor and at the bottom of the global poverty ladder, he asked: ‘Is there any reason Africa hasn’t become a high-income region?’ Mohamed Ould Ghazouani, the president of Mauritania and chairperson of the AU, described the summit as an opportunity for both sides to renew their commitment to shared growth and partnership based on mutual respect and trust. King Mswati III of eSwatini encouraged the Korean business community to invest in any part of the continent they like. ‘Choose a location to establish industries. Choose anywhere. We are no longer competing but collaborating,’ he said.

AFDB statement

Delegates forged a substantial number of agreements, signing 47 bilateral agreements and 23 memorandums of understanding in sectors such as manufacturing, mining, infrastructure, and energy. One of the most notable developments was the establishment of the ‘Korea-Africa Dialogue on Critical Minerals.’ This platform aims to ensure stable supplies of essential resources for energy transition technologies and to promote technological collaboration. Seoul has adopted a strategic approach that centres around backing Africa’s infrastructural and industrial advancements, to acquire access to crucial minerals like cobalt, nickel, graphite, and lithium, which hold great significance for the semiconductor and automotive industries. A Special Eurasia report notes that the summit also drew upon historical and rhetorical parallels, emphasising South Korea’s own development journey from poverty to economic prosperity as a model for African nations. The focal point of this narrative was on the shared experiences of colonialism and the interdependence on international aid, which underscored the potential for mutual progress and cooperation. Several African nations, such as the DRC and SA, have emerged as significant producers, attracting substantial foreign investment, particularly from China. In order to boost trade, different trade blocs have been created, such as the African Continental Free Trade Area, which aims to enhance mineral exports by minimising regional obstacles and promoting the growth of strong value chains.

Special Eurasia report

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