Tuesday, February 16, 2010

Chinafrica (26) Watching for PRC Influence in Africa


Debate: Africa and China: Is their relationship good or bad for the continent?
Tuesday, 16 February 2010 10:47 katende Bob Roberts

China is increasingly investing in Uganda. Recently, its oil company, Cnooc, agreed to buy a stake in Uganda’s oil fields. Today, distinguished academicians discuss whether the continued involvement of China in Africa is good or bad for the continent. Calestous Juma, Professor of the Practice of International Development, The Belfer Center, Harvard, argues that "China's rising demand for Africa's natural resources helped to re-establish Africa as a source of valuable commodities for the global market. But it also helped to focus Africa's political attention on why the continent still remains poor" while Prof. George Ayittey, a distinguished Economist, American University argues that: "China's increased engagement with Africa has impeded the continent's halting steps towards democratic accountability and better governance. African countries receiving Chinese aid have little incentive to improve governance."

Calestous Juma says: China's involvement in Africa has become a highly emotive debate in international diplomacy. The intensity has been fuelled by the sheer scale of its operation. In November 2009 China pledged to offer African countries $10 billion in low-interest loans over the next three years, set up a $1 billion loan facility for small and medium-size firms, and to forgive debt on some interest-free loans. The pledge is nearly 10% of the total trade between the two blocs.

The suddenness with which the details have come to the fore and general lack of transparency in the relationships have helped to fuel suspicion over its role in Africa. The concerned have been compounded by its close association with African regimes that have been singled out for human rights violation.

There is no doubt that China's involvement in Africa is driven by its long-term economic objectives, especially in regard to demand for natural resources and export opportunities.

But despite these concerns, China's involvement in Africa is welcome for a variety of psychological and pragmatic reasons.

The end of the cold war marked a dramatic reduction of interest in Europe and Africa. This shift was also associated with declines in demand for Africa's basic exports. For example, Africa's share in the European Union's foreign trade has fallen 3.2% to about 1.3% between 1989 and 2009. The bulk of the decline occurred in historic partners of Africa like the UK and France. This shift dealt a major blow to Africa's self-esteem.

China's rising demand for Africa's natural resources helped to re-establish Africa as a source of valuable commodities for the global market. But it also helped to focus Africa's political attention on why, despite its vast resources, the continent still remains poor. This has recently been captured by Malawi's president, Bingu wa Mutharika, who recently told the African Union, "Africa is not a poor continent; but the people of Africa are poor."

Growing trade relations between the two regions have forced Africa to start reflecting more deeply about its own economic future. The growing presence of China in Africa has played a key role in inspiring a re-examination of Africa's economic prospects.

Which brings me to the next important benefit: China's is an important role model for Africa. There is a lot Africa can learn from the West or how to solve many of its economic challenges. But these lessons are buried in the archives of economic history.

China's phenomenal economic growth serves as a source of inspiration for much of Africa. It gives the countries renewed hope that they too can start to grow out of poverty and become important players on the global scene.

There are a few key lessons that China is offering Africa today. First, China's large domestic market has served as a major stimulus for economic growth and innovation. It has played a key role in helping to attract foreign direct investment. African countries are currently focused on promoting regional integration to expand their internal markets.

Second, China's economic rapid economic growth also offers specific lessons that Africa is learning from. For example, China has in recent decades made massive investments in infrastructure as a foundation for economic renewal. Africa is benefiting from this in two ways. First, it is learning from China about the importance of infrastructure. Second, China is providing infrastructure support to Africa.

It is instructive that most Western countries have for decades shied away from support infrastructure and higher technical training in Africa, two areas that are vital for economic growth. China's involvement in Africa has helped to restore these two important factors in economic discourse.

Third, China's economic transformation has been associated with increased investment in science, technology, engineering and math. African leaders, operating mostly under the auspices of the African Union, are starting to focus on higher technical education practical measures. African presidents, for example, have consistently chosen innovation-oriented topics as themes for their annual summits.

China has not only increased its admission of African students in its universities, but it is also focused on strengthening the continent's scientific infrastructure. More recently, China launched a postdoctoral programme for Africans. The candidates will understudy China's science parks, but each will also return home with scientific equipment worth $22,000. No other country in the world has offered such support to African scientists and engineers.

In February 2010, China launched the China-Africa Economic and Technology Cooperation Committee of the China Economic and Social Council aimed at helping Africa to learn from China's development experiences. Speaking at the launch ceremony in Beijing, Ghana's ambassador to China, Helen Mamle Kofi, said the country's economics provide Africa with an "example to follow in terms of economic, financial, social, technological and cultural integration".

Finally, China is also offering Africa additional ways to approach the linkages between economic growth and governance. Over the last two decades Africa has experimented with multi-party democracy. The assumption was that Western-style democracy was a prerequisite for Africa's economic growth. But the evidence is inconclusive. Democracy fosters growth just as much as growth enables growth. But none of it happens automatically; it takes concerted collective effort.

There are also negative lessons that Africa should be aware of as it learns from China. China's rapid economic growth has come with immeasurable environmental costs. Africa would be better served to adopt low-carbon growth strategies for its economic transformation. This may also be an area of common interest between Africa, China and the rest of the industrialised. In fact, China's own investments in clean technologies provide additional lessons for Africa on the feasibility of adopting low-carbon economic strategies.

The involvement of China in Africa should therefore provide new opportunities for the Western industrialised countries to engage with Africa on new terms that recognise Africa's aspirations. Indeed, countries such as the UK are responding to the challenge by seeking to build new relations with African countries, especially through regional integration bodies. Such smart responses are likely to benefit all the parties involved.

These are issues that go beyond access to natural resources and markets; they are the centre of global security and stability. China's involvement in Africa would add more to global security if it can set the stage for new global relations guided by greater international understanding rather than crass competition.

To echo the words of Denis Tull at the German Institute for International Security Affairs in Berlin: "Only ill-informed observers would see Africa's embrace of China as a zero sum game."

George Ayitteh says: To feed the voracious appetite of its economic machine galloping at a dizzying 9% clip, China has been trolling for resources in Africa. It has spent billions of dollars securing drilling rights in Angola, Nigeria, Sudan and Angola; has exploration or extraction deals with Chad, Gabon, Mauritania, Kenya, the Democratic Republic of Congo, Equatorial Guinea and Ethiopia; and has invested in the copper industry in Zambia and Congo as well as buying timber in Gabon, Cameroon, Mozambique, Equatorial Guinea and Liberia. Across Africa, Chinese companies are muscling out Western and other foreign companies, winning contracts to pave highways, build hydroelectric dams, upgrade ports, lay railway tracks and build pipelines.

China's engagement with Africa should be a boon. Its overall trade with Africa rose from $10.6 billion in 2000 to $75.5 billion in 2008, propelling Africa's growth rate to 5.8% in 2008, its best performance since 1974. China is now Africa's second-largest trading partner after the United States, importing a third of its crude oil from Africa. Further, Africa needs the investment, in particular, to rebuild its decrepit infrastructure. A November 2009 World Bank Report states: "The poor state of infrastructure in Sub-Saharan Africa-its electricity, water, roads and information and communications technology (ICT)-cuts national economic growth by two percentage points every year and reduces productivity by as much as 40 percent." To close the infrastructure gap, an annual spending of $93 billion would be required. Thus, Chinese investment in Africa's infrastructure should be most welcome. But China's engagement is increasingly being seen as odious, predatory and brutish. The initial enthusiasm that greeted Chinese investments in Africa has now cooled.

"There is mounting objection to China's deepening forays into Africa" said News Africa (March 2007). The former president of South Africa, Thabo Mbeki, warned against allowing China's push for raw materials to become a "new form of neo-colonialist adventure" with African raw materials exchanged for shoddy manufactured imports and little attention to developing an impoverished continent.

In the 1980s, human rights groups pushed Western companies to maintain certain ethical standards when doing business in Africa. An African American pastor, Leon H. Sullivan, developed the Sullivan principles for Western companies doing business in apartheid South Africa. Similar campaigns were mounted against Western oil companies in Sudan on account of the genocide in Darfur. In addition, the 1975 Foreign Corrupt Practices Act prohibits US companies from paying bribes to foreign government officials. By contrast, Chinese companies operate with no such moral scruples or ethical constraints in Africa.

China deals with just about any rogue and unsavoury regime in Africa. It supplies jet fighters, military vehicles and guns to Zimbabwe, Sudan, Ethiopia and other repressive governments. At the UN, China has used its veto power to block sanctions against tyrannical regimes in Sudan and Zimbabwe.

The nature of China's contracts is most objectionable. They are secured through outright bribery by building presidential palaces (Namibia, Sudan and Zimbabwe) and sports stadiums (Democratic Republic of Congo and Guinea). Namibian prosecutors are investigating allegations of bribery and kickbacks on government contracts with China to supply Namibia with scanners at security checkpoints. Nuctech, the Beijing-based manufacturer and headed until 2008 by the son of Hu Jintao, China's president, is accused of paying $4.2 million in kickbacks to a Namibian front company (New York Times, July 31st 2009, p. A4). Another investigation involves a Chinese contract to build a key railroad link.

Most alarming, the deals are opaque and on barter terms dictated by China. For example, in exchange for oil exploration slots, China will rebuild Nigeria's dilapidated railway system. But China will supply nearly all the equipment and technical personnel at prices determined by itself. There is no protection against overcharging or cost overruns. As with other projects in Africa, China will supply most of the workers. The potential for exploitation and plunder of Africa's resources is enormous in such contracts, leading irate African commentators to denounce what they see as "chopsticks mercantilism". With chopsticks dexterity, China can pick off mineral dumplings with relish in Africa, all to its advantage.

Further, China's engagement has devastated local industries in Lesotho, Nigeria and Zambia. In Nigeria, the influx of Chinese products has destroyed Kano's manufacturing sector. In 1982, 500 factories churned out textile products in Kano, but fewer than 100 remain operational today, most at far less than full capacity. In South Africa, the textile union says some 100,000 jobs have been lost as Chinese synthetic fabrics replace cotton prints in street markets across Africa.

Angry Africans are sounding off. In 2007, South Africa's unions threatened to boycott anyone selling Chinese products. In April 2007, nine Chinese workers were killed in an attack by armed men on an oil field in eastern Ethiopia. In Nigeria, the Movement for the Emancipation of the Niger Delta (MEND) has vowed to expel all Chinese workers in the area.

Anti-Chinese sentiments even became a campaign issue in Zambia's September 2006 presidential election because of workplace accidents, poor working conditions and below-minimum wage pay at Chinese-run copper mines. More than 50 Zambian workers died in a 2005 mine explosion. The opposition leader, Michael Sata, called the Chinese profiteers, not investors, in a country where unemployment is about 50% and more than 73% of people live in poverty. "Chinese investment has not added any value to the people of Zambia," he charged (Washington Post, 25 September 25th 2006, p. A16).

More troubling, China's increased engagement with Africa has impeded the continent's halting steps towards democratic accountability and better governance. The West has made its aid conditional on progress on these fronts. But since China attaches no such conditions, African countries receiving Chinese aid have little incentive to improve governance. Indeed in 2003, when the IMF suspended $2 billion in aid to Angola, citing rampant corruption, China came to the rescue with a $2 billion oil deal.

The claim that China's intentions in Africa are noble is fatuous. Its real intentions are well known: to elbow out all foreign companies and gain access to Africa's resources at cheap prices; canvas for African votes at the UN in its quest for global hegemony; isolate Taiwan; and seek new markets for Chinese manufactures as European markets become saturated with Chinese goods. Less well known is its quest for African land to dump its surplus population. As a condition for Chinese aid, African states must accept large numbers of Chinese experts and workers as part of their investment packages. Chinese communes are springing up across Africa. In Namibia, the number of Chinese expatriates has reached 40,000, with 100,000 in Zambia and 120,000 in Nigeria. China even has a secret plan, called the ChongqingExperiment, to resettle 12m of its farmers in Africa.

As Rene N'Guetta Kouassi, the head of the African Union's economic affairs department, warned: "Africa must not jump blindly from one type of neo-colonialism into Chinese-style neo-colonialism" (AFP, September 30th 2009).

You can check more on the debate about Africa-China relations. http://www.economist.com/debate/days/view/465


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