The debate still rages on about the Chinese investing in Africa even as it remains a key partner
In Machakos, China has planned a Shs65 billion mega city styled as a Chinese-controlled economic zone to compete with Dubai to provide over 200,000 jobs. Going by their practice, of bringing along even the sweepers, Kenyan have a good reason to wonder whether Athi River will not become another Chinese colony and what the future will eventually be like. Many are already asking: How will it sit in relation to other proposed cities—Machakos City and Konza City? This analysis gives you the world view of Chinese investing in Africa.
China is today Africa’s third largest trading partner and second-largest export destination. And while some argue that it is using a neocolonial approach, others see it as an alternative to several Western condition overloaded aid. But the question is still in the air: Is China empowering or exploiting without concern, opportunities in Africa?
In the years 2002 to 2007, China offered over $33 billion of government-sponsored aid – over half for infrastructure projects – to Africa and $107 billion-a-year bilateral trade, quadrupled between 2000 and 2008.
The three main areas of trade are: primary resources from Africa to China, cheap manufactured goods and foreign Domestic Investments ( FDI) from China to Africa. In FDIs, China has ventured into new investment opportunities such as land acquisition and outsourcing of farm production. By 2009 almost one million Chinese farmers were working in Africa.
Led by its two largest economies, South Africa and Nigeria, Africa is probably one of the last major regions on earth that remain unexplored, as shown in The Plundered Planet by Paul Collier. It is supposed that what is actually under the soil in the average square kilometer of Africa is at least as valuable as what is known to be still available in the OECD countries.
Clearly, there will be a big wave of resource discoveries and Africa and the continent’s commodity exports will be five times their present level, ending up in a phase of rapid growth as you can see in the graph.
The graph shows that since 2004 economic growth across Africa has increased by an average of 6% annually, while poverty has substantially decreased. This is contrasted with the fact that Asian economies are in constant need for commodities, not only for new channels of oil and mineral resources, but also to mitigate their food-security concerns, and gain a strategic position in the continent.
Moreover, Africa will be soon among the last remaining low-wage regions. The effect of this will be to more good production activities to the continent where the returns on investments will remain higher than anywhere.
Three main reasons have let China succeed in Africa. Firstly, its credibility, gained since it shares with the latter a common experience as a developing country. Africans see in China a people who have overcome oppression to become one of the richest countries within a few decades.
Second China’s business-like approach to development and focus on infrastructure projects means hope for the Africans.
Thirdly, Chinese aid is generally focus on development project, aimed at satisfy immediate needs, rather than long-term investments typically taken into more consideration by Western countries.
The fourth reason is China’s the broad-based interests: China is involved in almost every sector, with engagement growing not only in sectors and geographies but also in a broader strategic commitment.
The flip-side of Chinese investment in African is its apparent over concern with its own needs. In many African countries, China is seen as supporter of dictatorial and oppressive governments and corruption and illegal trade. An example is Libya where it continued to support the regime of Muamar Khadafi even when it was obvious that the regime had lost touch with the ordinary Libyan. In Uganda, Rwanda and Ethiopia the Chinese have invested heavily although these are “hesitant democracies.”
Secondly, Chinese often rely on their own labor, hiring Chinese workers rather than local ones, and using Chinese materials, thus making their projects of little benefit to African communities and industries. Africans must take more responsibility for their own development.