Africa Love for China Explained
January 25, 2019 (Ezega.com) - There’s an ongoing debate among economic experts and politicians regarding the merits of the Chinese dealings in Africa. For instance, late last year Malaysian Prime Minister Mahathir Mohamad expressed his fears against what he termed a new form of colonialism, which he regards as a rebuke to China’s increasing political and economic influence in Africa.
However, these claims have been refuted by different African leaders. While addressing dignitaries at the Forum on China-Africa Cooperation (FOCAC) in Beijing in September last year, South Africa’s head of state, Cyril Ramaphosa refuted such accusations. He said the fact that the forum was taking place “refutes the view that new colonialism is taking hold in Africa.”
At the same event, African Union (AU) chairperson, who’s also the president of Rwanda, Paul Kagame lauded the Chinese involvement in developing the continent. He reiterated the relationship between Africa and the Chinese is based on mutual respect, which benefits both parties. His sentiments are shared by many African leaders; including Ramaphosa.
But despite Africa embracing China as a key partner in its development agenda, there are misconceptions about it being a “predator” in Africa. Critics argue China is making an attempt to recolonize Africa in a bid to exploit its mineral-rich reserves but is this the case?
Regardless of the position you take, African countries’ engagements with China are rational. Many nations in this continent face two fundamental development challenges; lack of funding and infrastructure. Without the huge amounts of money China offers, they can’t build the much-needed infrastructure.
Three years ago, China vowed to give Africa $60 billion for its development projects. At the moment, it's only China that has offered to assist the 1.2 billion inhabitants of Africa with such amounts of money.
Common misconceptions about China's involvement in Africa:
- One of the common narratives is that there’s a room in Beijing where the elites and the state-owned entities sit and divide the projects to be launched in Africa. This is not the case. Critics, especially in the western nations think China is only involved with resource-rich countries, but that’s not the reality. China is investing in countries like Ethiopia, Kenya, and Uganda, which don’t have significant resources compared to countries like South Africa and Nigeria.
- The deals that make headlines involve governments, but there are other Chinese firms that invest in Africa mainly in the service industry, wholesale and retail businesses. Their life-changing activities go unreported by the media.
- Secondly, critics of China-Africa involvement think that China offers a significant amount of foreign direct investment, in addition to grants and aid compared to the western countries. But the reality is the amount of FDI that goes into Africa from China is about 5% of the total that it receives. This is a very small percentage.
The loan is, however, robust but the good thing is it’s concessional, meaning it’s tied to market-based interest rates, compared to loans from Europe. At the same time, president Kagame refutes the arguments about “debt trap” because there’s no way you’ll take a loan to remain in debt. You only work with what your country’s economy can accommodate.
- Another misconception is that Africans don’t work on Chinese projects. Most of the contracts signed stipulate the number of Africans the Chinese must employ. For instance, a significant number of Kenyans were hired to work on the Standard Gauge.
The Chinese are not colonizing Africa:
The narrative propagated by the west that China is colonizing Africa doesn’t hold waters. The truth lies in analyzing how the dynamics work.
For instance, China is good at scouting for infrastructure projects in Africa, then they arrange high-level meetings with government representatives from a chosen country to pitch their ideas. Once an MOU is signed, the Chinese will conduct a feasibility study.
A contract is signed, and the Chinese pitch it to their export-import bank called EXIM that gives them the loan needed to complete the project. Africa works with China because they are known to move quickly. They do the feasibility study within a reasonable time compared to the western and European firms, and that’s why you’ll hear Africans say Americans take long.
American firms have a disconnect with some of Africa’s infrastructure projects and the funding approaches used hence the long time needed to put together investment deals.
Africa understands the shortcomings of dealing with China:
African states are very much aware of the concerns that arise when engaging with the Chinese. The hefty debts, poor quality goods, and corrupt engagements are not news. We understand that not all Chinese investors consider sustainability and some of their dealings aren’t compatible with our national interests.
However, while we expect China to shoulder some responsibility, we must also acknowledge our weak regulatory policies. At the same time, some of the governments in the continent serve their own interests.
But Africans believe it is their own governments and not China that should reassess their policies to ensure the continent is guarded against exploitation by not only Chinese firms, but any other entity willing to deal with their country.
So, why the love for China?
Debt shouldn’t be an outcome of a loan. Rather, it depends on how the money is used. The significant issue here is whether African countries use such monies for productive capital investment. Having said that here’s why Africa finds China a better partner;
- China offers unconditional soft loans and access to capital. They have helped Africa avoid pressure from institutions like the World Bank and the IMF, who’re keen on structural adjustments that don’t serve the interest of Africa.
- China has helped African countries to meet the demands of their ever-increasing populations, especially infrastructure and services. Many people now enjoy quick delivery of services like health, transportation, and telecommunication, which is made possible by Chinese firms.
- China’s economic growth offers a model that African countries are keen to learn and implement. The World Bank reports that in a span of 40 years, China has lifted more than 800 million people out of poverty. Africa is keen to borrow from China's economic progress.
There’s no doubt China has helped develop Africa, via investment in human capital, infrastructure and finance. The continent will benefit if they can create a conducive climate that attracts international investors like China. More importantly, African states shouldn’t rely solely on foreign investment alone.
Even if you establish a trade partnership, it should be based on an approach that can help you reach your development, respect and prosperity goals. As it is at the moment, China is helping Africa realize these goals.
By Solomon O. for Ezega News