Watch the Chinese-African connection

May 16, 2007

Although Sub-saharan Africa remains by far the great tragedy of our times in terms of its levels of economic, political and social “development”, grounds for cautious optimism have emerged. A combination of high commodity prices, the return of peace in many war-torn countries, debt relief, and better macroeconomic management have led the Black Continent to live through a few positive years recently.

According to the World Bank, economic growth in Africa averaged 5.5 percent in 2005 and 5.3 percent in 2006. The IMF forecasts 6.3% economic growth in 2007.

The African Development Bank says the outlook for Africa remains positive  

“with 31 countries growing at a rate above that of population increase , half of them above 5% while nine others were growing above 7% . Post-conflict countries like Liberia, Central African Republic, DRC and Burundi, were slowly getting back on their feet.”

According to the WTO, in 2006,

Africa’s merchandise exports rose by 21%, again faster than imports, which are estimated to have increased by nearly 16%. The share of Africa in world merchandise exports reached its highest level since 1990. Although most of Africa’s export growth can be attributed to the rise in oil exports, it is a noticeable development that non-oil exporting African countries increased their exports by about 16%.

This is all good news, and hopefully the beginning of a real African renaissance. But of course, this is not enough, and there is a long, long way to go. The World Bank warns that with current trends

“poverty in Africa will only fall to 37 percent by 2015 [way below the 50% target set in 2000 by the UN]—the target date for fulfilling the eight Millennium Development Goals that include eradicating severe poverty and hunger and achieving universal primary education.”

I also opened my The Economist “Pocket World in Figures 2007” and was reminded in its list of the world’s 50 countries with the lowest life expectancy (p.81) that only 7 are not African…

Failure of the rich West to really help doing something about it is quite blatant. For a variety of reasons. The first failure is in providing money for the continent in the forms of investments, or aid (only 10% of the aid package promised at the G8 meeting in 2005 in Gleneagles has been delivered so far!). The Economic Partnership Agreements that are being negotiated with the EU to replace the Cotonou agreements are in dire straits, for many complex reasons, but one is that the EU (with the usual suspect France at the forefront) does not want to open agricultural markets further to Africa….

Despite all this, Africa’s isolation in the world economy is clearly giving signs of reversal. This is in great part due to the emergence of China. Ties between Africa and China have even intensified so much, that Shanghai is hosting this years’ African Develpoment Bank’s board meetings. China, with its spectacular growth levels and its 1.3 billion inhabitants is clearly after Africa’s natural resources and commodities. It is also much heedless as to what tends to stop the West (or justify many a hypocrisy): corruption, the environment, human rights, etc.

The FT reports:

“Trade [between China and Africa] has risen more than tenfold in a decade to $55bn. Chinese demand for energy and mineral resources to fuel its booming domestic economic has driven up commodity prices on world markets, contributing to the longest period of sustained growth in Africa since the 1970s.

Providing cheaper and often faster delivery on projects than foreign competitors, Chinese construction companies have proliferated across Africa. They have won a market share that exceeds 50 per cent, according to recent research by the Organisation for Economic Co-operation and Development.”

Further:

“The new drive comes mainly on the back of China’s quest for oil and other natural resources. In fragile, war-damaged countries such as Sudan and Angola, the Chinese have seized opportunities where western lenders or investors have been holding back. But the Chinese advance has other dimensions: markets as well as materials, platforms for export, and, in key regional countries such as Ethiopia, political influence.

It is as builders and financiers that the Chinese have made the biggest impact, mostly through state-owned or partially state-owned companies, in big projects for which they have the advantage of access to low-cost, long-term funding. On a much broader front than ever before, China has established itself as a leading force in African infrastructure, building roads, railways, power stations and bridges at costs reckoned by experts to be 25-30 per cent below those of western counterparts”

China’s move into the African continent is controversial. Anti-Chinese sentiment is on the rise in some African countries. Ruthless colonial practices, bad quality of construction, short-termism, etc are frequent accusations made to Chinese over in Africa. All the efforts from the World Bank to the OECD to untie economic aid, to reduce corruption, etc, all are blown away.

Beyond the dark side of the Chinese-African bargain, it is worth noting that one positive way in which China differs significantly from the West in its dealings with Africa today is that at least it really means business.

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