Folu

Folu holds a bachelors in managerial economics & strategy and African studies from Washington University in Saint Louis and an MBA from the University of Cape Town.

Selected articles by Folu

China in Africa series: Predator or partner? Part 1

By Folu. Posted in Trade on 24 Sep 2012.

At the turn of the millennium, The Economist publication declared Africa, on its cover page, as ‘the hopeless continent’ (The Economist 2000). Needless to say, the publication would loath to offer same damnation of the continent today. In the decade after the May 2000 publication, Africa has experienced a period of immense growth and development. This development, however, can be judged through two lenses. On one hand, there are those that view African development with what Maloka (2009) characterises as Afro-pessimism. The Afro-pessimist approach, Maloka argues, highlights the shortcomings, dysfunctions and corruption of Africa’s political and economic elites; it puts the onus of African underdevelopment on leaders’ inability or unwillingness to correct failed development policies, halt their country’s dependence on raw materials exports, and arrest the prevalence of poverty, health and geopolitical issues.

On the other hand, those more optimistic point to the fact that between 2000 and 2008, Africa’s GDP grew by 5.3%, compared to 4% globally (Are 2009). Over the same period, several African stock markets outperformed global indices. In addition, foreign direct investment into Africa increased from $10 billion to $88 billion—more than that of India ($42 billion) and

 

80% that of China ($108 billion) (The Economist 2010). Further, in 2009, as the Great Recession caused many economies to experience severe shrinkage, Africa’s aggregate economy actually expanded by 2%. What has triggered this growth amidst dire economic environments? To answer this question, one must consider the near parallel growth experienced by China. To be sure, a large part of this growth has been fuelled by China’s involvement on the continent. In fact, since 1999, there has been almost a direct correlation between Chinese and African growth rates, even if on a much smaller scale for Africa (Gardner 2009).

China’s new scramble for Africa and its vast resources have attracted unprecedented international attention, scrutiny and intense debate. Traditional powers such as the US and the UK grow increasingly sceptical of China’s approach to African development – one that takes a collaborative state-business approach to foreign policy. Although China views its approach as one of mutual respect, others often see it as one perpetuating corruption and bad governance (Davies 2008).

Clive Tasker, former CEO Africa of Standard Bank seems to view Sino-African relations as primarily the former. In a presentation to MBA students at the University of Cape Town in 2010, Mr. Tasker declared that China’s involvement with Africa has been 80% good and 20% bad. Although Mr. Tasker’s words may have been a bit fraught with hyperbole, his intentions were clear. Evidence (billions given in low interest loans for roads and airports, schools and hospitals built, scholarships awarded, etc.) shows that China’s involvement has generally been more beneficial than harmful for Africa’s development; indeed, Beijing has been more of a partner in development than a predator.

However, what about the negative effects – the 20%? Surely the afro-pessimists see aspects of China’s involvement in Africa that are not so beneficial. For example, Luiz (2006) cautions against Chinese involvement in Africa as potentially detrimental to good governance initiatives, espoused by Africa’s latest development programme, the New Partnership for African Development (NEPAD 2001). African leaders are also starting to question relations between the two sides. This unease was evident at the July 2012 China-Africa summit where China pledged $20 billion to African countries over the next three years. After thanking the Chinese government for their contributions, South African president Jacob Zuma continued by warning of “unsustainable trade relations based on the export of energy and raw materials to China and the import of cheap Chinese manufactured goods” (Chan 2012).

Still others point to the lack of improvement in the lives of ordinary Africans, the relatively high unemployment rates in many African countries, the high child mortality rates and low life expectancies as evidence that China’s involvement has not improved the situation in Africa. Although China is not directly responsible for the ills of Africa, could it be held complicit in its underdevelopment, as Shell Corporation was complicit in the deaths of Ken Saro-Wiwa and other oil activists in Nigeria?

This 4-part analysis will seek to answer that question and holistically look at relations between African governments and China and explore how they can be improved, if they need to be improved. This first part has provided an introduction to the topic; part 2 will provide a background on China’s strategy in Africa; part 3 will cover 4 countries as case studies of Sino-African relations; and part 4 will provide a conclusion and suggest possible strategies for moving the relationship forward in a mutually beneficial manner.

References

Are, L., Chabenne, S., Dupoux, P., Ivers, L., Michael, D. C., & Morieux, Y., 2009, ‘The African Challengers: Global competitors Emerge from the Overlooked Continent’, The Boston Consulting Group, Boston: BCG.

Chan, J., 2012, ‘Tensions at China-Africa Summit’, World Socialist Web Site, viewed 26 July 2012, from http://www.wsws.org/articles/2012/jul2012/chaf-j27.shtml.

Davies, M., 2008, ‘How China Delivers Development Assistance to Africa’, Centre for Chinese Studies, University of Stellenbosch.

Gardner, B., 2009, ‘China and the New Africa’, China International Business , 16-22.

Luiz, J. M. (Ed.), 2006b, Managing Business in Africa: Practical Management Theory for an Emerging Market, Oxford University Press, Cape Town.

Maloka, E., 2009, ‘Afro-Pessimism: Riding the Waves’, The Thinker , 9, pp. 50-52.

NEPAD., 2001, ‘The New Partnership for Africa’s Development’, Abuja: NEPAD Secretariat.

The Economist, 2000, ‘The Hopless Continent’, The Economist, 13 May, Retrieved 24 September 2012, from http://www.economist.com/printedition/2000-05-13.

The Economist, 2010, ‘Uncaging the lions: Business is transforming Africa for the better’, The Economist, 10 June, Retrieved 19 August 2010, from http://www.economist.com/node/16317978.

 

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