China and Africa: Neo-colonialism? Or an opportunity for a stronger Africa?

The turn of the century has seen Chinese interest in Africa peak and investment proliferate to scales unrivalled anywhere else. This however is not a coincidence but one which has coincided with the increasing need for materials and resources to sustain China’s strong economic growth. There have been many debates over the genuine intentions of China, the fairness of the partnership and most importantly whether this is creating opportunity for growth or dangerously, a dependency on china which will hinder long term growth.  I personally believe that the current dynamics of the relationship will not support long term growth due to the increasingly significant influence and control China has in African economies. However I do believe it is the best route for Africa currently and with a change in dynamics of the relationship, co -operation with china will provide a platform for robust, powerful Africa.

Before I get into the delicacies of the relationship between Africa and China, I would like to highlight how such an increasingly strong relationship has come about. The focus on trade and co-operation with China has come about from the frustration and disillusionment of Africa with the west. The refusal of the west to tailor their services to Africa by focusing so much on implementing the features of a liberal democracy has pushed Africa into the arms of China. Working with China provides a lot less bureaucracy and no strings attached support which has crippled Africa with the West. Furthermore, the support from China is a lot more tangible with investment in infrastructure a visible testament of the work of China compared to the billions of pounds of aid sent to Africa from the west that does not reach or impact civilians. Dambisa Moyo also points out in her ted talk ‘ Is china the new idol for emerging countries’ that China has shown that explosive economic growth and development can happen without extending expanded political rights to its citizens – something which it shares with Africa. This goes against the pillars of liberal democracy which the west push as the only path to development and has tried to instill on Africa. This is an interesting view which does hold weight as the facts are there. China is the second largest economy in the world with an average annual growth rate of 9.91% since 1979. However I hope Africans take caution with following china’s path due to the strong cultural differences in Africa, especially in terms of governance which is crucial to copying china’s growth.

To say China’s involvement in Africa is a form of Neo-colonialism can be seen as simplistic. Reports from IMF show there’s not really a pattern where you see more deals going into natural resource-rich countries.” According to their data, the top 20 African nations in which China is involved include not only commodity-rich nations such as Nigeria and South Africa, but commodity-poor nations like Ethiopia, Kenya and Uganda. From $7bn in 2008, China’s investment in Africa has sky rocketed to $26 billion in 2013, with much directed at initiatives to build infrastructure such as roads, railways and telecoms systems. To illustrate the depth of Chinese investment, China is funding the rehabilitation of more than 1,350 kilometers of existing railway lines and the construction of more than 1,600 kilometers of new railroad. To put this in perspective, the entire African railroad network amounts to around 50,000 kilometers. What these stats illustrate is that China is making a tangible difference. Unlike the west, China has bypassed all the bureaucracy and focus on theory and idealism in how growth should come about and has gone straight to the work. This is key because Africa knows how to grow. It would be naive and arguably patronizing to believe after decades of research on developmental economics that the brightest minds in Africa wouldn’t know how to generate growth in their nation. The issue with Africa is implementation. An arguably inefficient public sector in addition to corruption has meant money meant to be used for funding policies and construction has been siphoned off by officials and contracted firms, leaving the end product a world away from what was expected. This is where China brings tangible difference and benefit to Africa. By providing Africa with the basic structures and infrastructure capacity to support trade and economic activity, China provides Africa with the tools for growth and importantly Foreign investment.

If you were to ask the average African person the benefits of foreign aid they’ve seen from the west, they will struggle. However, the answer if I asked about China’s investment would be very different with the provision of Jobs and Capital from the various infrastructure Projects undertaken in Africa. This touches on another area where China’s involvement has been a positive. China’s involvement bypasses corruption. What I mean is that China doesn’t provide financial aid in abundance, but actual capital and expertise needed in the infrastructure projects, meaning that the possible areas where corruption can occur is evaded and the projects needed are completed. An indirect benefit of China’s FDI in Africa is the freeing up of Government revenue for other critical needs such as health care and education. China’s influence and support in Africa has not been limited to infrastructure. Crucially China is supporting Africa in the development of their manufacturing and financial sector. The aiding of Africa into added-value, highly skilled sectors is a crucial advantage for Africa as it allows us to diversify our economies and engage in sectors where the potential for growth is continuous and will thrust us into the world of developed countries. China is already helping to build special trade and economic cooperation zones in Africa. Seven such zones are in the works: two in Nigeria; the others in Egypt, Ethiopia, Mauritius, Zambia, and, possibly, Algeria. These economic zones can be a very promising strategy for industrialization and employment in Africa’s least developed countries. It provides a targeted focus on boosting manufactured exports which can help countries overcome the exchange-rate appreciation which they are heavily subject to and can seriously affect the value of exports revenue which many nations rely on as a tool for growth. Furthermore, it overcomes the weakening of local non-energy industries that often accompany natural-resource exports. The main problem with African nations blessed with rich resources is that they become to dependent on it and fail to diversify and grow the economy in other sectors which severely limits the country’s growth potential while also leaving them heavily sensitive to changes in commodity prices. China’s effort to diversify the economies of Africa arguably outstrips alone the supposed support from the west since independence.

For all of China’s positive and relatively fruitful involvement in Africa, there is a worry that the co-operation has gone to deep and China’s influence in Africa has too much power. China’s influence in Africa can be seen to be disturbingly reach into institutions critical to nations such as the Industrial & Commercial Bank of China (ICBC)’s acquisition of a 20% stake in South Africa’s Standard Bank for $5.5bn in 2007. Such a significant stake in a national bank of importance gives too much room for influence over decisions which could have significant effects on an economy. Furthermore, there is the issue that the investment in African countries does not filter into local communities and business – the foundation of an economy. Delving into employment figures, when Chinese firms do invest in Africa, they tend to bring the Chinese workforce – on average 20% of the workforce. This is a significant block on employment for locals, preventing the money from fully trickling into the local communities as some will inevitably be repatriated back to China. Even worse, the Jobs taken by Chinese workers are the high paid, high skilled jobs, which ensures locals can only receive low paid, poorly conditioned jobs, minimizing the knock-on benefits of investment in a country. While china has brought across their large amounts of investment, they have also brought along their poor worker rights and environmental standards. Many workers are forced to work 12+ hours with no breaks. When there is a union available to protect them, the power of Chinese investment means unions are useless and workers are exploited. In terms of environmental standards, there is the issue of pollution from the mining of resources and deforestation and over-fishing, the latter compounded by local corruption that threatens to log out supplies of hardwood in Mozambique and many other countries. A recent phenomenon which ominously growing is the influx of Chinese entrepreneurs into local communities which have crowded out local firms. The ability of Chinese entrepreneurs to provide products such as cloth, linen and staples at lower prices than locals has led to the loss of livelihood of many locals and an increase in unemployment which was unforeseen by governments when they welcomed the Chinese. Lastly, many of the loans and deals between China and Africa are resourced backed. Examples are Chinese teams building one hydropower project in the Republic of Congo (to be repaid in oil) and another in Ghana (to be repaid in cocoa beans). With China’s desire for Africa’s resources, this will slowly drain Africa of its USP also decreases export earnings that could be made from the selling of their commodities on the global markets. Once China sucks Africa of its resources, where will Africa be left?

Nicholas Mgaya, deputy secretary general of umbrella group Trade Unions Congress of Tanzania – “They take over jobs that should be done by the locals. For example, in the construction sector where you find the majority of the Chinese, you would find people like supervisors, masons and carpenters being employed.”

For all the problems with Chinese influence in Africa, there has been acknowledgement and improvement, especially in terms of negotiations with China. This can be seen in Congo in their 2015 $3 billion copper-backed loan from China to finance hospital, roads and universities. The government ensured that between 10-12% of all infrastructure work must be subcontracted to Congolese firms.  Furthermore, a maximum of 20% of construction work can be Chinese and at least half of 1% of each infrastructure project must be spent on worker training. This shows a substantial improvement on the fears of lack of opportunity for local workers and the training of workers ensures there’s a long run benefit from Chinese involvement. The key issue and one which is addressed in this deal is ensuring the money filters through into the local community, where it can be a fuel and amplifier of growth. While progress has been made there is However many other pressing issues that have not been touched. The damage to the environment and more importantly labor exploitation is an area which needs more focus. While there is a limit on Chinese workers and firms in the projects for investment, Firms involved still exploit the lack of workers’ rights with many workers facing irregular payments and hours succeeding their contract. However, one must learn to walk before they can run, and it would be unrealistic to expect a complete shift in power dynamics between China and Africa, so the progress being initiated. is a starting point. As highlighted there has recently been a partial shift in the power from the Chinese to African countries. I believe this new hard line approach being taken will allow us to benefit from all the advantages of Chinese investment, ensuring the impacts in the local community is not limited.  The most important impact of all is the employment of well-paid local works and the training of workers which provide the African countries with the human capital needed to exploit manufacturing and tertiary sectors which is where the end goal of development.

While I have tried to give both views on China’s involvement in Africa and the potential consequences, the truth is that no one will know the effects for decades to come. What I can say is that China’s influence can be a disaster if it is not harnessed efficiently and robustly by governments or could be the platform for real development if manipulated to the benefits of local communities.