China is investing in Africa and that's a good thing
China is Africa's biggest trade partner and is helping to develop the continent's infrastructure
There has been a good deal of debate on China’s growing influence around the globe spearheaded by its economic and financial influence. The Trump administration is currently waging a trade war with China and trying to force renegotiations for better terms for US companies.
Before you sing President Donald Trump’s praises, however, remember this is the same administration that has kept punitive steel tariffs on SA’s products, and leveraged SA’s African Growth and Opportunity Act (Agoa) status to force us to buy US chicken.
Unthinkable perhaps five years ago, the guardian for globalisation and agitator for liberal trade order is China. Xi Jinping, the president of China and general secretary of the Chinese Communist Party, stood before world leaders in 2017 and urged against tendencies of protectionism in his address in Davos.
We ought to move on from Cold War ideological fortresses if we wish to grab the proverbial bull by its horns and get African economies moving. My colleague, Professor Odongo Kodongo, wrote a piece last week that represents a popular view here in Africa — that increasing Chinese investments on the continent, particularly in the infrastructure sector, will ultimately end in tears. I think this view is wrong.
A 2016 report by US management consultancy McKinsey on Chinese activities in Africa paints a different picture. The most extensive to date and based on interviews with more than 1,000 Chinese firms across eight African countries, the report finds that: 89% of their employees are African, 64% provide training and 44% of managers are African.
Instead of development assistance, Chinese firms have brought employment, training, new technology and financing. China is Africa’s number one trade partner, number one infrastructure financier and fastest-growing source of foreign direct investment. If this is China’s “rogue” development policy, I think we need more of it.
In contrast, economists William Eastly, in his The White Man’s Burden: Why the West’s Efforts to Aid the Rest Have Done So Much Ill and So Little Good, and Zambian-born Dambisa Moyo’s Dead Aid: Why Aid Is Not Working and How There Is a Better Way for Africa, have put forward compelling evidence that the more than $1-trillion in aid to Africa over the past 50 years, including the so-called good governance conditionalities, has in fact left Africans much worse off.
I am not arguing that China is a force for good in Africa and the US is not. I submit that this is the wrong way to frame the question. Adam Smith wrote that “it is not from the benevolence of the butcher, the brewer or the baker that we expect our dinner, but from their regard to their own interest”. Chinese state and private companies are not in Africa out of the goodness of their hearts to hand out alms; they are here looking for markets, customers and opportunities.
The Road and Belt Initiative, Xi’s signature foreign policy is intended to advance China’s national interests. It is about making strategic alliances across Eurasia and Africa, exporting surplus construction capacity, finding alternative outlets to invest China’s foreign reserves and finding new markets for Chinese companies. Our job is to use the investments from this policy to grow our economies in Africa.
There have been issues with Belt and Road Initiative projects. Some countries will probably default on their Chinese loans as projects fail. Infrastructure is certainly the backbone, without which an economy cannot grow. This does not mean poorly planned and executed projects will not be costly mistakes. China also used its natural resources as collateral to pay for infrastructure when it embarked on economic reform in the 1980s and has brought this economic model to Africa. Infrastructure-led development worked for China and, if well executed, it can work here.
Instead of scapegoating China when things go pear-shaped, we should hold ourselves and our governments to account when they plan, finance and execute the projects. Instead of worrying about whether the infrastructure development finance is eastern or western, or whether intentions behind them are benevolent or selfish, so long as the development financing grows African economies, we must utilise it.
Kuo is a research associate at the Gordon Institute of Business Science at the University of Pretoria. He writes in his personal capacity