Investment, not aid, is giving China an edge in Africa

  • Article by: ROGER SALWAY
  • Updated: December 13, 2013 - 6:20 PM

The country succeeded in creating goodwill.

 

Since the dissolution of the colonial system in the 20th century, there has not been significant investment in the African continent, but this is changing with the recent growth of China’s commercial involvement and status as a new economic superpower.

As Western investment in Africa slowed, Chinese investment began in earnest. More than 2,000 Chinese companies are involved in Africa — in finance, aviation, agriculture and tourism, after an earlier concentration on mining, energy, construction and manufacturing.

During the past 30 years, I have been involved in Africa, in both the business and nonprofit arenas, and I have watched Africans become increasingly enthusiastic about the growing engagement of China. Why would this be happening given the billions of dollars of aid the United States and other nations have provided over the past decades?

According to a recent article in the Guardian titled “Soft Power, Hard Cash,” China has committed billions of dollars in repayable, long-term development finance (not aid) for Africa over the past decade as it seeks to secure its political and economic clout there. While these multibillion-dollar loans are almost always tied to management of the project by a Chinese company (often a large state-owned company) and sometimes include a significant percentage of Chinese labor, China has nevertheless filled a void left by the West and is now reaping enormous praise from African governments.

AidData has research estimating that the Chinese government has backed some 1,700 projects valued at $75 billion in 50 African countries since 2000. Although this is less than the $90 billion USAID and other funding sources have committed in the same period, it does confirm the scope of China’s participation in the development of Africa. AidData research also challenges what has been the dominant story — that China’s quest for natural resources has driven this commitment. While there are definitely Chinese mining projects, transport, storage and energy initiatives account for some of the largest sums. In addition, many millions of dollars have been directed toward health, education and cultural projects in all but the four African countries that maintain diplomatic relations with Taiwan (Burkina Faso, The Gambia, Sao Tome and Principe, and Swaziland).

There is no clear evidence that China is adding significantly to the debt of Africa’s poorest countries; in fact, it canceled $2.8 billion of debt owed by 35 African countries. China’s Minister of Commerce, Chen Deming, has stated that China intends to urge its companies and banks to participate in cross-border, diversified trade and economic cooperation, and that China’s goal is to migrate more production to Africa to create jobs on the continent by creating several special economic zones. In addition, the BRICS (Brazil, Russia, India, China and South Africa) are exploring the possibility of establishing a development bank to compete with the World Bank.

What is perhaps even more interesting is that China has sent some 18,000 doctors to work in Africa, has trained 40,000 African personnel in a variety of sectors and has provided more than 20,000 scholarships to students from African countries. Today thousands of African students are encouraged to participate in learning Chinese in China or in Chinese-language classes in their native land.

China’s success at poverty reduction is another program that may have positive lessons for Africa — small-scale mechanization of agriculture and a focus on skills training. Agriculture consumes 60 percent of the African labor force, but the continent is still not able to grow enough food to feed its people. And the population of Africa is growing at around 35 million per year.

While aid from OECD countries stagnates or shrinks, a host of emerging countries, including China and Brazil, are closing the funding gaps in Africa.

Feedback from contacts in Africa confirms that China’s development projects, from infrastructure to debt relief to providing medical support, are building goodwill. Some of these projects are undoubtedly “upfront sweeteners” to win governmental favor for future commercial deals. But, with 54 countries in Africa, it is clear there is no single agenda.

Judge for yourselves — but investment, not aid, would look to be the better road to success in Africa for everyone.

 

Roger Salway, of St. Paul, is president of Post-Harvest Technologies, a company seeking to increase agricultural productivity in Africa.

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