The Wealth of Nations Finally comes to Africa

- Remy Kalter

Let us be under no illusions, the main aim of Chinese investment in Africa is not, in any way, to help Africa get out of the cycle of decline that the continent, as a whole, tends to perpetually be sliding into. But the fact of the matter is that the situation is desperate, and a new approach needs to be implemented to enable Africa to actually grow in a sustainable manner that does not leave it completely at the mercy of nations that see in it merely a quick buck.

International development organizations such as the IMF and the World Bank that tie aid and investment to good governance have clearly not been reading their history books. The United States, though one of the oldest nations with a democratic constitution, did in no way have social justice for huge sections of its population, even to this day. Legislation does not necessarily equate to reality, as those involved in the Civil Rights movement will quickly remind you.
Germany, pre-World War II, saw its economy resurrected by measures employed despite the ruling totalitarian dictatorship. I seek not to legitimize these actions, but to highlight that the Western qualifier of good governance in Africa hamstrings governments. In yet another show of the West carrying the “White Man’s Burden,” they seek to set Africa on the correct path of development through the lure of money with conditions. Well, South Asian investment is now offering another way forward, without the conditions, and though it may appear callous, I believe Africa to be better off for it.

The fact of the matter is that Africa’s relationship with China is by no means perfect, but it is an enabler to prosperity, and ultimately to democracy. Certainly, African raw materials are being extracted to feed the Chinese hunger for energy resources. This places the former at the mercy of the market. Without proper management by the African Union (AU), this could eventually lead to the forgotten continent having no goods to offer and being beyond help. But this is many years down the line, and the free market will step in before then.

Despite what we hear on a regular basis, democracy and free market economics are not inextricably bound. One can indeed exist without the other. Currently, China is the second largest investor in Africa after France, but seeks to double its trade to $100 Billion by 2010. The investments, both monetary and structurally, that the Chinese government has made seek to make basic amenities available to Africans. In addition to an influx of Chinese companies, and the further cancelling of debts, China is following the principals of free trade to a tee.

What does that mean for Africa as a whole? Firstly, China is playing a game of lowest-common denominator politics and economics. It isn’t pretty, but when you have the muscle that they do, then everyone else has to play along in order to compete. Western democracies will soon have to climb down from the moral high ground in order to not miss out on the raw materials the untapped continent can offer, following India’s lead. Competition, as any free marketeer will tell you, is a good thing, and this will give greater clout to the African governments and the AU. Though good governance restrictions will indeed lower, as the nations move further toward democracy, qualifiers will begin to rise in order to garner votes. Though there are currently only 11 free democracies on the continent of 53 nations, more than half the others are in the transitional process. These are encouraging statistics, but it is a good point to ask that if the qualifiers to investment are lowered, then wouldn’t this send the democratization process the other way?

It is a danger, of that there is no doubt, but let us also look at another factor of Chinese investment in Africa; the creation of telecommunication networks, such as that being built in Ethiopia. As Joseph Okpaku, The CEO of Telecom Africa Corporation acknowledged in 2005, that the building of Information & Communication Technologies (ICT’s) was the way to build the capacities and create the infrastructure and jobs to enable Africa to elevate its people to actual consumers. Through the introduction of these ICT’s, it will also become increasingly difficult to prevent democracy and respect for human rights from flourishing.

China’s investment is also not predicated on simply using up Africa’s resources and running away. It needs Africa to be sustainable, hence the capacity building measures it has put in place, which has helped Africans embrace Chinese investment much more readily, though conflicts regarding, for example, Nigerian oil contracts remain very much an issue. In fact, surprising though it may seem, China appears not to be trying to turn Africa into a cheap labour market as south-east Asia has become for the West. This may have something to do with the fact that though there are 900 million Africans, the economy of scale is very small, thus making such an aim far too time consuming. Instead, China looks to be seeking to make Africa a new market for its own cheaply produced products. For this to succeed, they would hope for Africans to have a degree of expendable income, something which for the vast, vast majority is not the case.

So while opening up into such a massive market would indeed lower the price of Chinese goods, at the same time it would help bring the earnings of Africans up, affording them the possibility of becoming consumers in a market and greatly lowering the amount of people surviving on less than one dollar a day. China also has the intelligence to realize that it should not simply push around nations with disregard, as the West learned the hard way, thus it is encouraging that they have stated, and shown, that they will be working with the African Union.

The great danger in all of this is that if China does have things entirely its own way, it’s very possible that Africans will be employed by Chinese and buying only Chinese goods, which would put them into a mercantilist trade system that would ultimately stagnate the economy and truly make Africa a slave to the fluctuations of the global market place. Couple this with the rising instability in China, and we do indeed have a recipe for disaster. Luckily enough, the Western corporations will never allow all those resources to be plundered by China alone, thus Africa should be okay in this regard.

There are many issues I have not touched on here, and it’s certainly not a bed of roses for Africa’s 53 members. Though economic hardship will continue for some time, and political repression may indeed be the order of the day for a while, what the continent is getting, which it has never had before, is the means to grow, with structures and ICT’s being put in place. Perhaps most importantly, it is gaining the bargaining power that imperialism has always sought to remove.

Many of the worlds great powers go on searches for allies and to spread democracy through bombs and threats. Perhaps they could learn something from the Chinese way of making friends, which is to build a school or a hospital instead of to bomb a munitions factory. As always, keep in mind that China is not doing this for Africa’s own good. Countries do not have friends, merely interests, and it is in China’s interests that Africa succeeds…at least for now.

Background & Research
China, Africa & Oil - Council on Foreign Relations
India and China to "boost Africa" (BBC) - May 22nd, 2006
Africa's Silk Road: China and India's New Economic Frontier (World Bank) - Harry G. Broadman The Rise of China and India; What's in it for Africa? (OECD) - Andrea Goldstein, Nicolas Pinaud, Helmut Reisen and Xiaobao Chen
The New Sinosphere: China in Africa (IPPR) - David Mepham, Leni Wild
Does the Future Really Belong to China? (Prospect Magazine) - Will Hutton