By Tapiwa Diamond Chadya
Africa has been riddled with failed economic adjustment plans and massive exploitation by foreign investors. As a result, every investor’s move has been put under the microscope, and of late, China has taken over the discussions. China has been brutally judged based on the past mistakes of other nations; its own labor policies and high levels of counterfeited production has not done any good for China. Indeed Africa cannot afford to repeat the same mistakes again.
The sudden surge of Chinese interest in Africa can never go unnoticed. Is China a devoted partner for Africa’s poverty alleviation? The world’s largest developing country, China, has offered an olive branch to Africa. Africa has been faced with unending misery that needs urgent attention.
Chinese President Xi Jinping had state visits to Zimbabwe and South Africa just before the FOCAC meeting which was aimed at highlighting new measures to promote co-operation with Africa. The definitive focal point was improving African livelihoods, industrialization, food security, public health, disease prevention and reduction, as well as investment in the continent.
China’s timeous arrival in Africa comes at a critical moment for the poverty-stricken continent which is still reeling after the effects of colonial exploitation by the West. The Western capitalistic ideologies have increased the gap between the rich and the poor and this has unfortunately become a major threat to stability in the region.
Through its remarkable achievement in agricultural projects built from the grass roots, China has made itself a case study for agrarian activities in developing countries. Africa’s development has been hampered by strenuous tasks of agricultural modernization and industrialization which have been aggravated by problems of transportation and inadequate energy supplies to sustain urbanization, which is defined by residential rather than industrial growth.
Most economies of the world still remain poor due to pitiable investment, or lack of adequate attention and investment in the modernization of the agricultural sector, which China made foundational to its development plan. Instead of depending on handouts, China created jobs which reduced its poverty levels. This is a missing link in Africa’s development efforts. Africa has to devise a plan which alleviates the dangers of donor aid dependency.
China is attracted by low industrialization levels on the continent which present huge opportunities for the industrial cooperation between China and Africa. Its progressive approach has helped the continent in developing its industrial capacity through technology transfer, especially from companies like ZTE and Huawei.
There has been a myth that China’s investment in Africa is in bad faith, but that is not the case as China’s Foreign Direct Investment in Africa does not meet the extreme heights that it is assumed to. China has been accused of links to countries with poor governance records, but all this is a myth that has no evidentiary back up. Even though China is attracted to African countries that are rich in resources, this upshot is the same for Western investment and this is the sole factor that determines investment by any country anyway.
The fact is that China has surfaced as Africa’s principal corporate associate, and there is a growing volume of Chinese FDI in the continent with high-profile natural resource deals in countries with poor governance accounts like Angola and Sudan. The scale of China’s direct investment in Africa, known as overseas direct investment (ODI), is around 6% of the total to the continent.
The irony of this disclosure is the fact that European Union countries like France and the UK as well as the USA are overwhelmingly the largest investors in Africa! A shocking exposé is that South Africa invests more on the continent than China! Chinese ODI is influenced by the size of the domestic market, which indicates that a portion of it is aimed at serving that market and not just hauling out natural resources and shipping them to China.
China’s Ministry of Commerce (MOFCOM) makes it mandatory for all firm-level data of Chinese enterprises making direct investments abroad to be recorded. The resulting database keeps footprints of the business projects and the country to which the investment is flowing.
The geographical investment for China has not been limited to resource rich countries like Nigeria and South Africa, but also in non-resource-rich countries like Ethiopia, Kenya, and Uganda. China is a source of external financing to the continent as its ODI is concentrated in capital-intensive sectors in the more capital-scarce countries.
China, like any other investor, takes into consideration the governance indicators focusing on property rights, rule of law, and political stability. Any type of FDI is concentrated in countries with better rule of law. Surprisingly, the Chinese ODI is indifferent to the rule of law measure, but on the other hand is positively correlated with political stability.
The Western investors have generally stayed away from nations with a visibly poor rule of law and fewer resources, but China has gone and invested even in those politically and economically arid areas. The biggest recipient of Chinese investment on the continent is South Africa. At this stage China has pledged 60 billion dollars to develop Africa in addition to the zero interest rate on loans and scholarships.
China’s share of investment is large in nations like Angola, Burundi, the Central African Republic, the Democratic Republic of the Congo, Eritrea, Guinea, and Zimbabwe. This is a more nuanced and accurate picture of China’s direct investment in Africa.
With the economic meltdown on its door, China is likely to pull back on investment into the region. This will hit certain African countries hard, particularly Angola, the DRC and Zimbabwe. On the one hand, this has the potential to see their regimes become even more repressive, in a bid to stave off discontent and consolidate their rule. The flip side is that the squeeze could also be the spark that leads to government reforms in some long-suffering countries like Zimbabwe.
In conclusion, China has invested a lot in Africa in good faith and is assisting the continent to a large scale. Its presence has ruffled feathers in the pioneer investors’ nests. These pioneers are investors by default as they had colonized the continent. Instead of benefiting the continent, they ship out the resources and raw materials of Africa for free, only to return with either expensive commodities, or to use Africa as a dump site.
To China, Africa says thank you. To Africa, Rise Up!
Chadya Tapiwa Diamond is a Legal Practitioner, a Lecturer, a Researcher, a Political Analyst-cum-Activist who is passionate about democracy, governance and human rights, labour and migrants rights. He is man after God’s heart like King David and serves as a resident Jnr. Pastor in the House of the Lord at Light House Ministries in Gauteng. He read law the University of KwaZulu Natal and is Researching towards an LLM. He concomitantly lives in the Natal Midlands and Johannesburg. He can be contacted on 27 (0)84 566 2756 or email him at firstname.lastname@example.org, or twitter @mantronieqscie or like Tapiwa Diamond Chadya on facebook. He writes in his own personal capacity.