Experience with China

Mar 06, 2013 Editorial

There have been criticisms of China’s involvement in Guyana’s recent development drive and also some responses, both official and unofficial, to those comments. China’s involvement in Africa predates ours and their experience might serve as a useful background for us.
Peter Eigen is a member of the Africa Progress Panel, chaired by Kofi Annan. He is the founder and chair of the Advisory Council, Transparency International, and chairman of the Extractive Industries Transparency Initiative. Below are extracts from his article, “Is China good or bad for Africa?”
“China’s growing presence in Africa is one of the region’s biggest stories, but even seasoned analysts cannot decide whether this booming relationship is good or bad for Africa. Critics say Chinese strategy is entirely self-promotional, aimed at maintaining access to Africa’s precious mineral resources even when that means propping up odious governments. China’s supporters say the Asian superpower is strictly neutral and business-oriented, preferring to generate economic growth not a dangerous dependency on aid.
China has certainly been contributing to Africa’s economic growth, both in terms of trade and with building infrastructure. All over the continent, it has built roads, railways, ports, airports, and more, filling a critical gap that western donors have been shy to provide and unblocking major bottlenecks to growth. Meanwhile, bilateral trade between Africa and China continues to grow at an extraordinary pace, reaching $160 billion in 2011 from just $ 9 billion in 2000.
But some 90 percent of Sino-African trade is still based around natural resources – oil, ores and minerals. And exports of natural resources by themselves do not help Africa to develop as we can see from the examples of Nigeria and Angola, Sub-Saharan Africa’s two largest oil exporters.
First, oil and mining are not labour intensive industries. So while natural resources may create impressive headline growth figures, they do not necessarily translate into widespread job creation.
So what else could Africa and China do so that Africa benefits more from its growing relationship with China?
For a start, African countries could diversify their economies as much as possible away from supplying unprocessed natural resources to China. This will make them less dependent on the vagaries of both the Chinese economy and the ups and downs of global commodity prices.
African nations should also prepare for the day when they no longer have natural resources to sell. At the Africa Progress Panel, we talk about transforming natural resource wealth into human capital, by investing revenues into health and education.
Second, African countries need to encourage Chinese investment into more labour intensive sectors. Africa’s population is growing faster than anywhere else in the world, and job creation is a top priority. If Africa cannot create jobs to keep up with the growth of its workforce, then we can expect to see a large and growing population of frustrated, jobless youth.
Third, African countries could negotiate better terms with Chinese investors, including quality control and better linkages with local economies. African governments could urge China to improve market access for African goods overseas, for example in trade fora such as the World Trade Organization. The IMF estimates the average import tariff faced by low-income countries in Africa in the BRICS at 13 percent – around three times the level in the United States and the European Union (which also operate a range of non-tariff barriers).
On quality, observers describe shoddy workmanship in a range of Chinese investments from crumbling walls in a Chinese-built hospital in Angola, enormous potholes in Ghanaian and Zambian roads, and a leaking roof in the African Union’s new $ 200 million headquarters opened in January. Fairly or unfairly, many in Africa complain that Chinese projects do not employ enough Africans or do enough to transfer skills and technology. The reality is that this will vary from project to project. But at the Africa Progress Panel we view job creation as a priority issue for Africa’s development. Skills development has a major role to play in this respect.
And when Africans are employed, working conditions are sometimes substandard. Human Rights Watch reports dangerous work conditions in Zambian mines.” As old folks say, “Hint a Beneba mek Quashiba tek notice”.