Author: Emmanuel Akyeampong
Affiliated organization: Harvard University
Type of publication: Article
Date of publication: 2015
China’s growing presence in Africa over the past decade or so reflects China’s growing stature in the global economy, now the world’s second largest economy after the United States of America. In the post-Cold War era, we have now progressed from a unipolar world revolving around the United States to one of contested uni-polarity. The value of China’s trade with Africa has grown astronomically from US$1 billion in 2000 to $55 billion in 2007, $198.4 billion in 2012, and $221.88 billion in 2014.
In 2009 China surpassed the World Bank as Africa’s top lender and also became Africa’s leading trading partner. In this same past decade, several African countries have experienced a commodity boom and strong economic growth. In the past decade or so, six of the world’s fastest growing economies have been in Africa – Angola, Nigeria, Ethiopia, Chad, Mozambique and Rwanda. In eight of the past ten years Africa as a region has grown faster than Asia.
While economists have conceded that China has become a global economic power, though we often hear about a possible slow down in China’s economy and its global implications, the jury is out on Africa’s recent economic growth spurt, whether this is just a commodity boom with no underpinning structural changes to transform the present economic opportunity into a permanent “takeoff.”Though China represents an important resource for Africa, few African countries have a “China policy.”
South Africa may be one of the exceptions, but even South Africa remains dissatisfied about its economic relations with China which over privileges the export of raw materials to China.
Thinking outside the box in economic transitions can unleash great potential for growth. One such historic example is the Marshall Plan after World War II, when a fast growing American economy, due to the demands of European war economies, discerned how strategic self-interest could entwine with benevolent capitalism in its offer to help rebuild Europe and Japan. America, in the process, grew even faster.
Thinking Outside the Box: The Economic Opportunity Africa Represents
Two of the fastest growing countries in Africa, Mozambique and Rwanda, are rebounding from ground zero, being former war-torn countries. Opportunities for growth are consequently limitless, and clear, strong leadership has accelerated the process.
This analogy can be extended to most of Africa, which, with the exception of settler colonies, suffered extreme under-development under colonial rule. This was the economic logic of colonial rule, which sought to expropriate wealth, and not necessarily to invest wealth.
The colonial economy revolved around commerce, mining and agriculture. Mining was extractive and the raw material exported with little processing. In agriculture colonial governments encouraged monocrop economies. Infrastructure aimed at the extraction of resources and rail and roads connected ports to areas rich in mineral resources or agricultural production. Colonial infrastructure was not intended to integrate colonial economies or provide a foundation for economic growth based on internal logic.
The BBC’s “The Story of Africa” notes that as early as the 1920s most of the main railway lines in colonial Africa had been completed. The motivation for these lines was mainly twofold: for the effective military and political control of colonies, and to transport minerals from mines to ports.
A large number of lines were built simply to transport minerals from mines to ports, with little benefit to communities on the way. In the Belgian Congo, copper from Katanga was taken to the port of Lobito in Angola on the Benguela railway. In Liberia a railway was built from the iron producing region of Nimba country to the port of Buchanan.
ECOWAS: The Struggle at Regional Integration and a Role for China
The Economic Community of West African States was created in 1975 with the initial intention of establishing a Free Trade Area among the member states as a step towards higher forms of regional integration – a Customs Union, Common Markets, and an Economic Union. Regional integration has been an uphill struggle for ECOWAS since its inception.
The francophone countries, the majority in the bloc, their common currency (the CFA franc) and the close orientation to France posed a challenge to the development of a common market. Administered in a single federation during the colonial period, the former French countries have more common institutions and structures, from economic institutions to the uniform gauge on their railway lines.
It is not surprising that the francophone countries in West Africa with the exception of Guinea were able to form in 1994 an economic and monetary union, Union économique et monétaire ouest-africaine (UEMOA), to facilitate trade between countries that share the CFA franc. UEMOA has developed a customs union and a common external tariff, and it has been described as one of the advanced integration schemes in Africa.
The activities of the West African Monetary Zone (WAMZ), comprised of the English-speaking countries and Guinea, complement UEMOA’s. WAMZ aims to introduce a single currency, the Eco, for its members, with the eventual expectation that the CFA and Eco will merge to create a single stable currency for all of West and Central Africa.
Yet there are also promising indicators in regional trade in West Africa in its diversity compared to West Africa’s trade outside the continent. This diversity reflects comparative advantage through factor endowments, underscoring a complementarity in regional economies compared to West Africa’s economic relations to the West or Asia, which has emphasized the export of agricultural products and minerals. Thus, Ghana, Benin, Togo, and Senegal export more manufactured goods and machinery within West Africa than they do in their trading relations outside the region.
In addition, ECOWAS trade seems to represent a significant proportion of the external trade of the less naturally endowed West African countries, underscoring its important role in wealth creation for these countries. Thus, ECOWAS trade represents 78 per cent of Burkina Faso’s trade, 60 per cent of Togo’s, 46 per cent for Senegal, and 35 per cent for Mali.
Regional trade hence contributes more to economic diversification, and this can reduce the vulnerability of West African countries to external shocks based on the price volatility of the primary products they export to the West and Asia. Instructively, domestic firms that look to regional trade have more permanent labor force arrangements, than firms dependent on global trade.
Strengthening regional trade has become imperative in the light of the recent global economic recession, which witnessed a general falling off of trade. Countries in Africa that traded with the European Union and Asia — rather than among themselves — were among the hardest hit in the global recession.
The success of regional integration in West Africa, and of trading agreements with the EU and other external trading blocs or countries depends on an improved infrastructure within West Africa. Poor transport infrastructure, bad communications and undependable power supply, among other factors, make the cost of doing business and moving goods in West Africa high.
Here there is the need to think outside the box at two levels, at the country level in West Africa and in terms of a China policy, and this is where a more coherent China ECOWAS agenda becomes necessary.
At the country level, China’s presence is evident in several African countries, pursuing bilaterally at the national level several of the goals we have underlined as necessary at the regional level. For example, China is assisting Ghana in its energy problems, rail and road networks, and other infrastructural projects. The Bui Hydro-electric Dam in the northern region of Ghana is the largest Chinese infrastructural project in the country, built by Sino-Hydro at an estimated cost of US$622 and financed by the Chinese Export-Import Bank (EXIM Bank). The eventual cost of constructing the Bui Dam stood at $790 million. The Ghana government’s financial contribution was $82 million, and the loan was collateralized through the export of cocoa from Ghana to China.
Strengthening regional trade has become imperative in the light of the recent global economic recession, which witnessed a general falling off of trade. Countries in Africa that traded with the European Union and Asia — rather than among themselves — were among the hardest hit in the global recession
The dam, completed at the end of 2013, was expected to generate 400 megawatts, a fifth of Ghana’s hydro capacity.26 In the past Ghana has exported hydroelectricity to Ivory Coast, Togo, Benin and Burkina Faso through the Akosombo Dam, and it was envisaged that the Bui Dam would supply Burkina Faso.
The Bui Dam has not been able to operate at its maximum capacity due to low rainfall levels, and has therefore not been able to intervene decisively in the current energy crisis in Ghana, which has led to a prolonged period of load shedding. In 2006 China pledged to build a new plant at Kpong to increase water supply in Ghana to the eastern parts of Accra by 40 million gallons a day.
Rich in natural resources, Ghana can afford these contractual agreements with China to build or rehabilitate infrastructure that are resource-backed. The Bui Dam is backed with Ghana’s cocoa, the construction of the gas pipeline by Ghana’s crude oil. Ghana’s exports to the West and Asia are unprocessed primary products. We have seen that Ghana exports more manufactured goods and machinery to its West African neighbors, yet ECOWAS trade represents only 18 percent of Ghana’s trade.
At present Ghana lacks a China policy, as do many other African countries, in spite the enthusiasm at the economic opportunities represented by China. We have gone from an era where there were no alternatives in the context of World Bank hegemony to one of choice.
Western alarm at China’s growing economic presence, comments on a second “colonial occupation” by China, criticism of Chinese business practices in Africa, and the struggle by African states to comprehend China have delayed the development of coherent China policies. The first China-ECOWAS economic and trade forum was held in Beijing in September 2008.
Coming after the first China-Africa Summit in 2006, West African countries hoped not only to highlight their natural wealth in agriculture, mineral wealth, and oil and gas reserves, but also to underscore the viability of their financial institutions and stock markets and the attractiveness of their regional trading bloc. Infrastructural projects were at the center of deliberations at this conference.
Loose Cannons: Chinese Adventurists and Crises Moments in Africa-China Relations
In July 2012 the youth of the village of Manso-Nsiena in the gold-rich Amansie West District in the Ashanti Region of Ghana clashed with some Chinese suspected to be engaged in illegal mining operations in the district. The cause of the confrontation was the destruction of the local environment in a community with a history of buruli ulcer, a disease closely associated with environmental changes.
National attention was riveted and temperament provoked at images carried in national news media, such as those in the Daily Graphic (July 20, 2012), which showed half-dressed Chinese miners swinging shotguns, which they fired in the air to deter the youth of Manso-Nsiena from approaching the mining camp. An armed police detachment rushed in from the nearest large town of Manso Nkwanta to defuse the situation and detained nine Chinese.
Then followed a few days of utter confusion and national debate on radio and in newspapers, about who authorized these Chinese miners to engage in mining operations in MansoNsiena, their blatant disregard of Ghanaian laws seen not only in their mining without a license but also the bearing of arms, and what disciplinary measures should be enforced against them.
Part of this confusion can, perhaps, be traced to what Lloyd Amoah has critiqued as the absence of a coherent Ghana policy on China, and the ambivalence that marks official relations with China and public uneasiness at the increasing Chinese presence in retail trade and even illegal mining.
The confused official response to Chinese illegal mining incidents may have two contributing factors. First is the ambivalence from the Western condemnation of China’s lack of support for human rights in Africa. Highly conscious of its much-lauded democratic credentials and its interest to keep donor funds flowing, Ghana, Amoah argues, engages in “self-censorship regarding her dealings with China at the expense of elaborating an independent, pragmatic China policy.”
China has a firm policy of “noninterference” in the political affairs of trading partners in stark contrast with the Western insistence on human rights and the World Bank’s position from post-1989 on political reform as a condition to the receipt of aid packages. African governments appreciate the absence of condescension in China’s treatment of its African partners, explaining the paradox of the eagerness of African leaders to engage China despite the West’s criticism of “Beijing’s perceived amoralism.”
Coming after the first China-Africa Summit in 2006, West African countries hoped not only to highlight their natural wealth in agriculture, mineral wealth, and oil and gas reserves, but also to underscore the viability of their financial institutions and stock markets and the attractiveness of their regional trading bloc. Infrastructural projects were at the center of deliberations at this conference
Second, and perhaps more importantly, the confused official response reflects the reality of dealing with the three “faces” of China in Africa: the state-owned enterprises that act as multinational corporations; the large private industries that operate with state backing; and the huge influx of ordinary Chinese who have flooded Africa in the past decade in search of a brighter economic future.
But the acquisition of firearms by Chinese miners added to the proliferation of small arms in a region recently plagued by civil wars in Liberia, Sierra Leone and Ivory Coast, which has led to the dispersion of small arms as these conflicts came to an end. This potentially dangerous situation led to the commissioning of a recent study that examined the impact of armed groups and guns on human security in the ECOWAS region.
Then there is the indigenous craft production of small arms by blacksmiths in West Africa, who serviced guns for hunters and farmers and gradually learned to manufacture pistols and rifles. With West Africa’s porous borders there are already huge security concerns about the proliferation of small arms in the region, a development made more dire with the acquisition of firearms by criminal networks, and the growing tendency for illegal miners to arm themselves. We have seen the consequences of these developments, especially in the Sahel-Sahara region.
During the recently ended civil war in Ivory Coast, armed rebels sought skilled miners from Ghana to come with their equipment and exploit gold rich areas in rebel-held areas under armed protection. To this troubling situation has been added the arms abandoned by the Chinese miners in Ghana who fled at the approach of task forces.
These guns were subsequently appropriated by villagers near the mining camps, making the Chinese reluctant to return for equipment they abandoned, considering the often tense relations between these Chinese miners and villagers.
Conclusion: China’s Development Vision for Africa
In 1947 the United States decided that it was actually not in its interest to continue a policy that economically weakened its recent enemies, Germany and Japan, and that it was strategic to help rebuild war-torn Europe. Labeled as the Marshall Plan, and announced by US Secretary of State George Marshall at a lecture at Harvard University on June 5, 1947, the US committed US$3 billion (the equivalent of $130 billion today) between 1947 and 1951 to rebuilding war-torn Europe and Japan.
The US ended the “Morgenthau Plan,” which sought to curtail Germany’s expansionist ambitions by “pastoralizing” it; a process reinforced by the Soviet interest in stripping Germany of its advanced machinery. This a remarkable example of thinking outside the box: “It was a political signal that the US saw it in its interest that other nations, even its former enemies, prosper.”
Parts of Africa have gone through recent wars or are still engulfed in conflict: Rwanda, Burundi, Uganda, the Democratic Republic of Congo, Mozambique, Angola, Liberia, Sierra Leone, the Ivory Coast, Mali and much of North Africa in its “Arab Spring.” This in addition to the economic deficits of colonial rule sets the context for a boom in reconstruction.
Africa’s growth potential has become noticeable in the past decade. Its wealth in minerals is astounding, and we are experiencing a revived agricultural sector, thanks in part to World Bank policies in support of export agriculture. The Heavily Indebted Poor Countries (HIPC) facility extended by the World Bank also allowed poor countries debt relief and to redirect monies that would have gone to debt repayment to development projects.
At the level of the African Union, and at the regional blocs, experiments at institutional reform, good governance, and peer review continue in the face of systemic corruption. What will China use its growing wealth and stature for in this critical juncture in African history with the current debate whether this is Africa’s time to enter sustained economic growth and structural transformation? It could continue to see Africa as a supplier of raw materials important to China’s growth, a market for dumping Chinese manufactures, and a site for Foreign Direct Investment with some of the highest rates of return presently, or it could be part of the ground-shifting process that transforms Africa’s economies and changes the fortunes of the continent for the better in the long term.
Unimpaired by a colonial legacy, noted for its lack of condescension or patronage compared to the West, and with a fund of goodwill based on its investments in infrastructural projects from the TanZam Railway to the Bui Hydroelectric Dam, China could be a force for good and positive change in Africa if it partners Africa in its developmental agenda, providing capital, technology and vision. Like the Marshall Plan,
this is the time for China to think outside the box, to assume an enlightened strategy towards Africa. The outcome would be even stronger economic growth for China.
Les Wathinotes sont soit des résumés de publications sélectionnées par WATHI, conformes aux résumés originaux, soit des versions modifiées des résumés originaux, soit des extraits choisis par WATHI compte tenu de leur pertinence par rapport au thème du Débat. Lorsque les publications et leurs résumés ne sont disponibles qu’en français ou en anglais, WATHI se charge de la traduction des extraits choisis dans l’autre langue. Toutes les Wathinotes renvoient aux publications originales et intégrales qui ne sont pas hébergées par le site de WATHI, et sont destinées à promouvoir la lecture de ces documents, fruit du travail de recherche d’universitaires et d’experts.
The Wathinotes are either original abstracts of publications selected by WATHI, modified original summaries or publication quotes selected for their relevance for the theme of the Debate. When publications and abstracts are only available either in French or in English, the translation is done by WATHI. All the Wathinotes link to the original and integral publications that are not hosted on the WATHI website. WATHI participates to the promotion of these documents that have been written by university professors and experts