Towards a win-win Sino-Africa relations

In spite of long years of romance with China, and notwithstanding massive Chinese investments in Africa, many analysts believe the continent is yet to position itself to truly benefit from its relations with the Asian country.

By Chuks OLUIGBO

Across all of Africa, Chinese presence can no longer be denied, nor can it be wished away. China is everywhere – in construction, education, telecoms, technology, oil and gas, transport, just name it – and it is not in a haste to leave. China is here to stay.

“Already, trade between Africa and China has grown at a breathtaking pace,” writes Kingsley Ighobor in Africa Renewal. “It was $10.5 billion in 2000, $40 billion in 2005 and $166 billion in 2011. China is currently Africa’s largest trading partner, having surpassed the US in 2009. The Chinese government is eager to cement China’s dominance by burnishing its image through initiatives such as a $20 billion credit to African countries to develop infrastructure and the African Talents Programme, which is intended to train 30,000 Africans in various sectors.”

Beyond these, Chinese construction firms are acquiring enormous construction contracts across Africa. The China Railway Construction Corp. (CRC), for instance, in February last year announced projects in Nigeria, Djibouti and Ethiopia worth about $1.5 billion in total. In September, it signed a $1.5 billion contract to modernize a railway system in Nigeria. In the same month, China South Locomotive and Rolling Stock Corporation, the largest train manufacturer in China, signed a $400 million deal to supply locomotives to a South African firm, Transnet. Hauwei, the Chinese telecom giant, operates fully in 30 out of 54 African countries. And China has made great inroads into Africa’s agricultural sector.

In Nigeria, the nation’s diplomatic relations with China dates back to 1971. Since then, many Chinese leaders have visited Nigeria and vice versa, and bilateral relations between the two countries have been smooth and steady, but especially since May 1999 when the country returned to constitutional democracy. China and Nigeria have since then signed a number of agreements on trade, economic and technical cooperation, scientific and technological cooperation, as well as an agreement on investment protection, and the two countries have set up a joint economic and trade commission.

And the volume of trade between Nigeria and China has grown exponentially. In 2012 alone, according to The Heritage Foundation, Chinese investment in Nigeria was $15.6 billion (the highest in sub-Saharan Africa). These investments, mostly contracts, were in the technology, transport, real estate and energy sectors. 53 percent were energy-related investments and contracts. Equally, according to the Debt Management Office, Nigeria owes China $678.9 million.

Opinions have been divided as to whether Chinese relationship with Africa is a one-way traffic or a win-win. Consider the new African Union headquarters in Addis Ababa, Ethiopia, a towering 20-storey building tagged "China’s gift to Africa” because China picked up the $200 million tab for the state-of-the-art complex. While Ethiopia’s late Prime Minister Meles Zenawi was prompted by that “gift” to refer to Africa’s current economic boom as a “renaissance” due partly to China’s “amazing re-emergence and its commitments to a win-win partnership with Africa”, Chika Ezeanya, a political commentator, considers it an “insult to the AU and to every African that in 2012, a building as symbolic as the AU headquarters is designed, built and maintained by a foreign country”. Yet Faida Mitifu, the Democratic Republic of the Congo’s ambassador to the US, told the Reuters news agency that “the good thing about this partnership is that it’s a give and take”.

On the positive side, in the case of Nigeria, analysts point to China’s efforts to help Nigeria diversify its economy. For instance, China has increased its volume of agricultural imports from Nigeria – cassava chips, sesame seed, etc – and as at 2009, there were an estimated 400 Chinese agricultural experts in Nigeria involved in the construction of small earth dams.

Yet, many believe the answer to China’s interest in Africa lies not in helping African countries grow their economies but rather in the ultimate need to ensure the expansion of the Chinese market by securing the source of cheap raw materials as well as ready market for finished products. China currently buys more than one-third of Africa’s oil. In addition, China’s industries are getting raw materials such as coal from South Africa, iron ore from Gabon, timber from Equatorial Guinea and copper from Zambia. Chris Alden, Daniel Large and Ricardo Soares de Oliveira, editors of China Returns to Africa, rightly note, “The overarching driver has been the Chinese government’s strategic pursuit of resources and attempts to ensure raw material supplies for growing energy needs within China.”

Conversely, Chinese products have flooded markets in Johannesburg, Luanda, Lagos, Cairo, Dakar and other cities, towns and villages in Africa. These goods include clothing, jewellery, electronics, building materials and much more – even little things like matches, tea bags, children’s toys and bathing soaps. In other words, China is re-enacting the era of the so-called legitimate trade in Africa – call it re-colonisation if you like. Thus, former US Secretary of State, Hillary Clinton, sometime ago warned against a “new colonialism in Africa” in which it is “easy to come in, take out natural resources, pay off leaders and leave”.

While the flooding of Chinese products into African markets is not bad in itself, the problem is that many of these products are of very poor quality, and their low prices are responsible for the collapse of local industries. For instance, in spite of massive intervention fund by Nigeria’s Federal Government into the textile industry in the country, textile factories across the country have failed to pick up because they cannot compete with cheap Chinese garments.

As already said, there is no wishing away Chinese presence. Rather, as Maged Abdelaziz, the UN Secretary-General’s special adviser on Africa, has admonished, Africa must develop a strategy for its dealings with not only China but other emerging economic giants such as Brazil and India if it is to truly benefit from its relationship with these countries.

Furthermore, in a recent editorial, a leading business and financial daily in Nigeria made a case for a purposeful engagement with China, saying Nigeria and other African governments need to exploit their relationship with China, and others, by aiming at improving economic diversification and competitiveness, and arguing that it is the only way to achieve a win-win relationship.

According to the editorial, while it is necessary to get benign loans to finance much-needed infrastructure, it is also good to realise that loans alone are insufficient. “Focusing on loans alone is to miss various opportunities that Chinese investments in construction, oil and gas, mines, and consumer products offer,” it said.

“Local private businesses and government need to focus on the strategy – priority sectors, favourable terms that develop skills and transfer technology – and the benefits of foreign investment, from China and elsewhere. These will help diversify the economy, create jobs, and reduce poverty. Economists say that as Chinese manufacturing moves up the value chain, export processing zones (EPZs) will be ideal for low-cost production,” it further said.

All said, there is no gainsaying that Chinese investments are for profit, and the Chinese are profitably employing their competitive advantage in price, risk appetite and access to credit. In concluding, the words of Patience Akpan-Obong, an analyst, are perhaps very instructive here: “I understand the allure of Chinese (foreign) investment for the Nigerian economy, both at the micro and macro levels. It promises an easy ride, jobs and growth, but China is not in Nigeria for missionary work. Heck, not even European missionaries in the first colonisation era returned home empty-handed! Perhaps it’s time that the Nigerian government reassessed its infatuation with China to ensure that it is truly an equal partner. If not, then it should have the courage to renegotiate the terms of engagement.” The same, needless to stress, goes for other African economies.