Changing the game: The Chinese approach to African development

While Canada, the United States and China are taking sharply different approaches to Africa, they all share something in common: Africa is more intrinsically important to all three countries today than it has ever been before.

One country understands that and has a comprehensive, evolving plan. Another country recognizes this growing relationship but its strategy is hardly coordinated and is shaped largely by other considerations. And the third country is turning away from Africa, a region where it developed a very tangible presence and reputation from the 1960s as a reliable, and often preferred, partner. All three directions have immense applications in any discussion about the possibilities of exporting or entrenching democracy on the continent.

How economically important is Africa to each of China, the U.S. and Canada? All three countries depend on the continent for over 20 percent of oil imports, and that ratio is growing, particularly in the case of China (already at one third of imports) but also the U.S.. Even net exporter Canada relies on Africa for about a quarter of its oil imports to the east coast. Africa is also host to billions in foreign direct investment (FDI) in natural resources and other sectors from all three countries, with Canada’s ongoing role as global mining financier attracting Canadian and offshore firms with interests in Africa to listings on the TSX and Venture exchanges: Natural Resources Canada tracks cumulative Canadian FDI in African mining and that figure jumped to nearly $15 billion by the end of 2007.

In an era of increasing global growth and related resource scarcity, Africa’s under-appreciated role in the world economy has turned a corner. China, recognizing this early, engaged a whole-of-China strategy, linking government policy and financial mechanisms, state-owned enterprises (SOEs), and the private sector in an aggressive push to secure access to African resources and markets. The U.S. government, which a decade ago stated it had no strategic interests in Africa, now refers to Africa’s oil as a strategic interest and sees one of the frontlines against terrorism cutting across the continent. The Canadian government, however, is currently ratcheting down its focus on Africa, despite an increasing foreign aid budget and increasing private sector FDI there.

There are significant implications to the possibilities of exporting democracy or otherwise assisting fragile states given these three policy directions, and yet all three countries have an interest in seeing a more stable, globally-linked Africa given their increasing dependence on the continent’s natural resources.

A pivotal month
February 2007 provides the symbolic demonstration of these shifts. Chinese President Hu Jintao undertook his third high-profile official visit to Africa that month, visiting eight countries in twelve days. Cameroon, Liberia, Sudan, Zambia, Namibia, South Africa, Mozambique and Seychelles all welcomed the president and signed a number of cooperation and economic agreements. This trip came on the heels of the November 2006 Forum on China-Africa Cooperation in Beijing that attracted 40 African heads-of-state to cement economic and political ties, including the announcement of a $5 billion China-Africa Development Fund. Chinese trade with Africa soared over the past decade, from perhaps $10 billion in 2000 to over $70 billion in 2007. By 2010, it is expected that China will surpass the U.S. as Africa’s largest trading partner.

Concessional and commercial loans and grants, through the China Exim Bank and China Development Bank and often in the form of resource-backed loan financing, increasingly dwarf bilateral and multilateral aid flows from OECD members and the World Bank to certain countries. And the activity of Chinese exporters, entrepreneurs and even provincial and local government-owned enterprises across Africa swells after high-level visits like President Hu’s.

On February 6th, 2007, while President Hu was still in Africa, the United States announced the creation of Africa Command (Africom). Previously, responsibility for Africa was shared among three other regional commands, making planning and operations on the continent difficult to coordinate. But the creation of Africom, currently based in Stuttgart, heralded a new approach: while headed by a four star general (General Kip Ward), the deputy for civil-military relations is a senior State Department official and ex-American Ambassador to Ghana (Mary Carlin Yates). And State, US Agency for International Development (USAID), and other departmental staff are integrated into the structure as well. The three “D’s” of defence, development and diplomacy are all under one roof in Africom and this is promoted as something new. However, many Africans and other observers worry that the command, led by the Pentagon, is an example of increasing American militarization of its relations with Africa for purely strategic reasons (i.e., oil, war on terror). Despite stated intentions, the creation of Africom is sending mixed messages to African leaders and civil society.

The week after the Africom announcement, and within days of President Hu’s return from Africa, the Canadian Senate released its controversial but path-breaking report on Canada’s relations with Sub-Saharan Africa. Over two years in the making, the report provided critical analysis of Africa’s poverty predicament as well as numerous policy recommendations to improve the effectiveness of Canada’s contributions to, and relations with, Africa.

An “Africa Office” to develop and coordinate an overall Canadian policy for Africa headed the recommendations, “comprising aid, trade, security and foreign affairs staff with a principal mandate of achieving economic development in Africa.” Unlike the American model, this office was not to be led by DND. Despite the work of the bipartisan Senate committee, chaired by Hugh Segal, and the global trends pointing towards the growing, not declining, importance of Africa, the government effectively killed the report and turned its attention to Latin America, a shift that is already impacting CIDA and DFAIT programming and resources.

China’s approach
If Canada is signalling that Africa is not a priority and Africom is putting the Pentagon in the driver’s seat, both countries’ efforts to promote and assist the development of democracy in Africa can only be hampered. China is seen as the aggressive new kid on the block, securing natural resources with untied loans, grants, investment and other assistance with few strings attached, especially any conditions related to governance or democracy. It has an explicit policy of non-interference in local political affairs. It does not impose its own model of development although it does offer an alternative vision. China also does not have a stand-alone development agency like CIDA or USAID nor, of course, agencies like Rights and Democracy (Canada) or the National Democratic Institute (USA).

China’s foreign aid, however defined, is managed by the Ministry of Finance and the Ministry of Commerce, and generally delivered by its Exim and Development Banks. For bilateral concessional loans, recipient countries select projects and programs they want to fund. Generally this is related to infrastructure or social welfare. As much of China’s loans and grants are tied to some degree to Chinese suppliers, there is not much room for funding programs related to democracy and good governance, and there are certainly no pressures to do so.

There are significant questions, however, about incentives to fund certain types of projects, like dams, that reflect the same tied aid or environmental debates once faced by OECD donors or worse, given reports of corrupt practices between African officials and Chinese firms on some projects. (Note that this is hardly a Chinese monopoly, but efforts by OECD countries to reduce and criminalize corrupt practices by their companies have made a difference, and China is not party to these OECD agreements). And China’s ongoing and significant role in failing states like Sudan and Zimbabwe – given the ongoing strife in Darfur and resurgent conflict in South Sudan, and the recent An Yue Jiang arms shipment to Zimbabwe that was turned away from various Southern African ports – is causing uneasiness about the impact of China’s presence on the future of democracy in Africa.

China is present across the continent and not just in problem states. It has more embassies than the U.S. in Africa and has significant loan packages and investments in oil and mineral producing states as well as other countries. Given its stated (if problematic) policy of non-interference abroad and internal pressures at home to maintain economic growth and increase export opportunities, China, its SOEs and entrepreneurs will venture where OECD firms will not. For instance, the limited number of new regions open for oil exploration, given constraints due to national oil company monopolies in many countries compared to a decade or two ago, leaves China’s three oil conglomerates with fewer options. Attempts by China to invest more heavily in the Canadian oil sands or to buy American mid-sized oil firm UNOCAL in 2005 were rebuffed. (See map for current activity of China’s three oil conglomerates across Africa.)

As Chinese oil firms expand across Africa, however, they have faced significant insecurity in places like Sudan, Ethiopia, Somalia and the Niger Delta. Chinese oil workers have been killed or kidnapped, and camps ransacked. Given 150 centrally owned SOEs, and countless other provincial, local and private Chinese enterprises active in Africa, the Chinese bureaucracy cannot police the activities of all of these actors nor ensure their security. There will be short-term pressure on host governments to do something, likely exacerbating local conflicts. In the meantime, social responsibility and environmental guidelines are slowly seeping their way into the regulatory and financial regime that Chinese firms active in Africa are facing. China’s oil firms still rank quite low on comparative international rankings of social sustainability. But the long-term goal for China is, then, fundamentally the same as the OECD: a stable, economically flourishing and globally integrated Africa.

China as development partner
How to get there remains the vexing question, one that the West has not unlocked for fifty years and China cannot in ten. Democracy alone is not the answer. However, building sustainable economies is a key step, and this takes sound governance, strong institutions and adequate infrastructure upon which stable democracies can be built.

African states and leaders with those goals in mind can certainly see the value in China’s investment and infrastructure focus: energy and infrastructure is gripping most of the continent. Unfortunately, China’s aggressiveness can also play havoc on African manufacturers, and undercut internal and external pressures for better governance. Countries can turn away from the governance-related conditions imposed by the World Bank and IMF and sign up for relaxed, oil-backed Chinese loans, as Angola did in 2006. But Angola is actually spending considerably on infrastructure, including roads and water, in advance of its first elections since 1992 later this year.

The U.K. is one of the first OECD countries to engage directly with China on its approach to Africa, trying to both impart and learn lessons from its experiences. And China in 2007 signed a MoU with the World Bank to better coordinate aid efforts and it hosted, for only the second time outside Africa, the annual African Development Bank meetings in Shanghai the same year.

China has changed the development game in Africa in a very short time. The opportunities this poses to Africa are immense, but only if the rest of the world stays engaged in the governance and democratic support it has promised to fragile and post-conflict states across the continent.

Authoritarian China, undergoing its own gradual internal transformation, simply cannot be the conduit of democratic institution-building. It can do many things for Africa, but stronger African states that can better manage this hyper-engagement will be better placed to leverage Chinese investment and infrastructure into long-term economic development. And governance and democratic institution building experience should be the lynchpin for old democracies like Canada and the United States to offer, not impose on, African states to make this a reality.

But if North America either ignores Africa’s real needs or sees China only as a threat, then we all suffer.

Chris WJ Roberts is vice president, Western Canada, for the Canadian Council on Africa (CCAfrica), and is currently studying at the Centre for Military and Strategic Studies (CMSS) at the University of Calgary. These are his views and do not represent the official or unofficial positions of CCAfrica or CMSS.

 

Author: Vanguard Staff

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