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Sunday, February 24, 2008

China's Influence in Africa

In retrospect The EU-Africa summit held in Lisbon in December 2007 was an explicit counterpoint to the China-Africa summit of November 2006. Mr. Bush just concluded a tour of five African countries. Korea and India are also becoming notable players in the continent.

Interest by the West in Africa quickly waned after the heady years of independence. Africa’s fledgling democracies quickly morphed into despotic regimes typified by violence, corruption, disease and poverty.

For nearly five decades, the West has typically shunned Africa. America and Europe have linked its loans, trade and investment to improvements in democracy and respect for human rights. Now the Europeans and the Americans are increasingly worried that they are reducing trade and clout in Africa.

All this attention has put Africa’s leaders in the enviable position of picking their friends and on their terms. African leaders have always lamented broken promises on aid and a hostile international economic system. What is on offer from Africa's suitors is blend of concessions and inducements.

Why the renewed scramble for Africa? Africa has 10% of the world’s oil resources. The continent holds 60% of the world’s diamond. 7% of the world’s Uranium resources are found in Namibia while Niger has 2.4%. 8% of the world’s proven gas resources are found in Africa.

Invariably, Africa’s oil and mineral wealth occurs in countries that have been characterized by Western powers as plagued with civil strife, chronic corruption, and weak governance. For the most part these countries are embroiled in conflict and occupy the bottom ranks on the UN Human Development Index.

2006 marked the “Year of Africa” in China’s diplomacy. China has calibrated its foreign policy to its domestic development strategy. The Chinese have stepped into the continent with deep pockets, fewer demands on commitments to democracy and respect for human rights on African governments.

Clearly, the real trigger for the new scramble for Africa is China. The United States and the EU are alert to the potential long-term disruption to important raw materials and energy sources as these resources come under “siege” by China to sustain economic growth. America’s renewed interest is tied to its desire to take 25% of its oil supply from Africa and reduce its dependence on the Middle East.

Sino-African trade was valued at $55 billion in 2006. This is a dramatic increase compared to $18.5 billion between 2002 and 2003. In October 2007, the Industrial and Commercial Bank of China bought 20% stake in Standard Bank of South Africa at $5.6 billion.

China has secured a major stake in future oil production with a $2 billion package of loans and aid that includes funds for Chinese companies to build railroads, schools, roads, hospitals, bridges, and offices; lay a fiber-optic network; and train Angolan telecommunications workers.

China is also a credible partner in non oil or mineral rich countries such as Ivory Coast, where Chinese companies are building a new capital, in Yamoussoukro, paid for by Chinese loans.

China’s appetite for oil and minerals could resuscitate Africa’s economies. But China could also be the tripwire for Africa’s potential failure to attain sustainable economic growth. China’s offer of billions of dollars on long-term deals for rights to natural resources, unconditional aid and cheap loans to African governments risks driving back into debt, countries that have only just benefited from debt relief.

China’s quest for resource and potential markets is supporting African dictatorships, hindering economic development, and exacerbating existing conflicts and human rights abuses in troubled countries such as Sudan and Zimbabwe. In an apparent reference to the post-election crisis in Kenya, China claimed recently that Western style democracy was not appropriate for Africa.

Europe is also getting into the spirit of compromise and concessions with Africa. At the expense of UK’s attendance, Europe overturned its travel ban on Mr. Mugabe to enable him attend the EU-Africa summit in Lisbon. Sudan’s al-Bashir also attended and was spared any scrutiny on the excesses of his army in Dafur.

In contrast, Americans say they are driven by compassion rather than strategic (trade and military) interests. At the start of his Africa tour, Mr. Bush proclaimed that his was a mission of mercy. By the end of its first five-year phase, in September, the President's Emergency Plan for AIDS Relief (PEPFAR) will have spent $18.8 billion, mainly in Africa. Mr Bush has requested Congress to approve another $30 billion over the next five years to tackle AIDS in poor countries.

Renewed interest by China, Europe and America has both positive and negative effects. It's good for the continent because they are willing to invest in the “dark” continent. But it is bad for Africa if it reverses the modest gains in political and economic reforms.

Africa must structure its trade and investment relationships to produce outcomes that offer the most optimal pathways for delivering growth, opportunity and greater democracy for its people.

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