Opaque deals leave benefits of Sino-African relations unappreciated

By Mark Kapchanga Source:Global Times Published: 2012-12-19 21:50:05

The Africa-China partnership produces interesting headlines in the global press. Most are negative, and disturbing. Rarely are they objective.

Western media has been the most critical of China's growing role. Some have forecasted doom for Africa and some have branded China a new colonial power of Africa, arguing that Africa should be cautious with regard to China's intentions.

The commonly shared perception of the Asian tiger's resurgent interest in Africa is that it is after the vast natural resources of the continent. China's investment in the war-prone Democratic Republic of Congo (DRC), for example, has been remarkable, driven by the country's mineral wealth.

The poorest nation in the globe has 30 percent of the world's copper reserves, huge deposits of industrial diamond and gold. It is the world's largest producer of cobalt and has 80 percent of the world's coltan. The mineral is a key ingredient for mobile phones. The DRC has untapped deposits of raw materials estimated to be worth in excess of $24 trillion, around 40 percent of the global economy.

China's decision to invest more than $9 billion in the DRC, dubbed the "deal of the century," is said to be a resources-for-infrastructure plan. Some non-governmental organizations claimed China would be granted 10 million tons of copper and 600,000 tons of cobalt, and in exchange, China would build 2,400 miles of roads and 2,000 of rail, 177 health clinics, hospitals, universities and hydroelectric dams.

Despite innumerable criticisms, China's $3 billion package for development of Congo's copper and cobalt mines are projected to turn into profits from next year. The mines will produce $40 billion to $120 billion in revenues.

A similar model has been adopted in Angola where China has injected close to $5 billion.  Bilateral trade between the two countries has been on a steady rise since 1988 when the Joint Economic and Trade Commission was established. Two years ago, bilateral trade exceeded $120 billion.

Angola is China's largest African trade partner. With the need to export its oil, Angola has benefited from China's involvement in the much-needed infrastructure expansion, which has in turn made it possible for Angola to diversify its exports beyond oil to timber, coffee and diamonds.

The change of mindset was conspicuous when the Economist splashed "Africa rising" a month ago. Some 10 years ago, it labeled Africa "the hopeless continent." At a time when the West saw Africa as a failed continent, China filled the void left behind. The scale of China's engagement with Africa has seen trade grow at more than 40 percent per year since 2000.

Chinese direct investment in Africa is now more than $8 billion, with more than 1,600 firms reported to have set up operations in the continent.

So, why is China seen to be exploiting Africa's resources?

As a matter of fact, Beijing has not concentrated only in the extractive sector. Chinese firms are fast spreading to food processing, manufacturing and telecommunications. ZTE Corporation, for example, has set up more than 40 offices, employing close to 4,000 people in Africa.

However, China needs to be more open in its deals. The government-to-government transactions are quite opaque. It is imperative that full and complete information about what is on offer is made public.

Another key problem that haunts China operations in Africa is the use of cheap labor. Recently, employees of a Chinese firm in Zambia demonstrated over low wages. They ended up killing one of the firm's managers. Such a brutal scene shows that Beijing should change its compensation packages and bring it in tandem with the prevailing market rates. This way, China's seeds of investment in Africa will germinate and sprout without wilting.



The author is a journalist on African issues based in Nairobi, Kenya. mkapchanga@gmail.com



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