By Paul Frimpong
In Africa, exports are booming and export markets have become more diversified. Foreign direct investments have increased by a factor of six over the past decade.
Private entrepreneurs have emerged as a dynamic force for change, driving innovation and transforming outdated business models.
There is an emergent middle class, although its size is often exaggerated. For the first time in over a generation, the number of people living in poverty have fallen; fewer children are dying before their fifth birthday and more are getting into school.
Africa and the West
Africa has had 50 years of development partnership with the West and even though still continues to, but really, there is not much change experienced on the continent.
This has sent a lot of frustration shared by people not only on the African continent but by people in the West as well. Questions are been thrown at the West as to why after several years and several billions poured into Africa, there has not been a significant change on the continent.
This and other questions are very legitimate to be tabled before both the donor west and recipient Africa.
The most intriguing aspect is that, Africans themselves are up on their toes and asking questions as to whether they are better off without the West/traditional donors or are there alternatives to this model. Can we as Africans form a different development partnership which can bring us the change that we so seek?
The coming of China
For the past decade, there has been a new friend of Africa in town – that whom the whole people are pointing at, saying, – ‘I like that’; ‘I want that’. I am talking about China in Africa. For many Africa’s, China is now the number trading partner.
The country has emerged as Africa’s largest trading partner. Two-way trade has increased dramatically to an all-time high of $166.3 billion, triple the figure for 2006.
Both imports and exports have registered impressive growth rates. According to estimates, there are around 800 Chinese firms in Africa, investing in the infrastructure, energy and banking sectors.
This enthusiasm has led Africa to sit at the same table with China, the new development partner. The China-Africa relation started dating back to the 1960s and 1970s.
But the relationship came to the fore in 2006 when 48 African leaders attended a joint forum in Beijing.
The Forum on China - Africa Cooperation (FOCAC) is the name of the joint meeting between the People's Republic of China and the states of Africa. There have been five summits held to date, with the most recent meeting having occurred from July 19 - 20, 2012 in Beijing, China.
The Forum on China-Africa Co-operation (FOCAC) which was held historically on November 2006, marked the beginning of a new chapter of China-Africa relations. This forum held in Beijing saw in an enthusiastic attendance of about 43 African heads of states.
This however has created some form of schism especially between the West-Europe and China’s share of trade on the continent.
Without doubt, China for the past decade has made a significant share of trade with the African continent. In 2014 and beyond, a lot more China would be seen as governments are seeking to sign new deals and enter into great deals – infrastructure deals with China.
In an August 30, 2012 article published by the Express Tribune, it stated that “It is indeed ironic, that the very nations that divided up Africa and its peoples in the last quarter of the 19th century are accusing the Chinese of being neocolonialists.
The original scramble for Africa took place between 1884 and 1885 following a conference in Berlin. As in other parts of the globe, the colonial powers left deep imprints on the continent. Some of the main problems that continue to plague Africa were perpetuated, nee fostered, by the colonial powers to further their own ends.
The frequent outbreak of violence between Hutus and the Tutsis in Rwanda is one such example where Belgian policy favoured the minority Tutsis much to the chagrin of the majority Hutus.
Post-independence, this historical sense of deprivation has often led to acts of ethnic cleansing carried out by the majority. Economic exploitation and policies favouring firms from the metropole were also promoted by the colonial powers”.
On the other hand, Chinese investment in the region is not based on extracting monopoly contracts for its firms. Similarly, in terms of development lending, as opposed to conditional lending by multilateral agencies (such as the World Bank) controlled by developed countries, Chinese aid to the region is unconditional and usually spent on infrastructure projects that have a greater impact on people’s lives.
Sinopec, one of the leading Chinese state-owned oil companies, acquired oil concessions in Angola on the back of an oil-backed credit of $2 billion from China’s Eximbank to rebuild the country’s railways, state buildings, hospitals and roads.
Far from being seen as neocolonialist, the “Beijing consensus” between African countries and China — to borrow a term coined by Joshua Cooper Ramo of the UK-based Foreign Policy Centre — is viewed as a much more attractive alternative economic development model in the continent, compared to the Washington consensus.
The Chinese Strategy
The Chinese strategy is hinged on a very simple economic principle – “we are here for development”. On government to government level- the Chinese approach has been non-interference, no political strings attached and mutual benefits.
Of course, one would be very naïve to ignore the Chinese interest. Whichever way, their involvement with Africa has saved the continent on many fronts.
It has helped Africa to diversify and hence helped to escape the hard consequences of the recent past global economic and financial crises as was felt heavily in other parts of the world.
In 2006, the Chinese government adopted Africa-China policy detailing how their engagement with Africa is going to be mutually beneficial.
The policy was characterized on sincerity, friendship and equality, mutual benefit, reciprocity and common prosperity; mutual support and close coordination as well as learning from each other and seeking common development.
African countries was able to weather the global economic crisis fairly well due in large part to a shift away from their tradi¬tional trading partners—primarily the United States and the European Union—toward China, India and other emerging markets.
Globally, there is been the debate of whose system is working and going forward, would continue to work to spur economic growth and development. Is it the West’s private capitalism or China’s state capitalism; liberal democracy or the de-emphasis on democracy; West’s political rights over economic rights or China’s economic rights over political rights.
Again, there are a lot of issues that have been raised internationally and diplomatically, as to the ethics of China’s involvement in Africa.
Also, there is the question as to whether China is really an emerging market or should they be classified as a fully developed economy together with the fact that they are also a member of the UN Security Council? And based on that, should they be playing a greater role in terms of conflict resolutions in Africa?
The point is that, Africa wants to develop-grow and transform its economies. In 2014 and beyond, African countries would continue to cultivate and build on these new and promising economic relationships with China, obviously with a new approach that would be mutually beneficial.
Whiles Europe continuous to be Africa’s trading partner, China, in particular, has emerged as an important and dy¬namic export destination for Africa. China’s share of exports from Africa has increased significantly over the last decade from 3 percent in 1998 to 15 percent in 2008.
In 2009, Chi¬na overtook the United States to become Africa’s largest trading partner. China again is by far the fastest growing external source of infrastructure financing for the continent-the roads, dams, rails etc.
At the level of attitude, China sees its interest in development as directly linked with Africa. Of course, that is what has necessitated for the constant engagement between African countries and China.
China has a huge population to feed; talk of domestic demand for potable water, arable land, oils, minerals etc. China therefore sees Africa as the best destination to meet the increasing demand domestically.
The Africa strategy
A wind of policy swing began blowing in 2013 and would continue in 2014 and beyond to position Africa well in this relationship.
Over the last decade, the China-Africa relationship has been dictated by China’s interest in Africa’s natural resources.
Therefore, for African coun¬tries to maximize the potential benefits from this partner¬ship, in 2014 and beyond, African governments must articulate their own com¬prehensive China policy, which should include strategies for engagement beyond natural resources.
Moreover, African government should take the advantage of increasing trade ties with China to gain access to other Asian markets more broadly and to diversify the African region’s ex¬port products.
China will continue to remain an important trading partner for Africa over the next decade. Therefore Africa should look at means to maximize on this relationship to spur economic growth and development, reduce poverty and reduce youth unemployment.
The writer is a Chartered Economist and a member of the American Academy of Financial Management (AAFM) writes on the macro-economy and global affairs. He is also an African Affairs Analyst and Emerging Markets Strategist.