Chinese investments in Africa unearthed

21 February 2017 | Columns

By Joseph Kalimbwe

Over the past two decades, the Chinese have overtaken the West's involvement in Africa with lightning speed. Africa has become a training field for the Chinese to practice corruption without heavy criticism or complete stoppage from those holding the reign of power. From west Africa to east Africa to southern Africa, their presence is increasingly visible but their main intention continues to be an unknown, whether to develop sub-Saharan Africa or to take the most precious resources found in the region.

In its quest to secure resources, China engages in a form of commercial diplomacy that most African countries can't match. For example, Beijing pitches vast trade, aid and investment deals on frequent trips to resource-rich countries, and retains an almost unparalleled ability to provide low-cost financing and cheap labour for infrastructure projects. China has also pursued exploration and production deals in smaller, low-visibility countries, like Gabon, Namibia, Zambia, Ghana and Angola.

And the fact remains there is a lot of considerable confusion surrounding what China really wants in Africa. Several economic analysts some from the famous UK based “The Economy” accounts, conflate investment with multi-billion dollar loans from China to African governments that often use the loans to build infrastructure by Chinese construction companies. These loans tend to go to resource rich countries such as Angola, Democratic Republic of the Congo and Ghana and are usually repaid by shipping natural resources back to China. Shockingly, these loans are not Foreign Direct Investments (FDIs) instead they are commercial deals, often with a concessionary loan component. Therefore, it is critical that as Africans, we should draw a sharp distinction between the true wants of China's involvement on the continent and its perpetuated need to develop the continent.

Since the start of the 21st century 17 years ago, close to 2 000 Chinese companies have invested in the African continent. Most of the investments have gone into energy, mining, construction and manufacturing. China's state-owned oil companies are active throughout the continent. The China National Petroleum Corporation, for example, invested up to US$6 billion in Sudan's oil sector. The China Power Investment Corporation plans to invest US$6 billion in Guinea's bauxite and alumina projects. Privately-owned Huawei and publicly-traded ZTE have become the principal telecommunications providers in a number of African countries. While most of their activity is sales, their operations are so large in some countries that they have established huge local offices. Increasingly, Chinese companies are moving into finance, aviation, agriculture and even tourism. In 2007, for example, the Industrial and Commercial Bank of China purchased 20% of South Africa's Standard Bank for US$5.5 billion. Ever since, China has invested increasingly in the financial sector of African countries.

What raises concerns about the Chinese involvement in Africa is their ability to come to the continent and pay handsome amounts of money to those in power in order for them to carry on with their activities of exploiting the continent. For example, China has a fertile corruption field in Africa. Due to weak leadership which our continent has suffered from for many years, Africa has long suffered from rampant corruption. A shocking discovery was made by journalists in Uganda and Gold Coast (Modern Day Ghana) after they reported that politicians were bribed by Chinese nationals to allow (the Chinese) to dig many uncovered pits in search of mineral resources.

In August 2014, the Obama administration invited close to 50 African heads of state and government to Washington to discuss possible west investments in Africa. During that conference, then US vice-president Joseph Biden was blunt in his remarks about corruption endemic prevalence on the African continent. “Corruption is a cancer in Africa,” he said. “It not only undermines but prevents the establishment of genuine democratic systems. It stifles economic growth and scares away investment. It siphons off resources that should be used to lift people out of poverty.” Biden's words are a true testament of the Chinese involvement in Africa.

However, some leaders have slowly begun to open their eyes on China's true reflections in Africa. Grievances range from poor compliance with safety and environmental standards to unfair business practices and the flouting of local laws. For example, Chad, which built new roads and public buildings with Chinese financial assistance, took a hard line with China National Petroleum after the company dumped excess crude oil in ditches near the capital of N'Djamena in 2013. Gabon also was quick to withdraw an oil field permit from a subsidiary of the Beijing-based oil and gas company Sinopec in 2013 due to environmental concerns.

Other African countries have voiced concern over China's continued use of its own labour and equipment in its projects on the continent. In the past two decades, more than one million Chinese citizens have moved to Africa. The impression that China has exploited resources without building up local African economies and society has triggered fierce criticism from some leaders. One of the delegates attending the US-Africa Summit in 2014 stated that, “US companies can never 'sweeten' a deal in Africa, but they do offer African partners quality, responsiveness, financing, training and a long-term business relationship,” he explained. “After years of getting to know Chinese poor quality, we find that African companies are seeking out known American quality and reliability.” The question of whether the Chinese are allowed to continue exploiting Africa lies entirely in our hands. We can choose to continue accepting their brides and let them take ten times what they left under our negotiation tables or we can educate ourselves and begin to provide for ourselves that which the Chinese have always beaten us on, the hard working spirit.

*Joseph Kalimbwe is a student at the University of Namibia's Department of Political and Administrative studies. He also serves as president of the Unam SRC.

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