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The new scramble for Africa: China and the West

Fearmongering seems to be the present modus operandi and the motor force for delivering fake news. Many are finding themselves brainwashed and worshipping at the feet of the purveyors of falsehoods. Mphuthumi Nthabeni looks at widely reported fears held throughout Africa, especially with respect to the exponential levels of Chinese interest and investment across the continent. Is it simply mere self-interest and a ploy for continental takeover?

The situation

We’ve recently seen one Western leader after another visit African states. What’s behind the new scramble for Africa? When you listen to them their message, from Obama to May to Marcon, is to warn ‘poor Africa’ against the so-called debt-trapping of African states by the Chinese.

It is obvious that China’s push into African economies puts it in direct competition for influence with the occidental countries. Since 2015, China has had the upper hand.

I think that the counteraction of the growing Sino economic influence on the continent is the prime motive for their visits. The latest visits are unlikely to be out of due care or love for the African continent. Thus, the only plausible answer is that they are fighting to protect their own interests – vying to secure national economic power for themselves.

Not only are the stakes in Africa high due to the continent’s rich abundance in raw materials. By 2050, 25% of the world’s population will be African and under 30 years old. This means that on top of being rich in raw materials, Africa also has the most valuable commodity needed for development anywhere in the world – the boon of human capital.

China is the fastest growing country with the greatest population.

Fundamentally, economics relies on the consuming human population, because a growth in manufacturing requires an increase in human consumption. The demand for manufactured goods, like cars and cell phones, is drying up in the occidental countries. China and Africa are the rapid-growing consumer markets.

It is also estimated that Africa supplies 90% of the world's platinum and cobalt, half of its gold, two-thirds of its manganese and 35% of the world’s uranium. The continent also accounts for nearly 75% of the world’s coltan, an important mineral used in electronic devices, like smart TVs,  cell phones and game consoles.

Theoretically, Africa should really be the epicentre of the next industrialisation boom. But that seems not to be the case, so where does the problem lie?

Africa's predicament

Africa needs to find the best way of turning her natural wealth into financing strategies for development.

To achieve this you need informed policies that follow best economic practices. And these require visionary leadership. It sounds clichéd, but Africa is underdeveloped because it lacks innovative and informed leadership.

To lead a country into a successful and sound economic platform you require a degree of sophistication and understanding of the long-term impacts of developmental economics.

Most African leaders, stupidly, do not bother to acquire these skills or employ strategic advisors who have them, as do other world leaders. In the instances where they do hire experts, they seek only classical economists whose training and backgrounds are designed to promote the hegemony of (neo)liberal economics.

Most of the time in African states this is to the detriment of their national interests. These leaders often insist on passé modes of neoliberal models – designed to ultimately benefit the hegemony of Bretton Woods' thinking, whose sole mandate is to indefinitely grow Western capital.

At worst, Africa’s leaders are corrupt, putting their personal gain above all else which perpetuates the patronage system ensuring that only the ruling elites take turns on the trough.

Luckily things are slowly changing. Africa's civic societies in particular and faith groups in general – not including political opposition parties who are largely no different from the ruling politicians they claim to oppose – have woken to the realisation that sustainable economic growth cannot just be based on the aggressive extraction of short-term high returns of raw materials.

They’re leading the challenge aimed at unlocking the continent’s economic potential through deals that promote internal manufacturing capacity development. The big question is where’s private business capital in all this. It is well-known that SA companies have a higher turnover income than many others in the world, they either sit on the income without reinvesting in the country or worse they take their profits offshore. Their latest excuse is that the reconstitution of Section 25 might impose uncertainty on property rights.

False narratives of African development and Chinese involvement on the continent

What the Chinese debt-trap talk fails to acknowledge is that African states do not accumulate debt because they like doing so or out of choice. It is simply because they urgently require the crucial infrastructure to enable large economic development.

Contrary to popular belief, the debt terms offered by the Chinese are often better than the Bretton Woods institutions (IMF & World Bank). When most Western-based companies agree to loans for African states, which is seldom, they do so at shark-loan rates because of the supposed risks that loans given to African states carry.

This is why African states are preferring the Chinese barter model for infrastructure investment and development. Indeed, this model is based much more on politics than on an objective business case. The only collateral that African states realistically have are their raw materials. And, only China is prepared to accept these as security on loans.

We hear people citing how the Chinese are about to take over the ownership of the as yet to be completed Kenneth Kaunda International Airport because Zambia is failing to service their national debts. These same people are quiet about how Abuja International Airport was, from the outset, built by private  British funders.

Speaking to the BBC, the Zambian Chief Minister of Information and Chief Government spokesperson, Dora Siliya said that they were not in a debt crisis, particularly with the Chinese and the stories circulating online and elsewhere are not true. The issue of defaulting on Chinese loans is not even in the picture or an issue for discussion yet. At the moment, the pressing issue is the Eurobond and the greater debt owed to Western capital investors. She said that these were “smear campaigns” intended to discredit African leadership.

Just so that we’re clear, there’s nothing wrong with China foreclosing when the African states fail to service their debts. All moneylenders do this.

In all the $120-billion or so that China has invested in Africa so far they’ve, in real terms, foreclosed only once. And that was not in Africa but Sir Lanka. They partially did the same in Angola when the Dos Santos administration tried to pull a fast one on them by selling crude-oil to Western countries with funds that were supposed to service their Chinese debt. They then backed off, when the new administration that took over from Dos Santos promised to service their debt as agreed.

In fact, China has often chosen to pardon the debt rather than to force terms when the real capacity to repay was genuinely proven to be lacking. Venezuela, Zimbabwe, Zambia and Angola have all been recipients of Chinese largesse.

There are other murmurings of China tightening the grip on Uganda because the government is using Chinese loan funds on wasteful and corrupt activities, such as buying luxury goods and setting up offshore accounts for political elites.

They’ve also become aggressive with Malaysia because a new administration there wants to renegotiate, to their own extreme favour, the deals that were done by the previous regime.

Many people like to raise the Standard Guage Railway project in Kenya to make the point that the Chinese model promotes corruption.

Yes, the Kenyan government could probably have refurbished and upgraded their rails for $1-billion but chose the Chinese model that cost them $3-billion instead. This is not only because the government wanted to pay patronage to its cronies or because their ruling party wanted to pay for their electioneering. Rather, the deal is linked to the greater Belt and Road Initiative that is revolutionising the infrastructure of West African states. Were it not for China who else would be willing to invest on Kenyan railway infrastructure?

The Kenyans claim that they have for years begged for money to refurbish their rail line from Mombasa to Nairobi built during British colonial times.

This transportation nerve-centre between Kenya’s two major cities is crucial for their development. But, the West was simply not interested in investing. The latest critique is that it is mostly being used for commuter rail than for transporting goods, the purpose for which it had been built.

What they don't tell us is that this is more likely due to the presence of trucking cartels who have secret monopoly deals with shipping owners and business people, mostly funded by western capital.

In any case, even if this was the case, commuter rail is still great for tourism and ordinary citizen travel. It may also be a while before businesses wake to the realisation that it is far cheaper to transfer goods by rail than road. As for the corruption that occurred with the Standard Gauge money: that is on the Kenyans; not the Chinese.

The panic of the West

In 2014, the USA committed to investing $14-billion in Africa over the next decade. If you consider that China actually invested $175-billion over the same time period, and has just committed an additional $60-billion during last week's FOCAC (Forum on China-Africa Cooperation 2018), you’ll understand why the West is panicking.

President Xi Jinping in 2015 promised that Chinese investment in Africa will target areas that foster sustainable economic growth: industrialisation, agriculture modernisation, infrastructure, financial services, green development, trade and investment facilitation, poverty reduction and public welfare, public health, people-to-people exchanges, and peace and security.

In this regard, China has been true to its word. Their investments often require local sovereign guarantees and strong local government support. Hence, the Chinese value political relations much more than the average common business sense.

I am not sure why as Africans we should overly concern ourselves with the Sinophobic tendencies of the West who have never been our friends anyway?

In forthcoming articles, I’ll look at why this model of barter-trade makes more sense for Africans, given our cultural identity. I shall also look closer at the system to see if it’s tendency of starting with infrastructure before actual economic growth, puts the carts before the horses? And, I will propose the best ways for African states to avoid being outmanoeuvred when dealing with China and the West.

* The opinions expressed here by Spotlight.Africa contributors and editors are their own and not official statements of the Society of Jesus in South Africa or of the Catholic Church unless explicitly stated.