Step away from the debt plate Africa, you need to watch what you’re eating.

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Africa is bingeing on debt and risks overeating at the buffet of financial offers from China, India, Brazil and many others. Kenya just recently signed a series of financial agreements worth billions with China during Prime Minister Lee Keqiang’s visit to the country this last weekend making it clear that we live in a multipolar world. In this new world order Africa is spoilt for choice with regard to who to partner with to fund development. But we (Africa) seem to have an insatiable appetite for this new money and do not seem to be fully aware of the implications of accepting all these tasty offers of cash. We also don’t seem to be thinking about whether we can, or how we can absorb these volumes of cash. Don’t get me wrong, Africa’s excitement at promises of billions apparently with ‘no conditions’ is understandable. Having spent the past decades grovelling at the doors of donors and investors from Europe and North America, many Africans felt we were giving away our pride for monies tied to what many felt were onerous conditions. So now, we are whistling our way to the bank with our new financials ‘partners’.

But is this truly smart? The reality is that all borrowing has conditions. So allow me to digress briefly and go slightly further with this point. China enjoys talking about about how it provides money with ‘no conditions’, but closer analysis reveals that this is not strictly true. The Chinese government, like any other government, will protect its investments; investments made almost exclusively with African governments…which seems to suggest that if China has to back up (even unpopular or despotic) African governments to protect its investments, it will. Look at the incriminating allegations that China funded Mugabe’s election ‘victory’ last year. Documents from Zimbabwe’s Central Intelligence Organization suggest that the success of Mugabe and his ZANU-PF party, ‘reflected direct intervention by the Chinese Communist Party’. (See more here and here). Perhaps for Zimbabwe the conditions that make China feel most secure in its investments is if Mugabe is in power. So maybe there are some conditions tied to money from China. The point I’m making is that it is important Africans analyse reality and not get spellbound by the rhetoric. But that is an aside; let’s get to the real problems behind Africa’s debt binge

 

 

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1. We don’t really know the scale of the debt we’re getting into

By ‘we’ I mean Africans not on the inside corridors of power, but on whose behalf these deals are being made. It is absolute madness that in the case of countries such as China, we actually don’t know how much debt we’re getting into. Over the weekend Kenya and China signed several agreements but, ‘The two leaders did not disclose the actual financial value of most of the agreements and protocols signed but their aides said the deals run into billions of Kenya shillings.’[1] Why the secrecy? How much of this money from China is grants vs debt? What are the interest rates (there are references to ‘concessional loans’ but that’s about it), what are the terms of repayment, what are the penalties for defaulting? Also bear in mind that in the past, ‘Many of the Chinese contracts in Africa lay down that repayments be made in natural resources, with complex institutional contracts that make repayments unpredictable in financial terms’. [2] How can we be comfortable with our governments getting into deals into the billions of dollars and yet these are shrouded in mystery? With no information at hand, we do not really know how deep of a hole we’re digging for ourselves.

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2. Do we have the absorptive capacity to handle all this money?

We are getting into debt to fund numerous development projects that range from infrastructure to agriculture, to security and wildlife but, pray tell, do we have the absorptive capacity to soak up these billions? Because whether we can absorb the money or not, we will be paying it back. Absorptive capacity here relates to the macro and micro constraints that recipient countries face in using resources, in this case money, effectively.[3] Does Africa have the physical, intellectual and systems-related infrastructure, expertise and culture to competently implement all these projects? For example, do county governments have the technical savoir faire to implement agriculture projects worth millions? One of the issues of serious concern is that investment in educational infrastructure rarely features prominently in these deals. There are very limited (if any) provisions for building the educational capacity of African countries especially at tertiary and vocational levels. So great, we’re getting money to build railways, but how many Africans can be effectively put to task on this, especially at managerial positions? Bear in mind that already, with regards to China, Africa has fallen into a trap where, 1) China is allowed to bring in Chinese nationals to provide labour and, 2) When African labour is used, it is cheap, unskilled labour.[4] This situation is untenable. Africa should be using every single government- funded project to hire Africans and build the capacity of Africans to do the job competently in the future. Africa cannot continue to so fundamentally rely on outsiders to do the basics for us such as building roads. But sadly, African countries seem to be happy with outsourcing all the large-scale projects, sometimes back to companies from the country that gave us the loans in the first place. This leads to the next point.

 3. With limited absorptive capacity, Africa will continue to outsource big contracts

Africa is not being very bright. We get loans then outsource the implementation of the projects back to companies from the donor country. In short, we’re paying China to pay itself. Why? Generally however, using outsourcing as the default strategy for large-scale project implementation is problematic in at least two ways: 1) It hides and exacerbates Africa’s skills deficit and, 2) It pumps money out of the country. The first point is obvious, if we continue to rely on others to build our roads, we will continue to lack the skillsets and capacity to competently build and maintain our roads ourselves. But since the roads are being built, we never feel the weight of our incompetence in this area and therefore have no sense urgency to rectify this problem. Secondly, companies implementing projects in Africa make a profit then expatriate the profit. So we’re getting into debt and then haemorrhaging some of that expensive money out of the continent through outsourcing. This makes no long-term sense. Ideally we should use local contractors to implement projects however, as elucidated in point 2, we do not seem to have sufficient volumes of companies capable of absorbing this workload. But rather than fix that, African governments go to the default setting labelled ‘outsource’. We’re getting into a vicious cycle as follows: We don’t have the capacity to implement large-scale projects → we outsource but fail to ensure skills transfer → exacerbates the skills deficit → we don’t have the capacity to implement large-scale projects. African governments should essentially use the development projects led by non-Africans as structured training opportunities for newly qualified professionals as well as building more seasoned professionals into the management structure of projects.

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4. Debt and Corruption are an awful mix

The appetite for debt by African governments is particularly concerning given that there does not appear to be any serious action to end the gross mismanagement of public funds. Getting into debt only makes sense if you plan to use the money properly. But if substantial sums of money end up in the pockets of faceless politicians, then Africa is ransoming future earnings with no future benefits. This is self-sabotage at its best. There is no need to belabour the point. Don’t take on billions of dollars of debt if corruption is still an untamed beast…the consequences for Africa’s economy and people will be dire.

 5. Overleveraged?

This issue relates to point number 1. There is limited information on the scale of the debt Africa is getting into with certain parties so at what point will we in Africa know when we’re overleveraged? It seems like the answer to that is ‘not any time soon’. The scary part is that some African governments seem to think debt will fix all our problems with Heads of States expecting hearty praise when they secure even more debt for the continent. It is true that structures such as the Debt Sustainability Framework (DSF) exist which seek to stop lenders from lending more money to countries that have exceeded their debt ceilings. But, ‘to work well, the DSF needs close co-ordination between all creditors. This is hard enough to do between public and private lenders from the traditional partners, but is even more difficult with the new lenders [such as China].[5],[6]Sadly, African countries do not seem to be keen on tabulating public debt figures at either national or pan African levels, and sharing them.

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So in short, these five factors are working together to create a scenario where, we: 1) Unknowingly get into unsustainable levels of debt, 2) Seem currently unable to absorb the funds thereby forcing us to 3) Outsource but we do so in a manner that exacerbates our skills deficit thereby entrenching our dependency on others and because we 4) Fail to competently manage the funds properly and keep track of our debt levels we get 5) Overleveraged. So if we are not careful and if we continue to fail to reign in African government debt appetite, Africa will amass toxic levels of debt. We need to get our fundamentals right and create a scenario where there are strategies developed and implemented to address each of these issues. Until then, I say: Step away from the debt plate Africa, you need to watch what you’re eating.

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Since the publication of the post on May 12 2014, it has been revealed that:

National Treasury Cabinet Secretary Henry Rotich disclosed that over 50 per cent (Sh174 billion) of the Sh340 billion financial agreements signed with the Chinese Government on Sunday is a commercial loan. Mr Rotich said the loan would attract an interest rate of 4.4 per cent per annum over a period of 12 years, with five years grace period. He said the other component of the financing is a concessional loan, which carries a fixed interest rate of two per cent per year over a repayment period of 20 years, with a grace period of seven years (Source: http://www.standardmedia.co.ke/business/article/2000119937/half-of-financing-deal-brokered-with-china-is-commercial-loan, May 13, 2014)

National Treasury Cabinet Secretary Henry Rotich yesterday disclosed that over 50 per cent (Sh174 billion) of the Sh340 billion financial agreements signed with the Chinese Government on Sunday is a commercial loan. Mr Rotich said the loan would attract an interest rate of 4.4 per cent per annum over a period of 12 years, with five years grace period. He said the other component of the financing is a concessional loan, which carries a fixed interest rate of two per cent per year over a repayment period of 20 years, with a grace period of seven years
Read more at: http://www.standardmedia.co.ke/business/article/2000119937/half-of-financing-deal-brokered-with-china-is-commercial-loan
National Treasury Cabinet Secretary Henry Rotich yesterday disclosed that over 50 per cent (Sh174 billion) of the Sh340 billion financial agreements signed with the Chinese Government on Sunday is a commercial loan. Mr Rotich said the loan would attract an interest rate of 4.4 per cent per annum over a period of 12 years, with five years grace period. He said the other component of the financing is a concessional loan, which carries a fixed interest rate of two per cent per year over a repayment period of 20 years, with a grace period of seven years.
Read more at: http://www.standardmedia.co.ke/business/article/2000119937/half-of-financing-deal-brokered-with-china-is-commercial-loan

[1] The Daily Nation, May 11 2014 ‘China rewards Kenya’s friendship with billions’, http://www.nation.co.ke/news/-/1056/2310614/-/14u68a8/-/index.html

[2] African Economic Outlook (2014), ‘Transparency needed to end debt sustainability fears’, http://www.africaneconomicoutlook.org/en/in-depth/emerging-partners/industrialisation-debt-and-governance-more-fear-than-harm/transparency-needed-to-end-debt-sustainability-fears/

[3]De Renzio, Paolo (2007), Aid effectiveness and absorptive capacity: Which way aid reform and accountability?’, ODI http://www.odi.org.uk/sites/odi.org.uk/files/odi-assets/publications-opinion-files/2271.pdf

[4] The African Development Bank Group (2010), ‘Chinese Trade and Investment Activities in Africa’, Policy Brief , http://www.afdb.org/fileadmin/uploads/afdb/Documents/Publications/Chinese%20Trade%20%20Investment%20Activities%20in%20Africa%2020Aug.pdf

[5] African Economic Outlook (2014), ‘Transparency needed to end debt sustainability fears’, http://www.africaneconomicoutlook.org/en/in-depth/emerging-partners/industrialisation-debt-and-governance-more-fear-than-harm/transparency-needed-to-end-debt-sustainability-fears/ [addition in brackets mine]

[6]Some argue that the net effect of China’s loans on African debt tolerance is positive because China is a major client of African raw material exports. Thus China has had a positive impact on the debt tolerance of some African countries through stimulating exports and GNP. (Reisen, Helmut (2007), ‘Is China Actually Helping Improve Debt Sustainability in Africa?’, OECD G-24 Policy Brief No. 9, http://www.oecd.org/dev/39628269.pdf) The strength of this point is debatable.

The consequences of China’s economic slowdown for Africa

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The Chinese economy is officially slowing down, ‘In January 2014, figures from China’s National Bureau of Statistics showed that in the quarter October to December 2013, China’s GDP grew at rate of 7.7%. This is the lowest since 1999’.[1] While these GDP growth rates are still spectacular comparatively speaking, most of us are unaccustomed to them. In fact as Africans we’ve banked on roaring GDP rates to feed China’s voracious appetite for African raw materials some of which are then converted into cheap goods sold on global markets. Africa has benefitted from both sides of this spectrum as we are providers of the raw materials and thankful consumers of cheap goods. But what are the implications of the slowdown for Africa? Quite frankly, it seems to be a bit of a mixed bag.

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The first consequence is obvious: A smaller appetite for Africa’s raw materials which means lower demand which may eventually cause a dip in commodity prices which then negatively impact African economies. And the slowdown is serious, in fact, ‘China’s manufacturing sector is not only slowing down, it’s contracting’.[2] Sadly, ‘African economies in their present state remain highly dependent on their trade with China and none will be immune to the consequences of reduced demand’ so with, ‘revenues down, (African) exporters are cutting jobs and governments are tightening their spending’.[3],[4] This does not bode well for African governments as they may, ‘have to cut ambitious plans for spending on education and other social programs’. Not good.

The second consequence is that the slowdown will force the Chinese government and investors to take a good look at their economy and regroup. There will likely be a period of introspection and economic restructuring within China and this is both good and bad news for Africa. The good news is that such introspection may reduce the pace of investments made in Africa, thereby giving African governments and companies time to regroup and have a more intelligent strategy when interacting with China. This investment slowdown is also likely to make African government reduce the pace of their ‘look East’ policy and prompt some rebalancing. The bad news however is that with the deceleration, Chinese investors are likely to become pickier than they have been. Africa may find investment propositions tabled scrutinised with China bargaining with more zeal than Africa has been used to. This paradox is one African governments need to get their heads around, and quickly.

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The third consequence linked to the point above is that with the slowing in demand for African raw materials and less rambunctious Chinese investment into Africa, African GDP rates may falter in the short to medium term. This does not bode well for African governments who have been desperately trying to sell themselves as the new global investment destination, promising robust returns.

Fourthly however, this slowdown may be good news for the global economy which is good news for Africa. In fact, ‘we should all welcome a slower China. Debt has been piling up to dangerous levels, industry is burdened by excess capacity, and the financial sector has been taking on bigger risks as a result’.[5] And because of the sheer scale of China’s economy, ‘fears have been mounting that China could suffer a financial crisis like the one that tanked Wall Street in 2008. That would threaten the stability of the entire global economy’.[6] Indeed, analysts have long questioned whether China’s model is sustainable thus the slowdown is welcome.
Fifthly, the China slowdown is an indication of a shift of from an, ‘investment-led to a consumer-led’ economic model. The implication for Africa is that this will pressurize African economies to, ‘expand their consumer good exports and manufacturing bases, in order to keep up with shifting demand’.[7] In short, China’s demand is shifting from copper to cameras.[8] This is a conundrum because a long-term solution is needed to address the short to medium-term consequences of a China slowdown.

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Africa however has reason to be optimistic despite this deceleration. Firstly, as the African Development Bank Chief Economist stated, the fallout will not be catastrophic for Africa and indeed African economies should be relieved there is a slowdown as , ‘the 7% rate of growth is a more sustainable rate of growth…this level of economic growth will still manage to [sustain] the upward trend in terms of demand for commodities’.[9] Secondly, Africa remains attractive to China as an investment destination. Africa is investment hungry and China still wants to do business. So although the specifics of the dynamics may change, healthy investment and trade will still occur. Finally, it will do African companies and governments a world of good to stop seeking economic solutions from outside. This slowdown ought to prompt African governments to do the much needed work to: a) Ensure investments already made are executed effectively with a positive impact of development and, b) Engage in the effort to promote intra-African trade and investment with renewed rigour as it appears that Africa can rely neither on the West nor East to fuel economic growth and development.

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[1] Gumede, William  (2014), ‘China’s economic slowdown and the potential impact on African growthOpinion’, http://www.enca.com/opinion/china%E2%80%99s-economic-slowdown-and-potential-impact-african-growth
[2] Minqi Li (2014), ‘Why is China’s Economy Slowing Down?’, http://therealnews.com/t2/index.php?option=com_content&task=view&id=31&Itemid=74&jumival=11405
[3] Cape Breton Post (2014), ‘5 ways China’s slowdown will ripple across global economy’, http://www.capebretonpost.com/Business/2014-02-11/article-3611600/5-ways-China%26rsquo%3Bs-slowdown-will-ripple-across-global-economy/1
[4] African Arguments (2014), ‘Could China’s slowdown mark the end of Africa’s decade of growth? – By Barbara Njau, Senior Reporter at fDi Magazine, fDi Intelligence’, http://africanarguments.org/2012/08/28/could-china%E2%80%99s-slowdown-mark-the-end-of-africa%E2%80%99s-decade-of-growth-by-barbara-njau-senior-reporter-at-fdi-magazine-fdi-intelligence/
[7] African Arguments (2014), ‘Could China’s slowdown mark the end of Africa’s decade of growth? – By Barbara Njau, Senior Reporter at fDi Magazine, fDi Intelligence’, http://africanarguments.org/2012/08/28/could-china%E2%80%99s-slowdown-mark-the-end-of-africa%E2%80%99s-decade-of-growth-by-barbara-njau-senior-reporter -at-fdi-magazine-fdi-intelligence/
[8] Langi Chiang and Jonathan Standing, ‘From copper to cameras; feeling the heat from China slowdown’, http://www.reuters.com/article/2013/07/24/us-china-economy-idUSBRE96N04N20130724
[9] Creamer, Terrence (2013) ‘African growth ‘resilient’ to China slowdown, but AfDB wary of QE tapering risks’, http://www.engineeringnews.co.za/article/african-growth-resilient-to-china-slowdown-but-afdb-wary-of-qe-tapering-risks-2013-08-07

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VAT in Kenya: Punitive or are we a country of whiners?

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Introduction

Today the post is light and seeks to provoke thought on an issue that still causes controversy : the VAT Act 2013.

Tax has always been a touchy issue for Kenyans but recently became an explosive one when Kenya’s National Assembly passed the VAT Act 2013 which then came into effect on 2nd September 2013. Most Kenyans have always felt disgruntled about tax and there are at least two big reasons for this. The first is due to the feeling that taxes often end up lining the pockets of government officials and are never used properly. So what’s the point of introducing a new Bill that will tax Kenyans even more? Shouldn’t the focus be on stifling corruption? Secondly, the introduction of this specific 16% Value Added Tax (VAT) was seen as particularly onerous as it targets what many view as ‘basic goods and services’ such as processed milk, cooking gas, school books, electricity, fertiliser and other commodities that were previously tax exempt. Indeed newspaper columnist Mutuma Mathiu observed that the VAT is basically over-taxing the poor and is, ‘the kind of ideology-deprived decision that an inexperienced government would make’.[1] Ouch.

But one has to ask: Why did the government table the Bill in the first place? Well, it depends who you listen to. The most popular story is that devolution has led to a bloated and therefore expensive government and slapping VAT on basic goods is the easiest (and laziest?) means through which money can be raised to foot the bill. The tax will also help the government meet its ambitious campaign promises. The second theory argues that large-scale tax evasion is costing the government up to KES 20 Billion annually.[2] This, and Kenya’s narrow tax base (largely because those in the informal sector are not reached by the taxman), is costly for the government. Putting a tax on basics such as milk ensures that EVERYONE pays tax in one way or the other…even if that means some Kenyans will be double taxed. The final theory is that, ‘The IMF was not happy with the long list of tax-exempted goods; the Kenyan government had to make good on their promise to the IMF to ‘improve’ the VAT law.’[3]  The Consumer Federation of Kenya is of the opinion that this alone is problematic as, ‘It cannot be ‘good’ merely because IMF says that it is a conditionality for grants and loans.’[4]

You decide which of these theories you believe but at the end of the day, the VAT Bill was passed.

Voices against the VAT

As expected, public protests preceded and followed the Bill’s enactment and numerous voices scathingly rang out against the Bill. The main anti-VAT arguments are as follows:

1. The Bill will likely have the biggest impact on the poor people due to the increase of 16% on purchases.[5]  The Bill is anti-poor as the additional tax burden on all essential items will take a greater share of the income of poor households than that of the non-poor households.[6] Further, why does the Bill tax essentials, yet luxury items such as helicopters don’t attract the same?

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2. The Bill will likely cause an immediate reduction in the purchasing power per family, and the slowdown of economic activity in the medium term.[7]

3. The Act eliminates the previously concessionary VAT rate on electricity, diesel oil and fuel oil which was intended to cushion local manufacturers against high energy costs.  The change is likely to increase the cost of locally manufactured goods especially given the dependence on thermal sources of energy to generate electricity.[8] Further, VAT on jet fuel, kerosene and aviation spirit will likely increase the cost of local and international air travel and render the local airlines uncompetitive.[9

4. The Bill raises the cost of inputs and therefore the price of locally produced goods making imported goods more affordable thereby displacing local producers.[10] Further, new and prospective entrepreneurs may find it difficult to grow their enterprise especially when inputs are heavily taxed yet they operate in an environment in which fiscal policies enable foreign firms to compete effectively.[11]

5. The Bill is punitive to key sectors that support economic growth such as tourism.  Tourism players argue that the sector is already experiencing a slow down because they have had to push up the cost of their services making Kenya a more expensive destination. This in turn will have negative implications for the overall economy to which tourism contributes significantly.

6. The VAT hike may drive inflation up in the short term. The Central Bank expressed its concern over potential inflationary pressures emanating from the implementation of the Value Added Tax law.[12] A research institution, further argued that, ‘Holding everything constant, this single law could see inflation increase by close to 200 bps as a primary effect’.[13]

7. Given the role of the mobile phone in Kenyan life as a source of communication, money transfer and even a savings device, taxing mobile phones and other ICT equipment takes phones, which are often a lifeline for some rural users, further away from their reach. Further, Kenya’s ICT sector contributed 5% to the growth of GDP in 2011-2012. High pricing will reduce digital penetration and less penetration will reduce contribution to the GDP growth.[14]

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8. The Bill seems to give sweeping powers to the KRA, ‘Sec. 27 allows KRA to unconventionally “direct the Chief Land Registrar” that land and buildings of tax defaulters will be used as security. It again lacks clarity on the manner and circumstances which precede such “directions”.’[15]

9. Finally, apart from goods consigned to or purchased by the Kenya Red Cross and St. John Ambulances, other charitable institutions will pay VAT despite the fact that they have an altruistic mission and assist those the government doesn’t.[16]

See an interesting article here by the Consumer Federation of Kenya on other reasons it opposed the Bill.

Voices in favour of the VAT

 However, there are also those who didn’t mind the Bill while others even championed it. Indeed one research group stated, ‘In our view, the new VAT code has some solid positive implications that have been lost in rhetoric’.[17]  The Institute of Certified Public Accountants also backed the Bill. This is what pro-VAT Bill voices had to say:

1. One of the key advantages of the Bill is that it simplifies the country’s tax code, making compliance easier. In the past the Kenya tax code was, ‘wrought with ambiguities, vagueness and sometimes conflicting interpretation. So the simple two way provision for either Zero or 16% is welcome’. [18] Indeed the KRA argued the Bill was not only formulated to help the government raise revenues but also to ease tax compliance in Kenya and thus improve the country’s investment climate.[19]

2. The changes will remove ambiguities which the KRA has exploited to collect tax from some taxpayers.[20] In the same way that previous loopholes facilitated tax evasion, they also facilitated exploitation.

3. Commodities are not necessarily cheap just because they are zero rated since there is no guarantee that the business person will pass this benefit on to the consumer.[21] So taxing is not really the problem here, perhaps the habit of eating from every potential corner by some business people is the real issue. (Bear in mind that when the Bill came into effect, unscrupulous business people raised the price of goods beyond the 16% margin or raised the price of goods that were still tax exempt.)

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4. KRA officials are now responsible for their actions or lack thereof. This Act penalizes dubious and unethical behaviour by KRA staff to the tune of KShs 1,500,000 or 3 years imprisonment. Perhaps the arbitrary use of power by KRA staff can now end.

5. Zero-rating of goods transfers the burden of recovering the VAT input cost from the consumer to the government leading to VAT refunds. ‘In effect, government subsidises consumption of zero-rated items…as a result of the exemptions, the government has been forced to scale down on development expenditures to meet the VAT input costs for manufacturers in terms of VAT refunds.’[22] The Bill seeks to rectify this. (Read this for Deloitte’s rebuttal of this argument.)

6. The introduction of a VAT of 16% is lower than regional regimes; Uganda and Tanzania VAT both stand at 18%. Further, the Bill is part of a move by East African Community countries to prioritise the harmonisation of taxation regimes as one way of promoting investment into the region.[23] Perhaps Kenyans should be willing to make sacrifices if these sacrifices attract investment and fuel job creation in the country.

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7. The New Act exempts taxable supplies (excluding motor vehicles) imported or purchased for direct and exclusive use in geothermal, oil or mining prospecting or exploration.[24] Deloitte argues that, ‘this is an extremely welcome move as it takes cognizance of the fact that costs for oil prospectors are huge and not being income generating should not be subject to additional tax’. [25] This provision makes Kenya a more attractive investment destination for this sector.

8. VAT will increase government revenue which will lower their need to borrow locally. This is good news for individuals with loans and the real estate sector as interest rates will not be pressured upward due to increased government demand for local credit.

9. The VAT is one of the tax measures that the government is using in order to support the poor and marginalised. The government, ‘has committed to transferring Ksh8 billion ($94.11 million) to guardians of orphans and vulnerable children…. The country will also spend Ksh3.2 billion ($376 million) to double the number of elderly members of the society receiving a monthly cash stipend from the government from 59,000 to 118,000’.[26]

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At the end of the day, perhaps due to public outcry, the National Assembly passed an amended Bill that granted tax exemptions to, ‘bread, rice, milk, wheat, milk formula for infants, maize flour, First Aid kits, vaccines, bandages and sanitary towels.[27]

I’m sure many of you had made up your minds on this already; this post was just a challenge to consider what the other side has to say. But as someone said, and I agree, ‘If the Kenya government can assure us that the collection of additional VAT will result in better roads, better social services, improvement in education and health services and helping the poor have access to basic necessities, then Kenyans might be a bit accommodating.’[28]


[1] COFEK (2013), VAT Bill 2013: Cofek presentation to Parliament’s Committee on Finance, Trade and Planning, http://www.cofek.co.ke/index.php/14-news/132-vat-bill-2013-cofek-presentation-to-parliament-s-committee-on-finance-trade-and-planning

[2] Varyanne Sika (2013), ‘ Will Slapping 16% VAT Cripple Growth of the Kenyan ICT Industry?’, http://www.ihub.co.ke/blog/2013/08/will-slapping-16-vat-cripple-growth-of-the-kenyan-ict-industry/#sthash.OJzJlh9X.dpuf

[3] Varyanne Sika (2013), ‘ Will Slapping 16% VAT Cripple Growth of the Kenyan ICT Industry?’, http://www.ihub.co.ke/blog/2013/08/will-slapping-16-vat-cripple-growth-of-the-kenyan-ict-industry/#sthash.OJzJlh9X.dpuf

[4] COFEK (2013), VAT Bill 2013: Cofek presentation to Parliament’s Committee on Finance, Trade and Planning, http://www.cofek.co.ke/index.php/14-news/132-vat-bill-2013-cofek-presentation-to-parliament-s-committee-on-finance-trade-and-planning

[6] COFEK (2013), VAT Bill 2013: Cofek presentation to Parliament’s Committee on Finance, Trade and Planning, http://www.cofek.co.ke/index.php/14-news/132-vat-bill-2013-cofek-presentation-to-parliament-s-committee-on-finance-trade-and-planning

[7] Nairobi Business Monthly (2013), ‘Jury still out on VAT Bill’, http://nairobibusinessmonthly.com/jury-still-vat-bill/

[9] COFEK (2013), VAT Bill 2013: Cofek presentation to Parliament’s Committee on Finance, Trade and Planning, http://www.cofek.co.ke/index.php/14-news/132-vat-bill-2013-cofek-presentation-to-parliament-s-committee-on-finance-trade-and-planning

[12] James Anyanzwa (2013), ‘Central Bank of Kenya warns on negative effects of new VAT law’, http://www.standardmedia.co.ke/business/article/2000094799/cbk-warns-on-negative-effects-of-new-vat-law

[13] Nairobi Business Monthly (2013), ‘Jury still out on VAT Bill’, http://nairobibusinessmonthly.com/jury-still-vat-bill/

[14] Varyanne Sika (2013), ‘ Will Slapping 16% VAT Cripple Growth of the Kenyan ICT Industry?’, http://www.ihub.co.ke/blog/2013/08/will-slapping-16-vat-cripple-growth-of-the-kenyan-ict-industry/#sthash.OJzJlh9X.dpuf

[15] COFEK (2013), VAT Bill 2013: Cofek presentation to Parliament’s Committee on Finance, Trade and Planning, http://www.cofek.co.ke/index.php/14-news/132-vat-bill-2013-cofek-presentation-to-parliament-s-committee-on-finance-trade-and-planning

[16] COFEK (2013), VAT Bill 2013: Cofek presentation to Parliament’s Committee on Finance, Trade and Planning, http://www.cofek.co.ke/index.php/14-news/132-vat-bill-2013-cofek-presentation-to-parliament-s-committee-on-finance-trade-and-planning

[17] Nairobi Business Monthly (2013), ‘Jury still out on VAT Bill’, http://nairobibusinessmonthly.com/jury-still-vat-bill/

[18] Nairobi Business Monthly (2013), ‘Jury still out on VAT Bill’, http://nairobibusinessmonthly.com/jury-still-vat-bill/

[19] Peter Kiragu (2013), ‘The Hidden Benefits Of The VAT Bill 2013’, http://www.the-star.co.ke/news/article-129020/hidden-benefits-vat-bill-2013

[21] KAM (2013) ‘What repercussions does the VAT ACT 2013 have for Kenyan Manufacturers? ‘,http://www.kam.co.ke/index.php/latest-news/347-what-repercussions-does-the-vat-act-2013-have-for-kenyan-manufacturers

[22] Peter Kiragu (2013), ‘The Hidden Benefits Of The VAT Bill 2013’, http://www.the-star.co.ke/news/article-129020/hidden-benefits-vat-bill-2013

[23] Ruth Ndichu (2013), ‘Proposed VAT laws to benefit both governments, citizens across the EAC’, The East African, http://mobile.theeastafrican.co.ke/Opinion/Proposed-VAT-laws-to-benefit-both-EAC-governments-and-citizens/-/433846/1928222/-/format/xhtml/item/1/-/i420p4/-/index.html

[24] Taxwise (2013), ‘Kenya New VAT Act 2013’, http://taxwise-consulting.com/news/114-kenya-new-vat-act-2013

[26] Peterson Thiong’o, (2013), ‘Kenya in tax measures to build infrastructure, cushion old and poor’, http://www.theeastafrican.co.ke/news/Kenya-in-tax-measures-to-build-infrastructure/-/2558/1883932/-/7foujf/-/index.html

[27] Alphonce Shiundu (2013), ‘Relief for Kenyans as amended VAT Bill is passed’, http://www.standardmedia.co.ke/business/article/2000090325/relief-for-kenyans-as-amended-vat-bill-is-passed

[28] The Voice of Africa (2013), ‘Kenyan VAT Bill and its implications’, http://www.africaontheblog.com/kenyan-vat-bill-and-its-implications/

CHINA AND AFRICA: WHAT’S THE DEAL? PART 3…THE WAY FORWARD

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So what should Africa do to take control of and manage this growing relationship in a manner that is favourable to Africa? At the core of these recommendation is the thought that, ‘Africa must not be too Westwards or Eastwards minded- but rather Inwards minded. It is within Africa that all the answers lie’.[1]  There are some specific steps Africa can take to ensure the engagement with China works to Africa’s advantage:[2],[3]

  • Identify needs before engaging with China

It is crucial that African governments better identify their individual and collective needs before engaging with China to ensure that projects are mutually beneficial.

  • Be proactive on development strategies

Africa needs to engage China with development strategies that have been proactively developed and thought through in order to ensure that the engagement with China is beneficial. There is a need to integrate a China strategy into national and regional economic and developmental bodies. The Sino-AU strategic dialogue provides an opportunity to mobilise Chinese support for specific development projects and initiatives.\

development

  • Develop appropriate policy and legal frameworks

Given the spread of sectors that China is engaging in, it is crucial that Africa develop the relevant policies and legal frameworks to ensure that all investments and activities are properly supervised and function in a structure that is of benefit to Africa. This is particularly the case for activities in the agriculture, industry and trade, natural resources and mineral extraction sectors.

  • Ensure technology transfer

Given China’s rapid economic development in the recent past, Africa is well placed to make use of the technology that catalysed this and engage in joint technology projects. This ought to be actively pursued since technologies developed, used or adapted by China may be a better fit for Africa given that they are being used and developed in an emerging country context.

solar panel with man_2

  • Integrate Chinese Development Aid into existing structures

It is important that Africa synthesizes Chinese official assistance programs into the activities of other donors in order to, ‘eliminate duplication and help to advance more productive and comprehensive development programs in Africa.’[4] China also needs to be integrated into the, ‘mechanisms of global aid accountability and corresponding processes in the recipient countries’.[5]

  • Analyse China’s engagement with Africa

There should be engagement between African researchers and policymakers specifically on China’s growing role on the continent. National research bodies should pioneer content development which is then shared through institutions such as the AU and Africa Development Bank.

  • Develop review mechanisms

The Forum of China- African Cooperation commitments ‘have not benefited from a focal point to oversee their implementation and monitoring’.[6] African countries can explore the introduction of a formal review mechanism that could be overseen by African bodies.

  • Engage with the private sector and civil society

Africa is well placed to use the private and civil society sectors to monitor Chinese engagements to, ‘inform policymaking and to ensure that the economic impacts of investments and trade are more broadly distributed.’ Civil society can be particularly engaged in this, especially in partnership with Euro-American donor organisations.

images

Ultimately I leave you with this quote: Africa ought to know that it really doesn’t matter who your partners are or what plans they have for you in economic development; rather it matters what plans and strategies you have for them.[7]


[1] Obadias Ndaba (2012), ‘Why China Will Not Solve Africa’s Problems’, The African Executive, http://www.africanexecutive.com/modules/magazine/articles.php?article=6753

[2] The Rockefeller Foundation (2009), ‘China’s Engagement with African Countries: Key findings and recommendations’, http://www.rockefellerfoundation.org/uploads/files/9049b3b0-c0be-4485-8525-563a330d8160.pdf

[3] Asche, Helmut and Margot Schüller (2008), ‘China’s Engagement in Africa: Opportunities and Risks for Development’,  GTZ,

http://www.giga-hamburg.de/dl/download.php?d=/english/content/ias/pdf/studie_chinas_engagement_in_afrika_en.pdf

[4] The Rockefeller Foundation (2009), ‘China’s Engagement with African Countries: Key findings and recommendations’, http://www.rockefellerfoundation.org/uploads/files/9049b3b0-c0be-4485-8525-563a330d8160.pdf

[5]Asche, Helmut and Margot Schüller (2008), ‘China’s Engagement in Africa: Opportunities and Risks for Development’,  GTZ,

http://www.giga-hamburg.de/dl/download.php?d=/english/content/ias/pdf/studie_chinas_engagement_in_afrika_en.pdf

[6] The Rockefeller Foundation (2009), ‘China’s Engagement with African Countries: Key findings and recommendations’, http://www.rockefellerfoundation.org/uploads/files/9049b3b0-c0be-4485-8525-563a330d8160.pdf

[7] Obadias Ndaba

CHINA AND AFRICA: WHAT’S THE DEAL? PART 2…THE PROS AND CONS

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There are pros and cons with regard to Africa’s interaction with China. The discussion here is not exhaustive but is rather aimed at highlighting the salient features that tend to define opinions over Sino-African relations. Let’s look at these arguments.

CHINA-AFRICA

PRO-CHINESE ARGUMENTS

  • China has forgiven African debt

China cancelled debt owed by heavily indebted African countries. In fact, 156 debts owed by 31 heavily indebted African countries totalling 10.5 billion RMB were forgiven by China. This can be seen as an indication that China is interested in Africa’s positive economic growth and development and is not interested in creating dependency and economic slavery of Africa by China.[1]

  • China is creating employment opportunities for Africans

The entrance of China into Africa has created jobs for many Africans. Indeed China seems so committed to this ideal that in 2012, talks between China and Uganda began to promote the transfer of low-value manufacturing jobs to Africa because, ‘China will likely shed some 85 million manufacturing jobs in the coming years because of fast rising wages for unskilled workers’.[2] The two countries launched work to, ‘help African countries seize the opportunity and facilitate the relocation of labor-intensive manufacturing industries (from China) to countries where wage differentials are large enough to ensure competitiveness in global production networks’.  This is another indication that China is committed to ensure its presence in the continent benefits Africa.

  • Some African countries have a trade surplus

Contrary to popular opinion, some African countries actually have a trade surplus with China. At least ten countries including Zambia, Congo Angola, Gabon, and Sudan have a trade surplus with China. Such countries benefit from China’s activities in their countries.

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  • China’s investments are giving Africa the capital and investment the continent needs

It is clear that Africa has been, ‘historically underinvested and underserved by international investors. Chinese capital offers a valuable alternative source of financing to develop the African economy.’[3] China is another valid investment partner that Africa should take seriously. This point is particularly pertinent given that in Africa, ‘most resources-rich states are in dire need of infrastructure development and support’.[4] Why should China refrain from improving the dilapidated infrastructure of so many African states? Because there may be challenges? Note that investment in infrastructure and other projects will arguably serve Africa for decades in the future…whether the Chinese are still active on the continent or not.

  • China invests where no one else is willing to invest

Linked to the point above is the fact that not only does China invest where Africa needs it to invest, it invests in high-risk areas where no one else is willing to go. Indeed there is empirical evidence that Chinese firms are less adverse to political risk compared to Western counterparts.[5] State Owned Enterprises are particularly risk friendly and, ‘may not behave solely as profit maximizers. Thanks to the financial support of Chinese state banks, they might indeed be able to undertake higher risks’.[6] Thus, ‘Through significant investment in a continent known for its political and social risks, China has helped many African countries develop their nascent sectors’.[7] Due to this, ‘China can promote economic projects in areas in Africa deemed too risky or unfeasible by other governments or multinational corporations’.[8] Why would Africa reject much-needed investment into areas that desperately need it? This indicates that China, in some ways, is perhaps the main country on which Africa can rely to develop areas that have been neglected for so long. Such engagement ought to be encouraged.

china_africa_1107 (1)

  • Africa exports a meagre amount of oil and minerals to China when compared to other countries

The standard argument is that 1) China is resource hungry and 2) Africa is exporting huge amounts oils and minerals to China to ‘feed the dragon’ and this is creating dependency. However, the following must be noted: [9]

–       China still produces much of the oil it consumes

–       China imports most of its oil from the Middle East (Saudi Arabia, Iran, and Iraq), Asia (Russia), Latin America (Brazil, Venezuela), and North America (Canada). Indeed for China, the Middle East remains the most important source for oil.

China is not singling out Africa for its resource needs. Africa is merely one of China’s many trading partners and Africa has good reason to meet such resource requirements like any other pragmatic trading partner would do.

  • Growing positive effect of Chinese diplomacy in Africa

Initially China declared a, ‘respect for the sovereignty of other nations and pledged to avoid interfering in the internal affairs of other countries’. This gained heated criticism because ongoing Chinese investments in certain countries were seen as encouraging the continued existence of rogue African states which had (have) dictatorial regimes with poor human rights records. Countries such as Sudan and Zimbabwe were mentioned often during such criticisms. Recently however China’s, ‘actions demonstrate a more proactive involvement on the African continent’.[10] In the case of North and South Sudan for example, in 2011 tensions between the two parties reached a near breaking point until China sent their envoy for African affairs to intervene in the matter. He managed to break the deadlock. In addition to this, ‘China supported the UN resolutions for peacekeeping missions in Darfur, and has sent several hundred troops to the region’.[11] Therefore, there seems to be an evolution towards a more positive proactive role in China’s political interaction with Africa that ought to be noted.

1337165711HuAfrica

  • Steps by China to protect Africa’s environment

It is generally NOT known that, ‘China is a world leader in renewable energy technologies – a much needed energy technology for both urban and rural communities in Africa’.[12] In addition to this, Chinese energy- efficient products have proven to be more affordable than Western products thereby making them more accessible to the African market. Further, technical assistance from China to Africa exists and is not only addressing environmental issues in Africa, it is also building the ability of Africans to better manage their ecosystems. China in conjunction with UNEP have a joint program to, ‘build the capacity of African countries in the fields of ecosystem management, disaster reduction, climate change adaptation and renewable energy’.[13] Therefore, it can be said that the perception that China is an environmental monster in Africa is not fully accurate…some positive acting in this field continues to happen.

  • China is treating Africa better than EuroAmerica did

It should be borne in mind that Europe and North America, often the harshest critics of China’s activities in Africa, have a very dark history with the continent with imbalances that continue to this day. Slavery and colonialism were crimes against humanity and continued in Africa for eons. Furthermore, the disastrous Structural Adjustment Programs introduced by EuroAmerican institutions in the past are often seen as having had dire consequences on African welfare. Trade imbalances between the two players continue to this day as seen in the failure of the Doha round of talks. In fact, the negative experiences African governments suffered at the hands of EuroAmerica have made Africans tougher negotiators and bargainers when interacting with China. African governments are learning from past mistreatment and mistakes. Further, Africa is no longer what it used to be. For example, opening a mine in Africa today is, ‘not so easy any more, you need to take into account the environment, local employment and benefits to local economy’.[14] Africa has learnt from the past. In fact it can be argued that China is getting a tougher time in Africa because of past injustices suffered at the hands of EuroAmerica. This is why some view China as the better option for Africa. China has a much cleaner record of interaction with the continent and given that Africans are now wiser, Africa stands to benefit a great deal from engagements with China.

These points indicate that China’s interaction with the continent has positive elements that should not be skimmed over or ignored.

angolan-chinese-engineers[1]

ANTI-CHINESE ARGUMENTS

 However, there are criticisms to China’s engagement with Africa.

  • Imbalanced trade

Although it is true that some African nations have a trade surplus with China, Africa as a whole does not. By 2008, Africa had a USD10 billion trade deficit with China.[15] This is particularly pertinent when one considers that, China-Africa trade, ‘represents close to 10 percent of the continent‘s exports and imports’.  Further, China continues to import basic raw materials from Africa, ‘Approximately 70 percent of registered African exports to China consist of crude oil and 15 percent of raw materials’.[16]

Chinese imports from Africa

sino-african-bilateral-trade

This continues to relegate Africa to being a mere provider of unprocessed goods with little value addition. If China were truly pro-Africa, surely it would seek to address such imbalances.

  • China’s political interaction with African nations

As indicated previously, China’s non-interference policy with African nations has been subject to negative criticism. Although there are certain indications that China may be taking a more positive role in Africa, certain actions continue to be negative. For example, ‘In Zimbabwe, China delivered propaganda bearing the insignia of Robert Mugabe’s incumbent political party prior to the 2005 election…The Chinese are reported to have offered Mugabe jamming devices to use against pro-opposition radio stations.’[17] Further China continues sell arms to African nations, even those with regimes the international community consider problematic such as Sudan and Zimbabwe.[18] If China truly had African welfare in mind, it is argued, it would not engage in such delinquent behaviour.

  • Environmental degradation

Chinese investments in environmentally sensitive sectors, including forestry, agriculture, fishing, oil and gas, have spurred anti-Chinese sentiment in many African countries. Chinese mining projects have also caused serious environmental problems, and demand in Asia for rhino horn and ivory has spurred the illegal wildlife trade in Africa.[19] Kenya has been particularly bad hit with the poaching of rhino and elephant horns and tusks this year to the extent that, ‘Tour operators and tourist hotel owners want the Kenya government to impose sanctions against Asian countries where trade in animal trophies is rampant…Increased poaching has been blamed on the demand for ivory in Middle East and China’.[20] In 2012 Kenya lost 384 elephants and 29 rhinos to poachers.[21]

Other examples abound of Chinese companies destroying Africa’s environment, for example a state-owned oily company created lakes of spilled crude in Sudan. In another example, Ghanaians say that not only are the Chinese destroying their environment, they are illegally taking over land. One villager said, ‘The Chinese destroyed our land and our river, they are sitting there with pick-ups and guns, plenty of guns…They operate big machines and it makes it very difficult to reclaim the land for farming when they are done.[22], [23]  Such transgressions make the Chinese look like they have absolutely no regard for African welfare at all.

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  • Poor working environment for Africans

Reports of poor labour conditions for African in Chinese activities are also rife, ‘At Chinese-run mines in Zambia’s copper belt they (Africans) must work for two years before they get safety helmets. Ventilation below ground is poor and deadly accidents occur almost daily. To avoid censure, Chinese managers bribe union bosses and take them on “study tours” to massage parlours in China….Workers who assemble in groups are violently dispersed. When cases end up in court, witnesses are intimidated’.[24]  To add insult to injury Chinese on the continent have killed Africans over labour-related disputes, ‘Chinese mine managers shot and wounded 11 of their employees in southern Zambia over a pay dispute, sparking a countrywide outrage’.[25]  Such allowances are simply unacceptable and create just anger in Africans who resent being so poorly treated on their own continent.

 

  • Bringing in employment from China

There is concern that, ‘Chinese infrastructure projects often import Chinese labour rather than developing local skills’.[26] The reality is that, ‘Chinese migration has followed in the wake of their country’s involvement in the local economies’.[27]  Although, generally speaking, more Africans than Chinese are employed, significant numbers of Chinese come in and there is concern that they are doing jobs that could be done by Africans. Look at these numbers: [28]

–    2011: Rwanda- Huawei is maintaining its project handed over in 2007 with 30 Chinese and 17 local technicians.

–    2010: Angola- China Railway 20 Bureau Group rehabilitation of 540 km of the Benguela Railway between Munhango and Luau, employing 300 Chinese technicians and 300 Angolans.

–    2010: Mozambique stadium- 500 Chinese, 1000 Mozambicans.

–    2010: Luanda stadium, Angola- 700 Chinese, 250 Angolans

Click here for more info. This pattern has disgruntled many Africans, particularly due to the fact that all the low-skill jobs are saddled on Africans while technical and management positions are reserved for the Chinese. This leads to the next point.

  • Even if jobs are created, they are of poor quality

Even in cases when China does create jobs for Africans, they are usual only for cheap, unskilled labour. For example, ‘Algerians are employed on construction sites as cheap local labour. Educated Algerians do not seem to have much access to Chinese companies’.[29] The extent to which this is replicated in Africa is not clear, however a casual look at sites managed by Chinese often have Africans as the cheap labour while the Chinese manage and supervise.

  • Racial tensions

Africans should not deceive themselves into thinking that merely due to the fact that both Africa and China have a history of struggle against Western imperialism and racism, this confers some immunity against racism to the Chinese. It does not. All signs seem to point to the fact that anti-black racism amongst Chinese is rife. For example, ‘Liberian student David Johnson moved to China just two months ago. He said he has already been subjected to several racist remarks. “One time I was walking down the street and someone called me a stupid black c***,” he reported’.[30] In fact when Chinese men were asked, ‘what they think about black women, many smiled and said they prefer white women, but black women with whiter skin are OK. They can “try one for fun.”’.[31] The reality is that, ‘Non-white foreigners, especially black people, are likely to face more obstacles in China as many Chinese see them as inferior’.[32] And this is not a recent phenomenon, ‘this kind of racism dates back to when Africans were first welcomed into China to study at Chinese universities in the 1960s. And in 1988, a violent, 300-strong mob broke into an African students’ dormitory at Nanjing University and destroyed their possessions while chanting “down with the black devils”.’[33] Some Africans need to get their blinders off for this one. Anti-black racism is a reality to contend with in Sino-African relations.

NIGGER-KING-STORE

 So what should Africa do to take control of and manage this growing relationship in a manner that is favourable to Africa? The next post will be on recommendations for Africa. At the core of these recommendation is the thought that, ‘Africa must not be too Westwards or Eastwards minded- but rather Inwards minded. It is within Africa that all the answers lie’.[34]


[1] Wenping, He, ‘China’s Diplomacy in Africa’, http://www.african-bulletin.com/doc/wenpingc.pdf

[2] Tentena, Paul (2012), ‘Africa: China to Create 85 Million Jobs for Africa’, All Africa, http://allafrica.com/stories/201203261325.html

[3] Cheung, Yin- Wong, Jakob De Haan, Xingwang Qian And Shu Yu(2011), China’s Outward Direct Investment In Africa, Hong Kong Institute For Monetary Research.

[4] Cheung, Yin- Wong, Jakob De Haan, Xingwang Qian And Shu Yu(2011), China’s Outward Direct Investment In Africa, Hong Kong Institute For Monetary Research.

[5] Belligoli, Serena (2011), ‘ Chinese Investments on the African Continent and Political Risk: the Ongoing Debate in China’, Journal of Cambridge Studies, http://journal.acs-cam.org.uk/data/archive/2012/201203-article8.pdf

[6] Belligoli, Serena (2011), ‘ Chinese Investments on the African Continent and Political Risk: the Ongoing Debate in China’, Journal of Cambridge Studies, http://journal.acs-cam.org.uk/data/archive/2012/201203-article8.pdf

[7] Alessi, Christopher, and Stephanie Hanson (2012), ‘Expanding China-Africa Oil Ties’, Council on Foreign Relations, http://www.cfr.org/china/expanding-china-africa-oil-ties/p9557

[8] Zhao, Shelly (2011), ‘The Geopolitics of China-African Oil’, China Briefing http://www.china-briefing.com/news/2011/04/13/the-geopolitics-of-china-african-oil.html

[9] Zhao, Shelly (2011), ‘The Geopolitics of China-African Oil’, China Briefing http://www.china-briefing.com/news/2011/04/13/the-geopolitics-of-china-african-oil.html

[10] Parenti, Jennifer (2012), ‘China-Africa Relations in the 21st Century’, http://www.ndu.edu/press/lib/images/jfq-52/23.pdf

[11] Green, James (2012), ‘China in Sudan and South Sudan: an Unlikely Mediator?’, Think Africa Press, http://thinkafricapress.com/south-sudan/china-sudan-and-south-sudan-unlikely-intervention

[13] UNEP, ‘UNEP – China – Africa Cooperation On The Environment’, http://www.unep.org/roa/portals/137/docs/UNEP-China%20flyer-WEB.pdf

[14] Becker, Antoaneta (2011), ‘China’s changing tone on African investment’, Al Jazeera, http://www.aljazeera.com/indepth/features/2011/06/201167142556551565.html

[15] The African Development Bank Group (2010), ‘Chinese Trade and Investment Activities in Africa’, Policy Brief , http://www.afdb.org/fileadmin/uploads/afdb/Documents/Publications/Chinese%20Trade%20%20Investment%20Activities%20in%20Africa%2020Aug.pdf

[16]The African Development Bank Group (2010), ‘Chinese Trade and Investment Activities in Africa’, Policy Brief , http://www.afdb.org/fileadmin/uploads/afdb/Documents/Publications/Chinese%20Trade%20%20Investment%20Activities%20in%20Africa%2020Aug.pdf

[17] Parenti, Jennifer (2012), ‘China-Africa Relations in the 21st Century’, http://www.ndu.edu/press/lib/images/jfq-52/23.pdf

[18] Zhao, Shelly (2011), ‘The Geopolitics of China-African Oil’, China Briefing http://www.china-briefing.com/news/2011/04/13/the-geopolitics-of-china-african-oil.html

[19] Van Sant, Shannon (2012), ‘Africans Urge China to Help Create Sustainable Development’, VOA, http://www.voanews.com/content/africans_urge_china_to_help_creating_sustainable_development_in_africa/1443475.html

[20] Kitimo, Anthony (2013), ‘Tour operators want Asian states sanctioned over wildlife trade’, http://www.businessdailyafrica.com/Tour-operators-want-Asian-states-sanctioned-over-wildlife-trade/-/539546/1685288/-/15lgk19z/-/index.html

[21] Opiyo, Dave (2012), ‘Wildlife count on way as poaching rises’, http://www.nation.co.ke/News/-/1056/1690230/-/x60v4nz/-/index.html

[22] The Economist (2011), ‘Trying to pull together’, http://www.economist.com/node/18586448

[23] Bax, Pauline (2012), ‘Ghana’s Gold Sparks Conflict With Illegal Chinese Miners’, Bloomberg,

http://www.businessweek.com/news/2012-10-07/ghana-s-gold-sparks-conflict-with-illegal-chinese-miners

[24] The Economist (2011), ‘Trying to pull together’, http://www.economist.com/node/18586448

[26] Grammaticas, David, ‘Chinese colonialism?’,  BBC, http://www.bbc.co.uk/news/world-asia-18901656

[27] The African Development Bank Group (2010), ‘Chinese Trade and Investment Activities in Africa’, Policy Brief , http://www.afdb.org/fileadmin/uploads/afdb/Documents/Publications/Chinese%20Trade%20%20Investment%20Activities%20in%20Africa%2020Aug.pdf

[28] Brautigam, Deborah (2011) ‘ Chinese Workers in Africa’, http://www.chinaafricarealstory.com/p/chinese-workers-in-africa-anecdotes.html

[29] The African Development Bank Group (2010), ‘Chinese Trade and Investment Activities in Africa’, Policy Brief , http://www.afdb.org/fileadmin/uploads/afdb/Documents/Publications/Chinese%20Trade%20%20Investment%20Activities%20in%20Africa%2020Aug.pdf

[30] Jaffe, Gabrielle ‘Tinted prejudice in China’, CNN, http://edition.cnn.com/2012/07/24/world/asia/china-tinted-prejudice

[31] Global Times Community (2012), ‘Racism still obstacle for blacks in China’, http://community.globaltimes.cn/portal.php?mod=view&aid=1521

[32] Global Times Community (2012), ‘Racism still obstacle for blacks in China’, http://community.globaltimes.cn/portal.php?mod=view&aid=1521

[33] Jaffe, Gabrielle ‘Tinted prejudice in China’, CNN, http://edition.cnn.com/2012/07/24/world/asia/china-tinted-prejudice

[34] Obadias Ndaba (2012), ‘Why China Will Not Solve Africa’s Problems’, The African Executive, http://www.africanexecutive.com/modules/magazine/articles.php?article=6753

CHINA AND AFRICA: WHAT’S THE DEAL? PART 1

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INTRODUCTION

Sino-African economic interactions have aroused keen interest in the global community over the past few years, and there are good reasons for this. In 2011, trade between China and Africa reached US$ 160 billion and investments totaled more than US$ 13 billion. In addition to that there are growing economic, political and even social ties developing between the two parties. Why are Africa and China becoming so close to each other and what does it bode for Africa? Part 1 looks at the history of Sino-African relations, current dynamics and factors informing China’s interest in Africa. Part 2 will explore the pros and cons for Africa in this economic interaction.

feature-china-africa-300_tcm18-140972

A BRIEF HISTORY OF SINO-AFRICAN RELATIONS

 

1950- 1980

It can be stated that, ‘China-Africa relations got off to a start after the first Asia-Africa Conference in 1955 as Beijing attempted to assert its leadership over the Third World.’ Further as independence movements spread over Arica in the 1950s and 60s, ‘Mao Zedong frequently received friends and organizations from Africa…proclaiming China’s “sincere sympathy and entire support for African people’s fight against imperialism and colonialism”’.[1] Bear in mind that, ‘China supported independent movements in Africa, providing not only moral and rhetorical support, but also weapons and military training’.[2] Some argue that during this period China was, ‘promoting Maoism’ where , the slogan “exporting revolution” became the primary objective toward Africa’.[3] In 1963 and 1964 Premier Zhou Enlai introduced the “Governing the Development of Relations with Arab and African Countries and the Eight Principles of Economic Assistance” which clearly designated China’s political stance towards African countries and marked the formation of China’s African policy’.[4], [5]  By the end of the1970s, 44 of the 50 independent African countries.[6] Further, despite of its relatively weak economic position at the time, China gave aid worth $2.476 billion to 36 Africa countries, which accounted for 58% of China’s total foreign aid.[7] In addition, ‘China sent ten thousand engineers, doctors and technicians and undertook various infrastructure projects, one of which was the 1860-kilometer long Tanzania-Zambia railway, financed and built by China’. [8]

1980- 1990

This represents a fairly quiet period between Africa and China due to a number of reasons. First was the fact that China began its own economic reforms in 1978 and thus was preoccupied with implementing Deng Xiao Ping’s economic vision of opening up. This period also was the era of Tiananmen Square protest which, ‘ended China’s honeymoon relationship with the western countries’. [9]  Censured and isolated by the West, China re-evaluated its foreign policies.

 tiananmen-square-1989

1990- 2000

During this decade, President Jiang Zemin visited six African countries and put forward a “Five Points Proposal” for the development of a long-term, more structured cooperative relationship between China and African countries.[10] It eventually led to the creation of the Forum for China-African Cooperation in Beijing in 2000 which was the first formal step towards promoting Sino-African economic and trade cooperation.[11] During this time however, formal trade and investments between the two parties was still limited to a paltry $3.5-4 billion.

 

2000-2010

This era was crucial for Sino-African relations and witnessed a momentous increase in economic, political and even social interaction between Africa and China. Economically speaking, Sino-African trade grew:

At a rapid pace from $10.5 billion in 2000, to $ 29.4 billion in 2004, nearly $40 in 2005 and over $50 billion in 2006. In 2008 the volume reached $106.8 billion, with an average growth rate of 30 percent in eight straight years. By 2007 China had become the second largest trade partner second only to the United States, and the largest individual country exporter to sub-Saharan Africa with a market share of 9.8% and a volume of $26.5 billion.[12]

Economic interaction

In addition to trade the following have developed markedly between 2000 and 2010:

–  Investment

From 2004 to 2011 Chinese FDI to Africa grew seven-fold, at an average of 115% annually.[13] Indeed by 2009 ‘137 Chinese enterprises invested a total of 1.08 billion U.S. dollars in Africa’.[14] As of 2007, out of the 800 Chinese enterprises investing in Africa, only about 100 were state-owned indicating the growing presence of the Chinese private sector in Africa. Indeed, according to some estimates by 2010, ‘the number of private enterprises investing in Africa accounted for more than 70 percent of the total number of enterprises investing in Africa’.[15]  By 2005 China’s direct investment in Africa, amounted to US$392 million.[16]  As of 2010 this stood at $2.1 billion representing an average increase of increasing at an average of 115% year on year.[17]

–  Financial cooperation

During this period, China and several African countries entered agreements to avoid Double Taxation. This however was criticised as it was only formalised with 9 African countries.[18] By the end of 2009, ‘Africa had direct investments in 683 projects in Guangdong on processing, manufacturing, commerce and financial services, totaling $2.3 billion (contractual value)’.[19] Moreover between 2007 and 2009, China had developed preferential loans and export buyer’s credit worth $5 billion to support African infrastructural development.[20] In addition to this, ‘the Export-Import Bank of China (China Eximbank),the China Development Bank (CDB), the Industrial and Commercial Bank of China (ICBC) and other financial institutions extended substantial commercial loans to African countries’.[21] The Chinese also saw this time as an opportunity to expand their financial presence in Africa and did so through offering products and services in more than 50 African countries. Chinese financial institutions collaborated with regional and sub-regional financial institutions in Africa such as the African Development Bank’.[22] African financial institutions also settled in China and by 2009, six banks from Morocco, Cameroon, South Africa, Egypt, and Nigeria set up at least one branch in China.[23] Bear in mind that this financial cooperation was affected by the 2009 Global Financial Crisis which, ‘hampered economic growth in both China and Africa’.[24] However this also gave China the opportunity to prove its commitment to Africa which it arguably did, at least in one case:

Due to the global financial crisis, the price of non-ferrous metal fell in 2009. However, China Nonferrous Metal Mining (Group) Company Ltd. applied a “no-cutbacks’ policy to the Chambishi Copper Mine. Of the seven foreign mining companies in Zambia, it was the only one that did not reduce production, investment or staff.[25]

 

Political interaction

 –   Political party exchanges

These types of exchanges began in 1950 and continued through to 2010. This often came in the form of High-ranking Communist Party of China (CPC) leaders leading delegations on visits to African countries.[26] The CPC also invited African leaders to visit China. These exchanges however tended to be focussed on the political party in power with limited relationships with parties not in power. Perhaps the interest from Africa was and is rooted in the fact that African political parties, especially those ruling parties, ‘ Hope to learn the experience of the CPC in party building and country construction’.[27] Given the longevity of the CPC in power and its commitment to a one party state, one wonders whether this bodes well for Africa.

–   Diplomatic cooperation

This area is perhaps the element for which began to receive high levels of criticism especially from the international community. This was primarily for two reasons: firstly, China began to clearly use the African continent as a scene of confrontation with Taiwan. Many African countries have severed diplomatic ties with Taiwan since staring serious interaction with China. Secondly, China continued to have economic and diplomatic relations with what were perceived to be rogue governments such as Sudan and Zimbabwe. However, in spite of such criticisms, China seems to fully understand the value of diplomacy and the use of soft power. All development efforts, technical cooperation, forgiveness of debt, the deployment of Chinese Peacekeeping troops to Africa and the establishment of niche funds such as the Fund for African Human Resources Development are activities that indicated that Africa was and will remain high on China’s diplomatic agenda.

521082-sg-china

Social interaction

 –   Development assistance

It is estimated that between 1957 and 2006 Chinese development aid to Africa rose stood at $5.7 billion and between 2000 and 2003 the aid to Africa represented 44% of China’s total foreign aid. By 2009 this rose to $1.6 billion a year.[28] Development assistance also started to come in the form of free technical assistance offered to Africa by China.

–    Technical cooperation and training

During this period, this element became an important component of how China operated on the continent. Indeed, ‘Medical, agricultural and engineering teams have provided technical aid to African countries for decades to support everything from building projects to treating AIDS patients. Since 1963, some 15,000 Chinese doctors have worked in 47 African states treating nearly 180 million cases of HIV/AIDS’.[29] It became clear that Chinese technical aid to Africa was becoming increasingly important in building China’s influence in the region.[30]

–    Environmental pollution

During this era it became clear that China had a certain disregard to environmental standards, ‘Examples abound where Chinese companies were caught flouting conservation laws and collaborating with criminals in the exploitation of Africa’s natural assets’.[31] In Gabon in 2002 Sinopec a Chinese oil company was found, ‘prospecting for oil in one of Gabon’s national parks. The company was charged with mass pollution, dynamiting areas of the park and carving roads through the forest’. Such behaviour attracted heated criticism from environmental activists in particular.

–    Cultural exchange and mutual tourism

It was in this era that China started to promote, ‘air travel, ocean shipping, financial and tourism services, and encourage Chinese citizens to visit African countries’[32]. This era also saw the beginning of African countries actively working to attract Chinese tourists. Indeed, ‘In 2009, tourism bureaus and tourism enterprises from Egypt, Zimbabwe, Kenya, Namibia and South Africa, among others, attended the China International Travel Mart, tourism promotion conferences and other events. At the same time, Chinese companies began actively engaging in tourism services including opening travel agencies and catering companies, and participating in the construction of hotels.[33]

MOTIVATIONS FOR CHINA MOVING INTO AFRICA

Clearly China is very motivated to continue making inroads into the continent and entrench its presence here. What is motivating China to do so? Consider the points listed below:

–   Africa as a source of raw materials

This is an obvious point, ‘To power its booming economy, China needs natural resources – particularly oil, gas, coal and iron ore. In the past five years alone, mining exports to China have risen by 140 per cent’.[34] As a resource rich continent, China views Africa as a crucial partner in this. Indeed, ‘China is Africa’s biggest trading partner and gets a third of its oil needs from the continent’.[35] It is clearly it is in China’s interest to continue moving into Africa and secure as much of the raw materials on the continent as possible.

–   Destination for Chinese Outward Directed Investment (ODI)

In 2010, China overtook Japan and the United Kingdom to become the fifth-largest global investor…The nation’s ODI grew 1.8 percent year-on-year to $60 billion last year’.[36] Africa is becoming an increasingly important player in this and ‘Chinese ODI to Africa has increased 19-fold, from US$491.2 million in 2003 to US$9.3 billion in 2009’.[37] This can be seen as China’s, ‘concerted efforts to encourage investments in overseas markets to support economic development and sustain economic reform in China’.[38]

map-chinese-investments-in-africa

–    Fast growing export market

The African market fits China’s development plans. As China shifts production towards higher-value manufactured goods, Chinese exports to Africa are also moving up the value chain, from low-value textiles to high-value capital goods.[39] This market exists in the form of contracts as well, not just consumer goods. Indeed, ‘Africa has become China’s second largest engineering contract market. The dollar value of China’s contracted projects dwarfs its ODI in Africa.’[40] ODI and market expansion are synergistic in that ODI activities, ‘could help Chinese firms to expand in the African market and, at the same, get around the relatively high tariffs on manufacturing goods in Africa’.[41] These factors point to the power of this motivator.

–   Enhance Diplomatic Power

It is no secret that China, ‘has long sought to portray itself as the leader of the Third World’.[42] As part of its strategy to do so, Africa is a crucial partner to have. China’s commitment to this soft power is demonstrated in the fact that, in the third Africa- China Forum, ‘China canceled all debts relating to interest-free government loans that matured at the end of 2005 for the most indebted and least-developed African countries with diplomatic relations to China’.[43] This use of soft power falls in line with China’s commitment to continue its ‘peaceful rise’ in the global arena. The use of diplomacy could be seen as geared towards three main diplomatic purposes: ‘To help spread China’s message of mutual benefit and equality to African leaders, to create opportunities for Chinese businesses abroad, and to encourage African nations to support the “One China Policy” with respect to Taiwan’.[44]

CURRENT ECONOMIC DYNAMICS

In Africa today however things are fast changing for China and for Africa as detailed in this next section.

–   Growing power of Brazil and India on the continent

As per my previous articles, Brazil and India are increasingly moving into Africa with economic, social and political strategies. Indeed, ‘Led by a vibrant private sector, India’s bilateral trade with Africa has grown rapidly in recent years—from around $1 billion in 2001 to about $50 billion last year, the country’s officials are now targeting $70 billion by 2015’. For Brazil, ‘trade with Africa increased between 2000 and 2010 from US$4 billion to US$20 billion. In terms of FDI, the Brazilian government has been prioritizing FDI in Africa and increased FDI from about US$69 billion in 2001 to US$214 billion in 2009’.[45] Although they may lack the economic clout of China they each have distinct advantages that could work for them. For India, there are long cultural ties with Africa, East and South Africa in particular. Large numbers of Indians consider themselves African and it can be argued that most black Africans view Indians as fellow citizens who vote and contribute to African development. China does not have such ties with the continent. In Brazil’s case, there is a huge Black Diaspora in Brazil and thus a basic commonality that can be built on in Brazil’s interaction with Africa. Again, China does not have this advantage. Further, the IBSA forum is one between Brazil, India and South Africa to the exclusion of China. IBSA logo

–   Increased competition between African countries for Chinese funds

Another emerging dynamic is that more African countries are looking for Chinese funds and thus China can afford to be more selective than before. Indeed, ‘the collective “look east” policy embraced by African countries means there is a sense of a beauty contest as to which country gets funded and for which projects’.[46] This emerging dynamic is one that African countries ought to be cognisant of.

–   Economic losses is making China wary

China is getting a clearer understanding of what it means to do business with Africa. Losses have been made and this is making Beijing more cautious. For example, ‘more than $4bn worth of projects were suspended in Libya after the fall of Colonel Muammer Gaddafi and the kidnapping of 29 Chinese workers in Southern Sudan earlier this year’ is rubbing China the wrong way.[47] In addition, ‘Chinese companies are now driving harder bargains and avoiding some of the most chaotic corners of the continent… China’s Africa strategy seems to have matured, and deals are receiving much more scrutiny with respect to risk and return’.[48] The previous gusto and enthusiasm seems to have dissipated a bit, some hard lessons have been learnt.

–   Criticism of entry of China into Africa on economic grounds:

Europe and North America began criticising China’s interaction with Africa from the onset referring to it as neo- colonialism and not in Africa’s interest. Arguing that China is a resource- hungry dragon exploiting Africa’s natural resources, EuroAmerica led the anti-China finger-pointing and name calling. However, it is 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 neo-colonialists.[49] Nonetheless, although such commentaries may be rooted in jealousy and a desire to instil Sino-phobia in Africa, the arguments are based on some factual data. EuroAmerica points to China’s willingness to pay bribes in Africa. For example in Botswana, ‘Three top local managers of a Chinese construction company were charged with bribery after allegedly offering a high-ranking local civil servant 250,000 pula ($32,249) to overlook their shoddy construction of a local school in 2011[50]. In Zambia, ‘A Chinese national attempted to bribe police officers with K100 million in a desperate move to secure the release of his colleague, who was arrested for theft of copper’.[51] Others point to the fact that China tends to focus its investment on mineral rich nations and its economic interactions are mainly extractive in nature. Critics both outside and within Africa argue that, ‘there is little or no long-term benefit of the increase in trade to the continent as exports to China comprise mostly primary commodities such as oil and agricultural products’.[52] China is sensitive to such criticism and, ‘the Chinese worry about their reputation and the fact that there has been a lot of criticism’ due to its activities in Africa.[53] This will affect and inform China’s strategy on the continent.

–   Africa is increasingly perceiving the economic imbalance

President Zuma of South Africa is openly concerned about the emerging economic dynamics between Africa and China stating that, ‘this kind of (resource based) trade is unsustainable in the long term and need to be cautious when entering into new partnerships’.[54] China will increasingly be criticised and perhaps this is an inevitable element as seen in the criticism of the economic activities of other powers in Africa.

CURRENT POLITICAL DYNAMICS

 –   Criticism on entry of China into Africa on political grounds

China has long been accused of continuing to doing business with rogue governments that trample on human rights the most prominent examples being Sudan and Zimbabwe. It is no secret that critics continue to state that, ‘the no strings-attached aid policy pursued by the Chinese leads to a reduction in the pressure on governments to improve on issues such as human rights’.[55] Further, ‘Chinese support to dictators is seen as counterproductive to the welfare of the masses and as benefitting Africa’s elite’.[56]

–   Beginning a shift away from non-interference

As stated above, China has received harsh criticism regarding its non-interference policy in Africa. Incidentally, I argue that this supposed ‘hands-off’ policy never really applied as the Chinese government did support African regimes and interfered with local issues for example, ‘In Zimbabwe, China delivered propaganda bearing the insignia of Robert Mugabe’s incumbent political party prior to the 2005 election’.[57] However the official position has been to respect sovereignty. China has demonstrated it is sensitive to criticism directed at this policy. In fact, ‘In response to mounting criticisms surrounding its relations with Sudan, China changed its approach to the Darfur issue dramatically. Since mid-2006, there have been signs of increasing Chinese pressure on Khartoum to restrain its actions and accept UN peacekeeping plans’.[58] This indicates a dramatic shift in China’s diplomatic strategy.

–    Continued Opacity

Although, China has continued to take steps to improve transparency there are currently still some aspects of China’s trade policy regime (among others) that remain complex and opaque.  China ranked 38th among 48 countries in the 2009 Opacity Index, which measures the degree to which countries lack clear, accurate, easily discernible, and widely accepted practices governing the relationships among governments, businesses, and investors.[59] However, as China seeks to continue in its global rise, ‘Chinese authorities will have to give more and more attention to transparent governance arrangements’ both politically and economically speaking.[60]

–    Changes in the leadership of the Communist party: Uncertainty

Vice-President Xi Jinping will be confirmed President in March 2013. Although African leaders are certain China will continue in its commitment to Africa, the transition creates anxiety because, ‘with an uncertain global economic climate affecting China’s own growth, it is almost certain that the Chinese authorities will keep an eye on returns on investment’ and may not be as generous as the current administration has been.[61] All African governments and people can do is wait and see while strategising on how to enter more favourable economic interactions with China. This opacity is a dynamic that African nations have to continue to contend with.

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CURRENT SOCIAL DYNAMICS

–    Growing Cultural exchanges

Cultural exchanges continue between the two parties and this year there was an African festival of arts and culture in, ‘Beijing, Tianjin, Nanjing, Hangzhou, Changchun and other major Chinese cities, as part of a project named “2012 African Culture Focus,”’.[62] These are set to continue to grow.

–    Vocal commitment to better environmental behaviour

Perhaps in response to international outcry in response to its environmental behaviour, the environment and climate change are beginning to feature more prominently in China’s dealings with Africa. In the run up to the fifth Forum on China-Africa Cooperation the following was stated, ‘With a view to improving African countries’ abilities to adapt to climate change, China implemented 105 clean energy projects in African countries…and sent senior officials including the special envoy for climate change negotiations to African countries to exchange views’.[63] This push for environmental responsibility also comes from Africans themselves, ‘African leaders and independent groups are pressing China to prioritize sustainable development in its trade with African countries. In Beijing, officials say they increasingly recognize the importance of sound environmental practices for building strong relations with the continent’.[64] Time will tell if actions match intention.

–    Chinese settlement and rising racial issues

As more Chinese move into Africa it can be said that, ‘the sudden increasing appearance of Chinese settlers in Africa has caused uneasiness among Africans, especially in the light of the immigrants’ low skill level and their apparently limited financial means’.[65] This links to another issue that Africans have with China, namely importing labour from China for projects done in Africa thereby limiting job creation opportunities for locals. Some Africans resent such behaviour. As a result of these factors, there is an emerging reality that, ‘several anti-Chinese movements have erupted in African countries, and strong resentment, boarding on racism, is emerging against the Chinese’.[66] This racial tension is not only found in Africa, but in China too, ‘Hundreds of Africans in Guangzhou blocked traffic and surrounded the police station to protest the death of a Nigerian man and demanded an investigation. According to witnesses, the demonstrators threw rocks at police and private vehicles’.[67] It is crucial that such emerging dynamics, which can easily erupt into race- fuelled incidents, be strategically managed by both sides.

africa1

As Sino-African cooperation continues to develop, it is crucial that Africans perceive the pros and cons of such an arrangement. This shall be explored in Part 2.


[4] Jianbo, Luo & Xiaomin, Zhang, “China’s African Policy and its Soft Power”, in AntePodium, Victoria University of Wellington, 2009
[5] Anshan, Li, (2007), ‘China and Africa: Policy and Challenges, China Security Vol. 3 No. 3 Summer 2007, http://hawk.ethz.ch/serviceengine/Files/ISN/44747/ichaptersection_singledocument/e83d676e-0584-4c99-b984-f39131478c29/en/cs7_04.pdf

[7] Jianbo, Luo & Xiaomin, Zhang, “China’s African Policy and its Soft Power”, in AntePodium, Victoria University of Wellington, 2009

[11] China Internet Information  (2003), ‘China-Africa Cooperation Forum: Past, Present and Future’,  http://www.china.org.cn/english/features/China-Africa/82189.htm

[13] China’s Foreign trade, Beyond Trade – China-Africa investment trends

http://cft.ccpit.org/ccpit-cft/a/zuixinzhongyingwenzazhi/China_s_Foreign_Trade/Re/2012/0919/1084.html

[14] Forum on Africa- China Cooperation (2009), ‘Chinese investment buoys Africa’s economy, http://www.focac.org/eng/zxxx/t857722.htm

[15] China Business News (2010), ‘China to encourage private investment in Africa’, http://cnbusinessnews.com/china-to-encourage-private-investment-in-africa/

[16] Jian-Ye Wang(2007), ‘What Drives China’s Growing Role in Africa?’, International Monetary Fund Working Paper, http://www.imf.org/external/pubs/ft/wp/2007/wp07211.pdf

[17] China’s Foreign trade, Beyond Trade – China-Africa investment trends

http://cft.ccpit.org/ccpit-cft/a/zuixinzhongyingwenzazhi/China_s_Foreign_Trade/Re/2012/0919/1084.html

[18] China Double Taxation Prevention Treaties 2012,  http://www.worldwide-tax.com/china/chi_double.asp

[19] Chinese Academy of International Trade and Economic cooperation (2010), ‘China Africa trade and Economic Relationship: Annual report 2010’, http://www.fahamu.org/downloads/China-Africa_Trade_and_Economic_Relationship_Annual_Report_2010.pdf
[20] Chinese Academy of International Trade and Economic cooperation (2010), ‘China Africa trade and Economic Relationship: Annual report 2010’, http://www.fahamu.org/downloads/China-Africa_Trade_and_Economic_Relationship_Annual_Report_2010.pdf
[21] Chinese Academy of International Trade and Economic cooperation (2010), ‘China Africa trade and Economic Relationship: Annual report 2010’, http://www.fahamu.org/downloads/China-Africa_Trade_and_Economic_Relationship_Annual_Report_2010.pdf
[22] Chinese Academy of International Trade and Economic cooperation (2010), ‘China Africa trade and Economic Relationship: Annual report 2010’, http://www.fahamu.org/downloads/China-Africa_Trade_and_Economic_Relationship_Annual_Report_2010.pdf
[23] Chinese Academy of International Trade and Economic cooperation (2010), ‘China Africa trade and Economic Relationship: Annual report 2010’, http://www.fahamu.org/downloads/China-Africa_Trade_and_Economic_Relationship_Annual_Report_2010.pdf
[24] Chinese Academy of International Trade and Economic cooperation (2010), ‘China Africa trade and Economic Relationship: Annual report 2010’, http://www.fahamu.org/downloads/China-Africa_Trade_and_Economic_Relationship_Annual_Report_2010.pdf
[25] Chinese Academy of International Trade and Economic cooperation (2010), ‘China Africa trade and Economic Relationship: Annual report 2010’, http://www.fahamu.org/downloads/China-Africa_Trade_and_Economic_Relationship_Annual_Report_2010.pdf

[26] China Org (2012), ‘Inter-party relations promote Sino-African strategic partnership’, http://www.china.org.cn/opinion/2012-08/28/content_26353120_2.htm

[27] China Org (2012), ‘Inter-party relations promote Sino-African strategic partnership’, http://www.china.org.cn/opinion/2012-08/28/content_26353120_2.htm
[29] Thompson, Drew (2010), ‘Economic Growth and Soft Power: China’s Africa Strategy’, China Brief Volume,http://www.jamestown.org/single/?no_cache=1&tx_ttnews%5Btt_news%5D=3699
[30] Thompson, Drew (2010), ‘Economic Growth and Soft Power: China’s Africa Strategy’, China Brief Volume,http://www.jamestown.org/single/?no_cache=1&tx_ttnews%5Btt_news%5D=3699
[31] Taylor, Ian (2007), ‘China’s environmental footprint in Africa’, http://www.chinadialogue.net/article/show/single/en/741-China-s-environmental-footprint-in-Africa
[32] Chinese Academy of International Trade and Economic cooperation (2010), ‘China Africa trade and Economic Relationship: Annual report 2010’, http://www.fahamu.org/downloads/China-Africa_Trade_and_Economic_Relationship_Annual_Report_2010.pdf
[33] Chinese Academy of International Trade and Economic cooperation (2010), ‘China Africa trade and Economic Relationship: Annual report 2010’, http://www.fahamu.org/downloads/China-Africa_Trade_and_Economic_Relationship_Annual_Report_2010.pdf
[34] Australian Strategic Policy Institute (2012), ‘FUELLING THE DRAGON: Natural resources and China’s development,The Brenthurst Foundation, http://www.thebrenthurstfoundation.org/Files/Brenthurst_Commisioned_Reports/Brenthurst-Special-Report-Fuelling-the-Dragon.pdf
[35] Australian Strategic Policy Institute (2012), ‘FUELLING THE DRAGON: Natural resources and China’s development,The Brenthurst Foundation, http://www.thebrenthurstfoundation.org/Files/Brenthurst_Commisioned_Reports/Brenthurst-Special-Report-Fuelling-the-Dragon.pdf

[36] Ding Qingfen (2012), Chinese firms’ growing ODI offers world opportunities

http://www.chinadaily.com.cn/cndy/2012-07/10/content_15563185.htm

[37] Australian Strategic Policy Institute (2012), ‘Fuelling The Dragon: Natural resources and China’s development,The Brenthurst Foundation, http://www.thebrenthurstfoundation.org/Files/Brenthurst_Commisioned_Reports/Brenthurst-Special-Report-Fuelling-the-Dragon.pdf

[38] Cheung,Yin-Wong, Jakob De Haan, Xingwang Qian And Shu Yu, (2011), ‘China’s Outward Direct Investment In Africa’ Hong Kong Institute For Monetary Research, Http://Poseidon01.Ssrn.Com/Delivery.Php?ID=074071112000083000023096000120080025056018064054034063029004091123094064075117082077004031019026053056124092121080113116018124118039014012004010007108086087123120053043031009002118111025072105089029010&EXT=Pdf

[39] China’s Foreign trade, Beyond Trade – China-Africa investment trends

http://cft.ccpit.org/ccpit-cft/a/zuixinzhongyingwenzazhi/China_s_Foreign_Trade/Re/2012/0919/1084.html

[40] Australian Strategic Policy Institute (2012), ‘FUELLING THE DRAGON: Natural resources and China’s development,The Brenthurst Foundation, http://www.thebrenthurstfoundation.org/Files/Brenthurst_Commisioned_Reports/Brenthurst-Special-Report-Fuelling-the-Dragon.pdf
[41] Australian Strategic Policy Institute (2012), ‘FUELLING THE DRAGON: Natural resources and China’s development,The Brenthurst Foundation, http://www.thebrenthurstfoundation.org/Files/Brenthurst_Commisioned_Reports/Brenthurst-Special-Report-Fuelling-the-Dragon.pdf
[42] Thompson, Drew (2010), ‘Economic Growth and Soft Power: China’s Africa Strategy’, China Brief Volume, http://www.jamestown.org/single/?no_cache=1&tx_ttnews%5Btt_news%5D=3699
[43] Cheung,Yin-Wong, Jakob De Haan, Xingwang Qian And Shu Yu, (2011), ‘China’s Outward Direct Investment In Africa’ Hong Kong Institute For Monetary Research, Http://Poseidon01.Ssrn.Com/Delivery.Php?ID=074071112000083000023096000120080025056018064054034063029004091123094064075117082077004031019026053056124092121080113116018124118039014012004010007108086087123120053043031009002118111025072105089029010&EXT=Pdf
[44] Parenti, Jennifer (2012), ‘China-Africa Relations in the 21st Century’, http://www.ndu.edu/press/lib/images/jfq-52/23.pdf
[45] Were, Anzetse (2012), ‘Brazil and Africa- What’s the deal’, https://anzetsewere.wordpress.com/2012/01/

[47] Hook, Leslie (2012) ‘Zuma warns on Africa’s ties to China’, http://www.ft.com/intl/cms/s/0/33686fc4-d171-11e1-bbbc-00144feabdc0.html

[48] Abrams, Stan (2012), ‘China Shifts Its Africa Investment Strategy’, Forbes, http://www.forbes.com/sites/china/2010/04/28/china-shifts-its-africa-investment-strategy/

[49] Safdar, Tayyab  (2012), ‘ China’s growing influence in Africa’, The Express Tribune, http://tribune.com.pk/story/428026/chinas-growing-influence-in-africa/

[50] Palmer James (2012), ‘Bribery brings red envelopes to Botswana’, http://www.globaltimes.cn/content/728010.shtml

[51] Sang’andu, Etambuyu(2012), ‘ Zambia: Chinese Dangles K100 Million Bribe – As Cops Bust Copper Theft Scandal in Kitwe’ , http://allafrica.com/stories/201210171007.html

[52] Safdar, Tayyab  (2012), ‘ China’s growing influence in Africa’, The Express Tribune, http://tribune.com.pk/story/428026/chinas-growing-influence-in-africa/
[53] Abrams, Stan (2012), ‘China Shifts Its Africa Investment Strategy’, Forbes, http://www.forbes.com/sites/china/2010/04/28/china-shifts-its-africa-investment-strategy/
[54] Mancheri,Nabeel  (2012),China’s “Chequebook” Diplomacy in Africa, Foreign Policy Journal, http://www.foreignpolicyjournal.com/2012/08/17/chinas-chequebook-diplomacy-in-africa/
[55] Safdar, Tayyab  (2012), ‘ China’s growing influence in Africa’, The Express Tribune, http://tribune.com.pk/story/428026/chinas-growing-influence-in-africa/
[56] Safdar, Tayyab  (2012), ‘ China’s growing influence in Africa’, The Express Tribune, http://tribune.com.pk/story/428026/chinas-growing-influence-in-africa/
[57] Parenti, Jennifer (2012), ‘China-Africa Relations in the 21st Century’, http://www.ndu.edu/press/lib/images/jfq-52/23.pdf

[58] Wu, Chengqiu  (2009), ‘Sovereignty, Human Rights, and Responsibility: Changes in China’s Response to International Humanitarian Crises’, Journal of Chinese Political Science, http://www.sirpa.fudan.edu.cn/picture/article/56/2f873cfa-6810-4d7b-9f1a-c097ddfbf4f9/f4b11df1-5cb5-4d7e-8345-1253f152a162.pdf

[59] World trade Organisation (2010), ‘China: Trade policy regime:  framework and objectives’, http://www.wto.org/english/tratop_e/tpr_e/s230-02_e.doc

[60] Australian Strategic Policy Institute (2012), ‘Fuelling The Dragon: Natural resources and China’s development,The Brenthurst Foundation, http://www.thebrenthurstfoundation.org/Files/Brenthurst_Commisioned_Reports/Brenthurst-Special-Report-Fuelling-the-Dragon.pdf
[62] Forum on China- Africa Cooperation , ‘African culture promoted in China’, http://www.focac.org/eng/zfgx/rwjl/t936170.htm
[63] Yang, Jiechi (2012), ‘Take the New Type of China-Africa Strategic Partnership to a New High’, http://ke.china-embassy.org/eng/zfgx/t952701.htm
[64] Van Sant (2012), Shannon Africans Urge China to Help Create Sustainable Development, VOAhttp://www.voanews.com/content/africans_urge_china_to_help_creating_sustainable_development_in_africa/1443475.html
[67] Jincui , Yu (2012), ‘ Racial tensions a new challenge for emerging China’, http://www.globaltimes.cn/content/716268.shtml

INDIA AND AFRICA- WHAT’S THE DEAL?

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As the economic rise of Brazil, Russia, India and China (BRIC) continue to be charted in the global economy, the relationship between Africa and India is coming under increased scrutiny and sparking focused interest. Pertinent questions include: How did the interaction between Africa and India start? What is the nature of the modern economic dynamic between the two parties and what are the implications of this engagement? What should Africa be worried about and how can we benefit? As the Lion economies begin to roar, they will raise global attention. Of focus in this piece is how the African Lions are interacting with the Asian Elephant called India.

HISTORICAL CONNECTIONS

India has been a long-standing partner to Africa and is in no ways new to the continent. The Indo-Africa economic interaction started through slavery where the European Indian Ocean slave systems drew captive labour from Africa and the Indian sub-continent. This joint history between the two sired familiarities between them. Under colonial rule outfits such as the British East India Company cemented interactions between Africa and India. In East Africa, Indians came in as labourers in the late 1800s to build the Uganda-Kenya railway[1]. Many of these original Indian workers stayed on to work as, ‘artisans, traders, clerks, and, finally, small administrators… Some even became doctors and lawyers.[2] Having established roots in Africa, some Indians became so identified with Africa that they fought alongside Africans for their independence as well in struggles against apartheid.

MODERN ECONOMIC TIES

In terms of modern Indo-African economic dynamics significant in-roads have been made, ‘India’s trade with Africa has doubled in the past four years, from $24.98 billion in 2006–07 to $52.81 billion in 2010–11….Indian investments in Africa totaled 1.52 billion in 2009–10’.[3] In terms of India’s imports with Africa, these grew, ‘from US$ 587.5 million to US$ 18.8 billion between 1990 and 2009, whilst its exports to the continent increased from US$ 436.8 million to US$ 13.2 billion during the same period’. [4] In terms of imports from Africa these are, ‘predominantly crude petroleum, gold, and inorganic chemical products’ reflecting India’s growing energy demands.[5] Exports however are more diverse and, ‘include manufactured goods, machinery, transportation equipment, food, and pharmaceutical products’.[6] Concerning bilateral trade, ‘both the sides have set a target of $70 billion to be achieved by 2015’.[7]

The Indian government is fully aware of the asymmetrical access it has historically had with some Eastern African countries and thus, ‘it remains committed to build and strengthen its commercial and economic ties with other African countries (Southern and Western regions)’.[8]

There are several key initiatives to keep in when discussing the economic ties between the parties:

  • Duty Free Tariff Preference: This provides for unilateral duty free and preferential market access for exports from low income countries including 33 from Africa.[9]
  • Focus: Africa programme: The main objective of this is, ‘to increase the interaction between the two regions by identifying the potential areas of bilateral trade and investment’. The programme is with 24 African countries and is designed to promote Indian exports in textile item, drugs and pharmaceuticals, machinery, transport equipment, and telecom and IT.
  • IBSA initiative: This Tri-lateral Commission is between India, Brazil and South Africa and is designed to foster, ‘cooperation in fields like health, IT, civil aviation and defence’ as well as business exchanges in, ‘infrastructure, technology, sustainable development and energy’.[10]
  • India – Africa Project Partnership Conclaves: This is an agreement between various Indian ministries and banks with the Africa Development Bank to facilitate join projects between the parties.  This year alone, ‘More than 200 projects worth almost $30 billion in sectors like infrastructure, mining, agriculture, telecom and healthcare were discussed at the India-Africa conclave’. [11]
  • TEAM-9 Initiative- Focus on West Africa: As part of its effort to reach out to West Africa, this initiative is between 9 West African countries and India and seeks to share expertise, intellectual and physical resource as well as build economic opportunities.
  • Lines of Credit (LOCs):  LOCs to Africa include, ‘US$ 5 million each to the Eastern and Southern African Trade and Development Bank (PTA Bank), the Industrial Development Bank Ltd, Kenya, and the East African Development Bank (EADB)’.[12] Indeed, ‘by far the largest part of Indian ExIm expenditure is allocated to African countries, receiving 61% of Indian ExIm Bank operational loans in 2009’.[13]

In addition to these are numerous independent deals, too numerous to trace between the two. For example:

India’s Oil and National Gas Corporation (ONGC) acquired shares in oil exploration ventures in Libya and Nigeria, which account for 15 percent of India’s oil imports…It also invested in Sudan’s hydrocarbon sector (US$ 690 million) and in offshore drilling in Côte d’Ivoire (US$ 12.5 million)…Vedanta Resources invested about US$ 750 million in a Zambian copper mine project, while Arcelor Mittal, which is the leading global steel company, launched a US$ 1 billion iron ore mining project in Liberia ’.[14]

Stealth in nature and not as ‘loud’ as China, India is making significant in-roads into the continent. Indeed, ‘India benefits from its invisibility and has so far managed to escape external criticism of its approach’ in Africa.[15]

Overseas Development Assistance (ODA)

Formal development assistance strategies include the following:

  • ODA directly coordinated by MEA. By, ‘2007-2008, Indian development assistance under the MEA’s jurisdiction reached US$420 million’.[16]This aid is primarily deployed through the following:
    • Indian Technical and Economic Cooperation (ITEC) programme: Launched in 1964 as a bilateral programme of assistance of the Government of India, to provide technical support to developing countries.[17]
    • Aid to African countries through SCAAP (Special Commonwealth Assistance for Africa Programme): This programme is targeted to 19 African countries and has six ODA components namely,: civilian and defence training; projects and project related activities; deputation of Indian experts abroad; Study tours; Donation of equipment and  Aid for Disaster Relief.
    • Under IBSA: As part of this relationship, a communal fund was set up to fight, ‘poverty and hunger in the three countries’ with ‘US$1 million annual contribution per country, administered by the UNDP. [18] Development Projects under IBSA include small-scale agricultural management in Guinea Bissau, health care clinics in Cape Verde and HIV/Aids clinics in Burundi.[19]
    • Under Team 9: Under this umbrella, Africa is benefiting from technical skills and technology transfer from India in sectors such as, ‘agriculture, small- scale industries, pharmaceuticals and healthcare , information’ as well as support for infrastructure development. [20], [21]
    • Pan African E-network Project: This is a joint initiative with the African Union fully financed by the government of India and worth US 117 million[22]. The project is focused on creating linkages for tele-education and tele-medicine to make Indian expertise and facilities available to Africa. [23]
    • Cancellation of debt: India cancelled US$24 million worth of debt of the Heavily Indebted Poor Countries (HIPCs) of Ghana, Mozambique, Tanzania, Uganda and Zambia[24]
    • Concessional loans: India borrows, ‘in the international capital markets and then on-lends concessional terms to less credit-worthy countries in Sub-Saharan Africa and elsewhere’. [25] This a form of ODA as India essentially takes on the burden and risk of making access to credit more affordable for Africa.
    • Development focused LOCs and grants: India had  US$2 billion worth of grants and LoCs to African countries by 2010, ‘for projects as varied as IT training centre (Lesotho), rural electrification (Mozambique, Ethiopia), railways (Senegal, Mali),; and cement factory (Congo)’.[26]

This list is by no means comprehensive however it does indicate the increasingly important development partner role India is etching out for itself in Africa.

THE CHINA ISSUE

China and India don’t mix well it seems. Rivalry for Africa’s resources and land is merely a modern expression of an old relationship: ‘South-South cooperation emerged in the 1950s in the context of the common struggle of former colonies to attain independence and greater autonomy…China and India were both at the fore-front of this movement, and since then have been in competition with each other to become the leading representative of Southern states’. [27] More recently however, Indians resent the fact that the, ‘Chinese Communist Party (CCP) has laid claim to Arunachal Pradesh in the Northeast of India, where it maintains a heavy military presence’.[28] This already-existing diplomatic tension between the India and China has spilt over into their going-ons in Africa. India clearly sees China as competitor and is actively amping up its presence partly in response to the behemoth China has become on the continent. One can argue that India has an advantage over China as it is seen as more benign and less domineering than China. Further, India rightly points out that is does not have the Chinese habit of cozying-up with rogue African regimes such as Zimbabwe and Sudan. India has other advantages. Africa and India share an ‘anti-colonial tradition’ and historic linkages to the continent that make India well-placed to eventually have a more significant presence on the continent. However, this familiarly between India and Africa is not always positive. Racial tensions exist between the two parties, even in relations between Africans of Indian heritage and Black Africans. In Kenya one can certainly see the tensions exist because despite decades of living side by side, there is still very little integration between the two communities. This dynamic is not one China has to contend with. China is seen as a ‘fresh’ power with limited socio-historical connections and therefore less baggage weighing down the interaction. Articulating and addressing the complexity in Indo-African racial dynamic in one that the Indian government ought to be aware and seek to influence in a positive direction if it is to, ‘compete with China globally and emerge as a new economic superpower’.[29]

 

RESPONSE TO INDIA’S ENGAGEMENT IN AFRICA

Anti-Africa argument

Energy -hungry

Africa has serious reason to view India’s newfound interest in Africa with profound scepticism. While India is fond of pointing to China’s voracious appetite for African resources, it too has this appetite. Skim through exports of Africa to India and it will soon become clear that mineral fuels dominate the list. Frankly, ‘The numbers behind China and India’s seemingly insatiable thirst for energy are mind-boggling… India consumes 3 million barrels per day, two-thirds of them imported… India will eventually be importing around 7.4 million barrels per day’.[30] Clearly, Africa will be increasingly turned to as a source of that fuel with current trends indicating that India will keep Africa as a mere provider of raw material.

Grabbing land

The ever-sensitive land issue rears its ugly head here. India is, ‘tapping the emerging agricultural opportunities in Africa…to help Indian farmers reap the benefits of the huge potential that lie in Africa’.[31] Basically, India wants to farm on African soil, to feed Indian mouths, even as some African’s starve. In fact, ‘Indian farming companies have bought hundreds of thousands of hectares in Ethiopia, Kenya, Madagascar, Senegal and Mozambique, where they are growing rice, sugar cane, maize and lentils for their own domestic market back in India’.[32] Chaos would emerge if Africans were to see food cultivated on what they perceive to be their land being shipped abroad while they themselves starve. So there is reason for Africans to resist this Indian onslaught as there may very be no dividends for Africans to reap themselves.

Race issues

Already touched upon, some tension does exist in race relations between Indians and black Africans. If left unaddressed some tensions may spill over into open hostility. Bear in mind such spill-overs have previously occurred. In 1972 Uganda’s President Idi Amin, ordered the expulsion of Indians from the country. Frankly, this race issue is the elephant in the room that can be easily glossed over and left to fester. It is in the interest of the Indian government to be aware of this reality and mitigate the potentially negative flavour it could infuse into Indo-African relations.

Pro-Africa argument

Mutual benefits

India’s interaction with Africa is the most mutually beneficial Africa has with any other major power on the continent. The extent to which Indians have embedded themselves in the continent and to a certain extent identified with the continent may make both them and the Indian government better placed to invest thoughtfully on the continent when compared to China for example.

Relevant expertise

India has practical skills that can be easily applied to African needs. Indeed, ‘India’s expertise in agro-processing and small farm mechanization is of relevance to Africa’s farming industry and could help African countries address their food security crisis’.[33]  Further, India has the, ‘ability to supply appropriate technology and at highly competitive cost’.[34] Moreover, ‘India’s strengths in biotechnology, pharmaceuticals, railways and space research are relevant to Africa’.[35]

Sense of responsibility

Perhaps a benefit of the long-standing relationship India has had with Africa, India may to have deeper sense of responsibility over Africa than China or other emerging powers do. This may be reflected in the fact that, ‘Rather than employing Indian workers, and in contrast to Chinese practice, many Indian firms train local staff for particular projects’.[36] India is also interested in Africa being more than merely a provider of natural resources but also a processing and value addition base, ‘ONGC Mittal committed itself to building an oil refinery worth USD 6 billion in exchange for extraction concessions. India has also been using ExIm activity to support the development of power plants in countries where it is extracting natural resources’.[37] It appears as though some Indian investors are committed to seeing Africa benefits.

 

RECOMMENDATIONS

  • Make use of the commodity boom India is playing a role in fuelling: Africa is well placed to use the commodity boom of traditional, especially energy related exports, ‘to invest in basic needs and   infrastructure, and enhance its industrial and technological capacity’.[38]
  • Create new sources of revenue: The nature of  Indian (and Chinese) investment in Africa in new industries and sectors (e.g. agro-industries, SME’s, pharmaceuticals, textiles, IT, banking and retail) offers the chance of accelerating diversification and moving from an agricultural to a more industrial and technology-based economy.[39]
  • Make use of the competition between India and other powers especially China: African governments are well placed to make use of the multi-polar world India and others are creating for them. Africans thus, ‘have to bolster their bargaining strategies…minimize the risks and harness unique medium and long term opportunities’.[40] Africa is well-placed to try and get the best of all the options at its disposal.

[1] Brueggemann ,Rudy (2000), Indians of East Africa, http://www.rudyfoto.com/IndiansofAfrica.html

[2] Brueggemann ,Rudy (2000), Indians of East Africa, http://www.rudyfoto.com/IndiansofAfrica.html

[3] Invest India Initiative (2012) , India-Africa Partnership: Gaining Currency, http://www.indiaafricainvest.in/index.php?option=com_content&view=article&id=297&Itemid=457

[4] African Development Bank (2011), ‘India’s Economic Engagement with Africa’, Africa Economic Brief Volume 2, Issue 6http://www.afdb.org/fileadmin/uploads/afdb/Documents/Publications/India%27s%20Economic%20Engagement%20with%20Africa.pdf

[5] African Development Bank (2011), ‘India’s Economic Engagement with Africa’, Africa Economic Brief Volume 2, Issue 6http://www.afdb.org/fileadmin/uploads/afdb/Documents/Publications/India%27s%20Economic%20Engagement%20with%20Africa.pdf

[6] African Development Bank (2011), ‘India’s Economic Engagement with Africa’, Africa Economic Brief Volume 2, Issue 6http://www.afdb.org/fileadmin/uploads/afdb/Documents/Publications/India%27s%20Economic%20Engagement%20with%20Africa.pdf

[7] Mittal, Sunil Bharti and Maxwell M Mkwezalamba(2012) , ‘India, Africa set trade target of $90 billion by 2015’, The Economic times, http://articles.economictimes.indiatimes.com/2012-03-17/news/31204825_1_sacu-trade-target-india-africa-business-council

[8] African Development Bank (2011), ‘India’s Economic Engagement with Africa’, Africa Economic Brief Volume 2, Issue 6http://www.afdb.org/fileadmin/uploads/afdb/Documents/Publications/India%27s%20Economic%20Engagement%20with%20Africa.pdf

[9] Invest India Initiative (2012), ‘India’s Trade and Investment Initiatives in Africa’  http://www.indiaafricainvest.in/index.php?option=com_content&view=article&id=276

[10] African Review, India’s Initiatives To Enhance Regional And Bilateral Trade And Investment Relations

http://www.indoafrican.org/Indias%20Iniatied.pdf

[11]Munjal, Sunil Kant and Jonathan Wutawunashe(2012), ‘Projects worth $30 billion discussed at India-Africa conclave’, The Economic Times,http://articles.economictimes.indiatimes.com/2012-03-20/news/31214929_1_african-countries-india-africa-project-partnership-conclave

[12] Africa Business Pages, ‘India – Boosting Trade With Africa’ http://www.africa-business.com/features/india_africa.html

[13]Saidi, Myriam Dahman and Christina Wolf (2011), ‘Recalibrating Development Co-Operation: How Can African Countries Benefit From Emerging Partners?’  OECD Development Centre, http://www.oecd.org/dev/48450803.pdf

[14] African Development Bank (2011), ‘India’s Economic Engagement with Africa’, Africa Economic Brief Volume 2, Issue 6http://www.afdb.org/fileadmin/uploads/afdb/Documents/Publications/India%27s%20Economic%20Engagement%20with%20Africa.pdf

[16] Bijoy, C. R. (2010) ‘India: Transiting to a Global Donor’, Special Report on South-South Cooperation http://www.realityofaid.org/userfiles/roareports/roareport_3ce2522270.pdf

[17] ITEC, Ministry of External Affairs,  http://itec.mea.gov.in/

[18] African Review, India’s Initiatives To Enhance Regional And Bilateral Trade And Investment Relations

http://www.indoafrican.org/Indias%20Iniatied.pdf

[19] White, Lyal (2010), ‘IBSA: Reflect, Realign & Redefine IBSA’, Redefine IBSA Academic Forum IPC, Brasilia April 2010, http://www.ipc-undp.org/pressroom/files/ipc150.pdf

[20] African Review, India’s Initiatives To Enhance Regional And Bilateral Trade And Investment Relations

http://www.indoafrican.org/Indias%20Iniatied.pdf

[21] Bijoy, C. R. (2010) ‘India: Transiting to a Global Donor’, Special Report on South-South Cooperation http://www.realityofaid.org/userfiles/roareports/roareport_3ce2522270.pdf

[23] Invest India Initiative (2012) , India-Africa Partnership: Gaining Currency, http://www.indiaafricainvest.in/index.php?option=com_content&view=article&id=297&Itemid=457

[24]Bijoy, C. R. (2010) ‘India: Transiting to a Global Donor’, Special Report on South-South Cooperation http://www.realityofaid.org/userfiles/roareports/roareport_3ce2522270.pdf

[25] Bijoy, C. R. (2010) ‘India: Transiting to a Global Donor’, Special Report on South-South Cooperation http://www.realityofaid.org/userfiles/roareports/roareport_3ce2522270.pdf

[26] Bijoy, C. R. (2010) ‘India: Transiting to a Global Donor’, Special Report on South-South Cooperation http://www.realityofaid.org/userfiles/roareports/roareport_3ce2522270.pdf

[27] McCarthy, Tom (2011), ‘Assessing China and India’s New Role in Africa’, http://www.e-ir.info/2011/07/26/assessing-china-and-india%E2%80%99s-new-role-in-africa/

[28] Philipp, Joshua (2011), ‘India-China Rivalry Heads to Africa’ Epoch times,

http://www.theepochtimes.com/n2/world/india-china-rivalry-heads-to-africa-56945.html

[29] Sharma, Spandan (2010), ‘India & Africa: Colonial Cousins, and more…’ http://simcwire.simc.edu/?q=node/3545

[30] Bloomberg BusinessWeek (2011), ‘China and India’s Growing Energy Rivalry’, http://www.businessweek.com/globalbiz/content/dec2010/gb20101215_795065.htm

[31] The Economic Times (2011), ‘African nations offering land for free to Indian farmers’

http://articles.economictimes.indiatimes.com/2010-08-11/news/27580718_1_indian-farmers-sudan-and-ethopia-number-of-indians-farming

[32] Nelson, Dean (2009), ‘India joins ‘neocolonial’ rush for Africa’s land and labour’, The Telegraph,

http://www.telegraph.co.uk/news/worldnews/asia/india/5673437/India-joins-neocolonial-rush-for-Africas-land-and-labour.html

[33] African Development Bank (2011), ‘India’s Economic Engagement with Africa’, Africa Economic Brief Volume 2, Issue 6http://www.afdb.org/fileadmin/uploads/afdb/Documents/Publications/India%27s%20Economic%20Engagement%20with%20Africa.pdf

[34]African Development Bank (2011), ‘India’s Economic Engagement with Africa’, Africa Economic Brief Volume 2, Issue 6http://www.afdb.org/fileadmin/uploads/afdb/Documents/Publications/India%27s%20Economic%20Engagement%20with%20Africa.pdf

[36] Price, Gareth (2011) ‘For the Global Good: India’s Developing International Role’, http://www.chathamhouse.org/sites/default/files/public/Research/Asia/r_indiarole0511.pdf

[37] Saidi, Myriam Dahman and Christina Wolf (2011), ‘Recalibrating Development Co-Operation: How Can African Countries Benefit From Emerging Partners?’  OECD Development Centre, http://www.oecd.org/dev/48450803.pdf

[38] Sumit, Roy (2012), ‘China and India, the ‘Emerging Giants,’ and African economic prospects’, http://www.globalpolicyjournal.com/articles/world-economy-trade-and-finance/china-and-india-%E2%80%98emerging-giants%E2%80%99-and-african-economic-pros

[39]Sumit, Roy (2012), ‘China and India, the ‘Emerging Giants,’ and African economic prospects’, http://www.globalpolicyjournal.com/articles/world-economy-trade-and-finance/china-and-india-%E2%80%98emerging-giants%E2%80%99-and-african-economic-pros

[40] Sumit, Roy (2012), ‘China and India, the ‘Emerging Giants,’ and African economic prospects’, http://www.globalpolicyjournal.com/articles/world-economy-trade-and-finance/china-and-india-%E2%80%98emerging-giants%E2%80%99-and-african-economic-pros