Wednesday, November 01, 2006

Sino-African love-in

Today's Indy has an analysis of China's influence in Africa. Beijing is hosting a forum where more than 40 African heads of state will be selling their souls in return for yen for their economies. It won't be long before you hear of African leaders sunning themselves in holiday villas in Guangdong, or going on shopping sprees to Shanghai. Sunday's Observer also had a piece on the same topic.

The pact between these two is rather simple: Africa gives Beijing its vast mineral resources (especially oil), and Beijing gives Africa money, in raw cash, loans, assistance. The Lagos to Kano railway line is a typical example. Nigeria gets a $1bn loan from China, and a Chinese firm CCECC (which is actually based in Hong Kong - not sure how much the distinction matters these days) builds the line.

Railway in Nigeria is going to be one of the keys to reviving the economy. And there are no better technicians to use than the Chinese. Chinese engineers and architects are leapfrogging stages in conventional progression. The Shanghai Maglev train is a prime example, and they're hoping to extend the line to Hangzhou by 2010. I suppose it is pie in the sky to hope for the Lagos-Kano line to use maglev, but we can at least expect cutting edge technology.

One of the arguments against China's investment in Africa is the hands-off approach to domestic affairs. Hence, China will say nothing of genocide being committed in Darfur. So long as the nation can still guzzle it Sudanese gas, it doesn't care. China is in Africa to do business, not to preach.

The irony of China's involvement in Africa is the aspirations of both parties. If Africa is going to compete in the next century, it needs to start adding value to natural resources. It needs to cut its diamonds, refine its oil, make stuff. And that is where China trumps all at the moment. China makes stuff for cheaper than any other country in the world. It has an army of workers just willing to sew footballs, stitch shirts, assemble electronics, the hallmarks of an industrialised nation. If Africa wants to compete, it will have to compete with China. Africa could obviously shun this method of development and follow the yellow brick road developing nations are treading - the ideas or knowledge economy.

Take the iPod. The man who led the design team for the iPod is Jonathan Ive (who also led the team behind the iMac), a Brit. He works for an American company, Apple Computer. However, the iPod is made in China. Nothing has been made by Britain or America, but their economies (or at least America) have much to gain from the invention and manufacture of the iPod.

If Africa isn't going to make stuff, it should be thinking of stuff to make. The problem with a knowledge economy is levels of education. Literacy rates in Sub-Saharan Africa are at just over 60%. Compare that to 85% for China or even 99% for Western Europe. Africa has a long way to go if it's going to be doing competing with China rather than just selling raw materials.

3 comments:

Aaron Rowe said...

Thanks for the link Nkem, very interesting.

I was only recently telling a Nigerian friend of mine, with my tongue firmly in my cheek, that the Chinese are the new Lebanese.

You only have to go on a short trip around V.I. to see the number of chinese firms establishing themselves in Nigeria. Quite possibly it will not be long before they outnumber European companies if they don't already. Probably Abuja and PHC are the same.

I believe it is a positive thing for Nigeria to move away from reliance on "Western" economies. Let us all hope, this generation of leaders all have the wisdom to do their job well.

snazzy said...

there is nothing wrong with Chinese investment in Nigeria as long as it comes with what the Chinese have always insisted on in their own country: knowledge transfer. If this knowledge transfer in all the areas happens then the knowlege economy u r hoping for might come to pass. Worse case with the knowledge the Nigerians could go do big brother for some other African country. What would be interesting is to find out how many of the 55,000 people the rail line is supposed to employ will be in management or technical positions.

dont get mad get even said...

The Chinese are all over Nigeria like a rash. The deal they just negotiated in Abuja means they get to cherry pick the best oil blocs in the country - and make money on the loan.

African govts (including Nigeria) are notoriously weak negotiators. Add the fact that no one has any confidence in any form of value-added manufacturing (with only Dangote and a few other exceptions), and you have a recipe for dictator-friendly Sino-colonialism in Africa in the next few years.

Snazzy: forget about knowledge transfer. All they need are the grunts - and even then, they'll probably bring over their own.