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#1 The great China 'takeover' of Africa is greatly exaggerated

Posted: Mon Mar 03, 2014 4:36 pm
by frigidmagi
CSM
Thatch covers the wooden roof of The Clubhouse in Abuja and the tables are decorated with animal-print cloths. The casual restaurant in Nigeria's capital looks archetypally African, but it is also distinctly Lebanese, serving dishes such as hummus and shish kebabs.

Early on a Saturday night, a young man in traditional clothes taps on his smart phone while manager Assaad Abi Antoun sips Lebanese coffee at a nearby table. "Lebanese can do hospitality at the top level," says Mr. Antoun, who has been here for four years.

The Lebanese are well known in West Africa for owning posh hotels, restaurants, and grocery stores. But, like other immigrant groups working on the continent, the Lebanese are not nearly as famous worldwide for investment in Africa as the Chinese, who are popularly believed to be "taking over Africa."

The great China takeover, however, may be something of a myth, according to Bright Simons, an honorary fellow at the Ghana-based IMANI Center for Policy & Education. China is Africa's biggest trading partner – it took the top spot from the United States in 2009 – and a large source of capital. Trade between Africa and China, which totaled $10.5 billion in 2000, ran $166 million in 2011.

But Canadians, Americans, Britons, the French, and Australians still represent a heavy footprint in Africa. And a plethora of investors from other emerging economies are becoming more integrated into Africa's social and political life, Mr. Simons says. While not eclipsing China, these new kids on the Africa block are showing a dynamism previously hidden by China's shadow.

African trade with South Korea and Brazil has moved from single-digit billions in 2000 to more than $25 billion each in 2011. (Korean giant Samsung peppered the continent with $150 million in shops, technology, and employment between 2010 and 2012, the company says.) India's footprint is small, but growing at 400 percent a year, according to Páidrag Carmody at Trinity College Dublin in his 2013 study "The Rise of the BRICS in Africa."

Investment by the emerging economic powerhouses of Brazil, Russia, India, China, and South Africa (BRICS) has doubled since 2007 in Africa, though numbers are notoriously poor (see accompanying story). A 2013 United Nations study shows African foreign direct investment grew 5 percent, to $50 billion, while shrinking in nearly every other region.

Africa's 'rise of the rest'

Africa auctions off mining and oil exploration to a "broad array of companies from around the world that you did not see before," says Todd Moss, a former senior State Department official dealing with Africa who is now at the Center for Global Development in Washington, D.C.

The push is being called a "rise of the rest" for Africa, or a new "South-South" partnership. Partly the story is of high rates of growth. New "greenfield investments" – business start-ups – from South Africa and the United Arab Emirates have eclipsed those of China, according to a new Ernst & Young study.

"People have said China is bolstering its 'soft power' through the use of charitable projects, Confucius Institutes, donations of medicines, etc.," Simons says. "But the truth is that most of these projects are lackluster."

To be sure, China's role in Africa will never be insignificant. Large-scale symbolic projects such as the highway across Nigeria or the new African Union headquarters in Addis Ababa, built by China at a cost of $200 million and the tallest structure in Ethiopia's capital, are hard to miss. With trillions in cash reserves and few legal restrictions on public-private partnerships, China's presence in Africa grows daily.

But the idea that China and the West are the only competitors in a battle for Africa's resources and markets is outdated, says Ben Payton, an Africa analyst at Maplecroft, a Britain-based global risk analysis company. "In addition to Africa's traditional partners in the West, there is growing interest in Africa's resource wealth from companies in countries such as Brazil, India, Singapore, and South Korea," Mr. Payton says. "By some measures, Malaysia provided more foreign investment in Africa than China last year."

Nations like Malaysia appeal to African states, says Mr. Moss, the former US-Africa trade official, as an "Asian model" that emphasizes strong political control and wealth. "Americans want both political openness and open markets, but Asians stick to a commercial relationship," he says.

With only Asia growing faster as a region than Africa, foreign investment can be successful on the continent despite troubles such as constant power outages and muddled trade laws, according to Thomas Hansen, a senior Africa analyst at Control Risks, a security assessment firm. "It's one of the few places in the world now where you can get a relatively high return on your capital," he says.

South Africa understands

In Nigeria, Africa's most populous country, with more than 160 million people, Indians own many of the supermarkets and computer shops. South Koreans are well known for making affordable electronics available. Brazil and Russia are growing players in Nigeria's gas and its 2.2 million-barrel-a-day oil export industry, the largest in Africa.

South Africa, the largest economy in Africa, stands out as one of the most successful investors, leading the telecommunications industry on the continent and building shopping malls and supermarkets, according to Simons of IMANI. South African investment tends to be visible in terms of social impact, he adds.

"South Africa has the exceptional capacity to understand Africa," he says. "South African investments tend to be savvy."

At a cafe in Abuja on a Sunday afternoon, waitress Becky Utase flips her BlackBerry in her hand. Despite rapid economic growth, the African continent is still the poorest in the world. Ms. Utase says foreign investment only matters to her if it somehow helps Nigerians live better lives. Mobile phone networks, she adds, mean the world to her.

Before cellphones, much of Nigeria and the continent was not connected by land lines. Utase says she remembers when posted letters or physical visits were the only way to keep in touch. "Communication is easier," she adds, sitting on a couch overlooking her dining customers on the patio. "Even work is easier. Back in the day all business needed to travel."

South Africa's MTN leads the telecommunications industry, and other major phone companies in Africa are based in the United Arab Emirates and India. Nigeria's own Globacom Ltd. provides mobile phone service in three other West African countries.

All these non-Chinese telecom companies, however, sell equipment such as handsets, headphones, and chargers made in China. Among the many innovations in mobile technology especially suited for Third World customers are popular prepaid flash modems, almost exclusively produced by China's behemoth Huawei Technologies.

Anti-China platforms

People in Africa often say they like China because the country's investors build roads, the needed predecessor to development and economic growth. But that doesn't necessarily translate into winning hearts and minds, according to Payton, the Africa analyst.

"Chinese companies are generally far less concerned with respecting internationally recognized labor standards than their Western counterparts," he says. "As a result, workforces and local communities in countries such as Zambia have become increasingly hostile to Chinese employers [see sidebar]."

This hostility feeds on itself when African governments use it to distract the public from their shortcomings, according to John Campbell, former US ambassador to Nigeria now at the Council on Foreign Relations in New York.

Both Zambia and Malawi have elected presidents who ran on anti-China platforms.

"The tendency," says Mr. Campbell, is "to blame the Chinese for certain domestic shortcomings, particularly about whatever government is in power."

The main difference between Chinese investors and all the rest, according to Mathew Agabi, who works at a popular Indian-owned supermarket in Abuja, is that Chinese companies are known for importing their own workers, and that angers many Nigerians. Locals employed by Chinese companies also are expected to work what Nigerians call "slave hours."

When Chinese companies don't hire locals and teach them technical know-how, Mr. Agabi says, they leave behind a community of workers that can't handle or maintain high-end operations. "South Korean companies don't have those issues," he says.

Chinese investors are not alone in angering Africans. Nigerians complain that most foreign companies may hire a majority of locals, but then give choice positions to expatriate workers. Nigerians particularly loathe Western clothing companies that prefer to open factories in Asia and overlook a massive pool of unemployed laborers in Africa. "They should build factories," Agabi says.

Investment anxiety, however, targets China because it tends to be the least accessible culturally, according to Payton. Few Africans speak Mandarin, and many fear that Chinese investments allow African governments to evade Western demands for compliance with human rights standards.

"In the long term, there is a risk that anger at perceived Chinese exploitation could escalate into a perception that China's political and economic clout enables it to exert a form of neocolonial domination over Africa," he says.

On the other hand, he adds, China has championed poverty-alleviation programs at home and could serve as an example for policymakers in Africa.

"Chinese investment is not only providing Africa with new infrastructure and new sources of capital," he says. "It is also altering the horizons of policymakers and driving a new confidence in the continent's economic outlook."

Back at The Clubhouse in Nigeria, manager Antoun says China may not be literally taking over Africa, but its presence is certainly palpable. A few years ago, Antoun says, he had one-fifth as many Chinese customers. Most of their work is in construction, he adds, and infrastructure draws other investors.

When his place opened about seven years ago, it had been a canteen for a construction company, without air conditioning, reliable electricity, or even a fan.

"There was nothing, from decoration to infrastructure," he says.

Antoun is not concerned that Chinese investors will drive others out because the Chinese tend to keep to themselves and avoid businesses with a high public profile, he says. In Nigeria, he adds, foreign companies struggle more with dealing with the country's chaotic business policies and poor infrastructure than competing with each other.

Hurdling those barriers, he says, is one thing Lebanese excel at. But he is sardonic about his reasons for working in Africa. The Nigerian economy is growing more than four times as fast as the Lebanese economy, according to the CIA World Factbook, and insecurity in the Middle East is making things worse. "We have to do something outside [Lebanon]," he says, lifting a single finger in the air, "because the chances in Lebanon are between zero and one."
I thought this was interesting. On a side note, being blamed and thrown under a bus to cover up local problems actually gives China and the US something in common. Odd that.

#2 Re: The great China 'takeover' of Africa is greatly exaggera

Posted: Mon Mar 03, 2014 5:14 pm
by General Havoc
I've said for a while that China is still learning this whole "Soft Power" thing. One of the hard lessons of it is that sometimes people piss all over you even when you are doing nothing but trying to help.

Welcome to the club, China.