China’s growing influence in Africa

Published: August 29, 2012

The writer is a doctoral candidate at the Centre for Development Studies at the University of Cambridge

Global powers, both new and old, are jostling for influence in Africa. This renewed ‘scramble for Africa’, to borrow a term from history, is largely to gain access to increasingly scarce natural resources such as oil and natural gas. Global giants such as British Petroleum, Tullow Oil, Chevron, China National Offshore Oil Corporation (CNOOC) to name a few are investing huge amounts of money in the continent in the quest to ensure energy security and satiate the ever-increasing global demand for these products. In countries across the continent such as Ghana, Angola, Uganda and Mozambique, investment in the oil and gas sector is seen by governments and policymakers as one of the most important drivers of growth and development. According to estimates of the International Energy Agency (IEA), the scale of investment in the continent’s oil and gas supply infrastructure over the period of 2010-2035 will be around $2.1 trillion. The resource affords a chance for sub-Saharan Africa to recover from years of economic misery brought in part by tough conditionalities as part of the IMF-led and World Bank-supported Structural Adjustment Programmes (SAP). For a continent that has often been seen as a global backwater there are major potential benefits and pitfalls.

In order to take advantage of these resources, both established and emerging powers such as the US, China, Brazil and India as well as former colonial powers like the UK and France continue vying for influence in the continent. China has taken the lead in fostering relations with African countries and over the last few years Chinese influence in the continent has increased markedly. The country has emerged as Africa’s largest trading partner. Two-way trade has increased dramatically to an all-time high of $166.3 billion, triple the figure for 2006. Both imports and exports have registered impressive growth rates. According to estimates, there are around 800 Chinese firms in Africa, investing in the infrastructure, energy and banking sectors. The deepening relationship between China and the continent has led to the formation of the Forum on China-Africa Cooperation (FOCAC). The first ministerial conference of FOCAC was held in 2000 with the most recent one held this past July in Beijing.

The increase in Chinese influence in Africa has been seen with alarm in many developed countries. Critics, both outside and within Africa, say 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 produce. They also assert 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. Chinese support to dictators is seen as being counterproductive to the welfare of the masses and as benefitting Africa’s elite. Some commentators have gone so far as to accuse the Chinese of pursuing a neocolonialist policy in the continent.

It is, indeed, 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 neocolonialists. The original scramble for Africa took place between 1884 and 1885 following a conference in Berlin. As in other parts of the globe, the colonial powers left deep imprints on the continent. Some of the main problems that continue to plague Africa were perpetuated, nee fostered, by the colonial powers to further their own ends. The frequent outbreak of violence between Hutus and the Tutsis in Rwanda is one such example where Belgian policy favoured the minority Tutsis much to the chagrin of the majority Hutus. Post-independence, this historical sense of deprivation has often led to acts of ethnic cleansing carried out by the majority. Economic exploitation and policies favouring firms from the metropole were also promoted by the colonial powers.

A 2007 article by Jedrzej George Frynas (currently a professor at Middlesex University in the UK) and Manuel Paulo in the magazine African Affairs shed light on this exploitation further. According to them, the development of oil resources in African colonies was pursued by the colonial powers to further their strategic and economic interests, and private as well as public firms of these powers developed the oil sector. In Anglophone Africa, a Shell–BP venture was given an effective monopoly for oil exploration and production in Nigeria. A colonial ordinance issued in 1914 stipulated that only British oil companies were permitted to obtain oil licences in Nigeria, allowing Shell–BP to dominate the country’s oil production. Similarly, in Francophone African countries like Algeria and Gabon, French oil interests were supreme. In Algeria, the newly-independent government was forced to sign a guarantee that French oil companies would receive preferential treatment in the granting of oil concessions for six years after the country’s independence. Apart from this, the military footprint of the US has also grown considerably in the continent. The military presence, apart from combating terrorism, has a vital support role in ensuring that oil fields in the continent in countries such as Nigeria are secure.

On the other hand, Chinese investment in the region is not based on extracting monopoly contracts for its firms. Similarly, in terms of development lending, as opposed to conditional lending by multilateral agencies (such as the World Bank) controlled by developed countries, Chinese aid to the region is unconditional and usually spent on infrastructure projects that have a greater impact on people’s lives. Sinopec, one of the leading Chinese state-owned oil companies, acquired oil concessions in Angola on the back of an oil-backed credit of $2 billion from China’s Eximbank to rebuild the country’s railways, state buildings, hospitals and roads. Far from being seen as neocolonialist, the “Beijing consensus” between African countries and China — to borrow a term coined by Joshua Cooper Ramo of the UK-based Foreign Policy Centre — is viewed as a much more attractive alternative economic development model in the continent, compared to the Washington consensus.

Published in The Express Tribune, August 30th, 2012.

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Reader Comments (14)

  • Hasan
    Aug 29, 2012 - 9:42PM

    All that china wants in Africa, is same as what the west did earlier. There is NO difference. All this infrastructure china is building is with chinese bank loan, making it mandatory to do all business with chinese firms, chinese equipments and chinese engineers. There is no helping african people. China has found another colony for its goods just like pakistan. Recommend

  • Nadir
    Aug 29, 2012 - 9:54PM

    So Chinas policies in Africa are acceptable because of the history of colonialism of imperial powers? What rubbish! Go and ask the Zambian miners who were shot and killed by Chinese managers! Go and ask all the local workers who are not hired by Chinese companies if they are members of unions. A major flaw in Chinese investment is that it does not offer opportunities to locals. Chinese firms ship in everything, from workers, managers, security guards, toothpaste, cooking oil etc.

    The reason why Chinese investment is looked on so fondly by the ruling elite in Africa is because of the hands off policies of Chinese investors. African leaders are easily bought off by Chinese largesses, like say the construction of new palaces in Sudan and Equatorial Guinea and “gifted” to their Presidents.

    Angola is perhasp the worst example to take. The oil bomb has made its capital Luanda the second most expensive city in the world, where the already poverty ridden population has been pushed out into unsustainable shanty towns with no water supply.

    The Washington Consensus is flawed, but what China offers is no better. The extreme capitalism of Chinese foreign investment is dictated by profit, thats it. Which is then neocolonial.

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  • Falcon
    Aug 29, 2012 - 10:50PM

    Well…it depends on who you ask…if you ask China’s rivals they would say this is because of China’s weaker moral ground in pursuing international investments. If you ask China’s supporters, this is because China is building its political and economic clout. Truth is in between. Most importantly, businesses originating from emerging markets are much better equipped than rivals from developed countries at exploiting bottom of the pyramid market penetration strategies, working around institutional voids, rapid adaptation to local requirements, operational expertise in high risk environments, and level playing field because of low brand barriers.

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  • Aug 29, 2012 - 11:09PM

    There is no such thing as a free lunch. So why fault the Chinese for looking after their own interests?

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  • Vikas
    Aug 30, 2012 - 12:30AM

    China goes all the way to help it’s friends. Pakistan is a shining example of it. They didn’t give them the nuclear technology but the bomb itself. Kudos. Way to go!

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  • Raw is War
    Aug 30, 2012 - 8:02AM

    @ Vikas

    agreed

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  • Feroz
    Aug 30, 2012 - 4:23PM

    The Chinese think they are clever but they are poor students of history. Indian businessmen spent a lifetime developing markets in most of East Africa decades ago but got kicked out nevertheless. This second round of colonization will meet a similar fate and Chinese assets will get nationalized sooner rather than later. Chinese seem to be buying US Treasury in Trillions too, no idea how that money will ever be recovered.
    Reckless Gamblers who will put Las Vegas punters to shame !

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  • from India
    Aug 30, 2012 - 5:38PM

    Very informative article. I would also like to point out that unlike China, Indian companies are investing on a long term perspective. Many African leaders have acknowledged that effort. India’s moto – “Both of us will grow” is more appreciated than China’s “First I will grow then you may”. Think about it !

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  • Raza Aslam
    Aug 30, 2012 - 5:55PM

    My company used do some work in Africa 30 years back. But the Chinese has just basically driven us out. Chinese government provides total support for their companies. They get cheap credit from their banks. They can do 100% of project using their engineers, machinery, training, support, financing. They will bribe aggressively and court the elite. The Chinese are very strategic, looking far ahead which are just not capable of doing.

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  • Raza Aslam
    Aug 30, 2012 - 6:10PM

    An example of Chinese success. A Chinese company Huawei is now the worlds largest telecommunication manufacturer, and is now larger than Motorola (owned now by Google) and Ericsson. It has 120,000 employees and was formed in 1988. Mot of cell phone equipment in Pakistan, Africa or rest of the third world is made by them. They are now moving into Europe. They follow a clever strategy of conquering the third world markets before attacking the developed country markets. Huawei is also has close connections with the chinese intelligence agencies. Chinese will do what it takes to succeed. They will steal patents, software code, bride, spy, anything and everything.

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  • asim
    Aug 30, 2012 - 9:26PM

    Its not only africa china has also started penetration in middle-east. China has overtaken US by importing record oil from Saudia arabia.
    With a population of 1.3b+ it has vital lessons for pakistan; Population is not a hinderance in growth its true committed leadership which makes the difference.
    Democracy is also not important for progress.. Its the vision of leaders.

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  • mike flynn
    Aug 30, 2012 - 10:24PM

    Why am i not surprised the author does not discuss the on going Arab\Islamic invasion of sub-Saharan Africa. Been going on for centuries. Growing more intensely violent for years.

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  • Sonia Wahab
    Aug 30, 2012 - 11:07PM

    The world will end if China comes in power like west. They are least sympathetic.Recommend

  • Adrian D'Souza
    Sep 1, 2012 - 4:01AM

    @from India:
    As if. India is as bad as China in investing in Africa. Case in point look at all of the land deals India buys up in Ethiopia. A country on the brink of starvation has much of its arable land bought out by Indians.

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