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'China is creating consumer societies in Africa'

Saturday November 06 2010
garmentpix

Employees at a Chinese garment factory. File Photo

China’s role in Africa is typically colonial — it tells African states to supply it with raw materials and in return gives finished goods,” was the harsh verdict of Ghanaian law professor Kojo Yelpaala after a heated debate at the African Economic Conference in Tunis.

Prof Yelpaala who teaches at the University of Pacific in San Francisco, accused African leaders of taking at face value contracts with China. He gave an example from the early 1900s, when Lever Brothers approached chiefs in Ghana to surrender their land for palm oil plantation but the chiefs replied that they would rather grow the palm oil and sell it to the white men.

“These chiefs did not have PhDs but they were able to see the nonsense in the whole business. It is surprising that our learned leaders are agreeing to contracts of shame with China,” Prof Yelpaala said.
But a contrary opinion holds that China’s trade and investment opportunities in Africa are only to the disadvantage of other countries doing business with the continent.

Prof Mina Baliamoune-Lutz of North Florida University argued that Africa, as world supplier of much-needed primary commodities, needs to view China as a growing market power and identify the type of management of its natural resources to reap to the maximum in the new partnership.

According to a report by AfDB released in August titled “Chinese Trade and Investment Activities in Africa,” the continent’s exports to China are growing while its trade with other major global markets is either flat or on a decline.

The share of African exports to China is now standing at 10 per cent of total exports from Africa to the rest of the world. Europe remains Africa’s largest export market, but its share has slumped from over 50 per cent in the early 1990s to just over 30 per cent.

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Most of those exports are either crude oil which accounts for 70 per cent of the total or raw materials 15 per cent. Almost all exports from Angola and Sudan are crude oil, but agricultural products from other African countries have a modest share.

In overall value terms, 70 per cent of Chinese imports from Africa come from just four countries: Angola 34 per cent; South Africa 20 per cent; Sudan 11 per cent, and the Democratic Republic of Congo eight per cent.

“China’s role in Africa’s infrastructure sector is highly visible, in particular, as this sector suffers from a large deficit whereas it is critical to its economic development and African integration, especially for Africa’s 17 landlocked countries,” said AfDB vice president and chief economist Prof Mthuli Ncube.

The report emphasised the contribution China has made to Africa’s infrastructure in recent years.
China’s infrastructure commitments have increased considerably during the first decade of the 21st century from $1 billion annually between 2001 to 2003, to $1.5 billion between 2004 and 2005 to reach $7.5 billion in 2006.

$3.3 billion investment

In 2007, China financed 10 hydroelectric power projects in with an investment of $3.3 billion.
“These projects combined have allowed Africa to raise its hydroelectric power production capacity by 30 per cent,” Prof Ncube said.

One of the two main talks on the China-Africa question at the conference challenged the idea that only China gains from the relationship.

In her paper, “A path to mutual prosperity? Trade and investment between China and Africa” Xiao Ye, a World Bank economist, explained that Africa needs to add value to its produce before export.

Prof Mwangi Kimenyi, a senior fellow and director of Africa Growth Initiative at Washington DC-based Brookings Institution said that African countries need to be in control of the partnership.

He called for knowledge sharing between China and Africa for the benefit of both sides.
Africa’s imports from China are more diversified, dominated by three major types of product – machinery and transport equipment; manufactured goods, and handicrafts.

In effect, the report says, because Chinese imports include electronic toys and textiles, they are contributing to the creation of a consumer society on the African continent, not least because their prices are often relatively low.

However, these exports tend to be destined for relatively few countries. Six countries account for 60 per cent of the total. South Africa accounts for 21 per cent, Egypt (12 per cent), Nigeria (10 per cent), Algeria (seven per cent), Morocco (six per cent), and Benin (five per cent).

Even so, the study notes that there is a large trade deficit between China and Africa to the tune of some $10 billion.

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