Yes, China can deliver African continent’s growth miracle

Tuesday June 12 2018

Jeremy Stevens, China Uganda Business Forum

Economist Jeremy Stevens speaking during the Third Stanbic China-Uganda Business Forum in Kampala. PHOTO | COURTESY 

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China could be the unlikely hero that unlocks Africa’s development, but the continent’s leaders will need to reset the relationship to achieve that.

Jeremy Stevens, a Beijing-based economist for Standard Bank, argues that China has been a loyal partner of Africa, but the relationship has been lopsided because Africa is using the wrong criteria to measure the success of this partnership.

China-Africa co-operation is premised on trade, investment and finance for major infrastructure development.

In Uganda, for example, China is displacing western contractors with Chinese companies enjoying a share of 40 per cent of government projects.

China also finances 29 per cent of all government projects compared with just 3 per cent by European states.

But while China has helped ameliorate Africa’s infrastructure deficit, it has not translated into job creation on a continent that will see 500 million people join the job market over the next 15 years.

Speaking at the end of the Third China-Uganda Business Forum organised by Stanbic Bank in Kampala, Mr Stevens said Africa “needs to change the metrics of how they measure the success,” of their relationship with China.

Rather than look at trade, loans and investment, Africa could introduce job creation and skills development as measures of success of that relationship. And Beijing would be likely to deliver.

“If Africa told China the measure of the success of our relationship is how many jobs are created and gave them a target; China would deliver because it has proved it can meet targets and commitments and is keen to be a partner of choice,” he said.

Export destinations

Africa is the fastest growing export destination for China globally and since 2009, 10 of its fastest growing export destinations have been in Africa.

China’s exports growth to Africa has been robust, with sales to the continent reaching $95 billion in 2017.

But the trade has been lopsided, with Africa mostly exporting raw minerals to China.

The Dragon is a major competitor for fledgling domestic manufacturing because its exports to Africa are mainly manufactured goods.

While the continent enjoyed a trade surplus with China for a period, the collapse of the commodity market in 2014 changed that.

An opportunity to restructure Africa’s engagement with China will present itself this September, when African leaders and business people converge on Beijing, for the 2018 edition of the Forum for China Africa Co-operation.

“Up to now, China’s engagement with Africa has been driven by China’s own interests. Africa will need to understand what is happening in China to be able to negotiate as an equal partner because that is going to drive what they do in Africa and unlock more opportunities in the China-Africa space,” Mr Steven said.

He added that China’s trade war with the US, which is less about trade and more about technology leadership, has created a unique opportunity for Africa because China has built itself as a brand and a partner that delivers on its promises and commitments.