Post by Ismail AbdulAzeez on Jul 8, 2017 20:27:08 GMT 1
CHINA'S INFRASTRUCTURE DEVELOPMENT STRATEGY IN AFRICA: MUTUAL GAIN?
Certain complementary preferential policies need to be in place during the initial stage at a time when there are risks to be managed, including opaque policies, corruption, and security concerns.
Africa is rich in natural resources and has enough people of working- age to drive the economy. However, despite swift progress in urbanisation, poor infrastructure is one of the key obstacles to its development. To accelerate domestic socio-economic development, there is an insatiable demand for more and better infrastructure, with most of the funding coming from outside. In 2015, the total reached US$83.4 billion, of which US$20.9 billion came from China.
With the intensification of China's overseas investment strategy in recent years, the overall scale of China's direct investment in Africa has risen considerably. Chinese investment encompasses railways, highways, ports, oil and gas fields and power plants (for the latter, see Table 1), whereas investment from the US and European countries mostly focuses on energy and power. As many as 322 large-scale projects for infrastructural development began in Africa before June 2013. Around 12 percent of these projects were undertaken by Chinese companies, while 37 percent were undertaken by European andUS companies.
The value of contracts newly undertaken by Chinese companies in Africa reached 'US$75 billion in 2014, with a turnover of US$53 billion, which is 40 times more than the figure in 2000. Among them, the coastal railway project contract in Nigeria, acquired by China Railway Construction Corporation Ltd, had a total value of US$11.97 billion, the highest value of a single-contract project in the history of China's foreign engineering activities. Stage one of the Addis Ababa-Adama Expressway, with a total length of 78 kilometres, was completed in May 2014. Designed and constructed by China Communications Construction, this expressway is the first in Ethiopia and the first with such scale and quality in East Africa. Bidding for the construction of a new bridge over the Cuanza River in Angola was jointly won by an Angolan company, China Road, and a Portuguese company, Bridge Corporation, in November 2014. Theproject has a total contract value of about US$110 million, making it the first major public works contract won by a Chinese- funded company in collaboration with foreign companies since the influx of Chinese-funded companies into Angola in 2003.
China's approach to investment in infrastructural development in Africa differs from that of the West. While the latter emphasises the model of “democracy first,” China believes in driving the economic growth of the receiving country through infrastructural development. As a result, the West often questions the motive for China's investment and construction support in Africa from its own point of view. The questions usually focus on the following three perspectives.
Does chinese investment in infrastructural development take away jobs from Africans?
The Sino-African collaboration in infrastructural development is based on the global value chain concept of mutual benefit. All engineering projects undertaken by China involve the construction of infrastructures much needed by Africa. For that purpose, China introduces competitive industries urgently needed for African industrialisation and hires and fosters a large number of local workers and technicians for the construction. Global investment that follows infrastructural advance not only boosts local employment but also generates spillover effects, such as skill development, management experience, and technology transfer, which also help to reduce the high unemployment rate in Africa. According to unofficial statistics, the number of people employed by Chinese-funded companies in
South Africa exceeded 26,000 by the end of 2015, of which 24,000 (90 percent of total employees) were locals. China's involvement in Africa has lasted more than a decade. To date, it has built six training centres, which provide training to 12,000 people annually.
Is it a form of "neo-colonialism” that facilitates plundering of resources?
China needs resources because it is a world leader in manufacturing and a major supplier for the global market. The economic cooperation between Africa and China brings mutual benefit and gains. China's investment in infrastructural development in Africa comes with no political strings attached, as Chinese Premier Li Keqiang stated: “China will not follow the beaten track of colonialism of other countries or allow the re-emergence of colonialism in Africa. To Africa and China, collaboration means opportunities and mutual gain.” More and more people in the West are becoming aware that China's development projects in Africa are part of its public diplomacy strategies to build friendly relations and win future international support.
In a paper dated July 2016, David Dollar, a senior research at Brookings, reached the conclusion that China's involvement in Africa has been gradually shifting from natural resources to human resources. Chinese businesses are placing a greater emphasis on the multiple social effects of investment, including in terms of technology transfer, capacity building, and ultimately improvement of living standards. In another study by Brookings published in 2015, researchers come to the following conclusions. First, China's overseas investment is primarily profit driven. It is a rational business choice within the context of globalisation, as China keeps in mind the significant market potential of Africa and accordingly develops international collaboration. Second, China's direct investment in Africa may be growing rapidly, but the amount remains relatively small, at about 3 percent of the total. Third, the investment of Chinese businesses in the field of natural resources in Africa is small compared to that in the services industry, which occupies a leading position, while investment in manufacturing is also significant.