The NY Times posted an article regarding China's increasing "investment" in Africa, specifically, Angola. I have been sporadically writing about China's involvement in Africa such as in Sudan, where despite the war, China's oil interests there are well protected. This particular report, China’s African Adventure Is particularly detailed, and sheds some light on what is wrong with this so called "investment."
In November 2003, Angola’s finance minister traveled to China to discuss a financial package. One year later, China announced that it had extended to Angola a $2 billion oil-backed loan, an Angolan specialty in which credit is secured by future oil production — just the kind of risky gimmick the I.M.F. had preached against. China uses its foreign aid as a means to promote opportunities for private investment, and the two countries agreed that Chinese construction companies would build the giant infrastructure projects financed by the loans.
China immediately began to increase its purchase of Angolan oil; by early this year, Angola had replaced Saudi Arabia as its single-largest source of oil. The extent of China’s commitment to Angola became stunningly clear this spring, when Sinopec, a Chinese state-owned energy company, bid $2.2 billion for the right to develop two deep-water blocks — a sum that shattered all previous records anywhere in the world. Sinopec made its investment in partnership with Sonangol. The billions China offered astonished the Western oil companies, which had already explored adjacent areas and had submitted only modest bids.
One should look at this very carefully. China loans Angola $2 billion secured by future oil production. Angola would use a portion of that money on development projects, the rest to disappear into the ether. Of that money going to development projects, Chinese companies get the contracts to do the development. Thus the Chinese have in effect paid the Angolans to pay the Chinese back. Plus interest. based on Oil production that the Angolans largely have little expertise in. How so you say? Check it:
Tu explained that they had been teaching the Angolans technical skills. “We taught them how to mix concrete,” he told me. When I expressed amazement that he had had to impart this skill, concrete being pretty much the only building material used in Angola, Tu said, “They didn’t even know bricklaying.” Apparently, there had been so little building activity until the last few years that even the most basic skills had been lost. Or, alternatively, the Chinese paid so badly that they couldn’t attract qualified workers.
Hence the hollowness of the so called "revolutionaries" who cannot think beyond their own selfish wants that they would decimate the country of modern technocrats and skilled artisans but are quick to teach young men and women how to kill. So bad is this situation that the Chinese are being paid to do just about everything:
I came across a high school being built by a Chinese company. It was Sunday morning, but the project manager, Tu Qingkui, was hard at work. He and the 180 workers he supervised had already built three dormitories to house 265 students (another 500-some-odd would commute) and had framed up the main academic building. Tu and his 30 Chinese employees worked for Sinohydro, one of the world’s largest construction companies; it was, Tu said proudly, responsible for half the work on the Three Gorges Dam. Sinohydro had projects all over Angola and across Africa. Once they were done here, they would move on to the central hospital in Huambo.
No local or continental African company can do this? Not something I even believe. Ultimately the Chinese are in this for themselves. As I said earlier, first they want to the oil. But as a nice side tack they get their loans back by Angola's use of Chinese construction companies. it is a win -win for the Chinese. Ultimately though Angola is going to have to raise the education level in that country it is clear that they are behind by at least 100 years in terms of technical know how. They are set to have elections soon. Hopefully there will be some change.
(17 years of informed commentary)
Of course the Chinese are in it for themselves. But if they offer better terms than the Europeans, the Angolans are right to take them.
ReplyDeleteHaving the Chinese as an option is good for Africa because it seems to me that the West likes to act as a bloc towards Africa, France does not compete directly with England or the US on African projects, but instead they divide the continent so that each gets its own regional monopoly and can dictate terms to the Africans without competition.
China competing changes that for the better.
Things would have been better if Angola had not had the war, but South Africa and the United States insisted.
These Chinese people are building schools and a domestic construction industry. If you know someone who can do that while giving Angola better terms, make a suggestion.
My issues with this situation is two fold:
ReplyDelete1 I have issues with non-Africans being the builders of Africa. Are we saying that there are no contruction companies in Africa capable of doing what the Chinese are doing?
Let me expand on that. Are there no African (as in the diaspora) construction companies capable of doing this work?
If not then what does that say about Africa?
2) Whither the money comes from the IMF or China, Should we be satisfied with large sums disappearing? Can we say that the issue of disappearing money is also the problem here and that the "condition free" Chinese money can also increase that problem?
If Mobutu had been the recipient of said "condition free" money would we be OK with that?
3) Another example would be the manner in which Mugabe trashed peoples homes saying he was clearing the rubbish. The contruction there is also being done by Chinese.
4) In Ghana there is/was a movement to import Chinese tricycles and supposedly bicycles rather than encourage home grown development which would lead to self-employment etc.
This is my issue. I fear that the Africans will be left, just like with european colonialism, with a small technocratic elite but dependent upon another outsider for "real" development.
How did "condition free" get into quotes? I didn't write that. Did anyone write that?
ReplyDeleteI don't like the fact that Africa is relatively undeveloped.
Here are my questions: Does anything in this transaction reflect negatively on the Chinese? My answer is no. My answer is the Chinese are giving Africa better terms than they would get from Western capital cartels. This transaction reflects positively on the Chinese.
Does the transaction make Africa less developed or make the situation worse than it would be otherwise, if the projects were not done or done by the West? My answer is no. China is competing with the West and in this case gave better terms. There is no doubt in my mind the Angolan government would favor Angolan firms. If a South African firm made a bid, which I doubt, there is a good chance that bid would have gotten favorable consideration. If the Chinese bid was so much better that the Angolans went with it. All to the good.
The terms are not perfect but 1- the terms are better than anyone else offered 2- the terms are better than not doing the projects at all.
In my opinion, the most important thing Africans in the diaspora can do for Africa is get their home countries to give African countries trading privileges and terms equivalent to the terms under which European countries trade. If a t-shirt or manufactured product from Israel comes to the US duty free or nearly so, t-shirts from Egypt and Ghana should come with the same terms. If an German firm can use US markets to raise funds, Sudanese firms should be given the same access.
The second thing Africans can do is oppose any role their countries play in dividing Africa into tiny states like pre-1850's Germany. US direct and indirect support for secessionist movements in Sudan, Congo, Uganda, Nigeria etc. should be ended and the US should encourage small states to form federations and associations with a view towards putting as large areas as possible under single political administration. That would save a huge amount of money and resources that are currently wasted on internal wars.
The third thing diaspora Africans can do is get more money into malaria treatment as well as clean water supplies. In the best world Africa would do this without outside help but of things that can be done today, this is important.
Bicycle factories are relatively small issues compared to these. But China has not really made it harder to open an African bicycle factory.