Opinionista Thembinkosi Gcoyi 8 October 2015

China-Africa partnership: An opportune time to recommit?

China is one of the most important, if not the most important, economic partner of the African continent. But there is a growing danger that the African side will become restive over its partnership with China if the perception takes root that China is deviating from what has always made it an ideal partner; that is, an equal partner.

Recent weeks have seen increasing predictions of doom for one of the most important, if not the most important, economic partner of the African continent; the People’s Republic of China. That country’s slowing economy has led many pundits to predict that the lower growth rates will have a negative impact on African economies, many of whom have China as their largest single trade partner. This is probably true from a trade perspective, considering the snowball effect the slowdown is having on commodity prices.

These predictions come at a time when both sides are hard at work preparing for the 6th Ministerial Meeting of the Forum on China-Africa Cooperation (Focac) in December 2015, which will be followed by the 2nd summit of the same. It will be interesting to see what measures the Chinese side will be announcing as part of its commitment to the African continent in light of its diminishing ability to dish out largesse to its partners.

Contrary to the dire predictions for Africa, China’s economic slowdown is actually irrelevant for China-Africa relations. This is so especially in the area of development assistance; which is more ‘smoke and mirrors’ than any other aspect of the relationship. Justifiably, there is growing unease on the African side about what is regarded as double counting of China’s assistance to the continent. This sees low-cost loans being counted as part of development assistance or commercial investments being regarded as state-to-state cooperation. For instance, the Industrial and Commercial Bank of China (ICBC) investment in Standard Bank somehow counts as part of China-Africa relations. I’m sure Standard Bank would disagree with any such notion, as the investment was surely made on the basis of potential synergies and leveraging the respective strengths of the two institutions.

This leaves the African side confused about what actually constitutes Chinese development assistance/investment as it seems every last bit of activity between a Chinese entity and an African counterpart is counted as part of some big Chinese plan for Africa. Imagine the US government reporting an investment by General Electric as part of the US-Africa Partnership. Seems rather unlikely.

However, one must acknowledge that China has spent a considerable amount on helping African countries with disease management (Ebola), capacity building, access to educational opportunities for African students, agricultural support through technology and skills transfers, etc. China periodically provides financial support to the African Union Commission; peacekeepers under the United Nations; and deploys navy patrols on the east coast of Africa against piracy.

At the 5th Focac meeting in Beijing in 2012, then president Hu Jintao announced that China would provide preferential loans of up to $20-billion for African projects over a three-year period. This amount was subsequently increased to $30-billion during Premier Li Keqiang’s visit to the continent in May 2014. What would surprise many is that in the space of 12 months, the Chinese were reporting that an amount of $17-billion had already been spent from the committed funds. On close examination, it became apparent that some of the listed expenditure was actually for funds committed prior to the $20-billion being announced. Thus, the $20-billion was partly old wine in a new bottle. Nothing unique about this of course. All the development partners dabble in some or other form of numbers-by-creativity.

Laudable as this appropriation of resources is, the troubling aspect is that no African leader was actually aware it was coming until the announcement was made. Not even the co-chairs (Egypt at the time) knew that such a staggering amount would be availed for African projects. In the event, no input was sought from the potential recipients on the areas in which the funding could be best utilised; no qualifying criteria for projects was ever tabled; no channel for accessing the resources was ever discussed; and certainly no mechanism was discussed on how disbursed funds could be accounted for.

One of the unfortunate outcomes of these unilateral announcements is that an impression is created that China ‘does’ things for Africa, and the African side merely receives. Readers would be aware that this has caused major discord with Western partners who are viewed as paternalistic, and condescending of their African partners. All of this gratitude notwithstanding. Because of China’s perceived affinity for the African continent, there has been a deliberate attempt at different levels of the relationship to reign in any excess tendencies veering towards replicating that which alienates African leaders from their traditional partners.

The constant refrain remains that of “African solutions to African problems”, of course with the support of better endowed partners. This is perfectly logical if one accepts that Africans are better aware of their own challenges. They understand their institutional weaknesses as they grapple with these on a daily basis. In designing solutions, they are inclined to opt for those that have benefit for a greater number than just the few. For instance, much as Chinese government scholarships are creating opportunities for Africans who may never have had access to tertiary education, more sustainable investments could be made towards creating African institutions capable of producing home-grown talent. Perhaps investment in regional education centres aligned with the educational priorities of Regional Economic Communities and modernising resource-constrained local institutions would serve a greater number of recipients at a lower cost. These could produce skills deemed most critical in the different regions and countries of the continent, while adhering to accepted forms of pedagogy and intellectual rigour.

On the economic front, China is the undisputed provider in the relationship. However, one must not underplay the important role African countries have played towards enabling China’s economic rise through opening their markets, and creating permissive conditions for Chinese companies to internationalise their operations. Most Chinese state-owned enterprises on the continent would have had their first taste of international investments in some or other African country. Part of their success boils down to African countries rolling out the red carpet and bending over backwards to accommodate their every wish, even the opportunity-destroying ones such as shipping in labour, and sourcing from China.

Despite China’s current economic challenges and latent weaknesses in the China-Africa partnership model, much opportunity remains. China will continue needing African resources, international support, and political allegiance for its sustained emergence. Africa needs China’s investment and long-term financing, now more than ever, given its own economic slowdown and emerging political fault lines. Flawed as it may be, the relationship is too important for both sides for “permanent decisions to be made over temporary situations”, as the great philosopher TD Jakes would say.

What is to be done? There are a few areas where quick wins can be achieved in the short term.

For starters, a clear joint strategy for agricultural investment must be developed, taking the Comprehensive African Agricultural Development Programme as the blueprint. Directing resources to areas where local farmers have strength and helping them with technological inputs such as irrigation systems, abattoirs, and cold storage could make the most impact. China could also revisit its stringent market access requirements to make it easier for African countries to export their produce to its market.

Technology transfers to enable African entrepreneurs to be better at what they do would greatly assist. China is the leader in harnessing the power of foreign technologies to power its own industries. Perhaps times are different to what they were when China embarked on its opening-up journey. However, the country is uniquely placed to understand the challenge of creating technology-driven partnerships that help to create local industries that can compete with the best in the world. We see this in China’s vehicle sector, fast trains, and renewable energy industry.

China must also revisit its preference for funding notoriously inefficient state-owned enterprises to deliver African projects without creating similar access to funding for local actors. A model similar to that implemented by the Industrial Development Corporation and China Construction Bank for onward lending could be instructive for creating access to Chinese finance for local players. Such partnerships help to provide access to funding without compromising risk management imperatives. The current case of funds being appropriated for African projects without participation by African industry except as low-end sub-contractors and menial labour has very real risks that, if not proactively managed, can undo the incredible goodwill built over years of partnership.

Perhaps most importantly, China must use its famed ability to listen to its partners to listen closely to what is not said by its African partners. There is a growing danger that the African side will become restive over its partnership with China if the perception takes root that China is deviating from what has always made it an ideal partner; that is, an equal partner. Many of us can probably imagine demagogues taking advantage of such restiveness for their own ends. I don’t speak ill of the departed so I shall not name names. Suffice to say, none of us should dare entertain the disruptive effects of such demagoguery.

China must also allow itself to be held more accountable for the commitments it makes. To do this, it needs to allow the African side space to co-pilot the partnership and define the areas of opportunity proactively, and not in reaction to Chinese announcements that are made a fait accompli. DM

Thembinkosi Gcoyi is managing director of Frontline Africa Consulting.

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