How Chinese investment and debt finance impacts Africa continues to be a major source of contention. A stream of studies indicate a more nuanced reality between claims China is a benign partner in Africa’s development and claims China is driven solely by geopolitical interests.
Yu-Shan Wu, Chris Walden and Cobus van Staden of the South African Institute for International Affairs studied responses to the Belt Road Initiative and showed African governments are not necessarily passive recipients of Chinese diktats. One, they have become adept at playing off Chinese and Western donors to receive better terms. Two, over the past few years African governments are demanding Chinese investments benefit local industrialisation and skills development and training. Both concepts are now embedded in Beijing’s latest Africa Action Plans. Three, African agency regarding China is now evident in local businesses, civil society and even regional bodies like the African Union. Beijing can no longer deal only with government in its engagement. Four, increased public consciousness on debt issues has meant pushback and protests are more common than in the past. China today faces “significant financial and reputational risks” when such controversies arise.
A paper by Marina Rudyak, in the Asia Dialogue and based on a larger study for the German aid agency, iterates earlier studies in saying Chinese investment in Africa has changed from an earlier “roads for rocks” model. This resources-for-infrastructure model is now shifting to one where Beijing’s development finance is used to support the equity investments of Chinese firms. The China Africa Development Fund and similar mechanisms are today used more as “door openers” for Chinese private companies. While transport and energy still dominate the African investment portfolio in terms of money, “the largest number of projects is to be found in the areas of health, governance, social infrastructure and education.”
She notes African countries who work out strategic partnership agreements with China that outline domestic priorities and channel Chinese funding accordingly benefit the most. South Africa and Ethiopia are countries that have done well through this pattern. Kenya, Nigeria and Tanzania don’t have such agreements. Angola and Zambia are still stuck in the older resources for infrastructure model.
Field studies on the impact of Chinese investment and trade at the grassroots level are remarkably few. Linda Calabrese and Xiaoxue Weng provided some answers by studying Chinese influence on three sectors: Zambian rosewood, Tanzanian mining, and Zimbabwean and Zambian cotton.
In the case of Zambian rosewood, they found that while Chinese had initially controlled the logging and export of the valuable timber, over time Zambian locals reclaimed the logging part of the supply chain. Tanzanian mining was already controlled by South African corporate interests so the Chinese moved into niche areas like the processing of tailings. Similarly, Indian firms were already strongly present in cotton. The Chinese moved into the informal cotton sector, making cash purchases of cotton surplus to existing long-term contracts. While popular with local farmers the study concluded their actions undermined formal investments in the sector.
October 30, 2018