Underdevelopment and aid: search for a right balance - Part II

That China’s a superpower in Africa was suddenly, painfully apparent to European leaders in 2006.

Once colonised by European nations, Africa garners more attention from Europe than the United States. Europeans provided hundreds of billions of dollars of loans and aid to African governments after nations won their independence. But little growth resulted from that money, no matter what strategy was applied. In the 1990s, the Europeans tried another approach hoping yet again to give Africa a new start.

The Europeans forgave much of African indebtedness, then offering new monies, with good governance conditionalities attached. That is, to receive funds, the governments would have to begin to clean up corruption, respect organised efforts of societal groups and move toward respecting fundamental human rights.

Angola, a major oil exporter, became a test case in 2006. Despite huge oil wealth, Angola suffered financial crisis created by massive corruption and plunder. While the Europeans often conceded to corrupt dictators who faked adherence to the European conditions, in 2006 Angola brushed aside both hypocrisy and the policy of conditionality, instead accepting a multibillion-dollar, no-strings-attached fund from China, thus defeating Europe’s policy aimed at limiting the sources of bad governance, failed states and civil war.

Suddenly, Europeans were aware of a rising authoritarian China in Africa. China had amassed almost $2 trillion dollars in foreign exchange reserves. This foreign exchange reflected trade imbalances, which also upset Europeans. The growing trade deficit with China seemed to cost Europe jobs and undermined the tax basis of social welfare states. Popular European anger intensified anxiety about Chinese policies in Africa fostering bad governance and contributing to an exodus of Africans into Europe.

China’s rapid economic rise and wasteful production inefficiencies brought a hunger for energy and other resources, and Africa could help. Chinese State-Owned Enterprises could outbid Europeans for contracts and leasing rights, aided by interest-free capital from Chinese state banks. Chinese presence and policy spread all over the continent, and Chinese investments swiftly caught up with those from America and Europe. The trend line suggested that China would soon be weightier in Africa than any other nation or region in the world. Authoritarian China’s new superpower clout, which disregarded human rights abuses, had reached Africa, and was largely welcomed, especially by authoritarian regimes.

In paying for oil in the Sudan, China provided Sudanese ruling groups the wherewithal to stabilise a government responsible for atrocities in Darfur, shored up corrupt leaders of the Congo, backed Zimbabwe’s bankrupt Mugabe regime against African democratisers and European sanctions, and spent huge amounts for oil in corrupt Nigeria. The sudden influx of Chinese wealth enriched African leaders.

China undercut efforts to promote good governance in Africa, and Europe viewed Chinese policies as a disaster. The Europeans therefore invited China to join with them in fostering needed political and administrative changes in Africa. China, however, brushed aside the invitation to co-operate, refusing even to join the European organisation meant to make energy investments transparent so that African peoples could benefit from Africa’s wealth instead of corrupt elites.

Europeans concluded that China hurts Africa. In Africa, civil society groups, labour unions and democratic political parties similarly understood China as but another chapter in exploitative neo-colonialism that would not benefit Africans, instead propping up greedy, corrupt African regimes that ripped off their own nationals.

But many had bristled at the European effort to tell Africans how to run their governments as arrogance, a renewed colonial approach and represented China’s offer of no-strings-attached money as how Africans should be treated, with dignity and as adults. After all, China had never colonised Africa and Europe had failed the continent in the past.

Africans insisted that, as the Chinese had raised themselves from misery to world power in one generation after the death of old-fashioned Stalinist tyrant Mao Zedong in 1976, so China could help raise Africa from stagnation.

Observers in Europe and democrats in Africa tended to disagree, seeing corrupt and useless African rulers grabbing a Chinese lifesaver to avoid a transition to good governance. In this critique, China is ripping-off African resources and propping up African tyrants to the detriment of the African people.

To be sure, there is truth to this critique. Chinese have illegally harvested timber and ripped off resources. But this critique of China in Africa as neo-colonialism is not the total truth and omits that China could trigger an African rise out of poverty. Indeed, World Bank figures already show that Chinese investments have sped Africa’s pace of growth.

As Beijing sees it, China in Africa in the 21st century will be like Japan in East and Southeast Asia in the half century after the end of World War Two. Japan, then, as China today, was uninterested in promoting democracy and human rights. It too acted on economic imperatives. But if one plugs into the economic dynamo, what Japanese called the “lead goose,” one benefits. One learns best practices almost unconsciously. The boon of the dynamic leader spreads and spills over into the nations playing catch-up.

There is a flying goose effect, that is, the lead Asian country keeps moving up the value-added ladder as labour costs increase and the currency rises in value. That prices the country out of lower-end markets. The production is then transferred to follower geese, who then similarly move up economically. Those that don’t join the formation, as the military tyranny in Burma and the Stalinist sultanate in North Korea did not follow Japan, lag. Similarly, those Africans who see China as a saviour would in fact benefit from joining China and following its lead.

China is hot-housing this flying-geese development. Beijing is pouring money into Africa for everything from infrastructure to business ties. It builds five special economic zones, which were pioneered in Taiwan, that support business and welcome hard-workers to make life easier for Chinese investors and exporters. From these five spots, economic dynamism will spread as Africans are attracted to the SEZs. Governments will then build infrastructures and compete for successful enterprises.

Finally, Chinese are moving to Africa in unprecedented numbers, carrying entrepreneurial frenzy and ties to lower-end factories that look to move to low-wage Africa to stay competitive. There are already more Chinese in the former UK colony of Nigeria than there were English at the height of the British empire; there are already more Chinese in the former Portuguese colony of Angola than there are Portuguese.

Expect millions more Chinese to relocate, since close to 300 million are still locked in Mao-era style stagnation in China’s countryside. Some millions of these hard-working, ambitious people see Africa as a land of opportunity. Compared to Europeans, Chinese live more poorly and work at a lower income for smaller slices in profits, yet have already found numerous profitable opportunities in Africa where Europeans found none.

Critics of Chinese policy who see China ripping off Africa and helping to entrench corrupt African elites may turn out to be right. But Africans are willing to give China the chance to replicate in Africa wealth-generating processes that have made Asia the fastest growing region of the world since 1945, with no end in sight. Europe, many Africans conclude, failed in Africa, and it’s hard to fault Africans for finding a way ahead by tying in with China. Perhaps the Chinese and Africans are right and, as Japan transformed Asia, so China can transform Africa.