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Thesis Final!

This document provides an abstract for a research paper that analyzes China and Western engagement with Africa. The paper seeks to determine which partner, China or Western countries, may be better for Africa's development goals. It will use a comparative analysis based on criteria like equitable relations, sovereignty, financing development, shared experiences, and history. The abstract outlines the paper's sections, which will cover stakeholders and definitions, the partners' historical and ideological perspectives, their development policies and projects, investment facts, private sector involvement, and recommendations for selecting and managing a development partnership. The major finding is that China and the West have fundamentally different aid approaches and development concepts.

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(Figure 1.1) (2013). Chinese, Dragon, Statue [Web Photo]. Retrieved from http://www.globe- walls.com/wallpaper/chinese-dragon-statue.html THE RISING DRAGON CHINESE VERSUS WESTERN AID AND FOREIGN DIRECT INVESTMENT IN AFRICA: SEEKING A PARTNER IN DEVELOPMENT Written By: Sara Boucher February 2014
1 The Rising Dragon Chinese Versus Western Aid and Foreign Direct Investment in Africa: Seeking a Partner in Development By Sara Boucher Abstract: This paper is based on a research undertaking to understand China’s presence in Africa and how this relates to Western relations with the continent. The research attempts to determine which option, Europe/US or the Chinese, may be the most suitable partner in development for Africa, as well as discuss what can be done to maximize the benefits, and mitigate the negative aspects of that relationship. A comparative analysis approach is used to judge the viability of each partner, and each is assessed according to a set of criteria, including the following: 1. Equitable and Respectful Relations 2. Maintenance of Sovereignty 3. Ability and Willingness to Finance Sustainable Development in Africa 4. Shared Experience and Understanding 5. Historical Element Drawing on the collected research presented in this document, the major finding is that the Chinese have a fundamentally different approach to aid and investment, and harbor conceptually distinctive ideas regarding development than the West. Based on the outcome of the comparative study against the above criteria, it is suggested that Africa may benefit from selecting China as a partner in achieving its own sustainable development, and suggestions are offered to effectively leverage this partnership.
2 Acknowledgement I would like to express my deep gratitude to Dr. Lisa Aubrey, my thesis director, and Dr. Wei Li, my 2nd reader, for their patient guidance, enthusiastic encouragement, and invaluable critiques of this research work. I would also like to thank Mr. Ken Holin, my Barrett Honors Advisor, for his help and guidance throughout the research process. My grateful thanks are also extended to Barrett, The Honors College at ASU for their gracious funding of my research undertaking. Finally, I wish to thank my parents for their support and encouragement throughout my study.
3 Introduction: Seeking a Development Partner for Africa Since colonization came to an end in the early 1950s, Africa has struggled to develop. Under the watchful eye of the Western world, African countries have implemented hundreds of policies and accepted billions in aid, all with the end goal of social, political, and economic development. However, after all the loans and policy changes and economic initiatives, many African states have little, if anything to show for it in terms of development. According to the National Bureau of Economic Research, “one half of the African continent now lives below the poverty line. In 1970, one in ten poor citizens in the world lived in Africa; by 2000, the number was closer to one in two”. In sub-Saharan Africa, “per capita GDP is now less than it was in 1974, having declined over 11 percent” (Picker, 2004). While there are certainly some success stories to be found, Africa as a whole has suffered from a chronic cycle of underdevelopment, a process by which attempts to better life conditions are not only stifled, but also pushed backwards. The dismal economic, political, and social realities of many African countries have caused much of the world to lose hope for Africa, questioning whether sustainable, positive development is even possible. Fund For Peace’s publishes an annual Failed States Index, which separates every country into four major designations, ‘Alert’, ‘Warning’, ‘Stable’, and ‘Sustainable’ and ranks them within each category based on economic, social, and political factors. Unsurprisingly, the Global South, which includes Africa, falls into either the ‘Alert’ or ‘Warning’ category, while the Global North consistently places into either ‘Stable’ or ‘Sustainable’. It is alarming though, that the top ten worst states are almost exclusively African nations, and that not a single country on the continent is in the ‘Stable’ category ("The failed states," 2013). Given Africa’s track record in regards to development, it is easy to adopt a pessimistic outlook. The Economist published an article designating Africa as ‘The Failed
4 Continent’. While obviously controversial, the piece mirrored the sentiments of many. But perhaps this assessment of ‘failure’ lacks perspective. As Claude Ake argues in Democracy and Development in Africa, development has not had the chance to fail, as it has “never been on the agenda in the first place” (Ake,1996, p. 40). It is no secret that Africa has long struggled with securing true independence from its former colonizers, and the issue of there being ‘no Africans at the table’ persists when discussing development. Historically, the West has exclusively dictated the development agenda, with Europe and the U.S. single-handedly shaping economic and political development policies, servicing loans to Third World countries, and deciding on loan terms and disbursement conditions. It is true, by almost any measure that Africa has failed to develop. But this may largely be due to the fact that up until very recently African voices have been left out of the conversation. This ensures that economic, political, and social development is never realized. Africa doesn’t need a development dictator. It needs a development partner, and for the first time since the Cold War period, there is more than one contender for this position. While the IMF and World Bank were drafting loan contracts from air-conditioned boardrooms in the North, a new foreign donor was knocking at Africa’s door. China, building from its own development success story, approached the continent offering a new path to development. Over the next several decades, China would commit over $160 billion in aid to Africa, quickly climbing the ladder to become one of the largest foreign aid donors. Thus began the rivalry between the West and the Far East. China’s aid is based on “mutual benefit” and takes the form of grants and non- conditional, resource-backed loans to finance African development. The Chinese stress “respect for the sovereignty of the host country” and do not involve themselves in the political matters of the nations to which they offer aid (Brautigam, 2009, p. 17). The West by
5 comparison is much more hands-on with their aid offerings, providing concessional loans with attached conditions and plans for achieving development targets. Western aid institutions are also involved in the political development of the countries they work with, and urge developing nations to liberalize, pluralize and privatize. There are certainly critics on both sides of the aid debate, but the fact remains that these two donors are fundamentally different in their aid motivations and ideologies. Africa is now faced with an alternative option to classic Western aid models, and nations have the opportunity to decide which path is more favorable for their development. This particular research undertaking will attempt to determine which option, the West or the Chinese, may be the most suitable partner in development for Africa, as well as discuss what can be done to maximize the benefits, and mitigate the negative aspects of that relationship. A comparative analysis approach will be used, and each perspective partner will be assessed according to a set of criteria to be discussed in the first section to follow. This analysis will be organized into the following sections: Section 1: Stakeholders, Definitions, and Theoretical Framework Before the positives and negatives of the China-Africa or Western-Africa can be assessed, it is essential to establish the key stakeholders involved in the aforementioned relationships, define some of the concepts which will be discussed, and go through the relevant theoretical framework to understand what criteria are important when attempting to choose a ‘partner in development’.
6 Section 2: Historical Perspectives and Ideologies It is crucial to gain an understanding of Africa’s historical experience, and how both the West and China have interacted with the continent over the years. Also included in this section is a brief development history of Europe, The US, and China and an overview of Western and Chinese development ideologies. Section 3: Western Development Policies, Projects, and Perceptions This section will look at modern Western aid and development policies and their impact in Africa. General public perceptions will also be discussed in relation to the West in Africa. Section 4: Chinese Development Policies and Projects This section will look at modern Chinese aid and development policies and their impact in Africa. General public perceptions will also be discussed in relation to the Chinese in Africa. Section 5: FDI Facts and Figures It is helpful to get a quantitative perspective on each side’s involvement in Africa with regards to foreign direct investment. This section will cover financial contributions of the US, Europe, and China and discuss which sectors are most active for foreign direct investment (FDI). Section 6: Private Actors in Africa Often, when comparing China versus the West, private industry is forgotten. However, private actors, while regulated by their respective domestic governments are not one in the same, so it helpful to separate the two. This section will provide an overview of some major private actors from each side, and discuss their involvement and impact in Africa.
7 Section 7: Selecting and Managing a Partnership in Development In the final section, an ideal partner in development for Africa will be proposed, with a recap of the strengths and weaknesses of the previously reviewed partners. The importance of managing relations will be discussed, as well as ideas to maximize the positive aspects and minimize the negative aspects of such a relationship.
8 Section 1: Stakeholders, Definitions, and Theoretical Framework In order to effectively develop an analytical consensus on an ideal development partner for Africa, it is crucial to discuss the criteria on which these conclusions will be drawn from, as well as identify the key related stakeholders and define the blanket terms involved. This section will essentially frame the research and build the foundation for the following comparative analysis between China and the West. Stakeholders Stakeholder #1: Africa Africa is often thought of as a ‘recipient’ of aid or the ‘host’ of foreign direct investment from the international community, but every relationship is active for both parties. That is the assumption made here, that Africa is not passively accepting aid or FDI, but is actively involved in this exchange. For the purposes of this analysis, ‘Africa’ will often be referred to as the collection of nations included on the continent. This is by no means an attempt to suggest that all African countries are the same, but is rather used for simplicity’s sake as a way to make some broad comparisons between Chinese and US-EU aid and investment, and its impact on Africa as a collective. Viewing the situation from a wider lens affords the clearest general perspective when evaluating development partners.
9 Stakeholder #2: The US Still a major player in aid and FDI in Africa, the US together with Europe has shaped aid policy, created multilateral institutions like the International Monetary Fund (IMF) and The World Bank (WB), and dictated development strategy for decades. Dollar-wise, the US typically gives the most in aid annually, numbering in the billions. However, that amount has fluctuated significantly over the years depending on relevant events, for example the US gave more aid during the Cold War period as it competed with the USSR. The fact remains that the US has amassed a huge influence in the foreign aid game, although there are now more countries competing for Africa’s attention. Stakeholder #3: The EU Europe has the longest history with Africa. As the colonizers of the continent, European powers have been heavily involved with Africa for centuries, and this trend continues into the modern day. The constitutions, governmental structure, and official languages of many African nations are closely based on their former colonizers. In this study, Europe will be taken in its collective, and will be dealt with in regards to the EU, its main multi-country institution. While the US surpasses foreign aid to Africa in terms or total dollars, when measured in the total percentage of the Gross National Index (%GNI), the EU consistently ranks above the US. It goes without saying that Europe has historically been the main player in Africa, and this is largely still true today.
10 Stakeholder #4: China China has emerged as a major world economic power, and a major influence in Africa. While the media has just recently turned its attention to Chinese foreign aid an investment in Africa, China has been significantly involved with the continent since the 1950s, providing aid, development projects, and concessional loans to African countries. Many sources have attempted to make estimates on how much China actually given in aid to Africa annually, and media reports often release huge numbers in the tens of billions per year. However, due to the fact that China operates on a much stricter governmental structure than its Western counterparts, the truth is that organizations and media channels making claims regarding the amount of aid given are operating largely on assumption. China does not release the figures of how much aid it gives to Africa, so care must be taken not to make comparisons based on assumption. This study will use some general estimated figures gathered from a variety of sources to begin to look at what China has been doing in Africa, however since these numbers will only ever be estimates, no apples-to-apples comparisons will be made in quantitative terms as a factor in selecting an ideal development partner. Definitions Foreign Aid: Defining “aid” is a most essential starting place in comparing foreign donors in Africa. Aid can be broadly though of as “funding given from governments to promote economic and social development in less-advantaged countries” (Brautigam, 2009, p. 13). However, this simple definition is not complete to understand aid in this context, as it leaves out the “how”. Aid can come in many forms, each with its own benefits and consequences. This research will focus on systematic aid, which includes aid payments made directly to governments either through government-to-government transfers (bilateral aid) or transferred through institutions
11 like the World Bank or IMF (multilateral aid). This type of aid can be broken down further into two basic forms, grants and loans. Grants are funds given to countries that do not have to be paid back, although this type of aid is usually less common and makes up a smaller percentage of the overall aid offerings. Loans are the most common type of aid, and may be structured in the traditional manner with interest paid and over a set term, or may be instead resource-backed as is common with Chinese loans. Resource-backed loans use a resource, such as coal or oil as the method of repayment for the loan. Foreign Direct Investment: FDI was defined by the United Nations Conference on Trade and Development as “an investment made to acquire a lasting interest in an enterprise operating outside the economy of the investor” (Moyo, 2009, p. 98). Through FDI, Africa can leverage its resources to gain investment and promote economic development. Private Actors: Refers to private industry and its interactions abroad. There are private actors from both the West and China operating in Africa in huge numbers, and they are often viewed as a direct extension of their domestic government. While it is true that their respective domestic governments may place some regulatory guidelines on their operation in Africa, private actors are not their governments and should not be discussed as such. In this study, private actors and their actions in Africa will be clearly separated from their governments and their impact compared as a stand-alone occurrence, rather than an integrated portion of governmental foreign involvement. The ‘West’: A historical term taken to mean the industrialized, developed nations of Europe and the US (mainly used during the cold war period) The Global North: The developed nations of the world, which are economically, socially, and politically more developed
12 Development: The social, economic, and political betterment of a country. Theoretical Framework: The Path to Development for Africa What Does Development Look Like? Before determining criteria of an ideal partner in development for Africa, it is essential to expand the definition of development, and gain an understanding of what development would look like in Africa. Development can be discussed as incorporating three major components— economic development, political development, and social development. Each piece is important, and real sustainable development will focus on each of these categories. Let’s take a look at each piece a bit more closely: Economic Development: Economic development is the first piece of the development puzzle, and many would argue the most important. It is first important to establish the difference between economic growth and economic development. Economic growth is often confused for economic development, but just because a country may be experiencing economic growth does not mean that it is also experiencing economic development. Economic growth is a quantitative concept which can be defined as “an increase in a country's real level of national output which can be caused by an increase in the quality of resources, an increase in the quantity of resources, or an increase in the value of goods and services produced by every sector of the economy” ("Economic development vs," 2000). Economic Growth can be measured by an increase in a country's Gross Domestic Product (GDP). While economic growth is a necessary condition of economic development, it is a better measure for
13 the economic status of developed countries than it is for developing countries. Economic growth has a much narrower scope than economic development, but is still a useful measure to see the quantitative changes in a country’s economy over time. Economic development on the other hand is a normative concept, defined by American economist and development pioneer Michael Todaro as “an increase in living standards, improvement in self-esteem needs and freedom from oppression as well as a greater choice”. Economic development implies changes in “income, savings and investment along with progressive changes in socio-economic structure of country”. Economic development is much wider in scope, and looks at not only quantitative, but also qualitative changes in the economies of developing countries. It is most often measured with the Human Development Index (HDI), which takes into account relevant factors like the literacy rate and life expectancy, which affect productivity. Economic development also looks at the “creation of more opportunities in the sectors of education, healthcare, employment and the conservation of the environment”("Economic development vs," 2000). Taken as a whole, economic development contributes significantly to the growth of human capital indexes, a decrease in inequality figures, and structural changes that improve the general population's quality of life. Political Development: A formal definition of political development is less unanimous among scholars than economic development, including the meaning, content, and nature of the concept. However, the term is closely tied with institution-building, that is developing the governmental and regulatory structures in which politic inhabit. There is a tendency when discussing political development to slip into an ethnocentric bias, where “political development is identified with political modernization and modernization is taken to mean westernization by most scholars” (Pye, 2012). However, this is a pitfall when thinking about building effective and sustainable political
14 structures in developing countries, especially in Africa. The cultural and ethnic realities in Africa may not make Western models the most viable, and instead countries should strive to develop a political structure that takes these all-important ethnic and cultural components into consideration. Another crucial distinction to make is that political and governmental stability is not so much a direct driver of overall development as it is a foundation for said development. There are numerous countries that have experienced rapid economic growth, and even development, but due to unstable political structures and resulting violence this development was unsustainable, and in many cases pushed backwards. So an essential feature of political development must be sustainability and long-term effectiveness. With regards to the components of political development, Lucian W. Pye, one of the experts on political development identified three levels where political development could be observed, including: Equality: which signifies mass participation, universal laws, and recruitment on the basis of merit. Capacity: which signifies governmental performance, efficiency and effectiveness, and secular orientation Differentiation: which signifies diffusion and specialization of structures, division of labor, and specialization based on integration (Pye, 2012). Each of the three levels of political development contributes to the system’s overall ability to provide the sustainable component, which acts to safeguard and promote both economic and social development.
15 Social Development: The World Bank has defined social development as “promoting the inclusion of poor, vulnerable and excluded groups, strengthening social cohesion and the capacity for collective action towards development, and enhancing the capacities of citizens and civic groups to hold accountable the institutions that serve them” ("The world bank:," 2008). The end goal here is to increase and promote the human capital of the country, so that all people have an opportunity to be involved in the development of the country and experience the benefits of that development. Social development has many indicators, like the education quality of the country, average schooling length, literacy rate, healthcare quality, etc. This type of development is often seen as an afterthought, with economic development being more important, but social development is an integral piece of successful development overall. Social development, or the increase of human capital leads to increases in productivity, leading to economic growth and bolstering economic development. Other Types of Development: While this study will focus on economic, political, and social development as it relates to Africa, those are not the sole three development categories. Both sustainability and human resource development play a part in overall development, and it should be noted that these areas are important as well. Sustainability supports the gains in economic, social, and political development by creating a structure that will stand the test of time, and in the case of economic development it is crucial to keep a sustainable mindset with regards to natural resources and how development projects are affecting the environment. Sustainability has been a focus traditionally in Africa, and it remains the ideal in regards to development. Human resource development serves a foundational purpose, and works on improving and increasing
16 human capital through education and skills acquisition, something that supports the overall goal of development (Anshan, 2011). Conclusion: Development is not a linear process, and is very much an all-encompassing and multi-faceted phenomenon. It is important to remember that separately, economic, political, and social development will not lead to long-term, sustainable development for countries. Each piece is equally necessary to achieve this goal. In this way, it is helpful to think of development in terms of a pyramid. Social and political development occupies the bottom or foundational pieces of the structure, and work to support and promote economic development. Neglect either of the foundational components, and the whole pyramid crumbles, as is such with real-life development. Figure 1.2: The Components of Development DevelopmentSocial Economic Political Sustainability Human Resource
17 Selecting a Partner in Development: Key Criteria Now that we have discussed the components of development, let’s shift the focus now to determining what criterion will be considered when choosing a development partner for Africa. Characteristics of an Ideal Development Partner: 1. Equitable and Respectful Relations The definition of a partnership is an arrangement in which two parties agree to cooperate to advance their mutual interests. Therefore, a desirable partner in development needs to contribute to a mutually beneficial, equitable relationship in which both parties treat each other with respect. The keystone of this relationship should be cooperative and innovative problem- solving, which both parties participating equally and on the same plane. 2. Maintenance of Sovereignty African nations are just that—nations. They are independent, sovereign countries and a proper development partner must recognize and respect this fact. Certainly both parties can learn from one another, but in the end African countries should have the final say of what is best for them and their people. 3. Ability and Willingness to Finance Sustainable Development in Africa The point of seeking a partner in development is to cooperate to bring about positive, sustainable development. Africa has rich natural resources and vast human capital. What it lacks is the proper financing to build infrastructure and harness those resources, and that is where a partnership can make a difference. But it is important to clarify that ‘financing’ is not enough. In order for development to be sustainable, Africa has to be able to repay the financing it secures. A suitable partner will understand this, and work with African countries to
18 come up with a feasible method of financing that will ensure ability to repay on the loans, adding an element of confidence for both parties. 4. Shared Experience and Understanding Often the most successful relationships involve parties with common values, motivations, goals, and perspectives. The more parallels that exist in these areas, the easier it is for the parties to see ‘eye-to-eye’ in negotiations, and the easier the overall relationship functions. Shared experience is crucial because it allows open and honest communication, as neither party feels as though they are inferior to the other. Shared experience is great because there are numerous opportunities for parties to learn from one another. 5. Historical Element It has been said that the past is often the best predictor of the future. This translates to relations as well. While it is true that all relationships have their issues at times, the best development partner will have had a overall positive relationship with Africa in the past, and this will lend itself to a partnership will less tension and more cooperation. Criteria and Comparisons: The above characteristics will function as the criteria for comparing between the West and China when attempting to choose a partner in development for Africa. Rather than imposing a point system and assigning a weight to each category, a more comprehensive approach will be utilized. The ideal development partner will be the contender who most closely matches the characteristics important for such a partnership, which again are: 1. Equitable and Respectful Relations 2. Maintenance of Sovereignty
19 3. Ability and Willingness to Finance Sustainable Development in Africa 4. Shared Experience and Understanding 5. Historical Element The following sections will provide an overview of each candidate’s history, ideologies, perspectives, policies, and current actions in Africa. This information will then be compared against the criteria to propose the most suitable partner in development for Africa. Method: The social science methodology is grounded in an analytical approach, and contains a strong observatory component. Most social science literature attempts to understand the underlying causes of an issue and observes its effect on people, places, and things, but often makes no attempt to propose solutions to the issues it focuses on. There are certainly benefits to this method of viewing social problems and phenomenon. It prevents the research from being biased, and adds creditability to the findings. However, in a practical sense, it also does nothing to solve the problems it studies. This can be understood as a ‘positivist’ approach. There is also a more modern ‘post-positivist’ approach that amends the positivist strategy by beginning to think about the effects or, rather than just the cause of various social science issues. While positivists believe that “the researcher and the researched person are independent of each other, post-positivists accept that theories, background, knowledge and values of the researcher can influence what is observed. However, like positivists, post- positivists pursue objectivity by recognizing the possible effects of biases” (Postpositivism, 2014). Even this approach, while it does attempt to address possible solutions, falls short in many respects of creating actionable solutions or imagining how these proposed solutions might function in real time.
20 In contrast, informed, action-based problem solving is a cornerstone of business strategy. It rests at the very core of private enterprise in a capitalist system. This is perhaps where business practices can lend a hand to social science methodology. With this research I hope to apply crucial business practices such as sensitivity to efficiency, total cost analysis, and strategic implementation to a social science-focused topic. In this way, a blend of fundamental business strategy and social science analysis can be achieved. I believe that this method is truly the most effective when discussing Africa’s development. Simply understanding and analyzing the problems are not enough. It is crucial to start a dialogue about how we can solve the problems that exist in the most efficient, cost-effective, and sustainable way.
21 Section 2: Historical Perspectives and Ideologies Africa has had a vast and varied history, colored with colonialism and shaped by not only the people that have called this continent home, but also foreigners who have interacted with it. It is crucial to gain an understanding of Africa’s historical experience, and how both the West and China have related with the continent and its people over the years. The development histories of Europe, The US, and China will also be discussed, as well as an overview of Western and Chinese development ideologies. The African Historical Experience: Western Influence and Development Ideologies Most of the scientific research available today designates Africa as the birthplace of humanity. From the Nile Valley to the kingdoms of West Africa, societies developed and became hubs of trade, education, innovation, and culture. Africans were segmented into many complex tribes and communities that were technologically, politically, and socially advanced. Many African societies with hierarchical government structures traditionally kept slaves, but they were part of the social structure in a much different context. Slaves “were an indication of power and wealth and not used for commercial gain” ("BBC: The story," 2013). However, with the arrival of Europeans, the nature of African slave ownership changed forever. Western countries have had a long and dark history in Africa. Beginning in the 1870’s, “Africa faced European imperialist aggression, diplomatic pressures, military invasions, and eventual conquest and colonization” (Iweriebor, 2011). Europe was engaged in a mass Industrial Revolution, and desperately needed the raw materials and resources that African countries were rich in. The ‘Scramble for Africa’ culminated with the Berlin Conference of 1884, when the “Magnificent African Cake” was divided among the European powers, and thus
22 began “100 years of greed, plunder, and terror” (Hochschild, 1998, p. 108). They laid the groundwork for colonization and drew lines on maps with no regard for ethnic patterns. Figure 2.1: Colonial Africa and Territory Division (2010). Colonialism 1914 [Web Graphic]. Retrieved from https://exploringafrica.matrix.msu.edu/students/curriculum/m9/activity4.php During this time, the continent was ransacked and resources were exploited using slave labor. By the 1900s, most of Africa had been claimed by “by seven European powers—Britain, France, Germany, Belgium, Spain, Portugal, and Italy” (Iweriebor, 2011). They set up colonial administrative systems to organize the indigenous people into societies and “facilitate control and economic exploitation” (Iweriebor, 2011). In essence, the colonial era left in its wake massive destruction and cultural erosion that persists today, and Europe was central to these
23 events. The United States, while not a colonizing nation, played an integral role in the Transatlantic slave trade. This was a phenomenon in which “at least 12 million Africans were forcibly removed from the continent” ("BBC: The story," 2013). While the U.S. did not claim colonies, it was the first country to “recognize the sovereignty of the Belgian king Leopold II over the Congo, and it sent observers to the 1884–1885 Berlin Conference, where it acquiesced in the partition of Africa” ("BBC: The story," 2013). While the 19th century was the age of imperialism in the third world, the 20th century marked the age of nationalism and independence. WWII had weakened Europe, both militarily and monetarily. The rebels of several territories fought back against their colonizing nations, reclaimed their land, and established new independent nations. Nationalism itself was a movement toward the resistance of outside rule, pride in one’s identity, and the desire for political self-determination (Isbister, 2006, p. 97). By the end of the 20th century, the majority of the Third World had achieved independence from their former colonizing powers. In this respect, the Nationalism Movement was successful. As emerging African nations attempted to set up state institutions and spur economic development, Europe lay in shambles after the war. At the Bretton Woods meeting in 1944, representatives “from some forty-four countries resolved to establish a framework for a global system of financial and monetary management” (Moyo, 2009, p. 11). A massive injection of American funds through The Marshall Plan provided capital for “rebuilding the factories” (Isbister, 2006, p.32). Comprised of mostly grants, the Marshall Plan “sparked economic recovery” and bounced Europe back from complete economic ruin (Foner, 1991). Due to this plan’s overwhelming success, the West adopted it as the new model for developmental aid for the Third World, believing that the Global South, like Europe, “simply needed to construct
24 capital goods—factories and machines—and their problems would be solved” (Isbister, 2006, p. 74). The West’s aid strategies and ideologies are deeply rooted in the Marshall Plan, and even though it is a very poor model for development in the Third World, they cling to its success. Unfortunately, the plan’s premise is not one that translates well to Africa. With the Marshall Plan, the money was “going into already existing physical, legal and social infrastructures which simply needed fixing” (Moyo, 2009, p. 36). At the point when aid started flowing to Africa, there were hardly any formal, functioning institutions to speak of, and the State was weak in those nations that did have systems in place. Another important distinction was that The Marshall Plan was a deliberately large cash flow (over $100 billion in today’s dollars) to rebuild and stimulate European economies (Ritschl, 2008). When this development model was exported to Africa, the money was not there in the same force, “governments of the rich countries sent foreign aid to the poor, but on the whole, they have not been generous. The United States and Britain…have reduced their commitment to aid, expressed as a percentage of GDP” (Isbister, 2006, p. 56). That said, many of the West’s theories on aid over the decades have stemmed from this plan, including structural adjustment, the neo-liberalism framework, and the promotion of democracy as a partner to development. Structural Adjustment Policies (SAPs) are economic initiatives that countries have to follow to be eligible for loans from the World Bank and IMF, and started in the 1980s. Although SAPs are supposedly designed for individual countries, they have many commonalities including “export-led growth, privatization and liberalization, and the efficiency of the free market”. SAPs generally require countries to “devalue their currencies against the dollar, lift import and export restrictions, balance their budgets and not overspend, and remove price controls and state subsidies” ("The whirled bank," 2003).
25 Devaluation essentially makes the country’s products cheaper for foreigners to purchase, but at the same time it makes foreign imports more expensive. In theory, this measure should discourage the country from buying foreign products or equipment, but since the IMF gives the country in question their loan in foreign currency, it actually incentivizes import purchasing. Figure 2.2: Debt Increase Relative to Years Implementing Structural Adjustment Programs (2010). SAP and Debt [Web Photo}. Retrieved from http://professornerdster.com/synopsis-of-race- against-time-part-ii-3/
26 Another goal of SAPs is to balance the budget, and cut down on the country’s deficit. There are two main ways of accomplishing this, increasing taxes or cutting government programs and spending. The IMF pushes cutting spending, and this results in “deep cuts to programs like education, health and social care, and the removal of subsidies designed to control the price of basics such as food and milk…so SAPs hurt the poor most, because they depend heavily on these services and subsidies” ("The whirled bank," 2003). SAPs also encourage countries to ramp up production and export of primary commodities like cocoa or raw materials to increase foreign exchange. However, since these commodities are pegged to the volatility of the global marketplace, they often fluctuate and decrease in price unpredictably. So by “devaluing the currency and simultaneously removing price controls, the immediate effect of a SAP is generally to hike prices up three or four times, increasing poverty to such an extent that riots are a frequent result” ("The whirled bank," 2003). In fact, the name "Structural Adjustment Program" has garnered such criticism and negative associations that the World Bank and IMF have since launched a new initiative, “the Poverty Reduction Strategy Initiative, and makes countries develop Poverty Reduction Strategy Papers (PRSP)” ("The whirled bank," 2003). However, this is just clever marketing because a change in name does not equate to a change in policies, and countries are still being forced to adopt the measures of the SAPs under the new guise of The Poverty Reduction Strategy Initiative. Another major development ideology of Western countries has been the Neo-liberalism framework. This is based on the tenants of ‘pluralize, liberalize, privatize’ and pushes countries to develop multi-party political systems, dramatically liberalize their economies and trade, and privatize state-owned industries. Essentially, neo-liberalist theory argues that, “the fundamental factor responsible for the economic crisis in Africa is the excessive state regulation of the economies of African countries, which among other things distorts the process of economic
27 development and leads to inefficiency in the allocation of resources” (Che, 2005). The effects of implementing measures in line with neo-liberalist goals have been “African countries and peoples with an apocalyptic situation in terms of the indices of the quality of life, from falling longevity, collapse of wages, and increasing illiteracy” (Shah, 2013). The question becomes then, why haven’t any of the West’s development initiatives and ideologies been successful in actually developing the Third World, especially Africa? There are hundreds of convincing and plausible answers to this question. Some would argue that the Global North has no desire to see Africa develop. This accusation may or may not be true, but let’s put aside intention for a moment. Perhaps the reason the West’s policies have not worked in Africa is simply because their development story is too different to provide a suitable model to copy from and implement. Europe’s development was largely made possible by taking from abroad, especially from Africa. While it is often a detail overlooked when discussing development, the fact remains that “of all the continents in the world, Europe is the most resourceless. There was some coal, yes; but not much else. Therefore, almost everything that Europe needed, and still needs, to develop and survive, had to come from abroad” (Boateng, 2005). This explains the colonial mindset, and the thousands of Europeans who “went out into the world to acquire land, resources and wealth which were in turn shipped back to develop Europe, and by extension the USA” (Boateng, 2005). And many of these riches came directly from Africa. As Professor Ali Mazrui said, “The labor of Africa’s sons and daughters was what the West needed for its industrial takeoff. The slave ship helped to export millions of Africans to the Americas to help in the agrarian revolution in the Americas and the industrial revolution in Europe simultaneously” (Boateng, 2005). Taking the Global North’s development history into
28 account, the West’s methods cannot be replicated to the benefit of Africa, because their development was made possible through theft and forced labor. The African Historical Experience: Chinese Influence and Development Ideologies China, however, has a comparatively different development story. The Chinese first encountered the African continent during the Ming Dynasty, when a fleet of vessels “sailed to the coast of East Africa several times between 1418 and 1433” but it should be noted that “the Chinese did not colonize the lands of Africa…they took not an inch of land, not a slave, but a giraffe for the emperor to admire” (Brautigam, 2009, p. 23). Spurred on by widespread poverty and suffering, and tension between the Communists and the Nationalists, in 1949 the Maoists came to power, “after a bloody civil war between the Communist Party and the Chiang Kai- Shek lead Nationalist Party” (Berens, 2001). After the Nationalist defeat, Mao set about putting in place a radical communist regime throughout China. During this period, China had “closed doors” to the outside world in terms of trade, with leaders stressing self-reliance (Brautigam, 2009, p. 25). It wasn’t until the reformers, lead by Deng Xiaoping, took over rule that China opened its doors and began its development journey. Xiaoping urged China to experiment and develop, “but not like Mao, in a great leap…cross the river by feeling the stones” (Brautigam, 2009, p. 52). And feel the stones they did. Change was slow to come as “they had to persuade a nation that had barely survived the radicalism of the Maoists to embark on a new transition” (Brautigam, 2009, p.51). China learned some very important lessons concerning both foreign aid and development as it improved its own economic footing in the world. In the early 1970s, “China was primarily an agrarian economy with immense reserves of natural resources—oil, coal, gold, copper—similar in structure to many African countries today” (Brautigam, 2009, p. 46). Before the Cultural Revolution, the nation had been obsessed with self-reliance, but soon figured out that partnerships were the key to success.
29 The first trading partner to stroll through China’s newly opened gates was Japan. Concerned with energy security after oil price shocks, Japan was looking to gain new suppliers, and began importing oil from China’s Daqing fields (Brautigam, 2009, p. 45). It was a partnership born of mutual benefit. Each nation needed something from the other, and both saw the benefits of cooperation and trade. The initial deal was that Japan would “finance the export of $10 billion of its modern plant, industrial technology, and materials” and China would repay the loan in oil and coal (Brautigam, 2009, p. 47). This gave Japan the access to energy it needed, and China received the equipment and training necessary to develop. This was a learning experience for the Chinese, who saw how two trading partners at different stages of development could help one another. This successful trade relationship with Japan “would later be repeated in China’s courtship of resource-rich countries in Africa” (Brautigam, 2009, p. 48). In the 1980s, China sought more Japanese investment to further draw upon the rich oil reserves, and the Japanese provided financing to build infrastructure for “power plants, railways, urban water supply, telecommunications, and highways…Japanese firms prospered, and China’s infrastructure expanded to support the demands of the growing economy” (Brautigam, 2009, p.48). It wasn’t long before Japan had competition for these energy reserves. In fact, China used its partnership with Japan to instigate an all-out bidding war to finance oil exploration and build infrastructure in what is referred to as “the scramble for China” (Brautigam, 2009, p. 49). This competition meant that China got the funds it needed to continue to develop economically at little-to-no interest, as the several countries vying for Chinese contracts attempted to out-bid each other. This strategy worked well for China, and in this way they were able to jumpstart their development. The exportation of oil was a temporary solution, but it bought them the opportunity to begin industrialization and opened the doors to new deals with other countries. While not all Chinese were better off despite the economic surge, it is estimated that approximately 400 million people were lifted out of poverty
30 (Brautigam, 2009, p. 50). It should be noted that income distribution gaps increased due to this development, and have continued to widen since. Economic development for China did not equate to income equality for all Chinese, however some Chinese were drastically better off and the country as a whole did make some real strides towards modernization. As China began to expand economically, it set out to develop its aid program, first in Vietnam, and then in Africa. It should be noted that this expansion into relations with African countries. In 1982, Chinese leader Zhao Ziyang went on a tour of Africa to “advance…on the path of South-South cooperation” (Brautigam, 2009, p. 53). It is on this trip that he announced the four principles that would embody a partnership with China, including “equality and mutual benefit, stress on practical results, diversity in form, and common progress” (Brautigam, 2009, p. 53). Nowhere in his speech did Zhao mention aid. He instead emphasized the cooperation that would take place to “build capacity and foster growth in China as well as in Africa” (Brautigam, 2009, p. 54). This is a very different focus than that of the West. The Chinese believe instead that aid cannot be one-sided and in this way they “avoid the paternalism that has come to characterize aid from the West” (Brautigam, 2009, p. 68). The Chinese, coming from a long history of self-reliance, encourage this trait among their partnerships in Africa. In a speech about Chinese aid in 1964, Premier Zhou Enlai stated “It is not our intention to make [Africa] dependent on us…they need to rely mainly on their own efforts…this will free them from capitalism’s sticky embrace” (Brautigam, 2009, p. 55). As the West changed economic development policies from year to year, China stuck to promoting those strategies that had produced real results for them, and “emphasized infrastructure, production, and university scholarships at a time when Western donors downplayed all of these” (Brautigam, 2009, p. 54). These values of development are present in all Chinese partnerships and projects undertaken in Africa.
31 While the West condemned the State, China built state-owned factories in Africa. In Mali, Sudan, Tanzania, and Ghana, they had been exporting raw cotton, but “Chinese-built textile mills allowed them to produce the lengths of printed cloth favored by African women for their lapas” (Brautigam, 2009, p. 66). Tanzania and Zambia, two of China’s closest foreign friends, had long wanted a railway to connect the two countries and push copper products out through Tanzania to the sea. The project was rejected an infeasible by the World Bank. Germany, Britain, and Canada also declined. China, however, signed off on the venture and together 16,000 Chinese and African builders set the tracks and constructed the railway (Brautigam, 2009, p. 83). The Chinese have always emphasized trade over aid, and frequently make dealings with African governments for local products and resources in exchange for equipment, training, and development projects. China is a rapidly expanding economy, and they need almost everything Africa can provide including “cotton from Egypt, rubber from Sri Lanka, coffee from Ghana, copper from Zambia…Tanzania bought spare parts for Chinese projects by exporting cashew nuts…Sierra Leone exported coffee and cocoa to make some of its loan payments” (Brautigam, 2009, p. 63). This system of “interweaving trade and aid was alien to the foreign aid norms of the West” but worked well for African countries who were resource rich, but cash poor (Brautigam, 2009, p. 60). Chinese aid historically has aimed to uphold the value of equality. In their African projects, “Chinese experts jumped into the muddy rice paddies beside local farmers” and encourages African officials to “disregard fixed ideas about work they considered beneath them” (Brautigam, 2009, p. 45). While the World Bank and IMF set about recruiting chiefs to run their “integrated agricultural development projects, the Chinese asked to work only with peasant farmers” (Brautigam, 2009, p. 67). Because China has never held a ruling position over African countries, it treats them as equals in the partnership. When working on development projects, Chinese workers would “transfer their
32 expertise fully and live at the standard of local counterparts”, a practice that the West has never considered important (Brautigam, 2009, p. 68). China’s simple approach to aid is “an attractive alternative to what is seen as the endless nit-picking of the IMF and the Paris Club of creditors, which have been quibbling over terms for years” (Moyo, 2009, p. 108). China has real credibility as a nation that developed economically in a different fashion than its Western counterparts. The Chinese used mutually beneficial partnerships to pull its people out of poverty and become an economic powerhouse. China as a “model for prosperity” has gained the attention and “captured the imagination of ordinary Africans” (Brautigam, 2009, p. 33). Unlike the West, who conquered Africa “through the barrel of a gun”, China prefers to use “the muscle of money” to provide discernible benefits and infrastructure, “there are now roads where there were no roads, and jobs where there were no jobs” (Moyo, 2009, p. 110). China’s development path is a success story that is a plausible model for Africa to look to. China was once resource-rich and cash poor. They were once an undeveloped, agrarian economy. They once had widespread poverty. But through efficiently leveraging key partnerships with more developed nations they were able to drastically improve their quality of life, and rise to become the second largest economy in the world. Conclusion From a historical perspective, the West’s development story, interactions with Africa, and development ideologies are fundamentally different than that of the Chinese. Europe colonized Africa, and while that period in history is over, it is not forgotten. As former colonizers, Europe’s development agenda in Africa is questionable, and the relationship dynamic is still more like that of a ruling authority even though African nations have since
33 become sovereign. The U.S., while not a direct colonizing country has taken a development policy position mirroring that of European countries, especially in regards to the international financing institutions like the IMF and World Bank. China, from a purely historical standpoint has much more credibility as a possible development partner due to the fact that they did not colonize Africa. Add to that the Chinese development history that has many parallels with the African experience and their pragmatic approach to development and China is potentially a suitable fit as a development partner.
34 Section 3: Western Development Policies, Projects, and Perceptions Having obtained a historical grasp on Western influence in Africa, let us shift the focus now to modern development policy, recent projects and initiatives, and some general perceptions of Western interactions with Africa in the modern day. Modern Western Development Policy: The United States The low point for US-Africa relations was arguably at the end of the Clinton era. Under his administration, the U.S. had failed to intervene during the Rwandan genocide, and American covered its eyes to what was happening in Africa, both physically and financially. However, the Bush administration made drastic changes to the country’s foreign policy toward the continent. During his time in office, an extensive HIV/AIDS program was implemented, and foreign aid to Africa tripled. Bush reacted strategically to 9/11 and the newfound oil insecurity in the Middle East after the terrorist attacks. The increasing necessity of African oil to the American economy “led Washington to worry about its continued flow, not least because of the perception that Africa’s oil-rich states were among the least stable and poorly governed states on the continent” (Van de Walle, 2009). Therefore, guaranteeing stability and promoting good governance incentivized the “increased diplomatic presence and foreign aid in countries like Equatorial Guinea and Nigeria, as well as occasional US navy tours to the region and increased technical cooperation to local navies” (Van de Walle, 2009).
35 The Bush policy shifted focus to Africa through linking the concept of development with security, thereby increasing political support for a more robust aid strategy. In fact, during his terms, foreign aid to the region, which grew from $2.5 billion in fiscal year 2000, to $7.5 billion in 2007. In fiscal year 2008, five sub-Saharan African states were among the 15 leading recipients of US foreign aid. They were Kenya ($599 million), South Africa ($574 million), Nigeria ($486 million), Ethiopia ($455 million) and Sudan ($392 million). By comparison, only Ethiopia had been in this select group ten years earlier. Africa’s share of total US aid increased from 13.3 to 28.6 percent during this period, though the US continued to provide a lower percentage of its overall aid to Africa than the other major donors, who were typically above 40 percent (Van de Walle, 2009). That said, numerical changes are not always a sufficient condition for real-world changes. In some respects, African policy under the Bush administration maintained the weakness of those administrations before him. The main criticism is that the famed aid increases “were not the result of some careful strategic thinking about the region” but were used instead as “an end in themselves, to be touted politically” (Van de Walle, 2009). Bush’s approach to aid was essentially fueled by the ‘war on terrorism’, rather than economic development or poverty alleviation for Africa. When Obama ran in 2008 for office, Africa was barely mentioned. This is especially odd, given that “he is personally linked [to Africa] through his father…and indicated an abiding interest and has perhaps more knowledge than any recent president” (Van de Walle, 2009). His early strategy was ambiguous to say the least. But, in response to a Chinese-lead re- engagement with Africa, a new policy was drafted and published in June 2012. The policy calls for “strengthening democratic institutions” and “boosting economic growth” across the continent (Obama, 2012).
36 As is stated in President Obama’s opening letter at the beginning of the policy, “We will work with our African partners to build strong institutions, to remove constraints to trade and investment, and to expand opportunities for African countries to effectively access each other’s markets and global markets” (Obama, 2012). The document goes on to outline the ‘Four Pillars of U.S. Strategy” which include the following: 1. Strengthen Democratic Institutions 2. Spur Economic Growth, Trade, and Investment 3. Advance Peace and Security 4. Promote Opportunity and Development It is clear, that the administration has placed the most emphasis, and dollars, on the maintenance and improvement of African democratic structures. It has been argued that the renewed push for democracy “is aimed at compelling African governments to carry out free market reforms, including privatizations and the abolition of subsidies and import controls” (Van Auken, 2013). Another central motivation for the democracy focus is “countering Chinese influence with the charge that Beijing, supposedly unlike Washington, is uninterested in “democracy” and “human rights” in Africa” (Van Auken, 2013). Pursuant to this charge of a democratic focus, the administration will seek to attach conditions in line with this end goal. But even though the ‘hoops to jump through’ for American aid are increasing, the financial contributions are not. In point of fact, “US aid to Africa has declined under Obama, falling from $8.24 billion during the last year of the Bush presidency to less than $7 billion today” (Van Auken, 2013). Despite the decline in aid, there are still ongoing programs that the administration feels will help with regards to African development and poverty alleviation. The key initiatives include:
37 Feed the Future Initiative: USAID’s global hunger and food security initiative, which seeks to increase agricultural production and research new relevant technologies. There is $1.06 billion allocated for this project. Global Health Initiative: This program is aimed at overcoming malaria, promoting safe birth, and addressing the HIV/AIDS epidemic on the continent. A total of $2.65 billion is reserved for this initiative. Other Areas of Focus: Increasing access to electricity, supporting democracy, human rights, and good governance, responding to humanitarian crises, and increasing resilience to climate shocks. These focus areas represent the remainder of the $7 billion in total USAID to Africa. While $7 billion sounds quite substantial, when this figure is considered in comparison to other U.S. aid expenditures it shrinks in the mind quickly. For example, “the size of the Iraq and Afghanistan programs are $60 billion and $89 billion respectively” (Peter, 2013). Those gargantuan numbers render the aid commitment to Africa rather miniscule. While Chinese interest has forced the U.S. to reconsider its strategy in Africa, “policy towards Africa suggests that the US is not adept at forging a coherent and strategic policy towards a region perceived to be of secondary importance” (Van de Walle, 2009). The development of Africa just doesn’t seem to be a priority for the U.S. and this is evident in its financial strategy relative to other areas in the world, and its lack of interest in visiting and actively engaging the countries on the continent it does support. When President Obama was elected, many in Africa were excited to see how he would engage the continent given his familial and racial connections. Tolu Ogunlesi, a reporter for the Guardian Africa Network recounted his reaction to Obama’s tour, “ When he was first elected there were celebrations across the continent, and perhaps unrealistic expectations that he would champion African
38 interests on the world stage…Since then his absence has been keenly felt, sparking accusations that he has betrayed his roots” (Ogunlesi, 2013). His policy was unclear and lackluster in the eyes of many, and largely maintained the strategies of the Bush administration. His 2013 tour in Africa included stops in Senegal, South Africa, and Tanzania, but oddly he didn’t make the time to visit Kenya, the land of his father. CNN comments that “Obama was in Africa to promote an increased partnership amid criticism the United States has, outside of military interests, focused its attention on other areas of the world” (Schwarz & Yellin, 2013). It may, however, be too late. For in the scramble to do business with Africa, America is lagging behind. The U.S. is “no longer Africa’s leading trade partner; it lost that position to China in 2009” (Ogunlesi, 2013). In a new effort to counter Chinese influence, Obama has announced plans to “invite 47 leaders to a landmark US-Africa summit in August, seeking to widen US trade, development and security ties” (New Vision). He will send invitations to “all African nations that are currently in good standing with the United States or are not suspended from the African Union -- meaning there will be no place for states like Egypt or Zimbabwe” (New Vision). Whether or not this summit will prove a success for Africa- US engagement remains to be seen, but it is a much-needed move at this point. Modern Western Development Policy: Europe Next, let us look at the development policies, projects, and perceptions of Europe, the other half of what we define as the ‘West’ for the purposes of this comparative analysis. Obviously Europe is a collective term for several countries, each having their own ideas and policies regarding the development agenda in Africa. There are different ways to approach this discussion. We could look at the top five or so European countries that interact with Africa, for example, by their amount of aid given to the continent. But then the issue arises of how to determine this figure. If we go by gross dollar amount, the frontrunners are the UK, France,
39 Germany, the Netherlands, and Spain. But if we use the top donors by % of Gross National Income (GNI) the list of top countries shifts significantly to Luxembourg, Norway, Sweden, Denmark, and the Netherlands. Since Europe maintains itself in a collective as the European Union, it is thus simpler and more representative to talk about Europe’s policies under its collective identifier. While that may not show the detail and diversity of African policy from country to country (and this may very well differ significantly), it does offer a birds-eye-view of the general approach toward Africa for Europe, and for the nature of this study that perspective should prove adequate. Prior to discussing detailed projects and perceptions, let us develop a working knowledge of the EU’s main policy toward Africa. The important thing to note is that the European Union mainly approaches its Africa policy as part of a larger ACP (Africa, Caribbean, and Pacific) policy. There are two main frameworks that shape EU policy with regards to Africa, “the African, Caribbean and Pacific (ACP), enshrined in the 1975 Lomé Convention and updated in 2000 by the Cotonou Agreement…and more recently, a continental approach has gained ground, which led to the Joint-EU Africa Strategy (JAES) conceived in the 2007 EU- Africa summit in Lisbon and reflecting the pan-African dimension” (European Commission, 2011). Let us unpack this collection of policy: The Contonou Agreement The Cotonou Agreement establishes three main EU-African, Caribbean and Pacific (ACP) Joint Institutions: 1. ACP-EU Council of Ministers: meets annually at Ministerial level to discuss matters of common interest in EU-ACP relations. It gathers representatives from all ACP and EU
40 countries, and the European Commission and, following the Lisbon Treaty, the European External Action Service (EEAS). 2. ACP-EU Committee of Ambassadors: meets generally to prepare for the Joint Ministerial Council. It is composed at ambassadorial level by representatives from all EU and ACP member states, in addition to the European Commission. The EEAS also attends. 3. ACP-EU Joint Parliamentary Assembly: a unique body whose goal is to bring together elected representatives of EU and ACP countries. The bulk of its activities relate to the promotion of human rights, democracy and the rule of law. It takes place twice a year, with a venue rotating between EU and ACP countries. The Cotonou Agreement essentially broadens the scope of EU-ACP partnership while seeking to adapt it to the changing international environment and the deriving challenges. Its three pillars are: 1. Development cooperation (funded by the EDF) 2. Economic and trade cooperation through the EPA's, seeking to make EU-ACP trade regimes WTO-compatible 3. A stronger political dimension. (European Commission, 2011). The second vehicle for EU-Africa aid and relations is the Joint Africa-EU Strategy (JAES). Adopted by the heads of state from Africa and Europe at the Lisbon Summit in 2007, JAES strategy focuses on the following: • Peace and Security • Democratic Governance and Human Rights • Trade, Regional Integration and Infrastructure
41 • Millennium Development Goals (MDGs) • Energy • Climate Change and Environment • Migration, Mobility and Employment • Science, Information Society and Space (European Commission, 2011). The main financial instrument for development cooperation in ACP countries is the European Development Fund (EDF). The EDF is now at its 10th round (2008-2013) and includes three financial envelopes: a national envelope covering bilateral cooperation with individual ACP countries, a regional one covering relations with ACP regions, namely Central Africa, West Africa, Eastern and Southern Africa and Indian Ocean, the Southern African Development Community (SADC), the Caribbean and the Pacific; and a third one to address the common challenges facing ACP States that transcend geographical criteria. Moreover, the intra-ACP envelope funds the African Peace Facility. The 10th round (2008-2013) of the European Development Fund includes a total budget of €22.682 billion, or approximately $30.652 billion dollars allocated in the following ways: • €21.966 billion ($29.684 billion dollars) directly to ACP countries • €286 million ($386.5 million dollars) to the OTC (overseas countries and territories of EU countries) • €430 million ($581.1 million dollars) to the Commission to support programming and implementation of the EDF The European Union makes it clear that while the joint fund is comprised as outlined above, “The Member States have their own bilateral agreements and implement their own initiatives
42 with developing countries that are not financed by the EDF or any other Community funds” ("European development fund," 2007). Concerning the EU, key programs and initiatives include: Aid for Trade: One of the EU’s main programs, aimed at increasing trade and investment with Europe. Specifically the program and its funds target: Internal "behind the border" constraints such as a lack of productive capacity and ability to meet standards in high value export markets, excessive red tape, or poor infrastructure; all of which make it difficult for developing countries to exports their products and undermine the potential benefits of increased imports. Targeting these constraints is what Aid for Trade (AfT) is all about, along with strengthening countries’ capacity to negotiate and implement trade agreements to their benefit ("Press release: Aid," 2011). Much of what this program does is to make sure that all African exports meet European safety standards (especially produce and other food products), and to increase exports and lift restrictions related thereto. Like with any other aid program through the EU, “AFT has to go through policy dialogue, needs assessments, inclusion of priorities into national and regional development strategies and formulation of response strategies” ("Press release: Aid," 2011).
43 Figure 3.1: Aid For Trade (EU and Member states, in EUR million) (2013, July 08). Aid For Trade [Web Graphic]. Retrieved from http://europa.eu/rapid/press- release_MEMO-13-649_en.htm This figure shows the contributions to the Aid for Trade program by the European Union and its member states over time. While contributions by member states have fluctuated from year to year, since 2005 the EU has been quite consistent with its portion of the contributions. The average for the years 2001-2011 was €2.188 billion.
44 Figure 3.2: Aid For Trade by Region (EU and Member states, in EUR million) (2013, July 08). Aid For Trade By Region [Web Graphic]. Retrieved from http://europa.eu/rapid/press- release_MEMO-13-649_en.htm This figure emphasizes the EU’s focus on African countries in relation to the AFT program. The contributions to Africa are around double what is spent in Asia, the next highest region, and the expenditures, while decreasing over the period 2008-2011 are still significant in terms of percentage of total aid budget. Euro-African Partnership for Infrastructure: Adopted in 2006, this initiative is one of the EU’s key programs with the aim to aid in the development of large infrastructure networks in the following areas:
45 • Transport: (road and railway networks, ports, maritime and river routes, air transport), in order to reduce costs and improve the quality of services • Water and Sanitation Networks: in order to improve the management of water resources at local, national and cross-border basin level, and also access to drinking water and adequate sanitation facilities • Energy: in order to allow network extension, distribution in rural areas and improvement of cross-border connections • Information and Communication Technologies (ICT): to ensure adequate access to affordable technologies by supporting regulatory reform, capacity building and broadband infrastructure development A total of €5.6 billion was allocated to projects related to this program in the 10th round (2008- 2013) of EU budgeting. ACP-EU Energy Facility: This program allocates €220 million to increase access to modern energy services for people in Africa, the Caribbean and the Pacific (ACP). The three identified priority areas include improving access to energy services, creating an enabling environment for energy services through good governance, and supporting future large-scale investment programs. European Water Facility for the ACP Countries: This program operates with a budget of €500 million to fund two types of activity: improving water management and governance, and co-financing drinking water and sanitation infrastructure. This is not an exhaustive list, but it covers the largest programs and initiatives. The EU does attempt to cover a wide range of issues related to development, but the effectiveness of this aid varies from project to project. Also, the EU is notoriously slow to implement, because it
46 requires the signing off of so many heads of State and the synchronizing of many different aid cycles along with the recipient country. The EU is testing a new method called ‘Joint Programming’ which is meant to streamline the implementation process, "to give the EU leverage to impose conditionalities more effectively…the EU is piloting joint programming in Ethiopia, Ghana, Guatemala, Laos, Mali and Rwanda for 2014-20” (Tran, 2012). Whether this will actually improve the process remains to be seen. As Mirjam Gehrke discusses in Africa: A New Era Possible in EU Development Aid, “More than half of global development aid comes from the EU and its member states. However, developing countries only receive European aid if they meet a set of criteria…on the political level, there is an agreement in Europe on certain standards like the demand for a democratic system and the respect for human rights in the receiving country” (Gehrke, 2014). This is a tenant generally attributed to aid from the West. Europe, along with the U.S. hold fast to the idea that imposing good governance conditions increases the effectiveness of their aid. This may be true in some cases, but the West is not the only actor competing for Africa’s attention. The EU, as well as the U.S. will have to evaluate how its aid schemes will function as China, India, and other rising nations enter the donor pool.
47 Section 4: Chinese Development Policies, Projects, and Perceptions Having obtained a historical grasp on Chinese influence in Africa, let us shift the focus now to modern development policy, recent projects and initiatives, and some general perceptions of Chinese governmental interactions with Africa in the modern day. Modern Development Policy: China As a starting point to understanding Chinese aid today, it is important to know how the government system is structured in China, that is, who is deciding which countries receive aid, at what time, for how much, and at what cost. While the West operates using varying degrees of democracy, China’s governmental system is different on a foundational level. As a single- party socialist state, China just doesn’t have to jump through the same hoops or get approvals from as many departments as the U.S. or European governments do. That’s not to say that the aid system is without a defined structure, but it is comparatively simpler. Like most high-level, high-budget decisions in China, aid is managed directly from the State Council, which includes China’s premier and vice premiers and the rest of the cabinet. Its main tasks are to “approve the annual aid budget, any grants of cash above $1.5 million, all aid projects above $12.5 million, aid to ‘politically sensitive countries’ and any requests to exceed the annual plan for foreign aid” (Brautigam, 2009, p.107). Under the executive government, there are four departments that manage all other aid-related tasks: The Ministry of Finance, Ministry of Commerce, Ministry of Foreign Affairs, and China Eximbank.
48 Figure 4.1: China’s Aid Institutions Brautigam, D. (Designer). (2009). China's system of aid and economic cooperation [Print Photo]. The Ministry of Finance: Responsible for allocating donations to multilateral organizations (UN agencies, World Bank’s International Development Association, ect), managing the cancellation of foreign aid debt owed to China, and signing off on the annual aid proposals. The Ministry of Commerce: Housed in the larger Ministry of Commerce is the Department of Foreign Aid. This small department of around 100 (comparatively, USAID has 2,200 employees) is the heart of China’s aid system and “programs all the zero-interest loans and grants, drafts the aid budget and aid regulations, manages the Foreign Aid Joint Venture and Cooperation Fund, and coordinates with China’s Eximbank on concessional loans.
49 The Ministry of Foreign Affairs: These diplomats are on the ‘front line’ in advising the leadership in China on how much aid to give to particular African countries. They also draft the annual plan for aid with the Ministry of Commerce and signs off on any changes in the aid plan. The China Eximbank: The bank manages the disbursement and maintenance of export seller’s credits (preferential loans for Chinese companies operating abroad), export buyer’s credits (for foreigners importing Chinese goods or services), and the foreign aid program. Now that we understand how the Chinese aid system operates, let us turn now to what policies and principles guide it. In Ghana on January 15th , 1964, Premier Zhou Enlai announced the Eight Principles for China’s Aid to Foreign Countries. They are as follows: 1. The Chinese Government always bases itself on the principle of equality and mutual benefit in providing aid to other countries. It never regards such aid as a kind of unilateral alms but as something mutual. 2. In providing aid to other countries, the Chinese Government strictly respect the sovereignty of the recipient countries, and never attaches any conditions or asks for any privileges. 3. China provides economic aid in the form of interest-free or low-interest loans and extends the time limit for repayment when necessary so as to lighten the burden of the recipient countries as far as possible. 4. In providing aid to other countries, the purpose of the Chinese Government is not to make the recipient countries dependent on China but to help them embark step by step on the road of self-reliance and independent economic development.
50 5. The Chinese Government tries its best to help the recipient countries build projects which require less investment while yielding quicker results, so that the recipient countries may increase their income and accumulate capital. 6. The Chinese Government provides the best-quality equipment and material of its own manufacture at international market prices. If the equipment and material provided by the Chinese Government are not up to the agreed specifications and quality, the Chinese Government undertakes to replace them. 7. In providing technical assistance, the Chinese Government will see to it that the personnel of the recipient country fully master such technique. 8. The experts dispatched by China to help in construction in the recipient countries will have the same standard of living as the experts of the recipient country. The Chinese experts are not allowed to make any special demands or enjoy any special amenities. (Source: Speech by Chinese premier Zhou Enlai, Accra, Ghana, January 15th, 1964.) These principles have been the center of much debate and controversy. Many have praised these tenants while others have condemned them. But, like it or not, these principles are the backbone of the Chinese aid engine, and are still in policy to this day. Why Does China Give Aid? There is a prominent myth prevalent in Western media and echoed by Western governments that China’s only motivation for giving aid in Africa is to secure as many natural resources as possible for itself, in essence, a land grab. It’s not hard to guess why this has become popular opinion. The Chinese are very active in the areas of Africa that contain the rich oil and mineral resources, and it would be incorrect to say that this isn’t important to them. But they aren’t just interested in countries with the most natural resources. It’s important to consider two facts:
51 • China gives aid to every single country in sub-saharan Africa that recognizes the Chinese government. • China doesn’t seem to give more official development aid to countries with more resources. Grants and zero-interest loans from the Ministry of Commerce are distributed fairly evenly across countries (Brautigam, 2009, p.279). Figure 4.2: African Countries Receiving Chinese Aid Brautigam, D. (Designer). (2009). China’s Aid Agreements in Sub-Saharan Africa [Print Photo].
52 So, if China isn’t reenacting a colonial resource-grab, then why do the Chinese give aid? The Chinese tend to think big-picture about aid and foreign relations. While “resources matter, China’s mutual benefit approach is about generating business” (Brautigam, 2009, p. 279). And China doesn’t discriminate on sectors. Yes, oil could be one area they would engage in, but anything that has the potential of generating a decent return is attractive to the Chinese. As a Nigerian diplomat commented on the Chinese in Africa, “The Chinese are trying to get involved in every sector of our economy. If you look at the West, it’s oil, oil, oil and nothing else” (Brautigam, 2009, p. 279). How Does China Give Aid? China uses a variety of different aid instruments as vehicles to deliver aid. These include resource-backed infrastructure loans, debt relief or loan forgiveness, education, and turn-key projects. Let’s take a closer look at each of these types of aid: Resource-back Infrastructure Loans: Unlike the Bretton Woods institutions that have notoriously condition-ridden loans that require months or years of negotiation, the Chinese take a more simplified and direct approach. Borrowing from their own development experience with Japan, they work with African states to guarantee the loan with whatever resources are available. This is a huge benefit for African nations, because they get the infrastructure they need, and which many Western institutions are unwilling to provide. Case in point is the DRC’s loans for infrastructure in 2008. China’s Eximbank “agreed to finance more than $6 billion in infrastructure, using just a single copper and cobalt mining joint venture as guarantee” (Brautigam, 2009, p.146). As the CEO of Congo’s state-owned mining company commented, “Congo doesn’t have to wait for its infrastructure until it has the money. Building starts immediately with the natural resources as
53 guarantee. Except in oil-rich states, I know of no other deal quite like this. The Chinese approach side-steps all the conditionality and just gets right to the point” (Brautigam, 2009, p. 146). The other unique feature of Chinese loans is the absence of conditionality. Conditionality is taken here to include imposed economic policies or governance reforms that are tied to the aid. Unlike the West, China doesn’t incorporate these conditions into its aid. This has been a highly criticized feature, especially by the Bretton Woods institutions that are increasingly losing loans to China. The fact is that Chinese aid is based on an equal, mutually-beneficial relationship. It views African states as sovereign, and doesn’t concern itself with the internal governmental affairs of nations. African leaders view this policy as an opportunity to self- govern in a way that is denied them by the West. A Ugandan official commented on Chinese aid: “The fact that a country gives you aid makes them think that they have a license to tell you how to run your affairs. These conditions are probably well-intentioned, but they are humiliating” (Brautigam, 2009, p.149). Jose Cerqueria, an Angolan economist provides his opinion of Chinese financing: “China’s straightforward approach is an attractive alternative to what is seen as the endless nit-picking of the IMF and the Paris Club of creditors, which have been quibbling over terms for years…China is welcome because it eschews the IMF’s ideological and condescending attitude” (Moyo, 2009, p.108). Some have made the argument that a lack of conditions to encourage good governance and appropriate economic procedures leads to the opposite and props up corrupt governments. Certainly there is some truth to this claim, as China does engage economically with Sudan and the corrupt government regimes of Zimbabwe’s Robert Mugabe and Mobutu in Zaire. However, the West, with it’s trade embargoes to governments it deems corrupt may be ‘too little, too late’ as it were. It is, after all, “under the auspices of Western aid, goodwill and
54 transparency that Africa’s most notorious plunderers and despots have risen and thrived” (Moyo, 2009, p.108). For better or worse, China just has no interest in assuming a managerial role in another nation’s affairs. As a Chinese official commented, “We don’t believe in embargoes…that just means that the people suffer. From a practical consideration, embargoes and sanctions can’t solve problems” (Brautigam, 2009, p.285). So while the Chinese choose to not get involved in these areas, the West obsesses over them. However, this focus on ‘good governance’ has produced little in the way of tangible results. As Serge Mombouli, ambassador from Congo-Brazzaville suggests, “We cannot be talking just about democracy, transparency, good governance. At the end of the day the population does not have anything to eat, does not have water to drink, no electricity at night, no industry to provide work…people do not eat democracy. China provided tangible things, while the West pushed for something less tangible” (Brautigam, 2009, p. 287). China’s position comes from its own history, and in the Chinese experience the simplest and most effective way to improve governance issues is to get rid of poverty and develop economically. Just decades ago China was in a similarly bleak political situation, but tensions were eased dramatically when people were lifted from poverty. Violence decreased, government structure became more stable. The Chinese believe this could be Africa’s solution as well. Loan Forgiveness Another form of official development assistance (ODA) is loan forgiveness, and China uses this frequently. The West was the first to employ a debt relief program in 1996, called the Highly Indebted Poor Countries (HIPC) program. The HIPC program began canceling debts of countries that qualified, by in Western form, “only after countries successfully followed a complicated steeplechase with hurdles that could take years to jump” (Brautigam, 2009, p.127). China launched its own loan forgiveness program in 2000, but unlike the West,
55 “Chinese debt cancellation was unconditional…they did not require governments to prove their ability to manage their economies or to develop strategies to use the cancelled debt for poverty reduction” (Brautigam, 2009, p.129). China uses this in tandem with other types of aid, and by 2008, “Premier Wen Jiabo announced that China had canceled a total of 24.7 billion yuan, or about $3.6 billion” (Brautigam, 2009, p.130). Since then, there have been more pledges to cancel debt, but this is still quite modest compared with the IMF/World Bank debt cancellations under HIPC, which to date “have been approved for 36 countries, 30 of them in Africa, providing US$75 billion in debt-service relief over time” ("Debt relief under," 2013). Education/Training This type of aid is commonly used by the Chinese government in Africa. China’s dedication, and some would say obsession, with education helped to fuel an economic revival in their economy and they believe in the power of education for Africa as well. In fact, “Chinese officials estimate that they have provided scholarships to 18,000 African students from 50 countries and sent 700 teachers to 33 countries since 1949. Since 2009, the Chinese government has offered 4,000 scholarships to African students every year” (Nesbitt, 2011). This is dramatically higher that in Western countries, such as the U.S., which has largely abandoned the education scheme it took up in the 1990s, “in 1990, USAID programs funded 9,128 university students, but only 1,212 in 2000” (Brautigam, 2009, p.121). China, in it’s goal of providing infrastructure in Africa, has also undertaken the building of schools and vocational centers. In Ethiopia, “a large training and vocational education center financed by Chinese aid and jointly operated by the two countries opened in early 2009. The school will enroll 3,000 students, with courses taught by Chinese and Ethiopian teachers in construction skills, architecture, engineering, electronics, electrical engineering, computer, textiles, and apparel. China also built a vocational training center in Uganda, and the Chinese
56 are building two centers in Angola” (Brautigam, 2009, p.158). Turn-Key Projects The Chinese focus on building industry and infrastructure makes grants for projects a significant portion of an aid package from China. Whether it’s a power plant in Ghana, a metal processing plant in Zimbabwe or a textile factory in Kenya, the Chinese see the value-added for Africa and themselves through investment in industry and infrastructure. When undertaking these types of projects, the Chinese use a modified version of the model the Japanese used with them during their development, the ‘Request-Based System’. This usually involves Chinese companies identifying possible projects and pitching them to the recipient country’s government for their opinion and approval. The recipient country then ‘requests’ that the Chinese government fund the project. In the China-Japanese development partnership, “the system helped Japan expand exports, and its focus on raw materials like cotton or timber, energy, industry, and mining was designed for mutual benefit” (Brautigam, 2009, p. 141). China’s model incorporates suggested projects by Chinese companies, but also allows African countries to propose projects that it deems important. Then a competitive bidding process ensues to identify the company or entity that will manage and complete the project. This process is an improved form of the Japanese model, because in the case of Japan at that time, they were the only ones bidding so there was a much greater risk of corruption. Today, the Chinese are usually one of many bidders, among the West, India, Japan, and South America. This mix of countries creates a check on the system, and “is intended to ensure that a project’s costs are realistic and fair” (Brautigam, 2009, p. 141). Some recent notable projects include: • China has built over 100 schools, 30 hospitals, 30 anti-malaria centers and 20 agricultural technology demonstration centers in Africa.
57 • On November 28th, 2013, the contract was signed for a $13.8 billion standard gauge rail line that is expected to link five East African countries and replace the line built by the British. • $232.4 million for the Kariba South hydropower expansion project in Zimbabwe • $3 billion interest-free loan from China Development Bank for oil and road projects in Ghana • $1.4 billion for the construction of a railway from Khartoum to Port Sudan in Sudan • $2.2 billion for dam construction in Ethiopia • $672.9 million for a light rail network in Nigeria • $464.8 million for rebuilding roads in Angola • $138 million for updates to the Kenyan urban power grid • $304.2 million for construction of the Central Zongo II Hydroelectric Dam in the DRC • $732.1 million for the Kafue Gorge Lower Power Plant in Zambia (Provost & Harris, 2013). The above are just a select few of the thousands of projects completed in Africa with the Chinese. According to research conducted by AidData, “China has committed around $75 billion to over 1,700 different projects across Africa in the past decade” (Provost & Harris, 2013). Final Notes on Chinese Aid Concerning infrastructure projects, it is worthwhile to note that there is a priority system built-in. The Chinese first prefer to repair or revive infrastructure that’s already in place where applicable. It’s more efficient, and makes loan funds go further. Second, the Chinese will generally agree to an African-proposed project before suggesting other options. This goes along with their pledge of non-interference. Wherever possible, they encourage African States to ‘speak for themselves’ in respect to projects within the country.
58 There has been much debate over the mix of workers dispatched to complete these projects. Many have alleged that China sends an overwhelming majority of Chinese workers to construction projects and that they don’t hire Africans. This is a myth that fortunately is largely just that. Figure 4.3: Chinese Projects and Investment (2012, August 15). Chinese Investment Offers in Africa Since 2010 [Web Photo]. Retrieved from http://www.stratfor.com/image/chinese-investment-offers-africa
59 The fact of the matter is that the ratio of Chinese to African workers varies wildly depending on the recipient country’s policy, the timeline demanded for completion, the ability to find skilled workers, and how long the Chinese company has been in that particular area. For example, “in Sudan, where Chinese companies have been working in the oil industry for over a decade, 93% of workers in China’s oil operations were Sudanese” (Brautigam, 2009, p.156). Similarly, in Tanzania, “Chinese companies employed Tanzanians at a ratio of eight or nine for every Chinese” (Brautigam, 2009, p.156). China will also respect local governmental policy, so countries that have these in place are successful in employing more local workers. In the case of Angola, the “require all employers to have at least 70% Angolan staff” and similarly in the DRC “at least 80% of the workers in China’s multibillion dollar infrastructure and mining venture must be Congolese” (Brautigam, 2009, p.157). Another interesting point of difference between West and East is the cost for experts to manage implemented projects. The fact is, the Chinese are cheaper. The export of expertise from the West comes at a cost, due to “the scores of relief workers who make triple digits in salaries for ‘working in dangerous zones’” (Brautigam, 2009, p.157). As an official in the President’s office in Sierra Leone notes, “Chinese interventions are not tied to a lot of experts who get half or three-quarters of whatever aid is coming to the country” (Brautigam, 2009, p. 157). The Chinese pay a fair market rate for what the same position would command in China (usually far less in salary than the West) and this rate is used for dispatching Chinese to Africa. Also, in keeping with their 8 Principles of Aid, Chinese workers don’t get bonuses or kickbacks for ‘working in a dangerous zone’ like is common with those being dispatched from the West. The result is tangible savings for African nations.
60 The Chinese aid strategy in Africa is aimed at mutual benefit for each party involved, and attempts to follow the model that worked for China personally, and helped them to lift millions of people out of poverty. Their focus is infrastructure and industry; to both make business function more easily through upgraded electricity systems or road revival projects, and also to generate a steady and stable return for economic growth. There are some discernible benefits of Chinese aid when compared with the West, but China’s policies aren’t perfect. While the West tends to focus on the intangible goals of democracy and good governance to the detriment of tangible and much-needed infrastructure, China doesn’t really bother at all with political or environmental concerns. However, when we look at from an impact or value-added perspective, the Chinese have done more to help Africa develop in the last decade than the West has managed in the last half-century. There are roads and railways where there used to be grass and dirt. There is electricity where there used to be darkness. There are schools, hospitals, and stadiums where nothing stood just five or ten years ago. Due to new raw material processing plants and construction projects, Africans that used to be jobless are now employed. While the West was arguing over ideologies, China came to Africa with the ‘muscle of money’ and the promise of a partnership.
61 Section 5: Foreign Direct Investment Facts and Figures While not considered Official Development Assistance (ODA), FDI is still beneficial, both to the host country and the originating country. FDI, defined by the United Nations Conference on Trade and Development as ‘an investment made to acquire a lasting interest in an enterprise operating outside the economy of the investor’ reached a record $1.4 trillion worldwide in 2006. Of that, Africa attracted only $17 billion of that total (Moyo, 2009, p.103). That’s interesting, given that Africa is a prime location for FDI—its labor costs are low, and investment opportunities are high. China, among others, has begun to take notice in a major way, and have finally started to come to Africa to do business, sparking a global race to African markets. FDI flows to African countries “increased by 5 per cent to US$50 billion in 2012 even as global FDI fell by 18 per cent”, UNCTAD’s annual survey of investment trends reports” ("Foreign direct investment," 2013). This section will explore this relatively new phenomenon, comparing and contrasting FDI flows from China and the West, and adding a quantitative perspective to this subject. Chinese FDI: Facts and Figures Like many aspects of its involvement on the continent, the Chinese have been very active in FDI. They have invested all over, and have really been integral in sparking competition and general interest in Africa as a business destination. China does everything it can to encourage FDI, both directly through the government, and “by encouraging private Chinese enterprises to invest in Africa, usually through preferential loans and buyer credits” (Moyo, 2009, p. 105). The amount of FDI China has amassed in the last decade is staggering, “As of mid-2007, the stock of China’s FDI to Africa was US $100 billion” (Moyo, 2009, p. 105).
62 Figure 4.4: Countries Ranked By FDI Flows (2014). Foreign Direct Investments (FDI) to Emerging Markets Doubles Over Past Decade [Web Photo]. Retrieved from http://www.weareallglobal.com/change/ While the U.S. has continued to engage most actively in FDI, China’s jump from 9th to 2nd in approximately ten years time is remarkable. While not all Chinese FDI is directed specifically at Africa, “Foreign Direct Investment in Africa has grown at an average of 146% annually over the last 22 years to reach US$36 billion in 2007 alone, while trade between Africa and the rest of the world (particularly Asia) has been steadily increasing” (Al, 2014). The diversity of investments is also something to note. It is a common misconception that Chinese FDI is overwhelmingly aimed at mining and other natural resources, but in reality this is not the case. As an Economist article suggested, “Africa is now more often seen by Chinese firms as a place to do business other than digging stuff out of the ground” and in an IMF study conducted in 2011 it was discovered that “only 29% of Chinese foreign direct investment in
63 Africa was in mining. Figure 4.5: Top Countries in FDI Over Time (2011). China's total OFDI flow to Africa has risen dramatically since 2003, with investments well diversified across a number of sectors [Web Graphic]. Retrieved from http://www.britishchamber.cn/content/african-tiger-africa’s-evolving-investment-landscape If anything, official figures understate the extent of Chinese non-commodity investment, as they rarely include smaller firms in wholesale trading, retail, catering and textiles” ("Little to fear," 2013). One thing is for sure: China is using the ‘muscle of money’ to expand its FDI pretense in Africa.
64 U.S. and European FDI: Facts and Figures While Asian countries have certainly lead the way in increases to FDI in Africa over the last decade or so, the West has steadily invested in African markets over a longer period of time. As African Economic Outlook points out, “OECD countries – including traditional partners still account for about 80% of FDI flows to Africa. However, the share of non-OECD countries including Brazil, India and China – has risen from an average of 18% in 1995-99 to 21% for 2000-08” ("Traditional partners remain," 2013). Figure 4.6: Africa FDI Flows (2014). African FDI inflows 1995-2008 [Web Graphic]. Retrieved from http://dx.doi.org/10.1787/888932403610
65 For the EU specifically, FDI flows to Africa while they total a significant dollar amount are actually quite sparse when considered as a percentage of their total FDI worldwide. Figure 4.7: EU FDI Flows to Africa (%) (2014). African FDI inflows % [Web Graphic]. Retrieved from http://dx.doi.org/10.1787/888932403610 In 2010, FDI to Africa accounted for only 5% of the EU’s total FDI flows, while 33% when to North America and 13% was directed at Asia. As far as where the EU invests in Africa, they target FDI almost exclusively in Egypt and South Africa. In 2011, FDI to Africa accounted for 2% of total FDI for the EU, and this 2% was split between only Egypt and South Africa ("Foreign direct investment," 2013). The U.S. also tends to invest more heavily in areas containing oil and other natural resources, and their biggest areas of FDI include South Africa, Nigeria, and Ghana. The Chinese tend to take a more comprehensive approach, and while they too invest significantly in resource-rich areas, their FDI covers the entire continent and spans several
66 sectors. The West invests much less in industries unrelated to natural resources. Figure 4.8: Chinese FDI By Country (2011) (2013, June ). Outward stocks of FDI, EU-27, end 2011 [Web Graphic]. Retrieved from http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Foreign_direct_investment_statistics While the West currently dominates FDI in Africa, these figures are shifting rapidly. In a report published by the United Nations Conference on Trade and Development, the data shows that “for the first time, FDI inflows from developing economies into Africa, outstripped those from developed economies”(Sulaiman, 2012). As James Zhan, director of UNCTAD's investment and enterprise division commented, “In terms of green field (new) projects, which account for over 90 percent of total FDI, the largest developing-economy investors in 2011 were India, South Africa, China, Korea and Mauritius” (Sulaiman, 2012).
67 Section 6: Private Actors in Africa Often, when comparing China versus the West, private industry is forgotten. However, private actors, while regulated by their respective domestic governments are not one in the same, so it helpful to separate the two. Private actors can have an enormous impact, for better or worse, on the economies they interact with. Although they may not be directly involved with the interests and actions of their national government, public opinion can be significantly swayed by their actions in the eyes of the citizens that live in the affected countries. This section will provide an overview of some major private actors from each side, and discuss their involvement and impact in Africa. Private Actors: Multinationals and Mega Corps Multinationals and other private corporations based in the West have been active in Africa for decades. The West is oil-obsessed, and private actors from Europe and the U.S. are heavily tied to the oil exploration and extraction that happens in Africa. While some private actors from these areas are also active in the Telecommunications industry or the extraction and processing of other natural resources, oil is really the main focus. Of all of the oil companies doing business in Africa (more than 120), 57 were European corporations and 23 were American. When you compare these figures alongside the number of African companies involved in oil production (just 13 across the entire continent) it’s easy to see that the West has quite a firm grip on African oil. Even China maintains just 7 companies dedicated to this sector. That said, these companies bring benefits to Africans. The big multinationals come with money to develop pipelines and spur exploration, and they provide numerous jobs to Africans. However, regulation is a huge issue with regards to these private actors, and this is a theme
68 that spans every industry and every country on the continent. It is when private business goes unregulated, unmaintained, and unchecked by the host governments that the country’s resources and people get taken advantage of. In the case of Western oil companies, there are constant examples of tax evasion, negative environmental impact, and human rights concerns that African governments are either unable or unwilling to address. In Tanzania, “The EU and other Western multinationals…use tax havens and other illicit schemes to scam the countries of the continent out of around $50 billion every year” (Nielsen, 2013). Zitto Kwabe, a Tanzanian Public Accounts Chairman, attributes part of the blame to the policies implemented under the direction of the IMF and World Bank, which “advised African states to design policies and laws which multinational corporations are abusing to avoid paying taxes in our countries” (Nielsen, 2013). The result is that Tanzania is unable to collect the tax revenue on the oil operations that would help the country wean itself off foreign aid. The conditionality of the IMF/WB loans has relaxed tariffs and taxes to the detriment of African economies in some cases, and this is one such example. The Chinese are also getting more involved in oil and the like, although they don’t have as many holdings as the West. The major Chinese companies in oil, unlike in the West, are state-owned and financed. They do however operate like a private corporation in every other aspect, and follow their own interests and goals. Figure 5.1: Role Of Chinese Government in National Oil Companies
69 Zhao, S. (Designer). (2011, May 03). National oil companies – Arms of the state or independent entities? [Print Photo]. Retrieved from http://www.china-briefing.com/news/2011/05/03/chinas-energy- strategy-and-the-role-of-govt-oil-in-africa.html In this case, the Chinese government does little in relation to general business operation, but instead maintains a light advisory role. The main role of government in the NOCs is to provide tax incentives and financing to help them penetrate new markets. Figure 5.2: China’s Notional Oil Companies (NOCs) Zhao, S. (Designer). (2011, May 03). China's Main National Oil Companies [Web Graphic]. Retrieved from http://www.china-briefing.com/news/2011/05/03/chinas-energy-strategy-and-the-role-of-govt-oil-in- africa.html In oil, because the Chinese are newer to the game, and because African governments have learned some expensive lessons from the West regarding taxation and other regulatory
70 measures, we don’t see the same abuses from private Chinese companies as exist with the U.S. or Europe. As Kwabe notes about the Chinese, “Chinese companies working in Africa, by comparison he said, are more transparent on taxes and pay their dues” (Nielsen, 2013). As is discussed in A Trilateral Dialogue on the United States, Africa and China, “While some are critical of China for seeking exclusive access to oil and gas supplies in Africa, others applaud Beijing's willingness to take risks in markets where some Western energy firms can't—or won't—go for a variety of reasons, arguably adding to world energy supplies, lowering prices, and benefiting consumers” (Zhenxing, 2013). Their oil exploration has lead to new findings and again, their efforts create African jobs. However, the issue of regulation will rear its ugly head in the case of China soon enough, especially as Chinese NOCs gain more influence within Africa. In telecommunications, the West has largely pulled out of Africa after the telecom crash of 2001. This sector is, more than any other, an African-held portion of the economy. MTN of South Africa, Orascom of Egypt, and Vodacom (British-South African joint venture) are all among the top five in the telecommunications industry on the continent. As for Europe, “only Millicom of Luxembourg and Vodacom, a joint-venture between Vodafone of Britain and Telkom of South Africa, have much of a presence” ("Mobile telecoms: Out," 2006). The Middle East has also penetrated the market, and is now more active than Europe in this sector. China is rapidly gaining influence in this sector, both with official governmental intervention to build infrastructure in Africa to support electricity and telecom operations, and with private Chinese companies moving in to provide telecom services. As Zhang Zhongxiang, a researcher at the Shanghai Institute for International Studies says regarding China’s involvement: The two major Chinese players in this field are equipment manufacturers Huawei Technologies and ZTE (Zhongxing Telecommunications Equipment Corporation).
71 In 2010, they were active in 50 African countries, providing communications services for over 300 million African users. The two Chinese firms have established more than 40 third-generation telecom networks in more than 30 African countries and built national fiber-optic communications networks and e- government networks for more than 20 African countries (Marshall, 2011). Chinese companies have also ramped up their involvement in construction, winning more and more contracts all over the continent. It is now a dominant force in construction in Africa. However, like most sectors, there are positives and negatives. For example, “A Chinese company built an eight-lane 30km road stretching from capital Nairobi to Thika, an industrial district” and as a Kenyan told Xinhua News, "All the public knows about China in Kenya is good quality roads. The image that Kenyans held about fake mobile phones and cheap clothes is fast fading. The roads have become a huge selling point for the Chinese” (Li, 2013). In contrast, there are also examples of not-so-stellar private sector involvement from China. In Zambia, “A Chinese private company built the road from Lusaka, Zambia’s capital, to Chirundu, 130km to the southeast. It was quickly swept away by heavy rains” (Li, 2013). When it comes to big business in Africa, the West and China are scrambling for resources and influence. Both sides bring money, jobs, and revenue to Africa, but lack of regulation and governmental oversight have muted the benefits of foreign investment considerably. On the positive side, the Chinese are perhaps more transparent about their interests in Africa, and in doing business with China African leaders can skip the political lecture. One African businessman in Angola commented candidly on foreign business to American researchers: [The Chinese] are here for the oil. But why are you here? The Americans and the French think they can give us lessons in ethics and transparency, but all
72 you’ve done is sneak our oil out from underneath us for forty years. You corrupted everybody. You prolonged the war—especially the Americans. The Westerners swagger about preaching ‘family values,’ and then pile in here to Luanda, stuff their faces, and screw hookers. But the Chinese are disciplined. They’re modest and respectful. Whilst the West wastes its time lecturing us on democracy, human rights, and accountability, the Chinese are hard at work (Michel & Beuret, 2009). While this is just one person’s opinion of Chinese versus Western involvement, it does give rise to a debate that is happening all over Africa. Private Actors: Retail and Local Merchants Nowhere are private actors more influential, and potentially damaging, than in small business. This is where more Africans are able to observe, and form opinions, about the Chinese. And opportunities to interact with Chinese small business have multiplied alarmingly fast over the last decade. Chinese merchants have moved into local African markets, and “Chinese consumer products are sold at rock-bottom prices all over Africa…and all of these items sell at a fourth or a fifth of the price the people have been used to paying” (Michel & Beuret, 2009, p. 115). This is troublesome for African merchants, who just can’t compete. Some Chinese have even stepped in to compete with traditional African goods. For example, in Cameroon there is a popular doughnut called the ‘Ca va se savoir’ and is sold by Cameroonian merchants. The Chinese, however, made their own version which “sells for 10 CFA francs less than the real thing and is made with highly questionable flour” (Michel & Beuret, 2009, p. 116). This type of unfair and unwanted competition has fueled African dislike, and in some cases hatred, of the Chinese. Some governments in Africa are responding to this
73 Chinese flooding of the market by restricting visas and trying to control how many Chinese are allowed to operate businesses. All in all, “it seems that every country in Africa is facing the same dilemma: how to satisfy the people’s demand for cheap Chinese goods without being overrun by the Chinese themselves” (Michel & Beuret, 2009, p. 119). With regards to the West, they are largely absent from this small-business discussion. There are certainly Western shop and restaurant owners scattered across Africa, but they haven’t come in the numbers and with the fervor in which the Chinese have. The West is much more present in big business than in small. From a regulatory perspective, African governments have to become actively involved with protecting African business owners in local markets from outside domination. This Chinese flooding of African markets is a real issue, and it is negatively affecting the African opinion on China. This is true even though Chinese private actors are a comparatively small, and separate entity from the Chinese government and China’s overall activity on the continent. Conclusion Private actors have a real and growing presence in Africa. China is making more of an impact business-wise on the continent. The West, while once the only players in the game, are now being outbid by the Chinese, who “operate with less bureaucracy, are faster and cheaper and, as a rule, provide financing for projects with low-interest loans from state-owned banks” (Grill, 2013). This can be a positive thing, lowering prices, increasing employment opportunities, and building much-needed infrastructure. There is enormous opportunity with engaging Chinese business, but left unregulated, Eastern involvement could spell disaster for Africa.
74 Section 7: Selecting and Managing a Partnership in Development It is no question that Africa has the ability to develop and prosper economically. While some are quick to write Africa off as ‘the failed continent’, there is a remarkable amount of knowledge, ingenuity, and ambition among Africans. Through the increased transnational interest and competition on the continent, Africans are beginning to reconnect with their own power to shape development and drive economic prosperity. Of the world’s ten fastest growing economies, seven are in Africa. There is a momentum that has been picking up speed over the last several years, and it can translate into economic, social, and political development for Africa, if used strategically, and managed carefully. It is true Africa is ready to develop. But the continent cannot hope to undertake such a large task alone, however desirable that option may be. Let us return once more to the central question guiding this East-West comparative analysis. Who is a better partner in development for Africa? The answer to this question spans many economic, social, and political topics and seemingly shifts by the second. It is an answer that may not be the same in a year, a month, or even a week from now. With that time- sensitivity in mind, I will propose an answer. The Ideal Partner In Development: Criteria Review In the introductory section, we defined the qualities an ideal development partner would possess. They include the following: 1. Equitable and Respectful Relations 2. Maintenance of Sovereignty 3. Ability and Willingness to Finance Sustainable Development in Africa
75 4. Shared Experience and Understanding 5. Historical Element Bearing in mind the information discussed previously, let’s zoom in and determine how the West and China held up to these standards. Equitable and Respectful Relations: The definition of a partnership is an arrangement in which two parties agree to cooperate to advance their mutual interests. Therefore, a desirable partner in development needs to contribute to a mutually beneficial, equitable relationship in which both parties treat each other with respect. There are always exceptions to these guidelines in any relationship, and no partnership is perfect, but a partnership should function as a two-way street. The West began its relations with Africa on the basis of a master-slave power structure, and since independence this has largely remained intact. The West views Africa as a patient, not a partner. Through Western-based, multilateral organizations like the IMF and World Bank, they dictate to Africa what it should do regarding every economic, political, and social issue. They have imposed conditions and development policies for decades that have done absolutely nothing to bring about economic development. Moreover, they do not listen to the voices of Africans and seem intent to make sure there are never any ‘Africans at the table’. China doesn’t have the colonial hangover that the West has, and because the country went from a similarly bleak developmental situation to the economic powerhouse that it is today, the Chinese development model is both believable and inspiring. The Chinese treat African leaders with respect, and don’t dictate policy or impose conditions tied to aid or investment. As demonstrated through countless visits form the Executive government across the continent, the Chinese really care about cultivating a relationship through South-South
76 cooperation. When Chinese workers or experts go to work on projects in Africa, they lives as the locals do and provide a better value for Africa. When financing development projects, the Chinese listen to the recipient governments and follow their lead. They are able to connect with the African experience in ways that the West could never hope to, because just decades ago they were not much different than Africa is today. Maintenance of Sovereignty: African countries are just that—countries. They are independent, sovereign countries and a proper development partner must recognize and respect this fact. Certainly both parties can learn from one another, but in the end African countries should have the final say of what is best for them and their people. In the West’s interactions and involvement with Africa it is clear to see that neither the U.S. nor the EU view African nations as independent. Europe is still involved in the African financial and legal systems to an extent that would be unheard of anywhere else. The U.S. is determined to create a carbon copy of the American liberal democracy in Africa, with little care or regard to the African opinion of what an ideal governmental structure should look like. The West maintains a very patriarchal relationship with Africa, and certainly does not respect the sovereignty of individual African countries. China, on the other hand, recognizes and respects sovereignty. They look to African leaders to make their own decisions and expect the same respect and consideration in return. China had a brush with Western control in the past, and while they were quick to prevent Western colonization in their own territory, they did not fail to notice the effect it has had on other parts of the world. They view Africa as an attractive business destination, but realize that it is privilege to conduct business there, not a right.
77 Ability and Willingness to Finance Sustainable Development in Africa: The point of seeking a partner in development is to cooperate to bring about positive, sustainable development. Africa has rich natural resources and vast human capital. What it lacks is the proper financing to build infrastructure and harness those resources, and that is where a partnership can make a difference. But it is important to clarify that ‘financing’ is not enough. In order for development to be sustainable, Africa has to be able to repay the financing it secures. A suitable partner will understand this, and work with African countries to come up with a feasible method of financing that will ensure ability to repay on the loans, adding an element of confidence for both parties. The West has provided Africa with billions of dollars in loans and other forms of aid. It is almost unbelievable that all that money didn’t, if only by chance, bring about development. But, unfortunately, a pile of money put towards the wrong problem is little help. The West has targeted governance, economic restructuring, trade reforms, and health issues, but these topics matter little when the people have no education, no electricity, no opportunity for employment. The West is willing to provide financing, but only for those projects and aims that it deems necessary and important. Europe and American aid focused on infrastructure and education for a brief time, but then moved on to the next ‘aid fad’ and left Africa struggling to build the basics in order to have a functioning society. The West also helped Africa accumulate vast amounts of debt, of which it cannot pay back. This has lead to and perpetuated the underdevelopment of Africa, in which the end goal of development has not just halted, but has been pushed back. China recognized Africa’s need for infrastructure and industry in Africa, and came ready to help build it. Using the financing strategies that Japan had used with China only decades earlier, it offered resource-backed loans to trade buildings and roads for natural resources.
78 And while the IMF and World Bank argued over loan terms, the Chinese build stadiums, hospitals, schools, housing, parks, and railroads. China is in a good economic position to finance African development, and Africa has the resources to exchange. The Chinese are hardworking, and value-oriented which allows Africa to get more for its money. The Chinese do not expect as high of a return on investment as the West, and they do not send expensive experts and officials that make triple-digit salaries and cut into the aid budget. Shared Experience and Understanding: Often the most successful relationships involve parties with common values, motivations, goals, and perspectives. The more parallels that exist in these areas, the easier it is for the parties to see ‘eye-to-eye’ in negotiations, and the easier the overall relationship functions. Shared experience is crucial because it allows open and honest communication, as neither party feels as though they are inferior to the other. Shared experience is great because there are numerous opportunities for parties to learn from one another. The West owes a large amount of its wealth to Africa. Colonialism spurred an economic boom in Europe, and slavery propped up the American economy for years. While it is true that the West has been engaging with Africa for a longer period of time, much of this was spent as a ruler. They stole things from Africans that can never be replaced. And they have done little since to restore or repair the damage they caused. As far as colonization, China did not experience it in the same manner and to the same extent that Africa did, but that’s not to say that China avoided foreign pressures entirely. In the nineteenth and early twentieth centuries, “Chinese foreign relations with most major world powers devolved into semi-colonialism as Britain, France, Germany, Russia, Japan, and the US coerced trade and territorial concessions in a series of so-called unequal treaties” (Larson,
79 2011). The Chinese also suffered through the Mao regime, where widespread poverty and oppression were commonplace. Through a strong focus on industrialization and economic development, and with financing from the Japanese, FDI from members of the Chinese diaspora, and other sources, China lifted itself from poverty to become the world’s second largest economy. The Chinese believe that their model of development can work in Africa, and offer a powerful alternative to Western development models. Historical Element: It has been said that the past is often the best predictor of the future. This translates to relations as well. While it is true that all relationships have their issues at times, the best development partner will have had a overall positive relationship with Africa in the past, and this will lend itself to a partnership will less tension and more cooperation. The West has unfortunately had a consistently negative historical relationship with Africa. The opposite is true with China. China is self-interested but respectful. Yes, they are here for business, but they are quite clear in that respect. The West operates under a guise of altruism that is both misleading and unhelpful. With Chinese involvement, Africa and the world have begun to view the continent for all its possibilities instead of its failures. Perhaps the most powerful thing the Chinese have done is to make Africa attractive to investment and important on the international agenda again. China has forced the West and the World to take a second look at Africa. Managing a Development Partnership: Mutual Benefit Realized Deciding to partner with China is not the end of a development strategy for Africa, but the beginning. Working with the West is safe, in that Africa knows by now what to expect, but a relationship with the Chinese is high-risk, high-reward. China has the potential to be a real part
80 of the solution for Africa, but African leaders must not be fooled. The Chinese are not there just to help Africa grow and develop. They may not be actively suppressing development as has been the case with the West, but they aren’t going to put African interests before their own. For a Chinese partnership to be effective, Africa will have to step up and be its own advocate. Leaders have to strategize to maximize the benefits, and minimize the negative affects of China in Africa. The most important area to focus on is private industry. Africa has to be quick to act and put measures in place to protect small business, and regulate big business. This will ensure that Africans are truly benefiting from the relationship. A passive role will not work with the Chinese. As Professor Chris Alden said in his 2005 essay, Leveraging the Dragon, “Africa should learn to say no to China, and if it cannot do that, then it should at least start negotiating conditions favorable to its own development, just as China has done to the Western companies that want to build factories in its special economic zones” (Michel & Beuret, 2009, p.257). Africa must be business savvy to take advantage of China’s interest. A Way Forward: The Age of Africa China has built something in Africa that is more important than roads, and more valuable than gold. They have built confidence—a renewed confidence in Africa that is felt by leaders and citizens alike. A confidence in the belief that they are not doomed to perpetual stagnation, a confidence that Africa has the ability to develop and the potential to succeed. The Chinese have also built competition—competition for Africa’s attention. The United States and Europe have never been more interested in Africa as they are now that the Chinese have pursued African business. India has begun to invest more heavily, and South America is even moving in. The world has begun to think, “if China has bothered to invest so much time, money, and energy in Africa, then there must be an opportunity there that’s been overlooked by the West” (Michel & Beuret, 2009, p.259). From a business standpoint, being desired and
81 sought after is an incredibly advantageous position to be in. If African countries really exploit this competition, they can get the infrastructure they need for much less than they would have paid even five years ago. This will make the money they do spend go farther, and make development more affordable. Real, lasting development has never been so well within Africa’s grasp, but leaders must be wise in negotiation and selfless in pursuit of this goal. For it is leadership that will ultimately make or break development in Africa. With China’s involvement, Africans have been presented with an alternative path, and an alternative future. The question is, will they seize it?
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87 Picker, L. (2004, January). The economic decline in africa. Retrieved from http://www.nber.org/digest/jan04/w9865.html Postpositivism. In (2014). Wikipedia. Retrieved from http://en.wikipedia.org/wiki/Postpositivism Powers, L. (2013, July 02). Why obama is making an african power-play against china. CBC News. Retrieved from http://www.cbc.ca/news/world/why-obama-is-making-an- african-power-play-against-china-1.1324935 Provost, C., & Harris, R. (2013, April 29). China commits billions in aid to africa as part of charm offensive. The Guardian. Retrieved from http://www.theguardian.com/global- development/interactive/2013/apr/29/china-commits-billions-aid-africa-interactive Pye, L. (2012). What is political development? . Retrieved from http://www.preservearticles.com/2012031427216/what-is-political-development- examine-various-crises-as-identified-by-lucian-pye.html Reducing poverty in africa – the chinese way. (2009). Chinafrica, Retrieved from http://www.chinafrica.asia/reducing-poverty-in-africa-the-chinese-way/     Ritschl, A. (2010, February 5). The marshall plan, 1948-1951. Retrieved from http://eh.net/encyclopedia/article/Ritschl.Marshall.Plan Schiere, R. (2013, September 09). China and regional integration as drivers of structural transformation in africa. SAFPI. Retrieved from http://www.safpi.org/news/article/2013/china-and-regional-integration-drivers- structural-transformation-africa Schwarz, G., & Yellin, J. (2013, July 02). Obama in tanzania, sees africa as next global economic success. CNN. Retrieved from http://edition.cnn.com/2013/07/01/world/africa/tanzania-obama/ Shah, A. (2013, March 24). Structural adjustment—a major cause of poverty. Retrieved from http://www.globalissues.org/article/3/structural-adjustment-a-major- cause-of-poverty Sharma, R. (2009, December 08). Nigeria says chinese companies eye $50b of oil reserves. Rigzone. Retrieved from http://www.rigzone.com/news/article.asp? Sharpe, B. (2013). Isoko: Promoting private enterprise in africa . Retrieved from http://isoko-institute.org Starr, J. (1997). Understanding china: A guide to china's economy, history, and political structure. New York, NY: Hill and Wang Publishing.
88 Sulaiman, T. (2012, July 06). Foreign direct investment into africa to double by 2014: Un. Reuters. Retrieved from http://www.reuters.com/article/2012/07/06/ozatp-africa- investment-idAFJOE86501J20120706 Takhal, A. (2013, April 10). China vs america : Which way for africa?. The African Executive. Retrieved from http://www.worldaffairsjournal.org/blog/gordon-g- chang/america-versus-china-africa The failed states index 2013. (2013). Retrieved from http://ffp.statesindex.org/rankings-2013-sortable The whirled bank group: Structural adjustment program. (2003). Retrieved from http://www.whirledbank.org/development/sap.html The World Bank: Social development. (2008, September). Retrieved from http://web.worldbank.org/WBSITE/EXTERNAL/COUNTRIES/MENAEXT/0,,contentMD K:20529511~pagePK:146736~piPK:226340~theSitePK:256299,00.html Traditional partners remain key and keep growing. (2013, June 09). African Economic Outlook. Retrieved from http://www.africaneconomicoutlook.org/en/in-depth/emerging- partners/africa-pushes-aside-post-colonialism/traditional-partners-remain-key-and- keep-growing/ Tran, M. (2012, November 28). 2012 'a lost year' for aid effectiveness reform in europe. The Guardian. Retrieved from http://www.theguardian.com/global- development/2012/nov/28/aid-effectiveness-reform-europe-aidwatch Untangling china's aid to Africa. (2013, September 17). SAFPI. Retrieved from http://www.safpi.org/news/article/2013/untangling-chinas-aid-africa Van Auken, B. (2013, June 28). Obama in africa to defend us strategic and profit interests. Retrieved from https://www.wsws.org/en/articles/2013/06/28/afri-j28.html Van de Walle, N. (2009). Us policy towards africa: The bush legacy and the obama administration. African Affairs , Retrieved from http://afraf.oxfordjournals.org/content/early/2009/11/04/afraf.adp065.abstract Wekesa, B. (2012, February` 10). Why china’s engagement with Africa is on the rise. Standard Digital News--Kenya. Retrieved from http://www.standardmedia.co.ke/? Wong, R. B. (1997). China transformed: Historical change and the limits of European experience. Ithaca, NY: Cornell University Press. Xinhua. (2013, June 08). China to build new university hospital in Tunisia. China Daily. Retrieved from http://africa.chinadaily.com.cn/world/2013- 06/08/content_16594052.htm
89 Zhenxing, L. (2013, May). Perspectives on china-africa oil ties. A trilateral dialogue on the united states, africa and china. Retrieved from http://www.brookings.edu/~/media/Research/Files/Reports/2013/08/us africa china trilateral dialogue/All China Oil Papers.pdf Zoumara, B. (2013, March 6). China in Africa: ‘imperial power’ or ‘altruist’?. Pambazuka News: Pan-African Voices for Freedom and Justice. Retrieved from http://www.pambazuka.org/en/category/features/86485 Image Sources Figure 1.1: (2013). Chinese, Dragon, Statue [Web Photo]. Retrieved from http://www.globe- walls.com/wallpaper/chinese-dragon-statue.html Figure 1.2: Created using Microsoft Word graphic software. Figure 2.1: (2010). Colonialism 1914 [Web Graphic]. Retrieved from https://exploringafrica.matrix.msu.edu/students/curriculum/m9/activity4.php Figure 2.2: (2010). SAP and Debt [Web Photo}. Retrieved from http://professornerdster.com/synopsis-of- race-against-time-part-ii-3/ Figure 3.1: (2013, July 08). Aid For Trade [Web Graphic]. Retrieved from http://europa.eu/rapid/press- release_MEMO-13-649_en.htm Figure 3.2: (2013, July 08). Aid For Trade By Region [Web Graphic]. Retrieved from http://europa.eu/rapid/press-release_MEMO-13-649_en.htm Figure 4.1: Brautigam, D. (Designer). (2009). China's system of aid and economic cooperation [Print Photo].
90 Figure 4.2: Brautigam, D. (Designer). (2009). China’s Aid Agreements in Sub-Saharan Africa [Print Photo]. Figure 4.3: (2012, August 15). Chinese Investment Offers in Africa Since 2010 [Web Photo]. Retrieved from http://www.stratfor.com/image/chinese-investment-offers-africa Figure 4.4: (2014). Foreign Direct Investments (FDI) to Emerging Markets Doubles Over Past Decade [Web Photo]. Retrieved from http://www.weareallglobal.com/change/ Figure 4.5: (2011). China's total OFDI flow to Africa has risen dramatically since 2003, with investments well diversified across a number of sectors [Web Graphic]. Retrieved from http://www.britishchamber.cn/content/african-tiger-africa’s-evolving-investment-landscape Figure 4.6: (2014). African FDI inflows 1995-2008 [Web Graphic]. Retrieved from http://dx.doi.org/10.1787/888932403610 Figure 4.7: (2013, June ). Outward stocks of FDI, EU-27, end 2011 [Web Graphic]. Retrieved from http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Foreign_direct_investment_stat istics Figure 4.8: (2012, May 17). Chinese Investments in Energy and Minerals [Web Graphic]. Retrieved from http://www.divergingmarkets.com/2012/05/17/how-to-think-about-china-africa-trade/ Figure 5.1: Zhao, S. (Designer). (2011, May 03). National oil companies – Arms of the state or independent entities? [Print Photo]. Retrieved from http://www.china- briefing.com/news/2011/05/03/chinas-energy-strategy-and-the-role-of-govt-oil-in-africa.html
91 Figure 5.2: Zhao, S. (Designer). (2011, May 03). China's Main National Oil Companies [Web Graphic]. Retrieved from http://www.china-briefing.com/news/2011/05/03/chinas-energy-strategy-and- the-role-of-govt-oil-in-africa.html

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Thesis Final!

  • 1.
    (Figure 1.1) (2013). Chinese,Dragon, Statue [Web Photo]. Retrieved from http://www.globe- walls.com/wallpaper/chinese-dragon-statue.html THE RISING DRAGON CHINESE VERSUS WESTERN AID AND FOREIGN DIRECT INVESTMENT IN AFRICA: SEEKING A PARTNER IN DEVELOPMENT Written By: Sara Boucher February 2014
  • 2.
    1 The Rising Dragon ChineseVersus Western Aid and Foreign Direct Investment in Africa: Seeking a Partner in Development By Sara Boucher Abstract: This paper is based on a research undertaking to understand China’s presence in Africa and how this relates to Western relations with the continent. The research attempts to determine which option, Europe/US or the Chinese, may be the most suitable partner in development for Africa, as well as discuss what can be done to maximize the benefits, and mitigate the negative aspects of that relationship. A comparative analysis approach is used to judge the viability of each partner, and each is assessed according to a set of criteria, including the following: 1. Equitable and Respectful Relations 2. Maintenance of Sovereignty 3. Ability and Willingness to Finance Sustainable Development in Africa 4. Shared Experience and Understanding 5. Historical Element Drawing on the collected research presented in this document, the major finding is that the Chinese have a fundamentally different approach to aid and investment, and harbor conceptually distinctive ideas regarding development than the West. Based on the outcome of the comparative study against the above criteria, it is suggested that Africa may benefit from selecting China as a partner in achieving its own sustainable development, and suggestions are offered to effectively leverage this partnership.
  • 3.
    2 Acknowledgement I would liketo express my deep gratitude to Dr. Lisa Aubrey, my thesis director, and Dr. Wei Li, my 2nd reader, for their patient guidance, enthusiastic encouragement, and invaluable critiques of this research work. I would also like to thank Mr. Ken Holin, my Barrett Honors Advisor, for his help and guidance throughout the research process. My grateful thanks are also extended to Barrett, The Honors College at ASU for their gracious funding of my research undertaking. Finally, I wish to thank my parents for their support and encouragement throughout my study.
  • 4.
    3 Introduction: Seeking aDevelopment Partner for Africa Since colonization came to an end in the early 1950s, Africa has struggled to develop. Under the watchful eye of the Western world, African countries have implemented hundreds of policies and accepted billions in aid, all with the end goal of social, political, and economic development. However, after all the loans and policy changes and economic initiatives, many African states have little, if anything to show for it in terms of development. According to the National Bureau of Economic Research, “one half of the African continent now lives below the poverty line. In 1970, one in ten poor citizens in the world lived in Africa; by 2000, the number was closer to one in two”. In sub-Saharan Africa, “per capita GDP is now less than it was in 1974, having declined over 11 percent” (Picker, 2004). While there are certainly some success stories to be found, Africa as a whole has suffered from a chronic cycle of underdevelopment, a process by which attempts to better life conditions are not only stifled, but also pushed backwards. The dismal economic, political, and social realities of many African countries have caused much of the world to lose hope for Africa, questioning whether sustainable, positive development is even possible. Fund For Peace’s publishes an annual Failed States Index, which separates every country into four major designations, ‘Alert’, ‘Warning’, ‘Stable’, and ‘Sustainable’ and ranks them within each category based on economic, social, and political factors. Unsurprisingly, the Global South, which includes Africa, falls into either the ‘Alert’ or ‘Warning’ category, while the Global North consistently places into either ‘Stable’ or ‘Sustainable’. It is alarming though, that the top ten worst states are almost exclusively African nations, and that not a single country on the continent is in the ‘Stable’ category ("The failed states," 2013). Given Africa’s track record in regards to development, it is easy to adopt a pessimistic outlook. The Economist published an article designating Africa as ‘The Failed
  • 5.
    4 Continent’. While obviouslycontroversial, the piece mirrored the sentiments of many. But perhaps this assessment of ‘failure’ lacks perspective. As Claude Ake argues in Democracy and Development in Africa, development has not had the chance to fail, as it has “never been on the agenda in the first place” (Ake,1996, p. 40). It is no secret that Africa has long struggled with securing true independence from its former colonizers, and the issue of there being ‘no Africans at the table’ persists when discussing development. Historically, the West has exclusively dictated the development agenda, with Europe and the U.S. single-handedly shaping economic and political development policies, servicing loans to Third World countries, and deciding on loan terms and disbursement conditions. It is true, by almost any measure that Africa has failed to develop. But this may largely be due to the fact that up until very recently African voices have been left out of the conversation. This ensures that economic, political, and social development is never realized. Africa doesn’t need a development dictator. It needs a development partner, and for the first time since the Cold War period, there is more than one contender for this position. While the IMF and World Bank were drafting loan contracts from air-conditioned boardrooms in the North, a new foreign donor was knocking at Africa’s door. China, building from its own development success story, approached the continent offering a new path to development. Over the next several decades, China would commit over $160 billion in aid to Africa, quickly climbing the ladder to become one of the largest foreign aid donors. Thus began the rivalry between the West and the Far East. China’s aid is based on “mutual benefit” and takes the form of grants and non- conditional, resource-backed loans to finance African development. The Chinese stress “respect for the sovereignty of the host country” and do not involve themselves in the political matters of the nations to which they offer aid (Brautigam, 2009, p. 17). The West by
  • 6.
    5 comparison is muchmore hands-on with their aid offerings, providing concessional loans with attached conditions and plans for achieving development targets. Western aid institutions are also involved in the political development of the countries they work with, and urge developing nations to liberalize, pluralize and privatize. There are certainly critics on both sides of the aid debate, but the fact remains that these two donors are fundamentally different in their aid motivations and ideologies. Africa is now faced with an alternative option to classic Western aid models, and nations have the opportunity to decide which path is more favorable for their development. This particular research undertaking will attempt to determine which option, the West or the Chinese, may be the most suitable partner in development for Africa, as well as discuss what can be done to maximize the benefits, and mitigate the negative aspects of that relationship. A comparative analysis approach will be used, and each perspective partner will be assessed according to a set of criteria to be discussed in the first section to follow. This analysis will be organized into the following sections: Section 1: Stakeholders, Definitions, and Theoretical Framework Before the positives and negatives of the China-Africa or Western-Africa can be assessed, it is essential to establish the key stakeholders involved in the aforementioned relationships, define some of the concepts which will be discussed, and go through the relevant theoretical framework to understand what criteria are important when attempting to choose a ‘partner in development’.
  • 7.
    6 Section 2: HistoricalPerspectives and Ideologies It is crucial to gain an understanding of Africa’s historical experience, and how both the West and China have interacted with the continent over the years. Also included in this section is a brief development history of Europe, The US, and China and an overview of Western and Chinese development ideologies. Section 3: Western Development Policies, Projects, and Perceptions This section will look at modern Western aid and development policies and their impact in Africa. General public perceptions will also be discussed in relation to the West in Africa. Section 4: Chinese Development Policies and Projects This section will look at modern Chinese aid and development policies and their impact in Africa. General public perceptions will also be discussed in relation to the Chinese in Africa. Section 5: FDI Facts and Figures It is helpful to get a quantitative perspective on each side’s involvement in Africa with regards to foreign direct investment. This section will cover financial contributions of the US, Europe, and China and discuss which sectors are most active for foreign direct investment (FDI). Section 6: Private Actors in Africa Often, when comparing China versus the West, private industry is forgotten. However, private actors, while regulated by their respective domestic governments are not one in the same, so it helpful to separate the two. This section will provide an overview of some major private actors from each side, and discuss their involvement and impact in Africa.
  • 8.
    7 Section 7: Selectingand Managing a Partnership in Development In the final section, an ideal partner in development for Africa will be proposed, with a recap of the strengths and weaknesses of the previously reviewed partners. The importance of managing relations will be discussed, as well as ideas to maximize the positive aspects and minimize the negative aspects of such a relationship.
  • 9.
    8 Section 1: Stakeholders,Definitions, and Theoretical Framework In order to effectively develop an analytical consensus on an ideal development partner for Africa, it is crucial to discuss the criteria on which these conclusions will be drawn from, as well as identify the key related stakeholders and define the blanket terms involved. This section will essentially frame the research and build the foundation for the following comparative analysis between China and the West. Stakeholders Stakeholder #1: Africa Africa is often thought of as a ‘recipient’ of aid or the ‘host’ of foreign direct investment from the international community, but every relationship is active for both parties. That is the assumption made here, that Africa is not passively accepting aid or FDI, but is actively involved in this exchange. For the purposes of this analysis, ‘Africa’ will often be referred to as the collection of nations included on the continent. This is by no means an attempt to suggest that all African countries are the same, but is rather used for simplicity’s sake as a way to make some broad comparisons between Chinese and US-EU aid and investment, and its impact on Africa as a collective. Viewing the situation from a wider lens affords the clearest general perspective when evaluating development partners.
  • 10.
    9 Stakeholder #2: TheUS Still a major player in aid and FDI in Africa, the US together with Europe has shaped aid policy, created multilateral institutions like the International Monetary Fund (IMF) and The World Bank (WB), and dictated development strategy for decades. Dollar-wise, the US typically gives the most in aid annually, numbering in the billions. However, that amount has fluctuated significantly over the years depending on relevant events, for example the US gave more aid during the Cold War period as it competed with the USSR. The fact remains that the US has amassed a huge influence in the foreign aid game, although there are now more countries competing for Africa’s attention. Stakeholder #3: The EU Europe has the longest history with Africa. As the colonizers of the continent, European powers have been heavily involved with Africa for centuries, and this trend continues into the modern day. The constitutions, governmental structure, and official languages of many African nations are closely based on their former colonizers. In this study, Europe will be taken in its collective, and will be dealt with in regards to the EU, its main multi-country institution. While the US surpasses foreign aid to Africa in terms or total dollars, when measured in the total percentage of the Gross National Index (%GNI), the EU consistently ranks above the US. It goes without saying that Europe has historically been the main player in Africa, and this is largely still true today.
  • 11.
    10 Stakeholder #4: China Chinahas emerged as a major world economic power, and a major influence in Africa. While the media has just recently turned its attention to Chinese foreign aid an investment in Africa, China has been significantly involved with the continent since the 1950s, providing aid, development projects, and concessional loans to African countries. Many sources have attempted to make estimates on how much China actually given in aid to Africa annually, and media reports often release huge numbers in the tens of billions per year. However, due to the fact that China operates on a much stricter governmental structure than its Western counterparts, the truth is that organizations and media channels making claims regarding the amount of aid given are operating largely on assumption. China does not release the figures of how much aid it gives to Africa, so care must be taken not to make comparisons based on assumption. This study will use some general estimated figures gathered from a variety of sources to begin to look at what China has been doing in Africa, however since these numbers will only ever be estimates, no apples-to-apples comparisons will be made in quantitative terms as a factor in selecting an ideal development partner. Definitions Foreign Aid: Defining “aid” is a most essential starting place in comparing foreign donors in Africa. Aid can be broadly though of as “funding given from governments to promote economic and social development in less-advantaged countries” (Brautigam, 2009, p. 13). However, this simple definition is not complete to understand aid in this context, as it leaves out the “how”. Aid can come in many forms, each with its own benefits and consequences. This research will focus on systematic aid, which includes aid payments made directly to governments either through government-to-government transfers (bilateral aid) or transferred through institutions
  • 12.
    11 like the WorldBank or IMF (multilateral aid). This type of aid can be broken down further into two basic forms, grants and loans. Grants are funds given to countries that do not have to be paid back, although this type of aid is usually less common and makes up a smaller percentage of the overall aid offerings. Loans are the most common type of aid, and may be structured in the traditional manner with interest paid and over a set term, or may be instead resource-backed as is common with Chinese loans. Resource-backed loans use a resource, such as coal or oil as the method of repayment for the loan. Foreign Direct Investment: FDI was defined by the United Nations Conference on Trade and Development as “an investment made to acquire a lasting interest in an enterprise operating outside the economy of the investor” (Moyo, 2009, p. 98). Through FDI, Africa can leverage its resources to gain investment and promote economic development. Private Actors: Refers to private industry and its interactions abroad. There are private actors from both the West and China operating in Africa in huge numbers, and they are often viewed as a direct extension of their domestic government. While it is true that their respective domestic governments may place some regulatory guidelines on their operation in Africa, private actors are not their governments and should not be discussed as such. In this study, private actors and their actions in Africa will be clearly separated from their governments and their impact compared as a stand-alone occurrence, rather than an integrated portion of governmental foreign involvement. The ‘West’: A historical term taken to mean the industrialized, developed nations of Europe and the US (mainly used during the cold war period) The Global North: The developed nations of the world, which are economically, socially, and politically more developed
  • 13.
    12 Development: The social,economic, and political betterment of a country. Theoretical Framework: The Path to Development for Africa What Does Development Look Like? Before determining criteria of an ideal partner in development for Africa, it is essential to expand the definition of development, and gain an understanding of what development would look like in Africa. Development can be discussed as incorporating three major components— economic development, political development, and social development. Each piece is important, and real sustainable development will focus on each of these categories. Let’s take a look at each piece a bit more closely: Economic Development: Economic development is the first piece of the development puzzle, and many would argue the most important. It is first important to establish the difference between economic growth and economic development. Economic growth is often confused for economic development, but just because a country may be experiencing economic growth does not mean that it is also experiencing economic development. Economic growth is a quantitative concept which can be defined as “an increase in a country's real level of national output which can be caused by an increase in the quality of resources, an increase in the quantity of resources, or an increase in the value of goods and services produced by every sector of the economy” ("Economic development vs," 2000). Economic Growth can be measured by an increase in a country's Gross Domestic Product (GDP). While economic growth is a necessary condition of economic development, it is a better measure for
  • 14.
    13 the economic statusof developed countries than it is for developing countries. Economic growth has a much narrower scope than economic development, but is still a useful measure to see the quantitative changes in a country’s economy over time. Economic development on the other hand is a normative concept, defined by American economist and development pioneer Michael Todaro as “an increase in living standards, improvement in self-esteem needs and freedom from oppression as well as a greater choice”. Economic development implies changes in “income, savings and investment along with progressive changes in socio-economic structure of country”. Economic development is much wider in scope, and looks at not only quantitative, but also qualitative changes in the economies of developing countries. It is most often measured with the Human Development Index (HDI), which takes into account relevant factors like the literacy rate and life expectancy, which affect productivity. Economic development also looks at the “creation of more opportunities in the sectors of education, healthcare, employment and the conservation of the environment”("Economic development vs," 2000). Taken as a whole, economic development contributes significantly to the growth of human capital indexes, a decrease in inequality figures, and structural changes that improve the general population's quality of life. Political Development: A formal definition of political development is less unanimous among scholars than economic development, including the meaning, content, and nature of the concept. However, the term is closely tied with institution-building, that is developing the governmental and regulatory structures in which politic inhabit. There is a tendency when discussing political development to slip into an ethnocentric bias, where “political development is identified with political modernization and modernization is taken to mean westernization by most scholars” (Pye, 2012). However, this is a pitfall when thinking about building effective and sustainable political
  • 15.
    14 structures in developingcountries, especially in Africa. The cultural and ethnic realities in Africa may not make Western models the most viable, and instead countries should strive to develop a political structure that takes these all-important ethnic and cultural components into consideration. Another crucial distinction to make is that political and governmental stability is not so much a direct driver of overall development as it is a foundation for said development. There are numerous countries that have experienced rapid economic growth, and even development, but due to unstable political structures and resulting violence this development was unsustainable, and in many cases pushed backwards. So an essential feature of political development must be sustainability and long-term effectiveness. With regards to the components of political development, Lucian W. Pye, one of the experts on political development identified three levels where political development could be observed, including: Equality: which signifies mass participation, universal laws, and recruitment on the basis of merit. Capacity: which signifies governmental performance, efficiency and effectiveness, and secular orientation Differentiation: which signifies diffusion and specialization of structures, division of labor, and specialization based on integration (Pye, 2012). Each of the three levels of political development contributes to the system’s overall ability to provide the sustainable component, which acts to safeguard and promote both economic and social development.
  • 16.
    15 Social Development: The WorldBank has defined social development as “promoting the inclusion of poor, vulnerable and excluded groups, strengthening social cohesion and the capacity for collective action towards development, and enhancing the capacities of citizens and civic groups to hold accountable the institutions that serve them” ("The world bank:," 2008). The end goal here is to increase and promote the human capital of the country, so that all people have an opportunity to be involved in the development of the country and experience the benefits of that development. Social development has many indicators, like the education quality of the country, average schooling length, literacy rate, healthcare quality, etc. This type of development is often seen as an afterthought, with economic development being more important, but social development is an integral piece of successful development overall. Social development, or the increase of human capital leads to increases in productivity, leading to economic growth and bolstering economic development. Other Types of Development: While this study will focus on economic, political, and social development as it relates to Africa, those are not the sole three development categories. Both sustainability and human resource development play a part in overall development, and it should be noted that these areas are important as well. Sustainability supports the gains in economic, social, and political development by creating a structure that will stand the test of time, and in the case of economic development it is crucial to keep a sustainable mindset with regards to natural resources and how development projects are affecting the environment. Sustainability has been a focus traditionally in Africa, and it remains the ideal in regards to development. Human resource development serves a foundational purpose, and works on improving and increasing
  • 17.
    16 human capital througheducation and skills acquisition, something that supports the overall goal of development (Anshan, 2011). Conclusion: Development is not a linear process, and is very much an all-encompassing and multi-faceted phenomenon. It is important to remember that separately, economic, political, and social development will not lead to long-term, sustainable development for countries. Each piece is equally necessary to achieve this goal. In this way, it is helpful to think of development in terms of a pyramid. Social and political development occupies the bottom or foundational pieces of the structure, and work to support and promote economic development. Neglect either of the foundational components, and the whole pyramid crumbles, as is such with real-life development. Figure 1.2: The Components of Development DevelopmentSocial Economic Political Sustainability Human Resource
  • 18.
    17 Selecting a Partnerin Development: Key Criteria Now that we have discussed the components of development, let’s shift the focus now to determining what criterion will be considered when choosing a development partner for Africa. Characteristics of an Ideal Development Partner: 1. Equitable and Respectful Relations The definition of a partnership is an arrangement in which two parties agree to cooperate to advance their mutual interests. Therefore, a desirable partner in development needs to contribute to a mutually beneficial, equitable relationship in which both parties treat each other with respect. The keystone of this relationship should be cooperative and innovative problem- solving, which both parties participating equally and on the same plane. 2. Maintenance of Sovereignty African nations are just that—nations. They are independent, sovereign countries and a proper development partner must recognize and respect this fact. Certainly both parties can learn from one another, but in the end African countries should have the final say of what is best for them and their people. 3. Ability and Willingness to Finance Sustainable Development in Africa The point of seeking a partner in development is to cooperate to bring about positive, sustainable development. Africa has rich natural resources and vast human capital. What it lacks is the proper financing to build infrastructure and harness those resources, and that is where a partnership can make a difference. But it is important to clarify that ‘financing’ is not enough. In order for development to be sustainable, Africa has to be able to repay the financing it secures. A suitable partner will understand this, and work with African countries to
  • 19.
    18 come up witha feasible method of financing that will ensure ability to repay on the loans, adding an element of confidence for both parties. 4. Shared Experience and Understanding Often the most successful relationships involve parties with common values, motivations, goals, and perspectives. The more parallels that exist in these areas, the easier it is for the parties to see ‘eye-to-eye’ in negotiations, and the easier the overall relationship functions. Shared experience is crucial because it allows open and honest communication, as neither party feels as though they are inferior to the other. Shared experience is great because there are numerous opportunities for parties to learn from one another. 5. Historical Element It has been said that the past is often the best predictor of the future. This translates to relations as well. While it is true that all relationships have their issues at times, the best development partner will have had a overall positive relationship with Africa in the past, and this will lend itself to a partnership will less tension and more cooperation. Criteria and Comparisons: The above characteristics will function as the criteria for comparing between the West and China when attempting to choose a partner in development for Africa. Rather than imposing a point system and assigning a weight to each category, a more comprehensive approach will be utilized. The ideal development partner will be the contender who most closely matches the characteristics important for such a partnership, which again are: 1. Equitable and Respectful Relations 2. Maintenance of Sovereignty
  • 20.
    19 3. Ability andWillingness to Finance Sustainable Development in Africa 4. Shared Experience and Understanding 5. Historical Element The following sections will provide an overview of each candidate’s history, ideologies, perspectives, policies, and current actions in Africa. This information will then be compared against the criteria to propose the most suitable partner in development for Africa. Method: The social science methodology is grounded in an analytical approach, and contains a strong observatory component. Most social science literature attempts to understand the underlying causes of an issue and observes its effect on people, places, and things, but often makes no attempt to propose solutions to the issues it focuses on. There are certainly benefits to this method of viewing social problems and phenomenon. It prevents the research from being biased, and adds creditability to the findings. However, in a practical sense, it also does nothing to solve the problems it studies. This can be understood as a ‘positivist’ approach. There is also a more modern ‘post-positivist’ approach that amends the positivist strategy by beginning to think about the effects or, rather than just the cause of various social science issues. While positivists believe that “the researcher and the researched person are independent of each other, post-positivists accept that theories, background, knowledge and values of the researcher can influence what is observed. However, like positivists, post- positivists pursue objectivity by recognizing the possible effects of biases” (Postpositivism, 2014). Even this approach, while it does attempt to address possible solutions, falls short in many respects of creating actionable solutions or imagining how these proposed solutions might function in real time.
  • 21.
    20 In contrast, informed,action-based problem solving is a cornerstone of business strategy. It rests at the very core of private enterprise in a capitalist system. This is perhaps where business practices can lend a hand to social science methodology. With this research I hope to apply crucial business practices such as sensitivity to efficiency, total cost analysis, and strategic implementation to a social science-focused topic. In this way, a blend of fundamental business strategy and social science analysis can be achieved. I believe that this method is truly the most effective when discussing Africa’s development. Simply understanding and analyzing the problems are not enough. It is crucial to start a dialogue about how we can solve the problems that exist in the most efficient, cost-effective, and sustainable way.
  • 22.
    21 Section 2: HistoricalPerspectives and Ideologies Africa has had a vast and varied history, colored with colonialism and shaped by not only the people that have called this continent home, but also foreigners who have interacted with it. It is crucial to gain an understanding of Africa’s historical experience, and how both the West and China have related with the continent and its people over the years. The development histories of Europe, The US, and China will also be discussed, as well as an overview of Western and Chinese development ideologies. The African Historical Experience: Western Influence and Development Ideologies Most of the scientific research available today designates Africa as the birthplace of humanity. From the Nile Valley to the kingdoms of West Africa, societies developed and became hubs of trade, education, innovation, and culture. Africans were segmented into many complex tribes and communities that were technologically, politically, and socially advanced. Many African societies with hierarchical government structures traditionally kept slaves, but they were part of the social structure in a much different context. Slaves “were an indication of power and wealth and not used for commercial gain” ("BBC: The story," 2013). However, with the arrival of Europeans, the nature of African slave ownership changed forever. Western countries have had a long and dark history in Africa. Beginning in the 1870’s, “Africa faced European imperialist aggression, diplomatic pressures, military invasions, and eventual conquest and colonization” (Iweriebor, 2011). Europe was engaged in a mass Industrial Revolution, and desperately needed the raw materials and resources that African countries were rich in. The ‘Scramble for Africa’ culminated with the Berlin Conference of 1884, when the “Magnificent African Cake” was divided among the European powers, and thus
  • 23.
    22 began “100 yearsof greed, plunder, and terror” (Hochschild, 1998, p. 108). They laid the groundwork for colonization and drew lines on maps with no regard for ethnic patterns. Figure 2.1: Colonial Africa and Territory Division (2010). Colonialism 1914 [Web Graphic]. Retrieved from https://exploringafrica.matrix.msu.edu/students/curriculum/m9/activity4.php During this time, the continent was ransacked and resources were exploited using slave labor. By the 1900s, most of Africa had been claimed by “by seven European powers—Britain, France, Germany, Belgium, Spain, Portugal, and Italy” (Iweriebor, 2011). They set up colonial administrative systems to organize the indigenous people into societies and “facilitate control and economic exploitation” (Iweriebor, 2011). In essence, the colonial era left in its wake massive destruction and cultural erosion that persists today, and Europe was central to these
  • 24.
    23 events. The UnitedStates, while not a colonizing nation, played an integral role in the Transatlantic slave trade. This was a phenomenon in which “at least 12 million Africans were forcibly removed from the continent” ("BBC: The story," 2013). While the U.S. did not claim colonies, it was the first country to “recognize the sovereignty of the Belgian king Leopold II over the Congo, and it sent observers to the 1884–1885 Berlin Conference, where it acquiesced in the partition of Africa” ("BBC: The story," 2013). While the 19th century was the age of imperialism in the third world, the 20th century marked the age of nationalism and independence. WWII had weakened Europe, both militarily and monetarily. The rebels of several territories fought back against their colonizing nations, reclaimed their land, and established new independent nations. Nationalism itself was a movement toward the resistance of outside rule, pride in one’s identity, and the desire for political self-determination (Isbister, 2006, p. 97). By the end of the 20th century, the majority of the Third World had achieved independence from their former colonizing powers. In this respect, the Nationalism Movement was successful. As emerging African nations attempted to set up state institutions and spur economic development, Europe lay in shambles after the war. At the Bretton Woods meeting in 1944, representatives “from some forty-four countries resolved to establish a framework for a global system of financial and monetary management” (Moyo, 2009, p. 11). A massive injection of American funds through The Marshall Plan provided capital for “rebuilding the factories” (Isbister, 2006, p.32). Comprised of mostly grants, the Marshall Plan “sparked economic recovery” and bounced Europe back from complete economic ruin (Foner, 1991). Due to this plan’s overwhelming success, the West adopted it as the new model for developmental aid for the Third World, believing that the Global South, like Europe, “simply needed to construct
  • 25.
    24 capital goods—factories andmachines—and their problems would be solved” (Isbister, 2006, p. 74). The West’s aid strategies and ideologies are deeply rooted in the Marshall Plan, and even though it is a very poor model for development in the Third World, they cling to its success. Unfortunately, the plan’s premise is not one that translates well to Africa. With the Marshall Plan, the money was “going into already existing physical, legal and social infrastructures which simply needed fixing” (Moyo, 2009, p. 36). At the point when aid started flowing to Africa, there were hardly any formal, functioning institutions to speak of, and the State was weak in those nations that did have systems in place. Another important distinction was that The Marshall Plan was a deliberately large cash flow (over $100 billion in today’s dollars) to rebuild and stimulate European economies (Ritschl, 2008). When this development model was exported to Africa, the money was not there in the same force, “governments of the rich countries sent foreign aid to the poor, but on the whole, they have not been generous. The United States and Britain…have reduced their commitment to aid, expressed as a percentage of GDP” (Isbister, 2006, p. 56). That said, many of the West’s theories on aid over the decades have stemmed from this plan, including structural adjustment, the neo-liberalism framework, and the promotion of democracy as a partner to development. Structural Adjustment Policies (SAPs) are economic initiatives that countries have to follow to be eligible for loans from the World Bank and IMF, and started in the 1980s. Although SAPs are supposedly designed for individual countries, they have many commonalities including “export-led growth, privatization and liberalization, and the efficiency of the free market”. SAPs generally require countries to “devalue their currencies against the dollar, lift import and export restrictions, balance their budgets and not overspend, and remove price controls and state subsidies” ("The whirled bank," 2003).
  • 26.
    25 Devaluation essentially makesthe country’s products cheaper for foreigners to purchase, but at the same time it makes foreign imports more expensive. In theory, this measure should discourage the country from buying foreign products or equipment, but since the IMF gives the country in question their loan in foreign currency, it actually incentivizes import purchasing. Figure 2.2: Debt Increase Relative to Years Implementing Structural Adjustment Programs (2010). SAP and Debt [Web Photo}. Retrieved from http://professornerdster.com/synopsis-of-race- against-time-part-ii-3/
  • 27.
    26 Another goal ofSAPs is to balance the budget, and cut down on the country’s deficit. There are two main ways of accomplishing this, increasing taxes or cutting government programs and spending. The IMF pushes cutting spending, and this results in “deep cuts to programs like education, health and social care, and the removal of subsidies designed to control the price of basics such as food and milk…so SAPs hurt the poor most, because they depend heavily on these services and subsidies” ("The whirled bank," 2003). SAPs also encourage countries to ramp up production and export of primary commodities like cocoa or raw materials to increase foreign exchange. However, since these commodities are pegged to the volatility of the global marketplace, they often fluctuate and decrease in price unpredictably. So by “devaluing the currency and simultaneously removing price controls, the immediate effect of a SAP is generally to hike prices up three or four times, increasing poverty to such an extent that riots are a frequent result” ("The whirled bank," 2003). In fact, the name "Structural Adjustment Program" has garnered such criticism and negative associations that the World Bank and IMF have since launched a new initiative, “the Poverty Reduction Strategy Initiative, and makes countries develop Poverty Reduction Strategy Papers (PRSP)” ("The whirled bank," 2003). However, this is just clever marketing because a change in name does not equate to a change in policies, and countries are still being forced to adopt the measures of the SAPs under the new guise of The Poverty Reduction Strategy Initiative. Another major development ideology of Western countries has been the Neo-liberalism framework. This is based on the tenants of ‘pluralize, liberalize, privatize’ and pushes countries to develop multi-party political systems, dramatically liberalize their economies and trade, and privatize state-owned industries. Essentially, neo-liberalist theory argues that, “the fundamental factor responsible for the economic crisis in Africa is the excessive state regulation of the economies of African countries, which among other things distorts the process of economic
  • 28.
    27 development and leadsto inefficiency in the allocation of resources” (Che, 2005). The effects of implementing measures in line with neo-liberalist goals have been “African countries and peoples with an apocalyptic situation in terms of the indices of the quality of life, from falling longevity, collapse of wages, and increasing illiteracy” (Shah, 2013). The question becomes then, why haven’t any of the West’s development initiatives and ideologies been successful in actually developing the Third World, especially Africa? There are hundreds of convincing and plausible answers to this question. Some would argue that the Global North has no desire to see Africa develop. This accusation may or may not be true, but let’s put aside intention for a moment. Perhaps the reason the West’s policies have not worked in Africa is simply because their development story is too different to provide a suitable model to copy from and implement. Europe’s development was largely made possible by taking from abroad, especially from Africa. While it is often a detail overlooked when discussing development, the fact remains that “of all the continents in the world, Europe is the most resourceless. There was some coal, yes; but not much else. Therefore, almost everything that Europe needed, and still needs, to develop and survive, had to come from abroad” (Boateng, 2005). This explains the colonial mindset, and the thousands of Europeans who “went out into the world to acquire land, resources and wealth which were in turn shipped back to develop Europe, and by extension the USA” (Boateng, 2005). And many of these riches came directly from Africa. As Professor Ali Mazrui said, “The labor of Africa’s sons and daughters was what the West needed for its industrial takeoff. The slave ship helped to export millions of Africans to the Americas to help in the agrarian revolution in the Americas and the industrial revolution in Europe simultaneously” (Boateng, 2005). Taking the Global North’s development history into
  • 29.
    28 account, the West’smethods cannot be replicated to the benefit of Africa, because their development was made possible through theft and forced labor. The African Historical Experience: Chinese Influence and Development Ideologies China, however, has a comparatively different development story. The Chinese first encountered the African continent during the Ming Dynasty, when a fleet of vessels “sailed to the coast of East Africa several times between 1418 and 1433” but it should be noted that “the Chinese did not colonize the lands of Africa…they took not an inch of land, not a slave, but a giraffe for the emperor to admire” (Brautigam, 2009, p. 23). Spurred on by widespread poverty and suffering, and tension between the Communists and the Nationalists, in 1949 the Maoists came to power, “after a bloody civil war between the Communist Party and the Chiang Kai- Shek lead Nationalist Party” (Berens, 2001). After the Nationalist defeat, Mao set about putting in place a radical communist regime throughout China. During this period, China had “closed doors” to the outside world in terms of trade, with leaders stressing self-reliance (Brautigam, 2009, p. 25). It wasn’t until the reformers, lead by Deng Xiaoping, took over rule that China opened its doors and began its development journey. Xiaoping urged China to experiment and develop, “but not like Mao, in a great leap…cross the river by feeling the stones” (Brautigam, 2009, p. 52). And feel the stones they did. Change was slow to come as “they had to persuade a nation that had barely survived the radicalism of the Maoists to embark on a new transition” (Brautigam, 2009, p.51). China learned some very important lessons concerning both foreign aid and development as it improved its own economic footing in the world. In the early 1970s, “China was primarily an agrarian economy with immense reserves of natural resources—oil, coal, gold, copper—similar in structure to many African countries today” (Brautigam, 2009, p. 46). Before the Cultural Revolution, the nation had been obsessed with self-reliance, but soon figured out that partnerships were the key to success.
  • 30.
    29 The first tradingpartner to stroll through China’s newly opened gates was Japan. Concerned with energy security after oil price shocks, Japan was looking to gain new suppliers, and began importing oil from China’s Daqing fields (Brautigam, 2009, p. 45). It was a partnership born of mutual benefit. Each nation needed something from the other, and both saw the benefits of cooperation and trade. The initial deal was that Japan would “finance the export of $10 billion of its modern plant, industrial technology, and materials” and China would repay the loan in oil and coal (Brautigam, 2009, p. 47). This gave Japan the access to energy it needed, and China received the equipment and training necessary to develop. This was a learning experience for the Chinese, who saw how two trading partners at different stages of development could help one another. This successful trade relationship with Japan “would later be repeated in China’s courtship of resource-rich countries in Africa” (Brautigam, 2009, p. 48). In the 1980s, China sought more Japanese investment to further draw upon the rich oil reserves, and the Japanese provided financing to build infrastructure for “power plants, railways, urban water supply, telecommunications, and highways…Japanese firms prospered, and China’s infrastructure expanded to support the demands of the growing economy” (Brautigam, 2009, p.48). It wasn’t long before Japan had competition for these energy reserves. In fact, China used its partnership with Japan to instigate an all-out bidding war to finance oil exploration and build infrastructure in what is referred to as “the scramble for China” (Brautigam, 2009, p. 49). This competition meant that China got the funds it needed to continue to develop economically at little-to-no interest, as the several countries vying for Chinese contracts attempted to out-bid each other. This strategy worked well for China, and in this way they were able to jumpstart their development. The exportation of oil was a temporary solution, but it bought them the opportunity to begin industrialization and opened the doors to new deals with other countries. While not all Chinese were better off despite the economic surge, it is estimated that approximately 400 million people were lifted out of poverty
  • 31.
    30 (Brautigam, 2009, p.50). It should be noted that income distribution gaps increased due to this development, and have continued to widen since. Economic development for China did not equate to income equality for all Chinese, however some Chinese were drastically better off and the country as a whole did make some real strides towards modernization. As China began to expand economically, it set out to develop its aid program, first in Vietnam, and then in Africa. It should be noted that this expansion into relations with African countries. In 1982, Chinese leader Zhao Ziyang went on a tour of Africa to “advance…on the path of South-South cooperation” (Brautigam, 2009, p. 53). It is on this trip that he announced the four principles that would embody a partnership with China, including “equality and mutual benefit, stress on practical results, diversity in form, and common progress” (Brautigam, 2009, p. 53). Nowhere in his speech did Zhao mention aid. He instead emphasized the cooperation that would take place to “build capacity and foster growth in China as well as in Africa” (Brautigam, 2009, p. 54). This is a very different focus than that of the West. The Chinese believe instead that aid cannot be one-sided and in this way they “avoid the paternalism that has come to characterize aid from the West” (Brautigam, 2009, p. 68). The Chinese, coming from a long history of self-reliance, encourage this trait among their partnerships in Africa. In a speech about Chinese aid in 1964, Premier Zhou Enlai stated “It is not our intention to make [Africa] dependent on us…they need to rely mainly on their own efforts…this will free them from capitalism’s sticky embrace” (Brautigam, 2009, p. 55). As the West changed economic development policies from year to year, China stuck to promoting those strategies that had produced real results for them, and “emphasized infrastructure, production, and university scholarships at a time when Western donors downplayed all of these” (Brautigam, 2009, p. 54). These values of development are present in all Chinese partnerships and projects undertaken in Africa.
  • 32.
    31 While the Westcondemned the State, China built state-owned factories in Africa. In Mali, Sudan, Tanzania, and Ghana, they had been exporting raw cotton, but “Chinese-built textile mills allowed them to produce the lengths of printed cloth favored by African women for their lapas” (Brautigam, 2009, p. 66). Tanzania and Zambia, two of China’s closest foreign friends, had long wanted a railway to connect the two countries and push copper products out through Tanzania to the sea. The project was rejected an infeasible by the World Bank. Germany, Britain, and Canada also declined. China, however, signed off on the venture and together 16,000 Chinese and African builders set the tracks and constructed the railway (Brautigam, 2009, p. 83). The Chinese have always emphasized trade over aid, and frequently make dealings with African governments for local products and resources in exchange for equipment, training, and development projects. China is a rapidly expanding economy, and they need almost everything Africa can provide including “cotton from Egypt, rubber from Sri Lanka, coffee from Ghana, copper from Zambia…Tanzania bought spare parts for Chinese projects by exporting cashew nuts…Sierra Leone exported coffee and cocoa to make some of its loan payments” (Brautigam, 2009, p. 63). This system of “interweaving trade and aid was alien to the foreign aid norms of the West” but worked well for African countries who were resource rich, but cash poor (Brautigam, 2009, p. 60). Chinese aid historically has aimed to uphold the value of equality. In their African projects, “Chinese experts jumped into the muddy rice paddies beside local farmers” and encourages African officials to “disregard fixed ideas about work they considered beneath them” (Brautigam, 2009, p. 45). While the World Bank and IMF set about recruiting chiefs to run their “integrated agricultural development projects, the Chinese asked to work only with peasant farmers” (Brautigam, 2009, p. 67). Because China has never held a ruling position over African countries, it treats them as equals in the partnership. When working on development projects, Chinese workers would “transfer their
  • 33.
    32 expertise fully andlive at the standard of local counterparts”, a practice that the West has never considered important (Brautigam, 2009, p. 68). China’s simple approach to aid is “an attractive alternative to what is seen as the endless nit-picking of the IMF and the Paris Club of creditors, which have been quibbling over terms for years” (Moyo, 2009, p. 108). China has real credibility as a nation that developed economically in a different fashion than its Western counterparts. The Chinese used mutually beneficial partnerships to pull its people out of poverty and become an economic powerhouse. China as a “model for prosperity” has gained the attention and “captured the imagination of ordinary Africans” (Brautigam, 2009, p. 33). Unlike the West, who conquered Africa “through the barrel of a gun”, China prefers to use “the muscle of money” to provide discernible benefits and infrastructure, “there are now roads where there were no roads, and jobs where there were no jobs” (Moyo, 2009, p. 110). China’s development path is a success story that is a plausible model for Africa to look to. China was once resource-rich and cash poor. They were once an undeveloped, agrarian economy. They once had widespread poverty. But through efficiently leveraging key partnerships with more developed nations they were able to drastically improve their quality of life, and rise to become the second largest economy in the world. Conclusion From a historical perspective, the West’s development story, interactions with Africa, and development ideologies are fundamentally different than that of the Chinese. Europe colonized Africa, and while that period in history is over, it is not forgotten. As former colonizers, Europe’s development agenda in Africa is questionable, and the relationship dynamic is still more like that of a ruling authority even though African nations have since
  • 34.
    33 become sovereign. TheU.S., while not a direct colonizing country has taken a development policy position mirroring that of European countries, especially in regards to the international financing institutions like the IMF and World Bank. China, from a purely historical standpoint has much more credibility as a possible development partner due to the fact that they did not colonize Africa. Add to that the Chinese development history that has many parallels with the African experience and their pragmatic approach to development and China is potentially a suitable fit as a development partner.
  • 35.
    34 Section 3: WesternDevelopment Policies, Projects, and Perceptions Having obtained a historical grasp on Western influence in Africa, let us shift the focus now to modern development policy, recent projects and initiatives, and some general perceptions of Western interactions with Africa in the modern day. Modern Western Development Policy: The United States The low point for US-Africa relations was arguably at the end of the Clinton era. Under his administration, the U.S. had failed to intervene during the Rwandan genocide, and American covered its eyes to what was happening in Africa, both physically and financially. However, the Bush administration made drastic changes to the country’s foreign policy toward the continent. During his time in office, an extensive HIV/AIDS program was implemented, and foreign aid to Africa tripled. Bush reacted strategically to 9/11 and the newfound oil insecurity in the Middle East after the terrorist attacks. The increasing necessity of African oil to the American economy “led Washington to worry about its continued flow, not least because of the perception that Africa’s oil-rich states were among the least stable and poorly governed states on the continent” (Van de Walle, 2009). Therefore, guaranteeing stability and promoting good governance incentivized the “increased diplomatic presence and foreign aid in countries like Equatorial Guinea and Nigeria, as well as occasional US navy tours to the region and increased technical cooperation to local navies” (Van de Walle, 2009).
  • 36.
    35 The Bush policyshifted focus to Africa through linking the concept of development with security, thereby increasing political support for a more robust aid strategy. In fact, during his terms, foreign aid to the region, which grew from $2.5 billion in fiscal year 2000, to $7.5 billion in 2007. In fiscal year 2008, five sub-Saharan African states were among the 15 leading recipients of US foreign aid. They were Kenya ($599 million), South Africa ($574 million), Nigeria ($486 million), Ethiopia ($455 million) and Sudan ($392 million). By comparison, only Ethiopia had been in this select group ten years earlier. Africa’s share of total US aid increased from 13.3 to 28.6 percent during this period, though the US continued to provide a lower percentage of its overall aid to Africa than the other major donors, who were typically above 40 percent (Van de Walle, 2009). That said, numerical changes are not always a sufficient condition for real-world changes. In some respects, African policy under the Bush administration maintained the weakness of those administrations before him. The main criticism is that the famed aid increases “were not the result of some careful strategic thinking about the region” but were used instead as “an end in themselves, to be touted politically” (Van de Walle, 2009). Bush’s approach to aid was essentially fueled by the ‘war on terrorism’, rather than economic development or poverty alleviation for Africa. When Obama ran in 2008 for office, Africa was barely mentioned. This is especially odd, given that “he is personally linked [to Africa] through his father…and indicated an abiding interest and has perhaps more knowledge than any recent president” (Van de Walle, 2009). His early strategy was ambiguous to say the least. But, in response to a Chinese-lead re- engagement with Africa, a new policy was drafted and published in June 2012. The policy calls for “strengthening democratic institutions” and “boosting economic growth” across the continent (Obama, 2012).
  • 37.
    36 As is statedin President Obama’s opening letter at the beginning of the policy, “We will work with our African partners to build strong institutions, to remove constraints to trade and investment, and to expand opportunities for African countries to effectively access each other’s markets and global markets” (Obama, 2012). The document goes on to outline the ‘Four Pillars of U.S. Strategy” which include the following: 1. Strengthen Democratic Institutions 2. Spur Economic Growth, Trade, and Investment 3. Advance Peace and Security 4. Promote Opportunity and Development It is clear, that the administration has placed the most emphasis, and dollars, on the maintenance and improvement of African democratic structures. It has been argued that the renewed push for democracy “is aimed at compelling African governments to carry out free market reforms, including privatizations and the abolition of subsidies and import controls” (Van Auken, 2013). Another central motivation for the democracy focus is “countering Chinese influence with the charge that Beijing, supposedly unlike Washington, is uninterested in “democracy” and “human rights” in Africa” (Van Auken, 2013). Pursuant to this charge of a democratic focus, the administration will seek to attach conditions in line with this end goal. But even though the ‘hoops to jump through’ for American aid are increasing, the financial contributions are not. In point of fact, “US aid to Africa has declined under Obama, falling from $8.24 billion during the last year of the Bush presidency to less than $7 billion today” (Van Auken, 2013). Despite the decline in aid, there are still ongoing programs that the administration feels will help with regards to African development and poverty alleviation. The key initiatives include:
  • 38.
    37 Feed the FutureInitiative: USAID’s global hunger and food security initiative, which seeks to increase agricultural production and research new relevant technologies. There is $1.06 billion allocated for this project. Global Health Initiative: This program is aimed at overcoming malaria, promoting safe birth, and addressing the HIV/AIDS epidemic on the continent. A total of $2.65 billion is reserved for this initiative. Other Areas of Focus: Increasing access to electricity, supporting democracy, human rights, and good governance, responding to humanitarian crises, and increasing resilience to climate shocks. These focus areas represent the remainder of the $7 billion in total USAID to Africa. While $7 billion sounds quite substantial, when this figure is considered in comparison to other U.S. aid expenditures it shrinks in the mind quickly. For example, “the size of the Iraq and Afghanistan programs are $60 billion and $89 billion respectively” (Peter, 2013). Those gargantuan numbers render the aid commitment to Africa rather miniscule. While Chinese interest has forced the U.S. to reconsider its strategy in Africa, “policy towards Africa suggests that the US is not adept at forging a coherent and strategic policy towards a region perceived to be of secondary importance” (Van de Walle, 2009). The development of Africa just doesn’t seem to be a priority for the U.S. and this is evident in its financial strategy relative to other areas in the world, and its lack of interest in visiting and actively engaging the countries on the continent it does support. When President Obama was elected, many in Africa were excited to see how he would engage the continent given his familial and racial connections. Tolu Ogunlesi, a reporter for the Guardian Africa Network recounted his reaction to Obama’s tour, “ When he was first elected there were celebrations across the continent, and perhaps unrealistic expectations that he would champion African
  • 39.
    38 interests on theworld stage…Since then his absence has been keenly felt, sparking accusations that he has betrayed his roots” (Ogunlesi, 2013). His policy was unclear and lackluster in the eyes of many, and largely maintained the strategies of the Bush administration. His 2013 tour in Africa included stops in Senegal, South Africa, and Tanzania, but oddly he didn’t make the time to visit Kenya, the land of his father. CNN comments that “Obama was in Africa to promote an increased partnership amid criticism the United States has, outside of military interests, focused its attention on other areas of the world” (Schwarz & Yellin, 2013). It may, however, be too late. For in the scramble to do business with Africa, America is lagging behind. The U.S. is “no longer Africa’s leading trade partner; it lost that position to China in 2009” (Ogunlesi, 2013). In a new effort to counter Chinese influence, Obama has announced plans to “invite 47 leaders to a landmark US-Africa summit in August, seeking to widen US trade, development and security ties” (New Vision). He will send invitations to “all African nations that are currently in good standing with the United States or are not suspended from the African Union -- meaning there will be no place for states like Egypt or Zimbabwe” (New Vision). Whether or not this summit will prove a success for Africa- US engagement remains to be seen, but it is a much-needed move at this point. Modern Western Development Policy: Europe Next, let us look at the development policies, projects, and perceptions of Europe, the other half of what we define as the ‘West’ for the purposes of this comparative analysis. Obviously Europe is a collective term for several countries, each having their own ideas and policies regarding the development agenda in Africa. There are different ways to approach this discussion. We could look at the top five or so European countries that interact with Africa, for example, by their amount of aid given to the continent. But then the issue arises of how to determine this figure. If we go by gross dollar amount, the frontrunners are the UK, France,
  • 40.
    39 Germany, the Netherlands,and Spain. But if we use the top donors by % of Gross National Income (GNI) the list of top countries shifts significantly to Luxembourg, Norway, Sweden, Denmark, and the Netherlands. Since Europe maintains itself in a collective as the European Union, it is thus simpler and more representative to talk about Europe’s policies under its collective identifier. While that may not show the detail and diversity of African policy from country to country (and this may very well differ significantly), it does offer a birds-eye-view of the general approach toward Africa for Europe, and for the nature of this study that perspective should prove adequate. Prior to discussing detailed projects and perceptions, let us develop a working knowledge of the EU’s main policy toward Africa. The important thing to note is that the European Union mainly approaches its Africa policy as part of a larger ACP (Africa, Caribbean, and Pacific) policy. There are two main frameworks that shape EU policy with regards to Africa, “the African, Caribbean and Pacific (ACP), enshrined in the 1975 Lomé Convention and updated in 2000 by the Cotonou Agreement…and more recently, a continental approach has gained ground, which led to the Joint-EU Africa Strategy (JAES) conceived in the 2007 EU- Africa summit in Lisbon and reflecting the pan-African dimension” (European Commission, 2011). Let us unpack this collection of policy: The Contonou Agreement The Cotonou Agreement establishes three main EU-African, Caribbean and Pacific (ACP) Joint Institutions: 1. ACP-EU Council of Ministers: meets annually at Ministerial level to discuss matters of common interest in EU-ACP relations. It gathers representatives from all ACP and EU
  • 41.
    40 countries, and theEuropean Commission and, following the Lisbon Treaty, the European External Action Service (EEAS). 2. ACP-EU Committee of Ambassadors: meets generally to prepare for the Joint Ministerial Council. It is composed at ambassadorial level by representatives from all EU and ACP member states, in addition to the European Commission. The EEAS also attends. 3. ACP-EU Joint Parliamentary Assembly: a unique body whose goal is to bring together elected representatives of EU and ACP countries. The bulk of its activities relate to the promotion of human rights, democracy and the rule of law. It takes place twice a year, with a venue rotating between EU and ACP countries. The Cotonou Agreement essentially broadens the scope of EU-ACP partnership while seeking to adapt it to the changing international environment and the deriving challenges. Its three pillars are: 1. Development cooperation (funded by the EDF) 2. Economic and trade cooperation through the EPA's, seeking to make EU-ACP trade regimes WTO-compatible 3. A stronger political dimension. (European Commission, 2011). The second vehicle for EU-Africa aid and relations is the Joint Africa-EU Strategy (JAES). Adopted by the heads of state from Africa and Europe at the Lisbon Summit in 2007, JAES strategy focuses on the following: • Peace and Security • Democratic Governance and Human Rights • Trade, Regional Integration and Infrastructure
  • 42.
    41 • Millennium DevelopmentGoals (MDGs) • Energy • Climate Change and Environment • Migration, Mobility and Employment • Science, Information Society and Space (European Commission, 2011). The main financial instrument for development cooperation in ACP countries is the European Development Fund (EDF). The EDF is now at its 10th round (2008-2013) and includes three financial envelopes: a national envelope covering bilateral cooperation with individual ACP countries, a regional one covering relations with ACP regions, namely Central Africa, West Africa, Eastern and Southern Africa and Indian Ocean, the Southern African Development Community (SADC), the Caribbean and the Pacific; and a third one to address the common challenges facing ACP States that transcend geographical criteria. Moreover, the intra-ACP envelope funds the African Peace Facility. The 10th round (2008-2013) of the European Development Fund includes a total budget of €22.682 billion, or approximately $30.652 billion dollars allocated in the following ways: • €21.966 billion ($29.684 billion dollars) directly to ACP countries • €286 million ($386.5 million dollars) to the OTC (overseas countries and territories of EU countries) • €430 million ($581.1 million dollars) to the Commission to support programming and implementation of the EDF The European Union makes it clear that while the joint fund is comprised as outlined above, “The Member States have their own bilateral agreements and implement their own initiatives
  • 43.
    42 with developing countriesthat are not financed by the EDF or any other Community funds” ("European development fund," 2007). Concerning the EU, key programs and initiatives include: Aid for Trade: One of the EU’s main programs, aimed at increasing trade and investment with Europe. Specifically the program and its funds target: Internal "behind the border" constraints such as a lack of productive capacity and ability to meet standards in high value export markets, excessive red tape, or poor infrastructure; all of which make it difficult for developing countries to exports their products and undermine the potential benefits of increased imports. Targeting these constraints is what Aid for Trade (AfT) is all about, along with strengthening countries’ capacity to negotiate and implement trade agreements to their benefit ("Press release: Aid," 2011). Much of what this program does is to make sure that all African exports meet European safety standards (especially produce and other food products), and to increase exports and lift restrictions related thereto. Like with any other aid program through the EU, “AFT has to go through policy dialogue, needs assessments, inclusion of priorities into national and regional development strategies and formulation of response strategies” ("Press release: Aid," 2011).
  • 44.
    43 Figure 3.1: AidFor Trade (EU and Member states, in EUR million) (2013, July 08). Aid For Trade [Web Graphic]. Retrieved from http://europa.eu/rapid/press- release_MEMO-13-649_en.htm This figure shows the contributions to the Aid for Trade program by the European Union and its member states over time. While contributions by member states have fluctuated from year to year, since 2005 the EU has been quite consistent with its portion of the contributions. The average for the years 2001-2011 was €2.188 billion.
  • 45.
    44 Figure 3.2: AidFor Trade by Region (EU and Member states, in EUR million) (2013, July 08). Aid For Trade By Region [Web Graphic]. Retrieved from http://europa.eu/rapid/press- release_MEMO-13-649_en.htm This figure emphasizes the EU’s focus on African countries in relation to the AFT program. The contributions to Africa are around double what is spent in Asia, the next highest region, and the expenditures, while decreasing over the period 2008-2011 are still significant in terms of percentage of total aid budget. Euro-African Partnership for Infrastructure: Adopted in 2006, this initiative is one of the EU’s key programs with the aim to aid in the development of large infrastructure networks in the following areas:
  • 46.
    45 • Transport: (roadand railway networks, ports, maritime and river routes, air transport), in order to reduce costs and improve the quality of services • Water and Sanitation Networks: in order to improve the management of water resources at local, national and cross-border basin level, and also access to drinking water and adequate sanitation facilities • Energy: in order to allow network extension, distribution in rural areas and improvement of cross-border connections • Information and Communication Technologies (ICT): to ensure adequate access to affordable technologies by supporting regulatory reform, capacity building and broadband infrastructure development A total of €5.6 billion was allocated to projects related to this program in the 10th round (2008- 2013) of EU budgeting. ACP-EU Energy Facility: This program allocates €220 million to increase access to modern energy services for people in Africa, the Caribbean and the Pacific (ACP). The three identified priority areas include improving access to energy services, creating an enabling environment for energy services through good governance, and supporting future large-scale investment programs. European Water Facility for the ACP Countries: This program operates with a budget of €500 million to fund two types of activity: improving water management and governance, and co-financing drinking water and sanitation infrastructure. This is not an exhaustive list, but it covers the largest programs and initiatives. The EU does attempt to cover a wide range of issues related to development, but the effectiveness of this aid varies from project to project. Also, the EU is notoriously slow to implement, because it
  • 47.
    46 requires the signingoff of so many heads of State and the synchronizing of many different aid cycles along with the recipient country. The EU is testing a new method called ‘Joint Programming’ which is meant to streamline the implementation process, "to give the EU leverage to impose conditionalities more effectively…the EU is piloting joint programming in Ethiopia, Ghana, Guatemala, Laos, Mali and Rwanda for 2014-20” (Tran, 2012). Whether this will actually improve the process remains to be seen. As Mirjam Gehrke discusses in Africa: A New Era Possible in EU Development Aid, “More than half of global development aid comes from the EU and its member states. However, developing countries only receive European aid if they meet a set of criteria…on the political level, there is an agreement in Europe on certain standards like the demand for a democratic system and the respect for human rights in the receiving country” (Gehrke, 2014). This is a tenant generally attributed to aid from the West. Europe, along with the U.S. hold fast to the idea that imposing good governance conditions increases the effectiveness of their aid. This may be true in some cases, but the West is not the only actor competing for Africa’s attention. The EU, as well as the U.S. will have to evaluate how its aid schemes will function as China, India, and other rising nations enter the donor pool.
  • 48.
    47 Section 4: ChineseDevelopment Policies, Projects, and Perceptions Having obtained a historical grasp on Chinese influence in Africa, let us shift the focus now to modern development policy, recent projects and initiatives, and some general perceptions of Chinese governmental interactions with Africa in the modern day. Modern Development Policy: China As a starting point to understanding Chinese aid today, it is important to know how the government system is structured in China, that is, who is deciding which countries receive aid, at what time, for how much, and at what cost. While the West operates using varying degrees of democracy, China’s governmental system is different on a foundational level. As a single- party socialist state, China just doesn’t have to jump through the same hoops or get approvals from as many departments as the U.S. or European governments do. That’s not to say that the aid system is without a defined structure, but it is comparatively simpler. Like most high-level, high-budget decisions in China, aid is managed directly from the State Council, which includes China’s premier and vice premiers and the rest of the cabinet. Its main tasks are to “approve the annual aid budget, any grants of cash above $1.5 million, all aid projects above $12.5 million, aid to ‘politically sensitive countries’ and any requests to exceed the annual plan for foreign aid” (Brautigam, 2009, p.107). Under the executive government, there are four departments that manage all other aid-related tasks: The Ministry of Finance, Ministry of Commerce, Ministry of Foreign Affairs, and China Eximbank.
  • 49.
    48 Figure 4.1: China’sAid Institutions Brautigam, D. (Designer). (2009). China's system of aid and economic cooperation [Print Photo]. The Ministry of Finance: Responsible for allocating donations to multilateral organizations (UN agencies, World Bank’s International Development Association, ect), managing the cancellation of foreign aid debt owed to China, and signing off on the annual aid proposals. The Ministry of Commerce: Housed in the larger Ministry of Commerce is the Department of Foreign Aid. This small department of around 100 (comparatively, USAID has 2,200 employees) is the heart of China’s aid system and “programs all the zero-interest loans and grants, drafts the aid budget and aid regulations, manages the Foreign Aid Joint Venture and Cooperation Fund, and coordinates with China’s Eximbank on concessional loans.
  • 50.
    49 The Ministry ofForeign Affairs: These diplomats are on the ‘front line’ in advising the leadership in China on how much aid to give to particular African countries. They also draft the annual plan for aid with the Ministry of Commerce and signs off on any changes in the aid plan. The China Eximbank: The bank manages the disbursement and maintenance of export seller’s credits (preferential loans for Chinese companies operating abroad), export buyer’s credits (for foreigners importing Chinese goods or services), and the foreign aid program. Now that we understand how the Chinese aid system operates, let us turn now to what policies and principles guide it. In Ghana on January 15th , 1964, Premier Zhou Enlai announced the Eight Principles for China’s Aid to Foreign Countries. They are as follows: 1. The Chinese Government always bases itself on the principle of equality and mutual benefit in providing aid to other countries. It never regards such aid as a kind of unilateral alms but as something mutual. 2. In providing aid to other countries, the Chinese Government strictly respect the sovereignty of the recipient countries, and never attaches any conditions or asks for any privileges. 3. China provides economic aid in the form of interest-free or low-interest loans and extends the time limit for repayment when necessary so as to lighten the burden of the recipient countries as far as possible. 4. In providing aid to other countries, the purpose of the Chinese Government is not to make the recipient countries dependent on China but to help them embark step by step on the road of self-reliance and independent economic development.
  • 51.
    50 5. The ChineseGovernment tries its best to help the recipient countries build projects which require less investment while yielding quicker results, so that the recipient countries may increase their income and accumulate capital. 6. The Chinese Government provides the best-quality equipment and material of its own manufacture at international market prices. If the equipment and material provided by the Chinese Government are not up to the agreed specifications and quality, the Chinese Government undertakes to replace them. 7. In providing technical assistance, the Chinese Government will see to it that the personnel of the recipient country fully master such technique. 8. The experts dispatched by China to help in construction in the recipient countries will have the same standard of living as the experts of the recipient country. The Chinese experts are not allowed to make any special demands or enjoy any special amenities. (Source: Speech by Chinese premier Zhou Enlai, Accra, Ghana, January 15th, 1964.) These principles have been the center of much debate and controversy. Many have praised these tenants while others have condemned them. But, like it or not, these principles are the backbone of the Chinese aid engine, and are still in policy to this day. Why Does China Give Aid? There is a prominent myth prevalent in Western media and echoed by Western governments that China’s only motivation for giving aid in Africa is to secure as many natural resources as possible for itself, in essence, a land grab. It’s not hard to guess why this has become popular opinion. The Chinese are very active in the areas of Africa that contain the rich oil and mineral resources, and it would be incorrect to say that this isn’t important to them. But they aren’t just interested in countries with the most natural resources. It’s important to consider two facts:
  • 52.
    51 • China givesaid to every single country in sub-saharan Africa that recognizes the Chinese government. • China doesn’t seem to give more official development aid to countries with more resources. Grants and zero-interest loans from the Ministry of Commerce are distributed fairly evenly across countries (Brautigam, 2009, p.279). Figure 4.2: African Countries Receiving Chinese Aid Brautigam, D. (Designer). (2009). China’s Aid Agreements in Sub-Saharan Africa [Print Photo].
  • 53.
    52 So, if Chinaisn’t reenacting a colonial resource-grab, then why do the Chinese give aid? The Chinese tend to think big-picture about aid and foreign relations. While “resources matter, China’s mutual benefit approach is about generating business” (Brautigam, 2009, p. 279). And China doesn’t discriminate on sectors. Yes, oil could be one area they would engage in, but anything that has the potential of generating a decent return is attractive to the Chinese. As a Nigerian diplomat commented on the Chinese in Africa, “The Chinese are trying to get involved in every sector of our economy. If you look at the West, it’s oil, oil, oil and nothing else” (Brautigam, 2009, p. 279). How Does China Give Aid? China uses a variety of different aid instruments as vehicles to deliver aid. These include resource-backed infrastructure loans, debt relief or loan forgiveness, education, and turn-key projects. Let’s take a closer look at each of these types of aid: Resource-back Infrastructure Loans: Unlike the Bretton Woods institutions that have notoriously condition-ridden loans that require months or years of negotiation, the Chinese take a more simplified and direct approach. Borrowing from their own development experience with Japan, they work with African states to guarantee the loan with whatever resources are available. This is a huge benefit for African nations, because they get the infrastructure they need, and which many Western institutions are unwilling to provide. Case in point is the DRC’s loans for infrastructure in 2008. China’s Eximbank “agreed to finance more than $6 billion in infrastructure, using just a single copper and cobalt mining joint venture as guarantee” (Brautigam, 2009, p.146). As the CEO of Congo’s state-owned mining company commented, “Congo doesn’t have to wait for its infrastructure until it has the money. Building starts immediately with the natural resources as
  • 54.
    53 guarantee. Except inoil-rich states, I know of no other deal quite like this. The Chinese approach side-steps all the conditionality and just gets right to the point” (Brautigam, 2009, p. 146). The other unique feature of Chinese loans is the absence of conditionality. Conditionality is taken here to include imposed economic policies or governance reforms that are tied to the aid. Unlike the West, China doesn’t incorporate these conditions into its aid. This has been a highly criticized feature, especially by the Bretton Woods institutions that are increasingly losing loans to China. The fact is that Chinese aid is based on an equal, mutually-beneficial relationship. It views African states as sovereign, and doesn’t concern itself with the internal governmental affairs of nations. African leaders view this policy as an opportunity to self- govern in a way that is denied them by the West. A Ugandan official commented on Chinese aid: “The fact that a country gives you aid makes them think that they have a license to tell you how to run your affairs. These conditions are probably well-intentioned, but they are humiliating” (Brautigam, 2009, p.149). Jose Cerqueria, an Angolan economist provides his opinion of Chinese financing: “China’s straightforward approach is an attractive alternative to what is seen as the endless nit-picking of the IMF and the Paris Club of creditors, which have been quibbling over terms for years…China is welcome because it eschews the IMF’s ideological and condescending attitude” (Moyo, 2009, p.108). Some have made the argument that a lack of conditions to encourage good governance and appropriate economic procedures leads to the opposite and props up corrupt governments. Certainly there is some truth to this claim, as China does engage economically with Sudan and the corrupt government regimes of Zimbabwe’s Robert Mugabe and Mobutu in Zaire. However, the West, with it’s trade embargoes to governments it deems corrupt may be ‘too little, too late’ as it were. It is, after all, “under the auspices of Western aid, goodwill and
  • 55.
    54 transparency that Africa’smost notorious plunderers and despots have risen and thrived” (Moyo, 2009, p.108). For better or worse, China just has no interest in assuming a managerial role in another nation’s affairs. As a Chinese official commented, “We don’t believe in embargoes…that just means that the people suffer. From a practical consideration, embargoes and sanctions can’t solve problems” (Brautigam, 2009, p.285). So while the Chinese choose to not get involved in these areas, the West obsesses over them. However, this focus on ‘good governance’ has produced little in the way of tangible results. As Serge Mombouli, ambassador from Congo-Brazzaville suggests, “We cannot be talking just about democracy, transparency, good governance. At the end of the day the population does not have anything to eat, does not have water to drink, no electricity at night, no industry to provide work…people do not eat democracy. China provided tangible things, while the West pushed for something less tangible” (Brautigam, 2009, p. 287). China’s position comes from its own history, and in the Chinese experience the simplest and most effective way to improve governance issues is to get rid of poverty and develop economically. Just decades ago China was in a similarly bleak political situation, but tensions were eased dramatically when people were lifted from poverty. Violence decreased, government structure became more stable. The Chinese believe this could be Africa’s solution as well. Loan Forgiveness Another form of official development assistance (ODA) is loan forgiveness, and China uses this frequently. The West was the first to employ a debt relief program in 1996, called the Highly Indebted Poor Countries (HIPC) program. The HIPC program began canceling debts of countries that qualified, by in Western form, “only after countries successfully followed a complicated steeplechase with hurdles that could take years to jump” (Brautigam, 2009, p.127). China launched its own loan forgiveness program in 2000, but unlike the West,
  • 56.
    55 “Chinese debt cancellationwas unconditional…they did not require governments to prove their ability to manage their economies or to develop strategies to use the cancelled debt for poverty reduction” (Brautigam, 2009, p.129). China uses this in tandem with other types of aid, and by 2008, “Premier Wen Jiabo announced that China had canceled a total of 24.7 billion yuan, or about $3.6 billion” (Brautigam, 2009, p.130). Since then, there have been more pledges to cancel debt, but this is still quite modest compared with the IMF/World Bank debt cancellations under HIPC, which to date “have been approved for 36 countries, 30 of them in Africa, providing US$75 billion in debt-service relief over time” ("Debt relief under," 2013). Education/Training This type of aid is commonly used by the Chinese government in Africa. China’s dedication, and some would say obsession, with education helped to fuel an economic revival in their economy and they believe in the power of education for Africa as well. In fact, “Chinese officials estimate that they have provided scholarships to 18,000 African students from 50 countries and sent 700 teachers to 33 countries since 1949. Since 2009, the Chinese government has offered 4,000 scholarships to African students every year” (Nesbitt, 2011). This is dramatically higher that in Western countries, such as the U.S., which has largely abandoned the education scheme it took up in the 1990s, “in 1990, USAID programs funded 9,128 university students, but only 1,212 in 2000” (Brautigam, 2009, p.121). China, in it’s goal of providing infrastructure in Africa, has also undertaken the building of schools and vocational centers. In Ethiopia, “a large training and vocational education center financed by Chinese aid and jointly operated by the two countries opened in early 2009. The school will enroll 3,000 students, with courses taught by Chinese and Ethiopian teachers in construction skills, architecture, engineering, electronics, electrical engineering, computer, textiles, and apparel. China also built a vocational training center in Uganda, and the Chinese
  • 57.
    56 are building twocenters in Angola” (Brautigam, 2009, p.158). Turn-Key Projects The Chinese focus on building industry and infrastructure makes grants for projects a significant portion of an aid package from China. Whether it’s a power plant in Ghana, a metal processing plant in Zimbabwe or a textile factory in Kenya, the Chinese see the value-added for Africa and themselves through investment in industry and infrastructure. When undertaking these types of projects, the Chinese use a modified version of the model the Japanese used with them during their development, the ‘Request-Based System’. This usually involves Chinese companies identifying possible projects and pitching them to the recipient country’s government for their opinion and approval. The recipient country then ‘requests’ that the Chinese government fund the project. In the China-Japanese development partnership, “the system helped Japan expand exports, and its focus on raw materials like cotton or timber, energy, industry, and mining was designed for mutual benefit” (Brautigam, 2009, p. 141). China’s model incorporates suggested projects by Chinese companies, but also allows African countries to propose projects that it deems important. Then a competitive bidding process ensues to identify the company or entity that will manage and complete the project. This process is an improved form of the Japanese model, because in the case of Japan at that time, they were the only ones bidding so there was a much greater risk of corruption. Today, the Chinese are usually one of many bidders, among the West, India, Japan, and South America. This mix of countries creates a check on the system, and “is intended to ensure that a project’s costs are realistic and fair” (Brautigam, 2009, p. 141). Some recent notable projects include: • China has built over 100 schools, 30 hospitals, 30 anti-malaria centers and 20 agricultural technology demonstration centers in Africa.
  • 58.
    57 • On November28th, 2013, the contract was signed for a $13.8 billion standard gauge rail line that is expected to link five East African countries and replace the line built by the British. • $232.4 million for the Kariba South hydropower expansion project in Zimbabwe • $3 billion interest-free loan from China Development Bank for oil and road projects in Ghana • $1.4 billion for the construction of a railway from Khartoum to Port Sudan in Sudan • $2.2 billion for dam construction in Ethiopia • $672.9 million for a light rail network in Nigeria • $464.8 million for rebuilding roads in Angola • $138 million for updates to the Kenyan urban power grid • $304.2 million for construction of the Central Zongo II Hydroelectric Dam in the DRC • $732.1 million for the Kafue Gorge Lower Power Plant in Zambia (Provost & Harris, 2013). The above are just a select few of the thousands of projects completed in Africa with the Chinese. According to research conducted by AidData, “China has committed around $75 billion to over 1,700 different projects across Africa in the past decade” (Provost & Harris, 2013). Final Notes on Chinese Aid Concerning infrastructure projects, it is worthwhile to note that there is a priority system built-in. The Chinese first prefer to repair or revive infrastructure that’s already in place where applicable. It’s more efficient, and makes loan funds go further. Second, the Chinese will generally agree to an African-proposed project before suggesting other options. This goes along with their pledge of non-interference. Wherever possible, they encourage African States to ‘speak for themselves’ in respect to projects within the country.
  • 59.
    58 There has beenmuch debate over the mix of workers dispatched to complete these projects. Many have alleged that China sends an overwhelming majority of Chinese workers to construction projects and that they don’t hire Africans. This is a myth that fortunately is largely just that. Figure 4.3: Chinese Projects and Investment (2012, August 15). Chinese Investment Offers in Africa Since 2010 [Web Photo]. Retrieved from http://www.stratfor.com/image/chinese-investment-offers-africa
  • 60.
    59 The fact ofthe matter is that the ratio of Chinese to African workers varies wildly depending on the recipient country’s policy, the timeline demanded for completion, the ability to find skilled workers, and how long the Chinese company has been in that particular area. For example, “in Sudan, where Chinese companies have been working in the oil industry for over a decade, 93% of workers in China’s oil operations were Sudanese” (Brautigam, 2009, p.156). Similarly, in Tanzania, “Chinese companies employed Tanzanians at a ratio of eight or nine for every Chinese” (Brautigam, 2009, p.156). China will also respect local governmental policy, so countries that have these in place are successful in employing more local workers. In the case of Angola, the “require all employers to have at least 70% Angolan staff” and similarly in the DRC “at least 80% of the workers in China’s multibillion dollar infrastructure and mining venture must be Congolese” (Brautigam, 2009, p.157). Another interesting point of difference between West and East is the cost for experts to manage implemented projects. The fact is, the Chinese are cheaper. The export of expertise from the West comes at a cost, due to “the scores of relief workers who make triple digits in salaries for ‘working in dangerous zones’” (Brautigam, 2009, p.157). As an official in the President’s office in Sierra Leone notes, “Chinese interventions are not tied to a lot of experts who get half or three-quarters of whatever aid is coming to the country” (Brautigam, 2009, p. 157). The Chinese pay a fair market rate for what the same position would command in China (usually far less in salary than the West) and this rate is used for dispatching Chinese to Africa. Also, in keeping with their 8 Principles of Aid, Chinese workers don’t get bonuses or kickbacks for ‘working in a dangerous zone’ like is common with those being dispatched from the West. The result is tangible savings for African nations.
  • 61.
    60 The Chinese aidstrategy in Africa is aimed at mutual benefit for each party involved, and attempts to follow the model that worked for China personally, and helped them to lift millions of people out of poverty. Their focus is infrastructure and industry; to both make business function more easily through upgraded electricity systems or road revival projects, and also to generate a steady and stable return for economic growth. There are some discernible benefits of Chinese aid when compared with the West, but China’s policies aren’t perfect. While the West tends to focus on the intangible goals of democracy and good governance to the detriment of tangible and much-needed infrastructure, China doesn’t really bother at all with political or environmental concerns. However, when we look at from an impact or value-added perspective, the Chinese have done more to help Africa develop in the last decade than the West has managed in the last half-century. There are roads and railways where there used to be grass and dirt. There is electricity where there used to be darkness. There are schools, hospitals, and stadiums where nothing stood just five or ten years ago. Due to new raw material processing plants and construction projects, Africans that used to be jobless are now employed. While the West was arguing over ideologies, China came to Africa with the ‘muscle of money’ and the promise of a partnership.
  • 62.
    61 Section 5: ForeignDirect Investment Facts and Figures While not considered Official Development Assistance (ODA), FDI is still beneficial, both to the host country and the originating country. FDI, defined by the United Nations Conference on Trade and Development as ‘an investment made to acquire a lasting interest in an enterprise operating outside the economy of the investor’ reached a record $1.4 trillion worldwide in 2006. Of that, Africa attracted only $17 billion of that total (Moyo, 2009, p.103). That’s interesting, given that Africa is a prime location for FDI—its labor costs are low, and investment opportunities are high. China, among others, has begun to take notice in a major way, and have finally started to come to Africa to do business, sparking a global race to African markets. FDI flows to African countries “increased by 5 per cent to US$50 billion in 2012 even as global FDI fell by 18 per cent”, UNCTAD’s annual survey of investment trends reports” ("Foreign direct investment," 2013). This section will explore this relatively new phenomenon, comparing and contrasting FDI flows from China and the West, and adding a quantitative perspective to this subject. Chinese FDI: Facts and Figures Like many aspects of its involvement on the continent, the Chinese have been very active in FDI. They have invested all over, and have really been integral in sparking competition and general interest in Africa as a business destination. China does everything it can to encourage FDI, both directly through the government, and “by encouraging private Chinese enterprises to invest in Africa, usually through preferential loans and buyer credits” (Moyo, 2009, p. 105). The amount of FDI China has amassed in the last decade is staggering, “As of mid-2007, the stock of China’s FDI to Africa was US $100 billion” (Moyo, 2009, p. 105).
  • 63.
    62 Figure 4.4: CountriesRanked By FDI Flows (2014). Foreign Direct Investments (FDI) to Emerging Markets Doubles Over Past Decade [Web Photo]. Retrieved from http://www.weareallglobal.com/change/ While the U.S. has continued to engage most actively in FDI, China’s jump from 9th to 2nd in approximately ten years time is remarkable. While not all Chinese FDI is directed specifically at Africa, “Foreign Direct Investment in Africa has grown at an average of 146% annually over the last 22 years to reach US$36 billion in 2007 alone, while trade between Africa and the rest of the world (particularly Asia) has been steadily increasing” (Al, 2014). The diversity of investments is also something to note. It is a common misconception that Chinese FDI is overwhelmingly aimed at mining and other natural resources, but in reality this is not the case. As an Economist article suggested, “Africa is now more often seen by Chinese firms as a place to do business other than digging stuff out of the ground” and in an IMF study conducted in 2011 it was discovered that “only 29% of Chinese foreign direct investment in
  • 64.
    63 Africa was inmining. Figure 4.5: Top Countries in FDI Over Time (2011). China's total OFDI flow to Africa has risen dramatically since 2003, with investments well diversified across a number of sectors [Web Graphic]. Retrieved from http://www.britishchamber.cn/content/african-tiger-africa’s-evolving-investment-landscape If anything, official figures understate the extent of Chinese non-commodity investment, as they rarely include smaller firms in wholesale trading, retail, catering and textiles” ("Little to fear," 2013). One thing is for sure: China is using the ‘muscle of money’ to expand its FDI pretense in Africa.
  • 65.
    64 U.S. and EuropeanFDI: Facts and Figures While Asian countries have certainly lead the way in increases to FDI in Africa over the last decade or so, the West has steadily invested in African markets over a longer period of time. As African Economic Outlook points out, “OECD countries – including traditional partners still account for about 80% of FDI flows to Africa. However, the share of non-OECD countries including Brazil, India and China – has risen from an average of 18% in 1995-99 to 21% for 2000-08” ("Traditional partners remain," 2013). Figure 4.6: Africa FDI Flows (2014). African FDI inflows 1995-2008 [Web Graphic]. Retrieved from http://dx.doi.org/10.1787/888932403610
  • 66.
    65 For the EUspecifically, FDI flows to Africa while they total a significant dollar amount are actually quite sparse when considered as a percentage of their total FDI worldwide. Figure 4.7: EU FDI Flows to Africa (%) (2014). African FDI inflows % [Web Graphic]. Retrieved from http://dx.doi.org/10.1787/888932403610 In 2010, FDI to Africa accounted for only 5% of the EU’s total FDI flows, while 33% when to North America and 13% was directed at Asia. As far as where the EU invests in Africa, they target FDI almost exclusively in Egypt and South Africa. In 2011, FDI to Africa accounted for 2% of total FDI for the EU, and this 2% was split between only Egypt and South Africa ("Foreign direct investment," 2013). The U.S. also tends to invest more heavily in areas containing oil and other natural resources, and their biggest areas of FDI include South Africa, Nigeria, and Ghana. The Chinese tend to take a more comprehensive approach, and while they too invest significantly in resource-rich areas, their FDI covers the entire continent and spans several
  • 67.
    66 sectors. The Westinvests much less in industries unrelated to natural resources. Figure 4.8: Chinese FDI By Country (2011) (2013, June ). Outward stocks of FDI, EU-27, end 2011 [Web Graphic]. Retrieved from http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Foreign_direct_investment_statistics While the West currently dominates FDI in Africa, these figures are shifting rapidly. In a report published by the United Nations Conference on Trade and Development, the data shows that “for the first time, FDI inflows from developing economies into Africa, outstripped those from developed economies”(Sulaiman, 2012). As James Zhan, director of UNCTAD's investment and enterprise division commented, “In terms of green field (new) projects, which account for over 90 percent of total FDI, the largest developing-economy investors in 2011 were India, South Africa, China, Korea and Mauritius” (Sulaiman, 2012).
  • 68.
    67 Section 6: PrivateActors in Africa Often, when comparing China versus the West, private industry is forgotten. However, private actors, while regulated by their respective domestic governments are not one in the same, so it helpful to separate the two. Private actors can have an enormous impact, for better or worse, on the economies they interact with. Although they may not be directly involved with the interests and actions of their national government, public opinion can be significantly swayed by their actions in the eyes of the citizens that live in the affected countries. This section will provide an overview of some major private actors from each side, and discuss their involvement and impact in Africa. Private Actors: Multinationals and Mega Corps Multinationals and other private corporations based in the West have been active in Africa for decades. The West is oil-obsessed, and private actors from Europe and the U.S. are heavily tied to the oil exploration and extraction that happens in Africa. While some private actors from these areas are also active in the Telecommunications industry or the extraction and processing of other natural resources, oil is really the main focus. Of all of the oil companies doing business in Africa (more than 120), 57 were European corporations and 23 were American. When you compare these figures alongside the number of African companies involved in oil production (just 13 across the entire continent) it’s easy to see that the West has quite a firm grip on African oil. Even China maintains just 7 companies dedicated to this sector. That said, these companies bring benefits to Africans. The big multinationals come with money to develop pipelines and spur exploration, and they provide numerous jobs to Africans. However, regulation is a huge issue with regards to these private actors, and this is a theme
  • 69.
    68 that spans everyindustry and every country on the continent. It is when private business goes unregulated, unmaintained, and unchecked by the host governments that the country’s resources and people get taken advantage of. In the case of Western oil companies, there are constant examples of tax evasion, negative environmental impact, and human rights concerns that African governments are either unable or unwilling to address. In Tanzania, “The EU and other Western multinationals…use tax havens and other illicit schemes to scam the countries of the continent out of around $50 billion every year” (Nielsen, 2013). Zitto Kwabe, a Tanzanian Public Accounts Chairman, attributes part of the blame to the policies implemented under the direction of the IMF and World Bank, which “advised African states to design policies and laws which multinational corporations are abusing to avoid paying taxes in our countries” (Nielsen, 2013). The result is that Tanzania is unable to collect the tax revenue on the oil operations that would help the country wean itself off foreign aid. The conditionality of the IMF/WB loans has relaxed tariffs and taxes to the detriment of African economies in some cases, and this is one such example. The Chinese are also getting more involved in oil and the like, although they don’t have as many holdings as the West. The major Chinese companies in oil, unlike in the West, are state-owned and financed. They do however operate like a private corporation in every other aspect, and follow their own interests and goals. Figure 5.1: Role Of Chinese Government in National Oil Companies
  • 70.
    69 Zhao, S. (Designer).(2011, May 03). National oil companies – Arms of the state or independent entities? [Print Photo]. Retrieved from http://www.china-briefing.com/news/2011/05/03/chinas-energy- strategy-and-the-role-of-govt-oil-in-africa.html In this case, the Chinese government does little in relation to general business operation, but instead maintains a light advisory role. The main role of government in the NOCs is to provide tax incentives and financing to help them penetrate new markets. Figure 5.2: China’s Notional Oil Companies (NOCs) Zhao, S. (Designer). (2011, May 03). China's Main National Oil Companies [Web Graphic]. Retrieved from http://www.china-briefing.com/news/2011/05/03/chinas-energy-strategy-and-the-role-of-govt-oil-in- africa.html In oil, because the Chinese are newer to the game, and because African governments have learned some expensive lessons from the West regarding taxation and other regulatory
  • 71.
    70 measures, we don’tsee the same abuses from private Chinese companies as exist with the U.S. or Europe. As Kwabe notes about the Chinese, “Chinese companies working in Africa, by comparison he said, are more transparent on taxes and pay their dues” (Nielsen, 2013). As is discussed in A Trilateral Dialogue on the United States, Africa and China, “While some are critical of China for seeking exclusive access to oil and gas supplies in Africa, others applaud Beijing's willingness to take risks in markets where some Western energy firms can't—or won't—go for a variety of reasons, arguably adding to world energy supplies, lowering prices, and benefiting consumers” (Zhenxing, 2013). Their oil exploration has lead to new findings and again, their efforts create African jobs. However, the issue of regulation will rear its ugly head in the case of China soon enough, especially as Chinese NOCs gain more influence within Africa. In telecommunications, the West has largely pulled out of Africa after the telecom crash of 2001. This sector is, more than any other, an African-held portion of the economy. MTN of South Africa, Orascom of Egypt, and Vodacom (British-South African joint venture) are all among the top five in the telecommunications industry on the continent. As for Europe, “only Millicom of Luxembourg and Vodacom, a joint-venture between Vodafone of Britain and Telkom of South Africa, have much of a presence” ("Mobile telecoms: Out," 2006). The Middle East has also penetrated the market, and is now more active than Europe in this sector. China is rapidly gaining influence in this sector, both with official governmental intervention to build infrastructure in Africa to support electricity and telecom operations, and with private Chinese companies moving in to provide telecom services. As Zhang Zhongxiang, a researcher at the Shanghai Institute for International Studies says regarding China’s involvement: The two major Chinese players in this field are equipment manufacturers Huawei Technologies and ZTE (Zhongxing Telecommunications Equipment Corporation).
  • 72.
    71 In 2010, theywere active in 50 African countries, providing communications services for over 300 million African users. The two Chinese firms have established more than 40 third-generation telecom networks in more than 30 African countries and built national fiber-optic communications networks and e- government networks for more than 20 African countries (Marshall, 2011). Chinese companies have also ramped up their involvement in construction, winning more and more contracts all over the continent. It is now a dominant force in construction in Africa. However, like most sectors, there are positives and negatives. For example, “A Chinese company built an eight-lane 30km road stretching from capital Nairobi to Thika, an industrial district” and as a Kenyan told Xinhua News, "All the public knows about China in Kenya is good quality roads. The image that Kenyans held about fake mobile phones and cheap clothes is fast fading. The roads have become a huge selling point for the Chinese” (Li, 2013). In contrast, there are also examples of not-so-stellar private sector involvement from China. In Zambia, “A Chinese private company built the road from Lusaka, Zambia’s capital, to Chirundu, 130km to the southeast. It was quickly swept away by heavy rains” (Li, 2013). When it comes to big business in Africa, the West and China are scrambling for resources and influence. Both sides bring money, jobs, and revenue to Africa, but lack of regulation and governmental oversight have muted the benefits of foreign investment considerably. On the positive side, the Chinese are perhaps more transparent about their interests in Africa, and in doing business with China African leaders can skip the political lecture. One African businessman in Angola commented candidly on foreign business to American researchers: [The Chinese] are here for the oil. But why are you here? The Americans and the French think they can give us lessons in ethics and transparency, but all
  • 73.
    72 you’ve done issneak our oil out from underneath us for forty years. You corrupted everybody. You prolonged the war—especially the Americans. The Westerners swagger about preaching ‘family values,’ and then pile in here to Luanda, stuff their faces, and screw hookers. But the Chinese are disciplined. They’re modest and respectful. Whilst the West wastes its time lecturing us on democracy, human rights, and accountability, the Chinese are hard at work (Michel & Beuret, 2009). While this is just one person’s opinion of Chinese versus Western involvement, it does give rise to a debate that is happening all over Africa. Private Actors: Retail and Local Merchants Nowhere are private actors more influential, and potentially damaging, than in small business. This is where more Africans are able to observe, and form opinions, about the Chinese. And opportunities to interact with Chinese small business have multiplied alarmingly fast over the last decade. Chinese merchants have moved into local African markets, and “Chinese consumer products are sold at rock-bottom prices all over Africa…and all of these items sell at a fourth or a fifth of the price the people have been used to paying” (Michel & Beuret, 2009, p. 115). This is troublesome for African merchants, who just can’t compete. Some Chinese have even stepped in to compete with traditional African goods. For example, in Cameroon there is a popular doughnut called the ‘Ca va se savoir’ and is sold by Cameroonian merchants. The Chinese, however, made their own version which “sells for 10 CFA francs less than the real thing and is made with highly questionable flour” (Michel & Beuret, 2009, p. 116). This type of unfair and unwanted competition has fueled African dislike, and in some cases hatred, of the Chinese. Some governments in Africa are responding to this
  • 74.
    73 Chinese flooding ofthe market by restricting visas and trying to control how many Chinese are allowed to operate businesses. All in all, “it seems that every country in Africa is facing the same dilemma: how to satisfy the people’s demand for cheap Chinese goods without being overrun by the Chinese themselves” (Michel & Beuret, 2009, p. 119). With regards to the West, they are largely absent from this small-business discussion. There are certainly Western shop and restaurant owners scattered across Africa, but they haven’t come in the numbers and with the fervor in which the Chinese have. The West is much more present in big business than in small. From a regulatory perspective, African governments have to become actively involved with protecting African business owners in local markets from outside domination. This Chinese flooding of African markets is a real issue, and it is negatively affecting the African opinion on China. This is true even though Chinese private actors are a comparatively small, and separate entity from the Chinese government and China’s overall activity on the continent. Conclusion Private actors have a real and growing presence in Africa. China is making more of an impact business-wise on the continent. The West, while once the only players in the game, are now being outbid by the Chinese, who “operate with less bureaucracy, are faster and cheaper and, as a rule, provide financing for projects with low-interest loans from state-owned banks” (Grill, 2013). This can be a positive thing, lowering prices, increasing employment opportunities, and building much-needed infrastructure. There is enormous opportunity with engaging Chinese business, but left unregulated, Eastern involvement could spell disaster for Africa.
  • 75.
    74 Section 7: Selectingand Managing a Partnership in Development It is no question that Africa has the ability to develop and prosper economically. While some are quick to write Africa off as ‘the failed continent’, there is a remarkable amount of knowledge, ingenuity, and ambition among Africans. Through the increased transnational interest and competition on the continent, Africans are beginning to reconnect with their own power to shape development and drive economic prosperity. Of the world’s ten fastest growing economies, seven are in Africa. There is a momentum that has been picking up speed over the last several years, and it can translate into economic, social, and political development for Africa, if used strategically, and managed carefully. It is true Africa is ready to develop. But the continent cannot hope to undertake such a large task alone, however desirable that option may be. Let us return once more to the central question guiding this East-West comparative analysis. Who is a better partner in development for Africa? The answer to this question spans many economic, social, and political topics and seemingly shifts by the second. It is an answer that may not be the same in a year, a month, or even a week from now. With that time- sensitivity in mind, I will propose an answer. The Ideal Partner In Development: Criteria Review In the introductory section, we defined the qualities an ideal development partner would possess. They include the following: 1. Equitable and Respectful Relations 2. Maintenance of Sovereignty 3. Ability and Willingness to Finance Sustainable Development in Africa
  • 76.
    75 4. Shared Experienceand Understanding 5. Historical Element Bearing in mind the information discussed previously, let’s zoom in and determine how the West and China held up to these standards. Equitable and Respectful Relations: The definition of a partnership is an arrangement in which two parties agree to cooperate to advance their mutual interests. Therefore, a desirable partner in development needs to contribute to a mutually beneficial, equitable relationship in which both parties treat each other with respect. There are always exceptions to these guidelines in any relationship, and no partnership is perfect, but a partnership should function as a two-way street. The West began its relations with Africa on the basis of a master-slave power structure, and since independence this has largely remained intact. The West views Africa as a patient, not a partner. Through Western-based, multilateral organizations like the IMF and World Bank, they dictate to Africa what it should do regarding every economic, political, and social issue. They have imposed conditions and development policies for decades that have done absolutely nothing to bring about economic development. Moreover, they do not listen to the voices of Africans and seem intent to make sure there are never any ‘Africans at the table’. China doesn’t have the colonial hangover that the West has, and because the country went from a similarly bleak developmental situation to the economic powerhouse that it is today, the Chinese development model is both believable and inspiring. The Chinese treat African leaders with respect, and don’t dictate policy or impose conditions tied to aid or investment. As demonstrated through countless visits form the Executive government across the continent, the Chinese really care about cultivating a relationship through South-South
  • 77.
    76 cooperation. When Chineseworkers or experts go to work on projects in Africa, they lives as the locals do and provide a better value for Africa. When financing development projects, the Chinese listen to the recipient governments and follow their lead. They are able to connect with the African experience in ways that the West could never hope to, because just decades ago they were not much different than Africa is today. Maintenance of Sovereignty: African countries are just that—countries. They are independent, sovereign countries and a proper development partner must recognize and respect this fact. Certainly both parties can learn from one another, but in the end African countries should have the final say of what is best for them and their people. In the West’s interactions and involvement with Africa it is clear to see that neither the U.S. nor the EU view African nations as independent. Europe is still involved in the African financial and legal systems to an extent that would be unheard of anywhere else. The U.S. is determined to create a carbon copy of the American liberal democracy in Africa, with little care or regard to the African opinion of what an ideal governmental structure should look like. The West maintains a very patriarchal relationship with Africa, and certainly does not respect the sovereignty of individual African countries. China, on the other hand, recognizes and respects sovereignty. They look to African leaders to make their own decisions and expect the same respect and consideration in return. China had a brush with Western control in the past, and while they were quick to prevent Western colonization in their own territory, they did not fail to notice the effect it has had on other parts of the world. They view Africa as an attractive business destination, but realize that it is privilege to conduct business there, not a right.
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    77 Ability and Willingnessto Finance Sustainable Development in Africa: The point of seeking a partner in development is to cooperate to bring about positive, sustainable development. Africa has rich natural resources and vast human capital. What it lacks is the proper financing to build infrastructure and harness those resources, and that is where a partnership can make a difference. But it is important to clarify that ‘financing’ is not enough. In order for development to be sustainable, Africa has to be able to repay the financing it secures. A suitable partner will understand this, and work with African countries to come up with a feasible method of financing that will ensure ability to repay on the loans, adding an element of confidence for both parties. The West has provided Africa with billions of dollars in loans and other forms of aid. It is almost unbelievable that all that money didn’t, if only by chance, bring about development. But, unfortunately, a pile of money put towards the wrong problem is little help. The West has targeted governance, economic restructuring, trade reforms, and health issues, but these topics matter little when the people have no education, no electricity, no opportunity for employment. The West is willing to provide financing, but only for those projects and aims that it deems necessary and important. Europe and American aid focused on infrastructure and education for a brief time, but then moved on to the next ‘aid fad’ and left Africa struggling to build the basics in order to have a functioning society. The West also helped Africa accumulate vast amounts of debt, of which it cannot pay back. This has lead to and perpetuated the underdevelopment of Africa, in which the end goal of development has not just halted, but has been pushed back. China recognized Africa’s need for infrastructure and industry in Africa, and came ready to help build it. Using the financing strategies that Japan had used with China only decades earlier, it offered resource-backed loans to trade buildings and roads for natural resources.
  • 79.
    78 And while theIMF and World Bank argued over loan terms, the Chinese build stadiums, hospitals, schools, housing, parks, and railroads. China is in a good economic position to finance African development, and Africa has the resources to exchange. The Chinese are hardworking, and value-oriented which allows Africa to get more for its money. The Chinese do not expect as high of a return on investment as the West, and they do not send expensive experts and officials that make triple-digit salaries and cut into the aid budget. Shared Experience and Understanding: Often the most successful relationships involve parties with common values, motivations, goals, and perspectives. The more parallels that exist in these areas, the easier it is for the parties to see ‘eye-to-eye’ in negotiations, and the easier the overall relationship functions. Shared experience is crucial because it allows open and honest communication, as neither party feels as though they are inferior to the other. Shared experience is great because there are numerous opportunities for parties to learn from one another. The West owes a large amount of its wealth to Africa. Colonialism spurred an economic boom in Europe, and slavery propped up the American economy for years. While it is true that the West has been engaging with Africa for a longer period of time, much of this was spent as a ruler. They stole things from Africans that can never be replaced. And they have done little since to restore or repair the damage they caused. As far as colonization, China did not experience it in the same manner and to the same extent that Africa did, but that’s not to say that China avoided foreign pressures entirely. In the nineteenth and early twentieth centuries, “Chinese foreign relations with most major world powers devolved into semi-colonialism as Britain, France, Germany, Russia, Japan, and the US coerced trade and territorial concessions in a series of so-called unequal treaties” (Larson,
  • 80.
    79 2011). The Chinesealso suffered through the Mao regime, where widespread poverty and oppression were commonplace. Through a strong focus on industrialization and economic development, and with financing from the Japanese, FDI from members of the Chinese diaspora, and other sources, China lifted itself from poverty to become the world’s second largest economy. The Chinese believe that their model of development can work in Africa, and offer a powerful alternative to Western development models. Historical Element: It has been said that the past is often the best predictor of the future. This translates to relations as well. While it is true that all relationships have their issues at times, the best development partner will have had a overall positive relationship with Africa in the past, and this will lend itself to a partnership will less tension and more cooperation. The West has unfortunately had a consistently negative historical relationship with Africa. The opposite is true with China. China is self-interested but respectful. Yes, they are here for business, but they are quite clear in that respect. The West operates under a guise of altruism that is both misleading and unhelpful. With Chinese involvement, Africa and the world have begun to view the continent for all its possibilities instead of its failures. Perhaps the most powerful thing the Chinese have done is to make Africa attractive to investment and important on the international agenda again. China has forced the West and the World to take a second look at Africa. Managing a Development Partnership: Mutual Benefit Realized Deciding to partner with China is not the end of a development strategy for Africa, but the beginning. Working with the West is safe, in that Africa knows by now what to expect, but a relationship with the Chinese is high-risk, high-reward. China has the potential to be a real part
  • 81.
    80 of the solutionfor Africa, but African leaders must not be fooled. The Chinese are not there just to help Africa grow and develop. They may not be actively suppressing development as has been the case with the West, but they aren’t going to put African interests before their own. For a Chinese partnership to be effective, Africa will have to step up and be its own advocate. Leaders have to strategize to maximize the benefits, and minimize the negative affects of China in Africa. The most important area to focus on is private industry. Africa has to be quick to act and put measures in place to protect small business, and regulate big business. This will ensure that Africans are truly benefiting from the relationship. A passive role will not work with the Chinese. As Professor Chris Alden said in his 2005 essay, Leveraging the Dragon, “Africa should learn to say no to China, and if it cannot do that, then it should at least start negotiating conditions favorable to its own development, just as China has done to the Western companies that want to build factories in its special economic zones” (Michel & Beuret, 2009, p.257). Africa must be business savvy to take advantage of China’s interest. A Way Forward: The Age of Africa China has built something in Africa that is more important than roads, and more valuable than gold. They have built confidence—a renewed confidence in Africa that is felt by leaders and citizens alike. A confidence in the belief that they are not doomed to perpetual stagnation, a confidence that Africa has the ability to develop and the potential to succeed. The Chinese have also built competition—competition for Africa’s attention. The United States and Europe have never been more interested in Africa as they are now that the Chinese have pursued African business. India has begun to invest more heavily, and South America is even moving in. The world has begun to think, “if China has bothered to invest so much time, money, and energy in Africa, then there must be an opportunity there that’s been overlooked by the West” (Michel & Beuret, 2009, p.259). From a business standpoint, being desired and
  • 82.
    81 sought after isan incredibly advantageous position to be in. If African countries really exploit this competition, they can get the infrastructure they need for much less than they would have paid even five years ago. This will make the money they do spend go farther, and make development more affordable. Real, lasting development has never been so well within Africa’s grasp, but leaders must be wise in negotiation and selfless in pursuit of this goal. For it is leadership that will ultimately make or break development in Africa. With China’s involvement, Africans have been presented with an alternative path, and an alternative future. The question is, will they seize it?
  • 83.
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