August 31, 2017

Africa must hold the cards in China ties

Business Day (SA) - China’s deals in Africa are negotiated in such a way as to create new frontiers for Chinese labour, capital, materials and contract fees. But the opposite is true in Africa

ARTICLE:

It doesn’t take long for tension to rise when the issue of China in Africa is raised in public forums on the continent.

Last week was one such case. At the Infrastructure Africa Business Forum in Sandton, grumbling emerged about the preferential access enjoyed by Chinese firms to lucrative construction and infrastructure projects on the continent, often to the detriment of broad-based African development.

More than a decade has passed since China’s engagement with Africa’s governments, its resources and its consumers began in earnest. And yet the issues that plagued its early expansion still linger. Many delegates at conferences across Africa and elsewhere over the years have analysed the complex Sino-African relationship and found the terms of engagement wanting. China was then, and still is, accused of riding roughshod over Africa’s development needs in its relentless pursuit of the bottom line.

 To avoid further exploitation by a foreign power, governments were urged to develop a continental, or at least regional, strategy to ensure Africa benefited from the interest of China and its deep pockets in the new millennium. But it looks like this has yet to happen.

China is here to stay. It is estimated that Chinese companies are responsible for about half of the African infrastructure being built.

No other foreign country is playing at this level. Africa is benefiting from Chinese-built infrastructure and, over time, the Chinese have diversified the nature of their engagement, investing in manufacturing, providing aid and technical support, transferring technology and assisting with skills training.

A Chinese CEO at the Sandton event said that contrary to popular opinion, importing labour from China was an expensive option.

The company in question has 30 projects under way, requiring about 9,000 workers. Skills training of locals by the Chinese is failing to meet the huge demand. But the relationship is tainted by negative perceptions about the Asians’ way of doing business. The cultural and language disconnect has also not helped.

But blame for China’s undue advantage in Africa, and its preferential resources deals, should be laid at the door of African governments, not the Chinese. Africa’s leaders are still not setting the agenda and making it clear what Africans want out of this relationship. To the contrary, government-to-government deals with China tend to be opaque and above scrutiny.

Tenders, empowerment, safety, environmental and local content rules are regularly bent by officials to sweeten deals for the Chinese.

The CEO of an African engineering company at last week’s event bemoaned the fact that African governments failed to build opportunities for their own companies into such deals and only brought in local contractors to pick up the pieces if there were problems with the Chinese. China’s deals in Africa are negotiated in such a way as to create new frontiers for Chinese labour, capital, materials and contract fees. But the opposite is true in Africa, mostly because states occupy the space and crowd out the local private sector.

Increasingly, the Chinese are focusing on the soft issues to avoid falling foul of their African hosts and critics. They are starting to respond to calls for their companies to be more cognisant of local transformation needs. But for now, the old story remains.

We are reminded that it is Africans, not the Chinese or anyone else, who have to transform Africa and do so by putting in place the conditions and incentives for global players to assist with transformation, not drive it.

• Games is CEO of business advisory Africa @ Work.

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