China's winning approach to African investment – DW (English)

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Many African decision-makers see their relationships with Europe as recipients of aid, rather than as equal partners on the ground, according to the Friedrich Naumann Foundation. DW examines why this gives China an edge.

This expressway in Nairobi, Kenya was built by a Chinese state-owned company
The Nairobi Expressway winds through the metropolis like a giant river on stilts. It stretches over 27 kilometers (17 miles) through the heart of the Kenyan capital and connects the West African country’s most important airport with Nairobi’s central business district, the National Museum and the Presidential Palace.
Construction under the aegis of China took only two years. Now the toll road is helping to relieve the city’s congested traffic arteries.
China’s state-owned companies are increasingly ahead of their European competitors with swift decisions and speedy implementation of contracts in Africa. That’s according to a study published in June by the Friedrich Naumann Foundation for Freedom, a German organization for liberal and libertarian politics. The foundation is affiliated with Germany’s Free Democratic Party, currently in a coalition government with Chancellor Olaf Scholz.
When the Tanzania-Zambia Railway (TAZARA) project was completed in 1976, it was China’s largest single foreign-aid package and a symbol of Beijing’s support for newly independent African countries. China dispatched nearly 50,000 engineering and technical personnel to work on TAZARA. However, this mighty project has been waning since the late 1990s. Now the train transports more copper than people.
Zambia is constructing a China-funded mega project – the 321 km (200 miles) Lusaka-Ndola dual carriageway. The construction is being carried out by China Jiangxi Corporation at a cost of $1.2 billion (€1.042 billion), paid with a loan from China’s Exim Bank. At the groundbreaking ceremony, President Edgar Lungu called the project “a symbol of China-Zambia friendship in the new era.”
Another example of spending on a lavish scale is the construction and expansion of the Kenneth Kaunda International Airport. The total contract sum of the ongoing project is put at $360 million, also funded by Exim Bank of China and built by China Jiangxi Corporation. Many Zambians describe it as an unnecessary “white elephant” project.
The Bank of China has opened branches all over Zambia. It has been running a yuan cash business service since 2011, providing financial services to Chinese companies seeking to enter the Zambian market. It’s however unclear whether the bank issues loans to local Zambians.
Copper is Zambia’s main export commodity and Chinese firms have been active in the industry, for example, in the Chambishi Copper Smelter. However, they lag behind the major players like Switzerland-based Glencore, Canada’s First Quantum Minerals and Barrick, and India’s Vendanta. The Chinese are,however, rapidly increasing investments in the mines with a recent $832 million mine in Chambishi.
Zambia permits foreigners to trade only in wholesale, not in retail. Despite this, DW found out that quite a number of shops in the capital Lusaka were owned by Chinese businessmen, who come by once in a while to collect money. Local Zambians are hired as front men and the shops are registered under their names.
At this chicken market in the suburbs of Lusaka, vendors told DW that the large trucks from where chickens are traded are owned by Chinese investors. This angers locals who say the Chinese have taken away their livelihoods and deprived them of jobs. The Zambian government has denied that Chinese investors were engaged in activities such as rearing chickens and roasting maize.
Author: Abu-Bakarr Jalloh, Fang Wan
More than 1,600 decision-makers from 25 countries were surveyed, including top managers, employees of NGOs and civil servants.
Their answers paint a picture of a Europe that seeks above all to export its values to Africa, while loans, excavators and workers come from China.
“The Clash of Systems” is how the foundation describes the results of the online survey conducted by Kenya’s Inter Region Economic Network think tank.
China also financed a railway that was launched in 2019
Europeans are perceived by decision-makers as having an edge on most performance indicators, according to Stefan Schott, a project manager for East Africa and the Global Partnership Hub at the Friedrich Naumann Foundation.
Social standards, the provision of jobs for locals, environmental standards and the quality of products stand out, he said.
On a list of 17 criteria, Chinese companies come out ahead on only four indicators — they make decisions more quickly, implement projects faster, interfere less in internal affairs and have fewer qualms about using corruption.
Alon Kiiza, an elder of the area’s Indigenous Bagungu community, lives in the rural Buliisa district at the epicenter of this ongoing, foreign-led scramble for the continent’s natural resources. The 88-year-old is among many there watching the industrial hubbub with concern. “Drilling for oil will disturb the ecosystem,” he said. “The spirit of the land does not connect well with these machines.”
A serious cause for concern is the wildlife inhabiting the area. Some drilling will take place within Murchison Falls National Park which is home to elephants, leopards, lions and giraffes, as well as more than 450 bird species, from blue-headed coucals to red-throated bee-eaters. Environmentalists worry about the possible impact of oil drilling on animals here, especially in the event of a spill.
But the megaproject is already underway. In April, Uganda and Tanzania signed final agreements with the French oil multinational, TotalEnergies, and the China National Offshore Oil Corporation to extract about 1.7 billion barrels from a 425-square-mile drilling zone. Given its remote location, a Chinese construction firm has been brought in to build a 70-mile (112-kilometer) road to reach the oil.
Following its planned, first extraction in 2025, the oil will be pumped 900 miles through the East African Crude Oil Pipeline — the world’s longest heated conduit — to Tanzania’s port city of Tanga, surrounded by mangroves and coral reefs on the Indian Ocean. Not only will the crude oil cross critical wildlife habitats, campaigners say the pipeline will displace thousands of farmers.
Even as the Ugandan government pushed ahead with this oil project on the shores of Lake Albert, it has also adopted a groundbreaking environmental law that could protect fragile habitats. The law formally recognizes the rights of nature in the same ways that human rights are recognized, treating ecosystems as living beings and allowing them to sue in court cases through guardianship bodies.
Kiiza sits next to Dennis Tabaro, a Ugandan environmentalist who is helping revive Indigenous environmental practices here that were eroded by the colonial era. The rights-of-nature law is rooted in ancient, Indigenous thought like of the Bagungu. The world’s 370 million Indigenous peoples account for 5% of the global population, yet live on lands that shelter 80% of the planet’s biodiversity.
As part of their renaissance, Bagungu elders have drawn maps of their ancestral land, complete with precolonial calendars showing changing seasons, breeding cycles, harvest time and rituals. One map visualizes old customs, another shows present-day disorder and third offers an optimistic, biodiverse vision for the future. The map-making process has rekindled memories of their heritage.
Despite environmental fears, the government is promoting the oil reserves as a way to boost living standards for Ugandans, more than half of whom live in poverty. This child had missed school to help his family collect crops. TotalEnergies says its project will create 6,000 jobs, mostly for locals, and that social and environmental risks had been mitigated in line with international standards.
There is no guarantee that Uganda’s rights-of-nature law will put a brake on the oil project. For one, it contains a clause stating that the government may choose which natural places are to be protected by the law and which are not — a worrisome loophole. Likewise, nature’s rights are not guaranteed forever. Such rulings in both India and the US have later been overturned by judges.
Chinese and Ugandan workers rest during a hot day of construction. Lawyers believe the rights-of-nature law may offer a chance to limit the impact of the oil project, but not stop it. “[It] is a fait accompli — we should focus on the mitigation plan,” said Frank Tumusiime, whose environmental nonprofit lobbied for the law and is now helping write regulations to give it teeth in the courts.
Bagungu elder Julius Byenkya walks toward a hallowed grove of trees in the savannah outside Buliisa. This is one of many sacred natural sites which take the form of lakes, rivers or woods — providing important wildlife habitats that are also revered by the community. “This is our spiritual center,” said Mr. Byenkya. “Our prayer is that this place remains undisturbed.”
Author: Jack Losh
“Obviously, these are the most important factors; there is no other way to explain the success of the Chinese in Africa,” Schott said in an interview with DW.
Europeans would have to draw their conclusions from this. It also affects their reputation for imposing regulations, he said.
“The paternalistic behavior of the Europeans is a problem; the Africans have difficulties with that,” Schott emphasized.
In view of this realization, what is the recommendation for German and European Africa policy?
“We would never advise throwing the European values of democracy, human rights, sustainability overboard. That would damage Europe’s position,” said Schott.
But countries would have to examine whether one should approach conditions in Africa with European standards.
“If the best standards are so high that the Chinese always receive the bid for business, you haven’t done any good for the social situation,” he said.
The European Union talks about values, he said, but if a constructed road leads to a village, that’s also a value.
Schott also brought up the idea of a European investment bank, with a mandate for quick decisions. To facilitate this speed, all 27 EU member states would not have to be consulted in advance.
The partnership at eye level, which European politicians like to emphasize, must definitely be examined.
“The survey participants don’t see that, but rather perceive Africa as an aid recipient,” Schott added.
The EU wants to invest in Africa — but puts strong values on good governance before any finances are agreed
For James Shikwati, a Kenyan economist and co-author of the study, this is precisely the crux of the matter: Europeans are stuck in their outdated view of Africa, Shikwati told DW.
They dictate to Africans what they need and are trapped in their own value system, which holds them back. Europe emphasizes governance, while the Chinese focus on “hardware,” the concrete infrastructure to touch.
“They ask: Which road should be built from where to where? But the Europeans first check how many insects walk over it,” said Shikwati, laughing. “It doesn’t work that way in Africa,” he added.
Europe needs to tailor its investment plans and approaches to engagement to specific regions and manage them flexibly, he said.
For Africa, that means offering competitive and strategically focused policies rather than fighting existing ones, Shikwati added.
That’s the old Europe, he said, but what’s needed is a new way of thinking. “It’s not just about migrants coming from Africa, but the incentive should be the huge opportunities that exist in Africa for investment and development.”
Only 4% of Chinese investment flows to Africa, the economist said. The rest goes to the United States, Europe and other regions.
But that 4% has produced a lot in poor African countries in just under 20 years — while consolidating China’s influence as the continent’s most important trading partner.
How many elections a government holds and how human rights are respected is important, Shikwati stressed.
However, this will not bring about a major turnaround for African countries.
This article was originally published in German
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