Daily Nation, August 29th 2010
By Justus Ondari
Quoted: Dr Martyn Davies, Chief Executive Officer – Frontier Advisory
Be it financing and executing
massive infrastructure projects — roads, power plants and mineral extraction,
or small time commercial ventures such as textile, electronic and other
household goods, the Chinese are literally driving the African economies.
It is a phenomenon that has
triggered a strong wave of reaction from the various African countries,
including Kenyans, ranging from open-arm welcome to indifference, to even
hostility bordering on Sino-phobia.
An expert in Sino-Africa relations,
Dr Martyn Davies, warns that while China is a significant investor in Southeast
Asia, one can hardly hear any criticism against the Chinese from that region.
“It (criticism) is coming from Africa, partly due to the vested western political interests in this (Africa) region,” Dr Davies, the chief executive officer of Frontier Advisory (Pty) Ltd, a research and strategy consultancy firm on emerging market economies, said of the People’s Republic of China, which established diplomatic relations with Kenya on December 14, 1963.
Fuelling interest
While this is subject to serious debate, the biggest question is; what is fuelling China’s sudden interest in Africa, Kenya included? “When we changed our foreign policy from the West and looked East, we opened our doors to the Chinese and welcomed them with our arms open,” said Dr Tabitha Kiriti-Nganga, a senior lecturer, School of Economics, University of Nairobi.
Immediately the Narc government came to power following the 2002 General election, the new regime started courting the Chinese by, among others, senior government officials including President Kibaki visiting Beijing while senior Chinese officials came calling in Nairobi such as Vice Premier Zeng Peiyan in February 2005.
Significantly, President Kibaki was among the African heads of state and government who flew into Beijing in 2006 at the invitation of the Chinese government for a trade conference. He returned with Sh6 billion worth of financial aid.
It is a diplomatic and economic relationship that has continued to blossom in his second term as seen by the Head of State’s visit as well as other members of his government such as Prime Minister Raila Odinga and Vice President Kalonzo Musyoka, with the latter visiting Beijing as late as last week.
While the ensuing bilateral agreements have resulted with total bilateral assistance of Sh42 billion, including the Sh1.2 billion grant announced during Kibaki’s latest trip — the third in five years — to China in May this year, they have also seen Chinese firms snapping up lucrative infrastructure projects.
For instance, among others, China Road and Bridge Corporation (CRBC) upgraded the over 470 km highway between Mombasa and Nairobi. Shengli Engineering won the Sh1 billion tender to refurbish the Moi International Sports Centre, Kasarani, which was built by the Chinese government for the All Africa Games in 1987 while the China National Offshore Oil Corporation (CNOOC) is involved in the exploration for oil in northern Kenya.
China Wu Yi Company, Synohydro Corporation Ltd and Shengli Engineering Construction are building Thika Road, which is scheduled for completion in 2011 at a cost of Sh26 billion. Other projects that have gone to Chinese firms include the Kisumu Airport, Nairobi’s southern and eastern bypasses, Jomo Kenyatta International Airport extensions, Kenyatta University library and the Sondu Miriu hydro project.
Although the same applies to many other African countries, including Zimbabwe where President Mugabe’s frosty relationship with Western governments has sent him into the bosom of the Chinese, however, the biggest driver of the Chinese into Africa is not “African.”
With a growing population, increasing unemployment, a vibrant manufacturing sector and fast improving life-styles, China’s demand for natural resources, markets for its products and job opportunities is growing at astronomical rates. This has made it seek new sources of resources, markets and employment for its people and Africa fits the bill.
“Since they have no hung-ups such as not going to “funny” suburbs and their aggressiveness to secure markets and resources is making most people in Africa feel as if they are being invaded,” said Dr Kiriti-Nganga, “and their cheap goods are driving out of the market the local entrepreneurs.”
In its 11th Five Year Plan (2006-2010), China’s Ministry of Commerce is encouraging its leading companies to establish offshore operations in designated Chinese special economic zones (SEZs) in foreign countries, a “Going Global” kind of strategy.
“Although manufacturing remains a small part of China’s outbound foreign direct investment (FDI) stock, it is rising as Chinese firms seek to guard against the likelihood of an appreciated Renminbi as well as to offset protectionist sentiment against Chinese products in the current global political economy,” he said.
Set up along the Chinese coastal provinces in the
mid-1980s and credited for China’s developmental success, Beijing is now trying
the same strategy in Africa by rolling out the economic zones in targeted
African economies –Zambia, Mauritius, Egypt and Nigeria.
Others are being mooted in Angola, Ethiopia, Mozambique, Tanzania and Uganda.
The China-Africa Development Fund (CADFUND), a venture
capital fund for Chinese firms to tap when investing in Africa, is spearheading
the financing of Chinese companies looking to set up in these zones. “China’s
“state capitalism” seeks to project power internationally through its companies
that are rapidly becoming emerging multinationals,” says Dr Davis.
But
the Chinese engagement with Africa is not a centrally steered process per se.
While Chinese government-controlled institutions are the key players by laying
the political and commercial groundwork, state-owned (local and regional)
enterprises, large private companies and small-scale entrepreneurs are
increasingly coming into play.
“All these do not necessarily pursue the same objectives and sometimes compete for contracts and market share,” says the Kofi Annan-chaired Africa Progress Panel. The Panel was formed as a vehicle to maintain a focus on the commitments to Africa made by the international community in the wake of the Gleneagles G8 Summit and of the Commission for Africa Report in 2007.
And there are good reasons why China is succeeding in Africa, edging out the continent’s traditional Western partners. Apart from their efficiency and speed of completing projects, its policy of not attaching any conditionality to its trade and aid to Africa has seen it literally run out of town the Westerners although this has been the source of its criticisms in the continent.
For instance, while the World Bank’s insistence on due diligence on the contractors has delayed the construction of Nairobi’s 30km Southern bypass, the city’s 85 per cent Chinese funded Northern and Eastern bypasses — a total of 70 kilometres — are almost complete, save for delays caused by Kenyans who have encroached on its path.
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