Africa does not need resource colonialism


ANALYSIS:While Chinese demand for oil and minerals benefits Africa, there are negative side-effects, writes Padraig Carmody

ACCORDING TO Tony Blair, China is the country with the most influence in Africa. How is this influence being used, and has the Chinese impact been positive or negative? China has had both direct and indirect economic impacts on Africa. China is the world's third-largest recipient of foreign investment, some of which might otherwise go to Africa.

So it is a competitor for investment and markets. However, the most important indirect economic impact on Africa has been through the channel of commodity prices.

China is now the world's largest consumer of copper and accounts for 40 per cent of the growth in global oil demand, pushing prices dramatically higher in recent years. Because some 80 per cent of what Africa exports is primary unprocessed commodities, its economy is growing quickly. It now hosts seven of the world's 20 fastest-growing economies, a dramatic turnaround from the 1980s and early 1990s when negative economic growth was not unusual in many countries. This is to be welcomed.

But what about the quality of this growth? Who is benefiting from the resource boom? Some refer to a two-speed Africa where oil and mineral-based economies grow fast, but those based on agriculture lag, and wealth becomes even more unevenly distributed.

There is concern that the Chinese-driven resource boom is increasing class inequality and may be strengthening authoritarian states. Equatorial Guinea is an oil-rich country in west Africa with a population of about half a million people and higher per head income than Ireland, if local prices are used.

Recently, its economy has grown at 20-30 per cent a year and it is ruled, in effect, by the Obiang family.

Despite its high average income, poverty is rife as much of the country's oil revenue finds its way into the ruling family's bank accounts. In the US, there was a congressional investigation into the money held offshore there, but the Bush administration recently decided to unblock and return $700 million of this, as Equatorial Guinea is a close US ally.

Chinese investment and trade also has gender impacts on the continent. Many of the new jobs being created in mines and infrastructure construction are for men. Women are often more likely to be employed in the clothing and footwear industries which have been affected by the Chinese "textile tsunami" which has swept over the continent.

Because of government subsidies and a highly competitive exchange rate, Chinese traders in Namibia can reportedly sell a pair of shoes for 30 US cents, which no African producer can hope to compete with. While consumers benefit, jobs are displaced.

In Zambia, some women traders selling second-hand imported clothes can't compete with cheaper, new Chinese imports. The quality of these imports is also an issue.

In Zimbabwe you can be arrested for saying zhing-zhong (slang for poor quality Chinese goods).

China is sensitive about the impacts of its manufacturing industries on Africa and is setting up five manufacturing zones around the continent, and self-restricting textile exports to South Africa.

China's growth has also opened up opportunities for some big South African companies to invest there, such as South African Breweries. Africa's manufactured exports continue to grow, much of them low-tech refined and processed minerals.

Also as African economies grow, some Chinese manufactures see opportunities there. For example, Ghana in west Africa now consumes more bikes per head than China, and a Chinese company has consequently set up an assembly operation there.

Sectors complementary to Chinese growth, such as tourism, are also expanding, as more countries are granted Chinese-approved destination status, which allows for direct marketing there. While this is welcome, what will happen to African economies when the oil, minerals and raw materials run out?

China is also having substantial environmental impacts. It imports almost half of Gabon's forest exports, much of it illegally harvested. The current deforestation process in Mozambique is referred to as the "Chinese takeaway" and a Chinese ship is reported to have docked in Mozambique with four tonnes of shark fins, leading to accusations of resource colonialism.

There are also major concerns about the proposed $2.3 billion Mphanda Nkuwa dam in that country, to be built with Chinese assistance, particularly as a 7.5 Richter scale earthquake was recently recorded there.

In Sudan, the Chinese-funded Merowe dam project will displace an estimated 75,000 people, mostly small farmers living on the banks of the Nile. Three protesters were shot dead in 2006. While faster-growing economies in general seem to be associated with a reduction in conflict, in certain oil-rich countries, such as Sudan, this is not the case.

The Chinese opened an oil pipeline, running east, from the south to Port Sudan in 1999, while in neighbouring Chad, another oil pipeline facing to the west through Cameroon (Africa's largest-ever private construction project) was opened in 2003, largely financed by American oil company money.

In between these two pipelines lies what geographers call a geopolitical fracture zone, where western-backed Chad and Chinese-backed Sudan confront each other, through proxy rebel movements.

Oil burning and climate change also contribute to the droughts which make resource competition between pastoralists and settled farmers for water and land in Darfur so acute. As China moves towards overtaking the US as the world's largest greenhouse gas emitter, will we see more of these types of multi-layer resource conflicts in Africa?

China is doing much good in Africa. It is helping revive moribund economies, building infrastructures, giving debt write-offs and sending badly-needed doctors and technicians. While it is often accused of undermining good governance, the World Bank recently reported improvements on the continent on this issue. In any case, western governments continue to support friendly, resource-rich dictatorships such as Equatorial Guinea where missionaries, tourists and aid workers have been executed. China is also opening up policy space through the so-called "Beijing Consensus" which argues that developing countries can leapfrog into higher technology activities rather than sticking to their comparative advantage in raw material exports. This policy is promoted by the western-dominated World Bank and the International Monetary Fund.

There is a mix of motivations for China's engagement in Africa - from resources to diplomatic support at the UN to solidarity. It works through both authoritarian governments and more democratic ones such as Zambia. It appears not to seek hegemony or to impose its own politico-economic model, but has a flexible approach where relations are maintained and deepened as long as raw materials are exported and Taiwan is not accorded diplomatic recognition.

China's resource strategy in Africa, at least in more democratic states, is different from colonialism which ultimately depended on conquest and force. However, there are also major problems. To date, it is reinforcing the resource-based structure of African economies and arguably strengthening authoritarian states.

Despite its stated policy of non-interference, selling arms to Sudan or Zimbabwe has dramatic implications for those countries' populations. It could be viewed as perhaps the most dramatic form of interference in internal affairs as their people struggle for democracy and a fairer sharing of their countries' wealth.

Padraig Carmody is a lecturer in human geography in the Department of Geography at Trinity College Dublin