China in Africa

Views and Perceptive From Tshepo Magagane

China in Africa: From all conversations, these are not some drunken pub harangue; they are with decision makers. ” Their Africa strategy is still like it is 1984!”

It is how do we start dictating terms – even at a very rudimentary basis – when I fly into various African cities, I am pleasantly surprised hey – modern airports (issues with the financing, yes), roads and infrastructure – and you are starting to see ecosystems sprouting around these economies – if I were to tell you that I am working on an industrial IPO and the company generates USD100m in EBIT!

We still need to dictate terms but the Chinese are already adding far more value than the West ever did – not saying it is enough; but they already are!

[Lobito Corridor plan illustrates stark poverty of American imagination in Africa – Pan African Review

“This is a project that will showcase the American model of development.”  These were the words of US ambassador to Angola, Tulinabo Mushingi, when he spoke to the Financial Times on the subject of a new $10bn  US-funded rail investment in the country. At a time when terms like “de-dollarisation,” “multipolarity,” and “global realignment” have morphed from being aspirational fighting talk into evident realities on the African continent, the Lobito Rail Corridor was the statement investment that would roll back the advance of Chinese economic and diplomatic influence in southwestern Africa’s regional hegemon.  

In addition to reaffirming America’s status as a solid, long-term trading partner that will go band-for-band with Chinese investment if need be, the funding of a 1,300 KM railway line cutting laterally across Africa was evidence that the US was finally warming up to a new form of economic engagement on the African continent. Also speaking to FT, David Maciel, chief

 executive of Carrinho Agri, an Angolan agribusiness conglomerate planning to locate processing facilities and silos along the railway, the Lobito railway represents “much more than a minerals train.”  There was just one problem.

A railway map is worth a thousand words

Appearing on the What Is Money Show last year, my friend and Chief Strategy Officer at the Oslo Freedom Forum, Alex Gladstein made an interesting observation. Referencing multi-year research on the interaction between Western financial institutions and Africa, he noted that the preferred Western economic model for Africa is for the continent to produce nothing except cheap, unprocessed industrial inputs and (inedible) cash crops. Once these raw materials are extracted from the ground under this model, he said, it is important for them to be exported as cheaply and quickly as possible. To keep the industrial inputs cheap, as little economic benefit as possible should accrue to the locals in Africa.  There should be no beneficiation or processing, except the most rudimentary kind, so that no complex economic ecosystems and industries develop around the resources being exported. 

If the resource in question is crude oil from Escravos, get it on a tanker sailing to Europe as soon as it is extracted. If it is copper ore from Ndola, get it on a train that will arrive at Dar es Salaam port in 24 hours. If it is cocoa from Sunyani, get it on a truck arriving at the Tema harbour in 8 hours. If it is the day’s haul of uncut precious stones from the middle of nowhere in North Kivu, get it on a plane waiting on the rough airstrip near the rudimentary mine, from where it will fly directly to Dubai, Mumbai or Brussels for processing.

This model, which closely resembles the colonial resource extraction model of the 19th century, both in intention and outcome, has created vast amounts of visible poverty on the continent and now increasingly attracts criticism as the Global North slowly realises that its entire system of prosperity is built on African misery. It has also provided the contextual backdrop behind China’s spectacular gains in influence around the continent. For the first time in knownhuman history, an external power has invested vast amounts of money in Africa to build infrastructure intended to grow the continent’s economies, as against merely evacuating its resources quicker and with less local participation.

On the surface, a $10 billion American investment in Angola looks like the perfect riposte to China’s estimated $45 billion – and counting – of investment in the oil-rich country. The problem is that the investment in question is exactly what you would expect an American investment in Africa to look like if the year were 1956. David Maciel might insist otherwise, but a simple glance at the map of the railway tells a clear and unmistakable story about the purpose and

 intentions behind the Lobito.

Source: The China-Global South Project (CGSP)]

To the East lies a cluster of the most economically and infrastructurally integrated countries in Africa – Tanzania, Kenya, Rwanda, Burundi and Uganda. Even allowing for the instability in South Sudan, Ethiopia and Somalia, East Africa commands over $1trn worth of GDP in PPP terms, and has a market exceeding 500 million people. By way of comparison, in 1950 at the height of American post-war investment in Europe, the total continental population of the war-ravaged,

 resource-poor continent of Europe was a little over 500 million. If one were to put these chunks of data together and see a massive American rail investment case for linking DR Congo to the East African Railway master plan that is already completed in parts of Kenya, Tanzania and Ethiopia, it would seem like a no-brainer.

The US, however, is not interested.

Incredibly, rather than showcase “the American model of development” in a relatively well integrated and geographically advantageous African environment with an educated regional market roughly the size of Europe and almost infinite investment upside, the Americans decided to look Westward, and plunk $10bn on a railway through 1,300KM of dense Angolan tropical rainforest. Save for the grain silos and processing units along the rail route – which the project partners are eager to sell as industrial symbiosis – the route is almost entirely devoid of any kind of meaningful interaction with African industrial or population centres.  

If you were to place a ruler on a map and draw a line from the Congolese mining hub of Kolwezi where the line originates, to the Chinese-built port of Lobito where it terminates on Angola’s west coast, you would have almost perfectly traced the proposed route of the Lobito Corridor. 

With just five stops along its 1,300KM length, its obvious aim is to transport Congolese minerals from mine to port as quickly as possible, and with as little contact with the local population as possible. Stop me if you’ve heard this before.

Meet the new America, same as the old one

510KM up the EN100 highway from Lobito, Angola’s bubbly capital city Luanda has benefitted from an altogether different sort of economic partnership with a foreign power. I have previously written about the Chinese-built city of Kilamba – on Luanda’s outskirts – and how it became the biggest success story for planned urban expansion in Africa after initially being written off as a ‘Chinese ghost city in Africa.’ Elsewhere around the capital, Chinese investment has been quietly but busily carving out new areas of influence in Angola that betray an altogether different set of goals from those of the Lobito Corridor. Within commuting distance of Luanda, the $1.6 billion Huatong Aluminum Industrial Park is taking shape, with the aim of creating an Aluminium industry chain in Angola.  Over five construction phases, this project is expected to generate 12,000 jobs, $3 billion in annual turnover, and $400 million in annual export earnings for Angola. 

The Chinese investment behind this project is obviously not born out of philanthropy, but the key difference between the Chinese model of African economic engagement exemplified by the Huatong Industrial Park, and the American model of African economic engagement exemplified by the Lobito Corridor is that one exists at eye level to make a profit, while the other is persistently condescending, pathologically grasping, and seemingly incapable of evolution. 

While China’s success on the African continent shows that it is possible for both parties to win in a trading relationship, the Lobito Corridor exemplifies all that is parochial and hopelessly out of touch about US Africa policy.

China has invested billions of dollars in rail connections, ports and communication infrastructure in Angola, Kenya, Tanzania, Ethiopia and Uganda. Clearly, a big motivation for doing so was to place itself in pole position to access resources from the mining belt that spans DR Congo and Zambia – which it has done.