Tuesday, 2 April 2013

How the west can contain Chinese influence in Africa

Thika Superhighway in Kenya: Buildby 
Chinese funded byAfDB
"THE WEST DOES not understand Africa," said a Kenyan economist, Aly Khan Satchu, in an interview with CNC, a Chinese Television Channel. A Sudanese economist concurs. "The Chinese build infrastructure for us in the 1970s and they are still functional." How right these two are!

Both analysts explain the decline of western influence in Africa. 

The rout of the Western Influence in Africa did not begin with the entry of the Chinese.It began early. Even in the private sector, home bred companies are elbowing out TNCs such as Unilever. And these upstarts that are elbowing out TNCs are part of the reason Africa is growing robustly.

The start- ups successfully competed and elbowed out transnational corporations in Kenya because the latter grew fat and lazy, thus losing their grip on the market. The same argument was repeated in the financial sector. I wanted to find out how indigenous banks - some as young as six or seven years old competed with, out grew, and now are elbowing Western TNC banks out of the African market.
  "Wrong decisions born of a slow decision making process." That is the culprit.  And it also plagues western governments and their institutions.  Read http://eaers.blogspot.com/2011/12/how-west-lost-africa-to-china.html
Speaking on the demise of western private sector in Africa, Industrialist Vimal shah said; "They slept on the job and became lunch for somebody else." Mr. Shah owns Bidco industries, a large manufacturer of consumer goods.  His company, born in the mid 1980s, now operates in 15 African countries, significantly eating into the market of Unilever Group in eastern Africa.

Africa is on its feet, and is dealing with only those who make their decisions of their feet. It is no longer keen on the traditional "Board room decision makers," much less anyone who pretends to understand Africa better than Africans themselves. On condescending attitude, the West excells- and this is their undoing.

Kigamboni Bridge in Tanzania:
Build by Chinese funded by Tanzania
The truth is Africa is on the second decade of persistent economic growth, averaging 5.6 per cent a year. Experts, such as the World Bank project that in the next five years, the continent will be the fastest growing region in the world.  And according to the UN Economic Commission or Africa, UNECA, the continent is a potential economic growth pole of the world. A growth pole is a region whose economic growth causes other parts of the world to grow too.  Businessmen in Europe have bought this view and are positioning themselves to get a slice of the African action before the Chinese and other easterners take it all. Please read http://eaers.blogspot.com/2013/01/the-second-scramble-for-africa.html

Much of the  growth is Africa’s own doing.  The growth in Africa is driven by the growth of domestic sectors which has seen per capita domestic revenue mobilization rise to U$441 compared to aid which has shrunk to $41 per capita. Good Commodity prices have also had their share I Africa’s good tidings.

 Consequently, the continent is lifting an estimated 15 million people out of poverty a year. This means that so far an estimated 90 million have been lifted out of poverty. At this rate of growth, an estimated 120 million people will join the middle class by 2017.

The growth of the private sector has spawned intense pressure on Infrastructure: They need plenty of electricity in order to cut production costs and be competitive internationally; they want to reach wider markets in region.

Such increased demand on infrastructure service s has clearly defined the developmental priorities in Africa. Infrastructure, infrastructure and more infrastructure. That is what government in Africa are to develop to enable the private sector to thrive. Estimates show that Africa needs some US$80 billion are years over the next 30 years to build roads, railway lines, sea ports, Hydro dams, geothermal wells and airports in order to meet the latent demand in infrastructure. The continent on its own can afford an estimated $30-40 billion of these.

 Therefore the continent is not ready to deal with laggards. China understands this very well because she needs the resources in Africa but is handicapped by the paucity for infrastructure. Consequently, infrastructure in Africa is also her priority.

Lamu Port in Kenya: Any takers?
This synergy is drawing China to Africa. It is also drawing Africa to China. And Africa is gaining from this she's getting quality infrastructure at affordable rates. The Chinese work long hours to deliver their projects on time.

One factor that western analysts ignore is the growing prosperity in Africa has made the continent more independent from the west. The continent is relying less on aid and financing its own projects. Some estimates show that by 2012, Chinese Engineering firms were working on contracts worth US$45 billion much of which was funded by African governments.

To its credit, western private sector-especially in oil exploration- Africa sectors is growing. This is a clear indication that Africa chooses its partners according to its needs. The western private sector has a lot to offer to Africa. First it has the Technology and the financial muscle to help Africa develop its resources. Therefore it is an indispensable partner in Africa's resources development. A word of caution though, given that Africa's especially the eastern coast is now a confirmed fossil fuels producer in the future.

We expect intense competition for futures exploration licenses. We also expect an upsurge in M&As in in this sector. Here western companies have to be decisive and quick in their decision making lest they also lose Africa to China.

 These are the players that will help hold back  Chinese influence in Africa. But even the bold and daring will have to take Africa serious because it can look elsewhere. Just ask the giant international telecoms, such as Orange and Dutch Shell and BP. Getting into Africa late is very expensive.

6 comments:

  1. Excellent Post. Thanks Musyoka. I hope you will clarify, in your next post, the new financial conditions that the Chinese established in the minds of the new generations of "Mother Africa" for the West to deal financially with the African own real and actual needs. Otherwise they must look for other places to invest their own excess funds outside their own countries, to increase their own international assets.
    Excellent and thanks again

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    1. Thanks Wail. I think we have made our point. It is now upto the west to change their business model in Africa. If they choose to do things as before....too bad.

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    2. Thanks Musyoka. Yes, the point is clearly made.
      As you surely know, the western tactics, not their minds, might change in one way or another. They will always seek ways and means for using their financial support to influence the African weak governments, societies, and elites for reaching their own goals, including the idiot sexual thing. They will never stop.
      Your valuable insights should, therefore, include the need for discussions for the establishment of the new clear-cut rules for all to deal with us in advance, from now on and in the future.
      Thanks again and wish you all the successes.

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  2. THanks. This forum is not my exclusive domain. I can give you the forum to express your ideas, including what you have just said. I think it is ahppening. I have just been watching South Africa's President discussing the recent BRICS conference in South Africa. He said that BRICs have formed a furom where issues should be discussed on an equal bassis. The current Economic Repoprt for Africa, says that Africa should only discuss investment aqnd aid according to her needs-Not accoridng to somebody else's fancies.

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  3. China has helped Africa,from time immemorial. Many observers talk about China as a new actor on the African development path. This view is quite misleading. The historical ties between China and Africa date back to the pre-independence period when the present-day African countries were colonies of the West and China has carried out a number of projects in these countries.In this regard to contain Chinese influence in Africa by the West would be a toll order. All the projects have been carried out at a bilateral level as China doesn’t have a development cooperation agency, however aid funding agency is handled by Department of Aid to Foreign Countries under the Ministry of Commerce. This Chinese development pattern seems to be an odd one out as China does not have a development cooperation agency such as USAID, Department for International Development (DFID) of UK, Japanese International Corporation Agency (JICA) and Canadian International Development Agency (CIDA) which are spread out across aid recipient countries, even though the Chinese Government pumps in a lot of investments in poor nations. This tendency has resulted in extension of aid in an uncoordinated manner. Therefore, your posting should have implored the Chinese Government to come up with an Aid Government owned organization to manage, evaluate, streamline and coordinate Chinese aid flow in aid in these aid recipient countries.

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  4. Thanks for your input. It serves to enrich this forum. I agree with you that China has always been in Africa-helping in infrastructure and other areas.However, the West had not sat up and taken note until China displaced Japan as the second largest economy in the world. That is when the west sensed that its grip on the world's economy and by extension politics and "ideals." was slipping through its fingers.Now it is busy mourning its loss . But Africa can leverage her newly found popularity in the world stage to ensure fast and equitable development. That's what the article is all about.

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