Lamido Sanusi on China in Africa

Photo source: ThisDayLive.com

Africa must recognise that China – like the US, Russia, Britain, Brazil and the rest – is in Africa not for African interests but its own. The romance must be replaced by hard-nosed economic thinking.

Engagement must be on terms that allow the Chinese to make money while developing the continent, such as incentives to set up manufacturing on African soil and policies to ensure employment of Africans.

Being my father’s son [Sanusi’s father was once Nigeria’s ambassador to China], I cannot recommend a divorce. However, a review of the exploitative elements in this marital contract is long overdue. Every romance begins with partners blind to each other’s flaws before the scales fall away and we see the partner, warts and all.

We may remain together – but at least there are no illusions.

Lamido Sanusi, Governor of the Central Bank of Nigeria, writing in the Financial Times Newspaper.

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The BRICS: A view from South Africa

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(Saurabh Das/Associated Press)

Last month the offices of a London law firm played host to a Royal African Society event entitled ‘The BRICS: A view from South Africa’. Dr Martyn Davies, CEO of Frontier Advisory, a South African research, strategy and investment advisory firm was invited to speak. His talk was wide-ranging and included an analysis of South Africa’s current position within the BRICS grouping, the challenges and the opportunities.

Davies stated early on that as demonstrated by South Africa’s joining in 2010, membership to the club had been largely down to geopolitics and not economics. The increasingly-influential BRICS grouping is made up of five of the world’s leading emerging economies – Brazil, Russia, India, China and South Africa. Even though BRICS members were united around a common vision of re-configuring the global economic landscape away from the erstwhile G8, what divided the BRICS nations was actually more powerful than what united them according to Davies. The intense economic competition that exists between them demonstrated this.

BRICS unity will come under greater scrutiny in coming months as the group seeks to strengthen co-operation on projects such as the BRICS Development Bank.

Compared to its BRICS partners, South Africa’s economy is the tiniest by some distance. Its domestic output stood at US$408.2bn according to 2011 World Bank figures. That is roughly a fifth of Russia’s and India’s economies, the next biggest, which stood at US$1.9tn. As expected, China’s economy led the pack at US$7.3tn while Brazil’s occupied second position at US$2.5tn. Despite its comparatively small economy, South Africa is an important member of the grouping as it is Africa’s largest economy and as some of its policymakers would like to believe, the cultural, trade and investment gateway to the continent – a view contested by observers such as Eliot Pence in his African Arguments article. And even if South Africa were to position itself as the “Gateway to Africa”, Davies argued that successive South African governments had not made deliberate efforts to making this more of a reality.

Of the five BRICS nations, South Africa is the one with “first-mover” advantage in Sub-Saharan Africa but it had been slow to actively formulate policies that encouraged and enabled greater penetration of African markets by its corporations, compared to China and Brazil. Davies stated that in 10 years no South African government minister had visited Angola, a mere 2-3 hour flight away from Pretoria and now one of the continent’s fastest growing economies. Contrast that with the number of high-ranking Chinese officials that have visited the country during that same period. He questioned how serious policymakers were about deepening their country’s engagement with the continent’s growth markets. An audience member raised the Nigeria question: what was the likelihood of Nigeria joining the group as Africa’s second-largest economy? Davies noted that because of the geopolitical dictates surrounding club membership, it was unlikely that Nigeria would be invited to join in the foreseeable future. South Africa, he said, would be more enthusiastic about an Indonesia or a Turkey joining, as is expected from next year forming the BRICSIT. Maybe this would allow South Africa to get its house in order first. As the group expands, it is likely to adopt a more pronounceable name: the E5 (Emerging 5) or E7.

Davies then went on to discuss China. Its economic achievements via state-led capitalism have led to a growing appetite for a similar model in some African countries and South Africa has not been excluded from this. State-led capitalism, he said, doesn’t necessarily involve the state through state-owned enterprises venturing into the market. It can mean the state being proactive at engaging business to create a good commercial environment as well as stepping in to provide the necessary backing where markets fail or just can’t deliver. Davies cautioned against unhelpful intervention by the state and instead called for greater commitment to a more investment-friendly environment.

While it remains to be seen what aspects of Chinese-style capitalism South Africa and other African countries adopt, Davies mentioned that wage levels continued to rise in China’s light manufacturing sector. Citing the Lewis Turning Point (where the costs of production begin to outstrip any gains in production), he mentioned that it was estimated that between 80-85 million jobs in light manufacturing will be lost in China over the next decade. This presented significant opportunities to the economies of Sub-Saharan Africa. South African trade unions, he said, needed to focus on being less ideological and more practical as the relatively high wage levels in South Africa (when compared to regional competitors) risked putting the country out of competition for outsourced jobs from China. Davies ended his talk with: “South Africa is world class, if only the government allows us to thrive.”

-End

The fuller picture

Photo source: AfricaNews.com

In his 2001 speech to the Labour Party conference, then British Prime Minister Tony Blair called for a concerted global effort to supporting Africa; a commitment that aimed to end poverty and political tyranny on the continent. He said,

“The state of Africa is a scar on the conscience of the world, but if the world focused on it, we could heal it.”

His was a bold and ambitious vision. If the world sought agreement on ending poverty in Africa, the world would be able to do it. He encouraged more aid to the continent as well as the cancellation of debts and untied trade and investment. From the Africans, he requested no more excuses for dictatorships, abuses of human rights and bad governance. True democracy was a key component to this healing process.

An all-too-familiar story

There was plenty of virtue and goodwill in Mr Blair’s words, no doubt. However, one cannot get away from the ‘lecturer speaking to his students’ kind of style adopted by the former Prime Minister. It is interesting to note that as Britain and other Western nations drafted lesson plans for Africa to follow, China on the other hand continued to grow its ties with the continent through a plethora of deft business deals and political gestures. From 2001 onwards, the Chinese presence in countries such as Sudan, Angola and Zambia would continue to flourish. The involvement of China in industries such as mining, infrastructure, energy, agriculture and manufacturing would grow exponentially.

Now, I don’t mean to attack Mr Blair’s words for the sake of it. There are countless examples of poverty-reducing, human development-enhancing initiatives that have gone to positively affect the lives of numerous people in different countries on the continent. I can think of work carried out by development agencies such as the UK’s Department for International Development (DfID), the Japan International Cooperation Agency (JICA), the Dutch Ministry of Development Cooperation, President George W. Bush’s Malaria Initiative and several more.

However, Mr Blair’s words are interesting because they add to a long tradition of presenting the African continent as the prime example of desperate poverty, darkness and despair in our world today. That, for a long time, has been the global Africa narrative: a continent full of potential and overflowing with valuable resources yet ravaged by self-inflicted civil wars and unable to fulfil its potential. As the Nigerian writer Chimamanda Adichie put it,

“If I had not grown up in Nigeria and if all I knew about Africa was from popular images, I too would think that Africa was a place of beautiful landscapes, beautiful animals, and incomprehensible people fighting senseless wars, dying of poverty and AIDS, unable to speak for themselves.”

Issues relating to lack of food security and access to healthcare do plague many households on the continent yet that has never been the full story. On the macro level, these two issues affect the continent significantly more than any other region of the world. And that is the reality. Urban slum dwellers often have to cram themselves into overpopulated areas where the sanitation is poor and epidemics are not far off. My bone of contention is however with the fact that one facet of the broader African story has over the last few decades become the unquestioned global Africa narrative.

It’s a bone of contention for me because it demeans large sections of the continent’s population who are striving and thriving on their talent and initiative. It’s a bone of contention for me more significantly because it simply is a half truth and doesn’t present the full picture.

Telling the fuller story

This desire to present the fuller picture as well as a love for business, particularly social enterprise, forms the foundation of this project. During the next few months, I will be profiling five young people from different African countries. They will give the readers of this blog a glimpse into the ways they are seizing opportunities to do business in their respective countries, using their initiative, gifts and talents.

It’s important to remember that approximately a billion people live on the continent across 55 different countries – countries that are often very different culturally, ethnically, historically and economically – so we should be mindful of not speaking about the continent in generic terms as if it were one big country.

According to the International Monetary Fund (IMF), six out of ten of the world’s fastest-growing economies are in Sub-Saharan Africa. This is exciting because economic growth can translate into poverty-reduction. But not automatically. And this is where electorates and their governments need to formulate clear, robust and achievable country-specific development solutions that will benefit the majority. Impressive economic growth rates of 6 or 7% of GDP per annum need to translate into a significant change in human development and poverty reduction. According to the United Nations Development Programme (UNDP) Africa Human Development Report 2012,

“Sustaining high growth rates was important in Asia, but it was not enough. The character of growth, not just its rate, matters for lowering the poverty rate. In Sub-Saharan Africa, even for the same rate of growth, there is historical evidence that growth has not been converted into poverty reduction as effectively as in other developing regions.”

So the single Africa narrative that we’ve become accustomed to has got to be challenged. And even though positive steps are being made in certain areas, plenty more work needs to be done to ensure that the economic growth the continent is currently enjoying translates into poverty reduction and the enhancement of lives.

I hope you will enjoy reading about each of the five young people. I am. Keep your eyes peeled.