New masters hold the key to
Africa's pace of recovery
3 July, 2009 | By William Wallis
Source ::: Financial Times
A new aphorism has emerged in Addis Ababa to describe Africa’s
rapidly shifting relations with the outside world. Washington, so it goes,
is in charge of corralling the western donors. Europe provides the
money. The Chinese walk off with all the business. It may not be quite
Aid campaigners have their new mantra well honed. Africa had no part
in creating the conditions for global financial turmoil but it has suffered
severe collateral damage. Rich nations have a responsibility to help. In
what has become an annual ritual, traditional donors will duly reiterate
pledges to increase aid.
However, the pace at which China’s economy rebounds, and to a lesser
extent that of Brazil, India and Russia, will almost certainly be more
significant in determining how quickly African economies re-emerge
from the downturn. Recovery in demand and prices for the raw
materials Africa has in abundance will be driven in large part by these
emerging Bric economies. Once prices are moving up again, investment
in Africa will look more attractive.
European trade with Africa is still more than twice that of China’s and
European Union foreign direct investment is far greater too. Bric
country trade is developing much faster however, moving from $16bn
in 2000 to $157bn in 2008. Moreover, Europe still sees Africa as a
burden. The Chinese, Brazilians, Indians and others see it as an
opportunity. “We have a competitive advantage,” says Gu Xiaojie,
China’s ambassador to Ethiopia, with a certain amount of glee.
“My own experience is that they [African governments] are
uncomfortable dealing with developed countries. They think they
[Europeans] want to impose their own ideas and they have a long
[mutual] history that is violent and bitter.” In Ethiopia the Chinese are
building roads and hydroelectric dams and are financing a $1.5bn (€1.1
bn, £910m) expansion of the state-owned mobile telephone network
through credit lines. That makes ZTE, the Chinese telecommunications
company, the de facto monopoly supplier - the kind of deal that western
companies such as Siemens had in Nigeria in the past but rail at now.
In total, according to Mr Xiaojie, Chinese banks and companies are
providing more than $4bn in credit lines and tied aid to Ethiopia, a figure
that places Beijing among the country’s foremost partners and which
explains the aphorism. Inevitably, that level of interest and engagement
has considerably weakened western leverage over the Ethiopian
government. It has allowed Addis Ababa to play off competing interests
against each other and strengthened the government’s ability to brush
off criticism of its human rights record and chart an independent course
on economic policy. Other African governments, however, have been
less successful at this game. The Democratic Republic of Congo has
been embroiled in a stand-off between the International Monetary Fund
and Beijing over a planned $9bn Chinese mines-for-infrastructure
project.
The deal has threatened to scupper Congo’s eligibility for debt relief
under the Highly Indebted Poor Country initiative. Western creditors
stood firm, the Congolese buckled, agreeing to reduce the deal by $3bn,
and the Chinese are now showing willingness to discuss adapting the
contract to address IMF concerns.
Africa's pace of recovery
3 July, 2009 | By William Wallis
Source ::: Financial Times
A new aphorism has emerged in Addis Ababa to describe Africa’s
rapidly shifting relations with the outside world. Washington, so it goes,
is in charge of corralling the western donors. Europe provides the
money. The Chinese walk off with all the business. It may not be quite
- that simple. But China’s purposeful
march across Africa over the past
decade is challenging western
assumptions about the continent in
multiple ways. When members of
the Group of Eight industrialised
nations meet next week in Italy there
will no doubt be hand-wringing
about the number of Africans falling
back into poverty this year.
Aid campaigners have their new mantra well honed. Africa had no part
in creating the conditions for global financial turmoil but it has suffered
severe collateral damage. Rich nations have a responsibility to help. In
what has become an annual ritual, traditional donors will duly reiterate
pledges to increase aid.
However, the pace at which China’s economy rebounds, and to a lesser
extent that of Brazil, India and Russia, will almost certainly be more
significant in determining how quickly African economies re-emerge
from the downturn. Recovery in demand and prices for the raw
materials Africa has in abundance will be driven in large part by these
emerging Bric economies. Once prices are moving up again, investment
in Africa will look more attractive.
European trade with Africa is still more than twice that of China’s and
European Union foreign direct investment is far greater too. Bric
country trade is developing much faster however, moving from $16bn
in 2000 to $157bn in 2008. Moreover, Europe still sees Africa as a
burden. The Chinese, Brazilians, Indians and others see it as an
opportunity. “We have a competitive advantage,” says Gu Xiaojie,
China’s ambassador to Ethiopia, with a certain amount of glee.
“My own experience is that they [African governments] are
uncomfortable dealing with developed countries. They think they
[Europeans] want to impose their own ideas and they have a long
[mutual] history that is violent and bitter.” In Ethiopia the Chinese are
building roads and hydroelectric dams and are financing a $1.5bn (€1.1
bn, £910m) expansion of the state-owned mobile telephone network
through credit lines. That makes ZTE, the Chinese telecommunications
company, the de facto monopoly supplier - the kind of deal that western
companies such as Siemens had in Nigeria in the past but rail at now.
In total, according to Mr Xiaojie, Chinese banks and companies are
providing more than $4bn in credit lines and tied aid to Ethiopia, a figure
that places Beijing among the country’s foremost partners and which
explains the aphorism. Inevitably, that level of interest and engagement
has considerably weakened western leverage over the Ethiopian
government. It has allowed Addis Ababa to play off competing interests
against each other and strengthened the government’s ability to brush
off criticism of its human rights record and chart an independent course
on economic policy. Other African governments, however, have been
less successful at this game. The Democratic Republic of Congo has
been embroiled in a stand-off between the International Monetary Fund
and Beijing over a planned $9bn Chinese mines-for-infrastructure
project.
The deal has threatened to scupper Congo’s eligibility for debt relief
under the Highly Indebted Poor Country initiative. Western creditors
stood firm, the Congolese buckled, agreeing to reduce the deal by $3bn,
and the Chinese are now showing willingness to discuss adapting the
contract to address IMF concerns.
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Obama Must Reverse Bush-Era
African Policy
2 April 2009 ( EQN ) -
The United States
Militarized its policy
towards Africa,
defended
unpopular and undemocratic regimes and undermined
United Nations peacekeeping missions on the
continent under the Bush administration, says the
Africa-centered More
African Policy
2 April 2009 ( EQN ) -
The United States
Militarized its policy
towards Africa,
defended
unpopular and undemocratic regimes and undermined
United Nations peacekeeping missions on the
continent under the Bush administration, says the
Africa-centered More
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