Courting Africa Asian style

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A boon for Africa’s infrastructure

 As the west becomes more isolationist Asia has taken a more expansionist role on the global stage with Africa clearly in its sights. At stake are abundant resources, investment opportunities in infrastructure and a nascent market eager for every sort of product and service.

By Robert Barnes

Africa stands to benefit from the current environment as  it is wooed by several suitors all eager to garner influence not only economically but also diplomatically.

On the economic front is access to Africa’s vast mineral wealth while on the diplomatic front is the support of Africa’s 54 votes in the UN to help sway current debate on gaining permanent seats for Japan and India for instance and an African country as well in the security council and not forgetting the thorny  issue for China that Taiwan represents as well as its tiff with Japan in the South China Sea. A growing military presence in the Indian Ocean is also another card on the table for these Asian giants keen on protecting their hard won interests in the region.

Africa needs over US$90 Bn in investment in infrastructure annually and Asia is providing a good chunk of this with areas where benefits are being derived for Africa being in the development of infrastructure; roads, rails and ports and this has undoubtedly kept alive the building and construction industry on the continent in the face of a depressed global economy.

Xhina, Japan and India have all hosted African forums where the promotion of trade partnerships and investment for mutual development has been the clarion call.

India held its third India-Africa summit in October last year in which heads of state and government of 41 African countries and representatives of all 54 African states attended in New Delhi where India forked out a US$10 Bn fund and infrastructure projects.  China on its part held its forum on China-Africa Cooperation (FOCAC) in December in South Africa only 2 months after India’s forum. During the forum Chinese President Xi Jinping pledged US$60 Bn.

Japan not to be outdone held its forum dubbed TICAD in Nairobi this August and the Japanese  Prime Minister Shinzo Abe pledged US$30 Bn over 3 years which includes  $10 Bn investment in infrastructural development. This one-upmanship is a boon for Africa and as Kenya’s Minister for Foreign Affairs Amina Mohamed  put it. “If there is no competition, there is a problem. It simply allows us to choose the best,” she said ahead of the Ticad conference.

China

China came into the African scene in any significant way at the turn of the century and has since risen to become the continents largest trading partner, this despite facing criticism for its unconditional aid policy in which it turns a blind eye to human rights abuses while focusing only in extracting resources from Africa for its own use.

Though there are many observers who dispute this stereotyping the benefits have been plain to see that China has made a significant impact in developing infrastructure in Africa. Chinese companies have signed over US$70 Bn in construction contracts for vital infrastructure projects such as hospitals, pipelines and airports, with positive downstream benefits for African economies.

In the last decade China has forked out over US$ 90bn in financing to Africa and has seen its migrant population increase to one million by some conservative estimates.

Chinese multi-nationals have invested locally and offered training to local personnel marking a shift to helping develop Africa’s nascent manufacturing sector. Though the Chinese motives have always been looked at with suspicion and their business culture has been a source of friction overall their participation in Africa has been beneficial in spurring growth through infrastructure development that is implemented faster than projects from other countries that often take years to get off the ground due to pre-conditions.

During December’s Africa forum the Chinese Premier pledged US$ 60bn in new funds a departure from the trend of simply doubling the previous amount (in 2012 the amount committed was US$ 20bn) as has been the tradition. This seemed to suggest a more aggressive investment stance in securing African assets which by 2014 stood at over US$30bn a phenomenal rise from the level in 2000.

This may signal more acquisition of mineral and oil resources as these remain Africa’s largest export to China despite the current depressed demand environment in China.

Japan

Japan has for a long time been a credible development partner for Africa channeling its aid through its aid agency JICA and ensuring that funded projects enjoyed a higher success rate.  Recently however Japan has decided to ramp up its development agenda and this was the message at the recent TICAD conference held in Nairobi, Kenya.

The fact that this was the first time in 20 years that Japan had held such a forum in Africa was not lost on observers who pointed out that the race is now on for Africa’s resources as well as for its large market for Asia’s products.

The Chinese seemed rattled by Japan’s more aggressive stance and were keen to pour cold water by throwing doubt on Japan’s commitment. “There is a never shortage of conferences and promises for Africa, and yet action and implementation have not always followed.

 

“We hope Africa’s partners will honour their commitments with real actions and deliver tangible fruits to the African people,” Said Mr Zhang Ming, China’s Vice-Minister for Foreign Affairs who was in Nairobi

The one upmanship between Japan and China can be seen in the support for development of infrastructure across the continent. Japan just completed the construction of a second container terminal in Kenya while China is supporting the construction of a new port on the coastal town of Bagamoyo in Tanzanian. Mozambique has also seen activity by both if not all three Asian countries all eyeing Mozambiques vast coal and natural gas reserves.

India

India has had a long history in Africa from the days of colonialism when Indian labour was imported to Africa to build railways and work on plantations. Today many of those initial migrant families own thriving businesses in Africa that have grown over the past century and have been the spearhead of India’s US$72 Bn  trade with Africa.

India unlike its rivals Japan and China does not come across as a white knight given that it faces similar problems to Africa however its benefits to Africa derive more from its innovative solutions that Africa can greatly benefit from along with a vast pool of skilled labour and training opportunities. In terms of investment India cannot compare to China in any scale with China’s trade in Africa surpassing US$200 bn compares to Indians US$70bn in 2014.

A recent trip by the Indian Premier in the wake of last years forum  none-the-less further underscored Africa’s importance to India.  His visit centered around 4 countries namely South Africa, Mozambique, Tanzania and Kenya. All four countries lie on the Indian Ocean coast an area that has become an arena for military maneuvers for the three Asian nations involving countering piracy but undoubtedly also with a view to securing gas interests in the Indian Ocean off the coast of Mozambique.

In South Africa, India sees an ally as a fellow BRICS member in their mutual bids of obtaining permanent seats on the UN security Council while in addition South Africa’s support of India’s efforts to join the  Nuclear Suppliers Group (NSG) is seen as essential. The NSG was set up when India tested its first nuclear bomb in 1974 and it aims to stop the proliferation of nuclear weapons by controlling access to sensitive technology. India’s bid to join has been blocked by China.

Away from the diplomatic front India’s need for Africa is being largely driven by the need for energy and this means oil resources. South Africa, and Nigeria are therefore of key interest as are the gas resources off the shores of Africa’s Indian Ocean coast. Most of India’s investment is directed here and this has put it in direct competition with China which has a similar strategy. Unlike China, India’s FDI is driven by a mix of both private companies and government owned ones unlike China which is largely driven by government owned corporations with deep pockets. The US$10Bn credit line offered by the Indian government during the recent Africa forum will help encourage Indian firms in their quest to expand in Africa given the policy of reserving 85% of the funds to Indian procurement.

Asia’s scramble for Africa comes at a time when the continents traditional donors in the western hemisphere are pre-occupied with trying to jump start economies still plagued by the economic crisis of a decade ago and recent immigrant issues have made their position even more inward looking.

In the short term Asia stands out as the silver lining in a cloud of isolationist rhetoric in the west coupled by a slowing global economy that has meant low prices for commodities such as oil, coal and iron ore that Africa has been dependent on.

 

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