China in East Africa: why it’s better than we give it credit for

Xinhua | NATION Chinese employees of China Wuyi Company Limited working on the Thika Road superhighway show local workers how to fix steel bars at a construction site. For Africa to manage increased investment from China and India, the continent must ensure relations with these countries meet its long-term economic objectives.  (from http://www.nation.co.ke/News/Africas+solution+to+Asian+interests++/-/1056/1229862/-/c26vsg/-/index.html)

“ Look, they work really hard, really fast, they’re a fantastic example and inspiration to us, and at last we have what we need, a road!” hotel owner Emelda Nzungu on the nearly completed Chinese built by-pass outside Nairobi is enthusiastic. And Shh, whisper it, she’s not alone.

It’s a conundrum: East Africa has resources (gold, copper, diamonds,coltan- the key component for computer chips and mobile phones.) It has cheap labour. It has a desperate need for infrastructure and trade (primarily macadamed roads to link urban capitals) hospitals and homes. But despite this, for large projects, it has a very poor investment climate, according to the IMF. Problem areas highlighted are ‘burdensome licensing procedures, reflected in high start-up costs, insufficient access to credit, restrictive labour regulations, difficulties in registering property and poor property rights, and very poor infrastructure’ (IMF, 2006: 9).The World Bank’s 2011 Doing Business report ranked Tanzania 128th out of 174 countries surveyed in the ease of doing business. Malawi, Kenya and Uganda also scored equally poorlyi

Chinese Investment

China stands out as being an investor that is prepared to take riskson large projects in Africa. As of this week, the Chinese governmentis providing Tanzania with a $1.06-billion loan to construct ‘new infrastructure’ (the wording is deliberately vague), which includes the port developments at Lamu and Tanga, and a new gas pipeline stretching across Kenya, Tanzania and Uganda, as part of the LAPSSETdevelopments. Chinese involvement in Africa is very undocumented anddifficult to trace: however the omniscient China National Offshore Oil Corporation (CNOOC) has a presence in Sudan, Kenya, Uganda, Mozambique, Somaliland, Chad, DRC, Congo and Angolaii. Recent figures suggest Chinese/African trade is worth over $100 billion USin Africa, an aggregate of investment of loans, trade, aid and flowsof capitaliii.

According to Standard Bank Group Ltd, Chinese investment in Africa may grow by 70 per cent to $570 billion by 2015 from 2009, while bilateral trade will double to $300 billion by 2015iv. However these figures are unreliable, partly due to Chinese reticence, and to the hot potato nature of the debate. As construction manager Bernard Muthara* a Tanzania resident comments: “They give us loans, with fewconditions, and no interest rates. Witness the massive affordable house building plans afoot in Arusha (to the tune of $7.2 million), the Pan Africa Kenya- Tanzania highway (Chinese built), the new Zanzibar airport (rumoured to cost $17 million)”.

On a broader stage, Large scale structural projects, often accompanied by a soft loan, are proposed to African countries rich in natural resources (for example Angola, for copper rights). Thisresults in moving natural resources back to China, or loans in exchange for future mineral or drilling rights. While relations are mainly conducted through diplomacy and trade, military support is also a major component, such as the provision of arms and weapon systems to countries throughout the African continent. China now has a military presence in six African countries, and in 1990 their troops joined the UN peacekeeping forces.

Driving through Nairobi in his taxi, John Kihera remarks: “look, thebottom line is service delivery, with our new government we’ve been impressed with the house building, the bridges, and the Chinese frankly do the job better, and more efficiently than our people havein the past. At least we trust the job will be done, and the money

won’t disappear into someone’s pocket!” New Kenyan businesses thatflank the new roadside agree- Chinese are a good thing. Evidently others in the region agree: in December 2011 the first Chinese delegation visited Rwanda to investigate large scale road building.

Chinese investors are quick to defend their presence. Says David Quiang, a long term Chinese resident of East Africa, “Since 1975 andthe gang of four, in China we’ve embraced capitalism. We’re in a capitalist world, if America and Europe are constantly drawing attention to our poor human rights record, it’s because they are losing the race. We’re cheaper, more efficient. We get the job done!This is a competitive process, remember.”

Historical and Cultural Chinese Presence

There are other cultural and historic reasons why Chinese do well inEast Africa. For a start China has a long history in Africa: which many care to forget. There are traces of Chinese activity in Africa dating back as far back as the Tang Dynasty. Chinese porcelain has been found along the coasts of Egypt in North Africa. Chinese coins,dated 9th century, have been discovered in Kenya, Zanzibar, and Somalia. The Song Dynasty established maritime trade with East Africa (now Tanzania, Zimbabwe) in the mid-12th century. Later, in 1955 the Bandung Conference was key in inspiring (both theoreticallyand actually) the countries outside of the Cold War antagonisms, which led the formation of the Non-Aligned movement. China shared with the NAM countries a ‘victim background’: China at the hands of imperialist Japan, Africa at the hands of Europe and America. Deborah Brautigamv argues that Chinas approach centres on offering Africa an olive branch for development. China is eager to share, and teach, African states the lessons of China’s own developmental experiences, and create partnerships that are generally beneficial to both parties; Africa gets prospects for development through knowledge transfer, Economic Protection Zones (sometimes referred toas Economic Special Zones) and large-scale Chinese investments. China meanwhile gains access to new markets, natural resources, andacquires political currency in the continent.

Whilst co-operation exists at a government-government level, and business to business level, there are also scores of Chinese people in Africa running small business- hospitals, restaurants and electrical enterprises. And even the occasional safari company.

Chinese tourists to East Africa are on the rise, they are the new target market. Yet definite numbers of Chinese in East Africa are impossible to gauge. The Tanzania- Zambia (TANZAM) railroad, completed in 1976 employed over 50,000 Chinese people, many of whom stayed on, complimenting the estimated 100,000 Chinese who were already resident, legal or not. Sino-African marriages are common, and apparently successful.

Additionally, Chinese doctors, engineers and teachers played a strong role in supporting East African countries- particularly Tanzania and Uganda since the independence in the fifties. Academically China has several established and respected African departments in the larger universities, and has been generous in itssupport of African students and bursaries. These days Beijing encourages its firms to ‘go out’ (zou chuqu) in a manner reminiscentof a bird finally encouraging its offspring to tentatively leave thenest. As (construction) Site Manager Mr Li says “When I left China in the eighties it was a new thing, my family thought I was mad, andbrave. These days it’s normal, there’s just so much opportunity. Although I still send my daughter to school in China. She must learnher culture.”

The Tanzam railway station in Dar Es Salaam is a grand architectural and symbolic statement, and so will the new (highly criticised) port in Lamu, Kenya be too. Logistically these are complex projects, and evidently Kenyan and Tanzanian governments trust the Chinese, although they refused to comment for this article. Generally Chinese involvement is more low key: witness the Sudanese oil pipelines, or the influx of every conceivable form of nick nack in African markets; from umbrellas to padlocks to pants. This was initiated first by the Chinese diaspora who reactivated their familial connections to import low-priced goods such cups, forks, and bowls to Africa. These days, aspirant citizens of East africa have a screaming need for low-cost goods in large quantities.This has dovetailed neatly with the Chinese ability to produce everything more cheaply than most African manufacturers can, and with better quality. Cheap Chinese clothes, and cars, motorbikes, generators and washing up bowls, at half the price of western-produced ones, have allowed African customers to suddenly raise up the purchasing power and consume.

in As Mr Jie, a large construction manager who has managed projectsin Kenya and Tanzania for over 26 years, says “We have a common history. Our parents too were peasants, we understand what it is to be poor. We do not approach the Africans as servants, but as people who, like us, want to better themselves, who understand hardship.” This tacit reference to colonialism belies a much stronger truth: there is nothing paternal about the Chinese approach to business. Adds Mr Jie, “Yes, there is corruption, yes there is inefficiency doing business here, but the bottom line is we factor this into the costing, and we work round that.”

Cheap Chinese WorkMuch to the chagrin of local road builders, who are missing out on the tenders for larger projects. Jasper Mrosso, an East African roadbuilder comments “I am not sure how they (the Chinese) do it: they consistently undercut our bids, they bring in all their own JCB’s , gravel, tools, everything from China, which cost a quarter of what our heavy machinery costs. We just can’t compete.”

There are many, often legitimate criticisms of Chinese involvement in Africa: poor business practices, corrupt bosses, kickbacks, the lack of regulations, minimum wage standards and contracts. Indeed the rumour in Kenya and Tanzania is that it is Chinese convicts building the roads at present. Chinese companies have aggravated local unions (witness the deaths, turbulence and strikes in the mining sectors in Zimbabwe, Zambiavi and South Africa, the hostile villagers attacking oil explorations in South Sudan and the Chinesethreats to Nigerian textile factories). There are growlings from theenvironmental lobby in East Africa who say that Chinese presence hasbumped up the trade for animal parts for traditional Chinese medicine – particularly Rhino horn. A letter in the local newspaperThe East African expresses a popular view, “Oh — they are building aport in Lamu, bigger than Mombasa. They will use all local labour and companies… BUT bring with them, everyone they need, even the cement.”

Arguably the concerns raised by labour analysts, trade unions and the environmental lobby would be pertinent with any port construction project of this size. And China is making moves to address the criticisms. Over 30% of firms in China are now private,

and increasingly are governed by the dictates of a market economy, and while notionally state-owned, China is grappling with the problems of regulating its own provinces and corporations overseas.Even the major players of China’s global strategy such as Sinopec and CNPC, often seen as extensions of the Chinese state itself, areconducting their operations on the requirements of a reasonable degree of freedom from state interference. Brautigan is clear that the sino-african balance sheet has been seriously skewed to downplaythe positive elements of the relationship. Academic and commentator on African/Chinese relationships Xiao Yuhua thinks China takes all criticisms very seriously. He believes the way forward is greater co-operation and dialogue between civil society organizations in China and Africa, an opinion that so far has not been disseminated in the Western media.

i World Bank, Doing Business in Tanzania, 2011 accessed Aug 27th http://www.doingbusiness.org/~/media/fpdkm/doing%20business/documents/profiles/country/db11/tza.pdf* Names have been changed.ii Sources: All Africa, Ernst & Young; African Business magazine; Oil Review magazine; International Energy Agency, http://www.polity.org.za/article/is-east-africa-the-new-frontier-for-oil-and-gas-exploration-opportunities-2012-02-20, Consultancy Africa Intelligence’s Africa Watch Unitiii Chinese and African Perspectives on China in Africa, Eds Harneit Sievers A, Marks S, Naidu S, Pambazuka 2010 iv Quoted on http://www.theeastafrican.co.ke/news/China+targets+Rwanda+infrastructure+projects/-/2558/1229816/-/12a2jurz/-/index.htmlv Brautigan, D, ‘The Dragons Gift’ Review: The Dragon’s Gift: The Real Story of China in Africavi Rethinking China in Africa “The Chinese have diverse interests in Africa, but the risk of abuses must be addressed by the government.” 4 JULY 2011 - 10:43AM |BY THOMAS MOODYAssorted Articles The East African Newspaper including ‘China targets Rwanda infrastructure projects’ September 5th 2011