The Promota Magazine

Who’s the most attractive partner for Africa? All of them.

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As Europe’s debt crisis continues to rumble on, it’s not difficult to see why Africa’s relationship with China is growing so fast. For an African leader deciding on whether to align themselves with one or the other of Europe or China, the latter would appear the more forward looking choice, especially considering China’ eager and encouraging attitude to engaging politically with African leaders. Often economic relations with Africa are depicted as a zero sum game for Europe and America. In the media especially, Africa’s political and economic relationships are understood as a competition between China and the West. The reality is quite the opposite.

It is in fact China’s role in catalysing Africa’s growth which has caused Europe and America to reconsider their preconceptions about Africa. At the moment the developed world is struggling to shift its perspective and lazily reverts to Cold War conceptions of spheres of influence. In the past it mattered that big resource suppliers were in a Western sphere, because of the economic apartheid imposed by the Cold War. Today, much of the copper and oil that China ‘grabs’ will end up in Apple’s iPads, or will power their manufacture. Global supply chains and markets are so intertwined that the issue of strategic resources should not carry the same weight it once did.

While Chinese and Western firms occasionally compete for African resource contracts, the big deals still tend to be won by industry leading Western firms. Where China is ahead is in the sheer scale of trade, investment and economic integration it is realising with Africa. Chinese firms are only gradually building the skills needed to run large scale resource projects in foreign countries, as Reuters backhandedly report this week. Until they do Western firms are still likely to snap up the most attractive new concessions.

The reason for Europe’s failure to take advantage of Africa’s opportunities is down to two factors. Firstly it lacks the economy to engage with Africa in the way that China has. Europe lacks the small scale manufacturing and cheap infrastructure industries which Africa’s economy requires. Secondly Europe lacks the appetite for African engagement. Politically Europe does not give place the same importance on its relations with Africa. As individual states and as a union Europe fails to engage with African politicians and businesses to anywhere near the same degree as its Chinese counterparts. This is in part a flaw in Europe’s perception of the continent in obsessing about an aid based relationship, and a paternal responsibility to save Africa. It is growth in the developing world – both as a market and a source of innovation- which will eventually allow the European and the US economies to recover. Both should focus on how their economies can service a changing world market rather than attempting to hold back China’s growing relationship with Africa.

But it is also due to the fact that Africa’s success over the past decade is fundamentally aligned with China’s rise, and that as the last great developing market and holder of huge swathes of the world’s remaining untapped resources, Africa is a natural partner for China. Had Europe and America decided in 1999 to pursue a policy of engagement and investment in Africa similar to China’s, they would have found it impossible to achieve the same results. Europe and the US’s recent realisation of African potential is completely predicated on the positive impacts of high resource prices and improved infrastructure driven by China’s engagement.

In the mid-1990s President Clinton was sending Robert Kaplan’s apocalyptic note on Africa (The Coming Anarchy) to all of his African embassy staff. Business leaders were unlikely to consider an office anywhere but perhaps South Africa. Asia was in vogue while Africa had been forgotten with the end of the Cold War. But now, after a decade of impressive growth Western institutions like McKinsey and PWC predict Africa’s take-off, and funds increasingly search for ways in to Africa. Nevertheless engagement is tentative, reactive, and politically naive.

There is an oft quoted principle that the Chinese economy must grow at 8 per cent per year in order for the country to avoid serious civil revolt. Therefore the continuing fragility of the in the Western world is likely to be of concern to China. In order to offset the risk of US and European markets ceasing their seemingly inexorable increases in imports from China, Beijing needs to find new markets to buy their goods. China knows better than most that a large population is a powerful tool. Therefore as well as providing resources to China’s industries, Africa holds special potential for Beijing. There should be more consideration of this long term potential as a market in Europe as well.

This represents a significant change in the geopolitical importance of Africa. While Asian markets remained undeveloped they were a less risky place than Africa for the developed world to invest. Western firms have sought to build their brands in Africa over the past few decades, but generally other regions have been the real prize. While seeding the Coca-Cola brand in Africa was seen as an important part of the long term strategy, it was not a significant investment, as the big profit was to be made elsewhere. However in the emerging world economy growing powers such as Brazil, China and India will need to find new markets for their exports if they are to grow. In Africa this means stimulating demand as well as meeting it. The African consumer class is growing, but urbanisation and more widespread wage labour will be necessary in order for African consumers to make an impact on the world market. China, Brazil and India therefore have a vested interest in Africa’s development, as they may be dependent on Africa’s one billion population for their future success.

Europe and China have fundamentally different interests in Africa, but both should benefit from its rise. Europe and the US need to free themselves from the misconception that they are in competition with China in Africa, and find their own ways to innovate and help. This must focus on the private sector rather than charity, and leverage what the developed world is best at. Europe must cease in their attempts to compete with China at what they do best, and should focus on their own strengths. Europe and Africa share a long and often successful relationship and despite sensitivities around colonialism, attitudes towards Europe are often very positive. Europe should concentrate on building constructive relationships with regional and national bodies, and lead trade trips for European business, and entrepreneurs to Africa’s key markets. Diasporas are also potentially powerful tools, but the key change should be to engage Africa in a business friendly and positive manner. European leaders grant much lip service to private sector engagement, but little is actually done. In whatever state Europe eventually emerges from its credit crisis, its constituents will need to reengage with the parts of the world that are growing. Increasingly, that’s Africa.

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