From: Berhane Habtemariam (Berhane.Habtemariam@gmx.de)
Date: Tue Nov 10 2009 - 14:11:05 EST
What China's $10 billion means for Africa
<http://bikyamasr.com/?author=1> Joseph Mayton
10 November 2009
China-Africa ForumCAIRO: China continued its push in Africa over the weekend
at an international conference in Sharm el-Sheikh, offering the continent
$10 billion in concessional loans. The two-day forum on China-Africa
Cooperation began on Sunday and many analysts see Beijing's efforts to
establish itself as the top development partner in Africa as a sign the
Chinese are moving forward on their plans to push out from Asia and enter
the global community, as a leader not a follower.
A clash of development ideas appear to be manifesting, but for the most
part, China is winning over the hearts of their African counterparts.
"It is obvious what is going on to anyone who has a clue," began Ahmed
Mohsen Goma'a, an investment analyst attending the Sharm conference. He
believes China is making a play for African hearts and minds.
"Unlike other nations, China sees the importance of a relationship based on
mutual needs and respect and by entering this continent with the belief they
can be profitable and still help develop Africa's stalled economies, it
could be bad news for other Western donors," he added.
China's Prime Minister Wen Jiabao pledged the $10 billion at the opening of
the conference, setting the tone for the weekend. Optimism abounded, but
Goma'a says Western viewers were not too happy.
"They see their power eroding and their spot at the top of the development
world going bye-bye because of China's efforts," the analyst continued.
"We will help Africa build up its financing capabilities. we will provide 10
billion US dollars for Africa in concessional loans," Wen said at the forum
at the Red Sea resort.
In 2006, at the last Forum in Beijing, China pledged $5 billion over three
years to Africa. At that conference, China also signed agreements to cancel
or relieve debt of 31 African nations. This year, China hopes the funds will
go toward "small and medium-sized businesses," Wen said.
"China is ready to deepen practical cooperation in Africa," he said, adding
that Beijing was prepared to take on a role in "the settlement of issues of
peace and security."
The Asian giant, who is quickly rising in the ranks of top economies
worldwide, also said it would remove tariffs on 95 percent of products "from
the least-developed African states that have diplomatic relations with
China."
China also plans to set up environmental programs in the continent,
including 100 clean energy projects and to increase cultural exchanges with
the continent.
In the past half decade, Chinese investment in Africa has skyrocketed, from
$491 million in 2003 to $7.8 billion in 2008, according to official Chinese
figures.
What does this mean for Africa?
Economists and analysts have long viewed China's efforts in Africa as a way
of garnering political and cultural support vis-a-vis Western nations who
still view Beijing skeptically, but one Chinese official told Bikya Masr
that these efforts are mainly economical, not political.
"There is not a need for our government to deal in politics in Africa at
this point. What concerns us is making a profit and making these places more
profitable. In turn, this money will go a long way in developing a
relationship between businessmen and women who can then help support and
make their countries a better place to live in," the official said.
But, not everyone is convinced. Michael Sabah, a Lebanese-American analyst
with a leading security firm, says that the Chinese government's efforts are
an attempt to ensure Africa uses Chinese products and goes to Beijing for
aid instead of looking to the West for its security.
"China understands the effect they are having on Africa and people believe
in China. They believe they can achieve what Western nations have been
unable to do for decades. They may be right, but for now, Africa needs to
think twice before they take so much from China. These altruistic notions
that China has Africa's best interest at heart may not be what they seem,"
Sabah argued.
He said that what many are forgetting is that China is becoming
overpopulated and they need to get jobs to their own citizens. What better
way, he says, than to implement for-profit endeavors in Africa that hire
Chinese workers?
"Look at what is going on here in Egypt? Already we have seen Chinese
companies enter the market, taking advantage of Egypt's relationship with
the United States via Israel, but what people forget is that despite all the
jobs they are giving to Egyptians, they are essentially doing the same thing
other companies do: give Chinese citizens management positions that get paid
a lot more than the average Egyptian to make certain profits are high.
Africa is full of underpaid workers and China sees this as an opportunity,"
the analyst added.
Water
Highlighting China's push in Africa is their alleged commitment to water
security. The Nile Basin has quickly become one of the most contentious
regions in the world in terms of water use. Egypt maintains that it receives
the lion's share of water from the Nile and has been unwilling to
renegotiate terms with the other 8 Nile Basin Initiative nations, but China
might cause more damage to political relations among African nations than
thought.
According to Egypt's Water Ministry, they are closely watching Beijing's
development efforts in the Nile Basin, seeing what the country will do.
Khaled Hegazy, a ministry consultant, said recently that if China attempts
to help the upstream nations - Tanzania, Burundi, Ethiopia, Rwanda etc. -
develop means to take water from the Nile, Egypt would "stop diplomatic
relations with a number of countries, including China."
This would be detrimental to China's efforts in Africa, as Egypt is seen as
the gateway to the rest of the continent based on its position as the second
largest economy in Africa, next to South Africa.
Rwanda's President Paul Kagame - also the chairman of the East African
Community - is not concerned with Egypt's threats. He says that trade
between the region and China has grown by over 200 percent since 2007 and is
helping push the region forward.
"Partnership with China will be crucial for the infrastructure projects
planned to facilitate the region's vast potential for commerce and
investment," the Rwandan leader said.
Future
Sabah believes that while China can have a positive affect on Africa as a
whole, it must be looked through a realist prism that does not take anything
for granted.
"It is easy to see China as the savior of Africa, especially after the West
failed miserably to do much in the continent, but we must remain cautious,
cautiously optimistic maybe, that China will succeed where so many have
failed," he said.
With $15 billion pledged in the past three years in aid to the continent,
loan and debt relief continuing, it is hard to imagine China's role
diminishing in the near future.
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