China is ramping up investment in Sub Saharan Africa as it
searches for natural resources. Its foreign direct investment (FDI) in
particular has played a prominent role in economic interactions with many
developing countries. It's now one of the largest 'emerging' investors,
especially in Sub Saharan Africa countries, it has investments being in
Nigeria, Sudan, South Africa and Angola among others, but whether the benefits
are mutually beneficial is questionable. What remains unclear is whether
China's foray Africa has any real intention in helping to promote economic
growth and development in these countries. Recently, the Bilateral Sino-African
partnership has not yielded much competitiveness to Africa. There was no
significant skill set development, nor adequate technological transfer or any
measurable upgrade to the productivity levels in Africa.
China is in pursuit of oil, gas, precious metals and mining
to diversify its energy resource import's pool; it requires other resources to
sustain its manufacturing capabilities. Africa can offer all of these things to
the world's second largest economy: about 40 percent of global reserves of
natural resources, 60 percent of uncultivated agricultural land, a billion
people with rising purchasing power and a potential army of low-wage workers. China
has undertaken multiple investments in Sub Saharan Africa that most people
believe are due its search for natural resources to feed its industrial output.
African countries are one of the fastest growing markets and
profitable outlets for exported manufactured goods. In the past, the U.K. and
France were the prime trade partners for Africa, however, today, China is
Africa top bi-lateral trading partner with trade volume exceeding $166 billion.
Between years 2003 and 2011, its FDI in the continent has increased thirty fold
from $491 million to $14.7 billion. Not a long time ago, China eyed areas in
Africa where resources were abundant and easy to extract. It focused on
resource-rich countries such as Algeria, Nigeria, South Africa, Sudan and
Zambia. Today, Sino-African investment focus has become broader. China is
branching out into non-resource-rich investments, focusing on countries such as
Ethiopia and Congo. Higher margins have attracted many state-owned enterprises
and private companies to compete on gaining dominion in the vast continent.
Oil, gas, metals and minerals constitute three-quarters of African-exports to
China. Chinese Imports to Africa are more diverse, mostly comprised of
manufactured goods. China has made considerable investments in the fields of
infrastructure targeting key sectors including ports refurbishments,
telecommunications, transport, construction and water disposal categorically.
Geographically speaking, China has become an important partner of East Africa
with some of its biggest projects in Uganda with an estimated total investment
of $596 million in 2012 alone. China's increased presence in East Africa has
gradually raised concerns about the economic development of these countries as
well as the environmental and social sustainability of their natural resources.
The Chinese entry to the African market has collapsed the
already frail and small and medium enterprises under increasing pressure from
cheap Chinese Imports. According to one recent study, the Chinese growing
presence in Africa has accrued a cost to the South Africa's economy in the
range of 75,000 jobs in the years 2000-2011. China's relationship with Africa
has often been described as "colonial", in which most of the benefits
are far from mutual and often accrued to China. China has seemingly created a
dependency for the African countries, without providing real structural help to
show integration in the local communities. Exploitation of labor, protectionism
of technologies and distance from the interests of a real wish for inclusion,
the current activities of China in Africa, raise pressing doubts about supposed
mutual benefits.
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