China’s Role in Africa

27 01 2010

This is an older post of mine that has renewed significance.  CNOOC, China’s state-owned oil company, is currently Tullow Oil’s first choice as a partner in its Ugandan oil fields now that Heritage Oil is selling it’s stake.  MJ

You can really tell that the Cold War is over. We almost never hear about the influence China is beginning to have in Africa and other parts of the world. If Russia had this much reach during the Reagan era, we might have already experienced World War III.

Since the 1960’s, the West’s relationship to Africa has been primarily built around foreign aid. Billions of dollars have been given in food aid, medical supplies and other direct assistance. It would be difficult to make the claim that these efforts have been wildly successful. Most of the problems that the money has been intended to fix have gotten worse, and very few African nations seem to be any closer to being independent from donor money.

Perhaps part of the reason for the lack of success stories is that very little of that money has gone towards building infrastructure, industry or skill capacity on the continent itself. One could even make the claim that western countries want Africa to remain underdeveloped, because it makes it easier to keep prices low on all of the raw materials we take from the continent, including oil, diamonds, cotton, coltan (used in cell phones and other electronics), cocoa, coffee, and tea, just to name a few.

China is taking a very different route in Africa. China is building roads, factories, hydroelectric plants and refineries. Their commitments to oil development alone are about $16 billion. Africa is China’s third-largest trading partner, behind the European Union and the United States. Their goal is to increase the volume of trade from approximately $50 billion today to $100 billion in 2010.

Let’s not be deluded into thinking they are doing this out of any charitable intent. Their phenomenal growth needs to be fueled by raw materials from somewhere. They are coming in with very clear business objectives and plan to make a profit here. And what’s wrong with that? For a nation that elevates the “free market” to a religion, America has shown very little inclination to use it as a solution to Africa’s challenges. Will China use our favorite tool to succeed where we have failed?

In the past, the U.S. and Europe were the only places African nations could look for an influx of cash. That has changed now. Sometime in the next couple of years, Chinese loans to African nations will surpass those of the World Bank. I can’t help but envision the United States as a parent who’s kids just moved out of the house. We will be left standing there, looking forlornly at Africa, saying “Oh…they don’t need us any more. When did that happen?” Well, it’s happening now. Our influence is already diminishing.

Put yourself in the place of the leader of an African nation that might have a questionable human rights record. The money that you receive from Western governments probably comes with a lot of strings attached – those donors will want free and fair elections, improved working conditions, environmental protections, reduced corruption, etc. Then in walks China and offers to invest millions of dollars without wanting anything more than a financial return. Who’s your daddy?

We must pay attention to Africa. The continent’s population passed 1 billion this year, so more than 1 out of every seven people on the planet lives in one of Africa’s 53 countries. Combine that with China’s population and you have an economic relationship involving nearly a third of the earth’s population, driven by leaders who often do not have the best interests of people and the planet in mind. For decades, we in the United States have been able to just assume that we will be in the center of anything important happening in the world. But guess what – if we rest on those laurels, the world is going to pass us by.

Mark D. Jordahl – Kampala




3 responses

20 02 2010

Mark – you might like this just finished debate about China’s role in Africa on the economist’s website, featuring a couple of sharp Africans…

Mike (Shannon’s friend)

3 02 2010
Chuck Lennox

Check out this related (and depressing) article from Fast Company on China’s economic interest in African without any scruples attached.


27 01 2010
Trevor Brooker

An interesting article highlighting some interesting points not in the focus off big brand, western media.

It has often been said that there are few morals in business and we can find comparable events throughout history at both company level and on a national/global scale.

It’s just China’s turn and it’s called ‘doing business’.

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