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Africa’s solution to Asian interests

Saturday September 3 2011

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.

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. 

By Calestous Juma

In a much-publicised statement apparently aimed at China during her recent visit to Africa, US Secretary of State Hillary Clinton warned against a “new colonialism in Africa,” where it was “easy to come in, take out natural resources, pay off leaders and leave”.

While these concerns require attention, Africa’s most important challenge is to reconstruct its relations with the rest of the world through its long-term economic objectives.

China’s trade with Africa was worth $10 billion (Sh936 billion) in 2000 and is projected to exceed $110 billion (Sh10.3 trillion) in 2011.

The surge

India too has significantly increased its presence on the continent. India’s trade with Africa was $3 billion (Sh280.8 billion) in 2000 and is projected to rise to $70 billion (Sh6.6 trillion) by 2015. The surge in interest in Africa by China and India requires a different approach that does not view the continent as a helpless victim of foreign influence.

To that end, African countries are seeking to replace classical foreign policy with a new vision of economic diplomacy. Africa has started shaping its economic diplomacy through regional economic and trade integration.

For example, this June, Africa launched negotiations to merge three regional trade blocs into a “Grand Free Trade Area” spanning the continent from Cape Town to Cairo. The trade area will cover 27 countries with a combined GDP of about $1 trillion (Sh96.3 trillion) and a combined population of over 700 million.

The trade will involve adding value to natural resources, expanded manufacturing, and investing revenue from natural resources in economic foundations such as infrastructure and technical training.

The lessons learned through intra-Africa trade will inform the way the continent relates to the rest of the world.

Africa’s determination to become a global economic actor will focus diplomatic relations with China and India on issues such as infrastructure, skills development, market access and agricultural land.

Achieving Africa’s trade-integration goals will depend on the extent to which it can invest in adequate infrastructure (energy, transportation, irrigation and telecommunications). It is estimated that the continent will need to invest over $50 billion (Sh4.7 trillion) a year in the next decade to meet its economic growth objectives.

China has a headstart on infrastructure investment in Africa and India has offered to deploy its railways expertise. Infrastructure investments will require greater consideration of issues such as corruption, ecological damage and cost escalation. Very soon, many of the investments being made will come under closer scrutiny and their governance will be called into question.

The second area of cooperation involves Africa’s determination to build the requisite technical capacity to upgrade the labour productivity of its people.

This is an area where China and India have demonstrated experience. India’s long tradition in building technical institutes and its new effort to create a new species of universities that focus on innovation and entrepreneurship will align well with Africa’s emerging focus on technical training.

China, on the other hand, has shown remarkable creativity in linking universities to the productive sector through regional development efforts. The lessons from these efforts, as well as its focus on engineering education, could form its second-generation cooperation with Africa.

Africa is currently focusing on expanding internal regional markets. But quite soon, it will be starting to look outward. Access to foreign markets for Africa’s manufactured goods will become a key feature of the continent’s economic diplomacy.

It is estimated that Africa’s manufactured exports will double in the next decade. But with enhanced focus on engineering and business training, growth in this sector could be faster than currently estimated. Access to foreign markets and competence in international trade will become an essential part of Africa’s relations with other nations.

Finally, there is the contentious issue of foreign investment in Africa’s agricultural land by Chinese and Indian firms.

‘Land grabs’

Many of the deals have been aptly referred to as “land grabs”. Many others represent foreign direct investments that attract technology, build local expertise, foster food security, generate foreign revenue and create employment. Good practices that advance the latter will help improve the image of China and India in Africa.

Africa is relating to China and India separately through summit diplomacy. This is normal in the early stages of such arrangements.

The time has come to explore the prospects of convening Africa-China-India tripartite consultations. This might also help diminish the perception that China and India are competing for Africa’s resources and create a transparent platform for economic diplomacy.

Calestous Juma is professor of international development at Harvard University. This article was first published on the website of CNN’s weekly business programme, CNN Marketplace Africa. He is the author of The New Harvest: Agricultural Innovation in Africa which can be downloaded free on the linkhttp://ksgexecprogram.harvard.edu/features/agin.aspx