Wednesday, November 29, 2017

How Europe still conquers in Africa race


        Abidjan. Hard cash but also the intangible ties of history have kept Europe in pole position as Africa’s main partner, even if an influx of Chinese investment is prompting many African countries to look eastward.

Successive years of hefty spending, particularly in infrastructure, have propelled China into the continent’s top slot when calculated in terms of individual investor nations.

But a quite different picture emerges when this is seen through a broader prism -- the ties between Africa and Europe as a 28-nation bloc.

“Europe is in front, given the shared history,” said Pierre Dagbo Gode, professor of political science at the Felix Houphouet Boigny University of Abidjan.

“Europe is the premier trade partner, the top investor, the top donor,” a European diplomat in Brussels added, speaking ahead of a summit between the EU and African Union in Abidjan on Wednesday and Thursday.

According to the Chinese ministry of commerce, trade between China and Africa was worth $149.2 billion last year -- $92.3 billion in exports from China, against $56.9 billion of imports.

That made China, for the eighth year, Africa’s foremost individual trade partner -- well ahead of France and Germany.

However, trade between the EU and Africa totalled 286 billion euros in 2015 ($341 billion at current rates) with a 22-billion-euro surplus in Europe’s favour.

Europe also contributed some 21 billion euros in foreign aid -- more than the United States and China combined.

“When people say Europe has let China overtake it you have to keep things in perspective,” said an EU diplomat in Abidjan.

Factors such as language, cultural cooperation, university exchanges, a military presence and aid all help to ensure “Europe remains the point of reference” for Africa, the source said.

‘Aggressive policy’

Even so, Chinese competition is hotting up.

Beijing’s big policy is to mix aid and loans at ultra-low interest rates to muscle in on numerous large-scale projects.

“They have a very aggressive policy, in the good sense of the term, on loans and this seduces states,” said one financial observer in the region.

According to China’s state-run Xinhua news agency, quoting Fitch Ratings, loans from China to Africa over the past decade amounted to $67.2 billion -- a whole $12.5 billion more than those made by the World Bank.

“The aspects which attract Chinese enterprises to Africa are the development potential, resources and the market,” said Xu Tiebing, professor of international relations at the Communication University of China.

“The Chinese government has a South ‘complex’. They think that when the South becomes powerful the world will be more balanced,” added Xu.

Natural destination

“China thinks perhaps that as two of the world’s poles of development (Europe and North America) are already in decline, Africa, Latin America and Asia are becoming the natural destination for Chinese investment.

“In the past, China was more concerned by the political angle, but now ascribes greater importance to common development and to mutual advantage,” he said.

A European diplomat commented: “China’s presence and engagement in Africa attracts a lot of attention.

How did China get involved in developing an African metropolis that westerners tend to associate with famine and death? And this is just one project among many across the continent.

Since the turn of the century, Chinese firms have built stadiums, highways, airports, schools, hospitals and, in Angola, an entire city that still stands empty.

China has pumped hundreds of billions of dollars into African governments and infrastructure. In return, it has reaped hundreds of billions in commodities. In 2015, it promised an impressive $60 billion in assistance and loans to boost development of the continent as it emerged Africa’s largest trade partner, and.

New colonialism

Few in Africa are certain that there is fair quid pro quo at play here. Is this the dawn of a new colonialism, they wonder, a new scramble for Africa in which the continent is once again left in tatters? Or is it the beginning of an era during which Africans shake off old colonial masters and look elsewhere for direct investment and aid?

“But China is not the only one massively gearing up its interests in Africa. Look at Japan, India and the Gulf States. There is a multitude of players.”

The so-called BRIC states -- Brazil, India, China and Russia -- have all gained a foothold on the continent.

Bolstered by its African roots and after first concentrating on fellow Portuguese-speaking countries, Brazil has been extending its influence, although its internal political problems have hampered the process.

Brazil-African trade was worth $12.433 billion ($7.830 billion of that made up of Brazilian exports) in 2016 -- but that was well down on the 2013 figure of $28.5 billion.

“With Lula (former president Luiz Inacio Lula da Silva, in power 2003-2010), Brazilian-African relations went through a very intensive phase,” explained Pio Penna Filho, a professor of international relations at the University of Brasilia.

After Dilma Rousseff (2011-2016) succeeded Lula, Brazil “did not put an end to its African policy but there was a lessening of this intensity,” owing to a political crisis sweeping the Latin American giant, he said.

Africa’s allure for investors is multifaceted. One attraction is the notion that, in many countries, a middle class is rising, providing a potent market for housing, transport, clothing, education and consumer products.

Coupled with that is demography -- the continent’s population is expected to roughly double to 2.5 billion by 2050, according to a UN estimate.

But, as Dagbo notes, there is also an age-old view of Africa as a “raw materials zone”, a treasure trove of natural resources that are extracted but not transformed.

As a result, the continent misses out on the added-value part of the processing chain -- the extra margin that boosts prosperity and employment.

“An example: Ivory Coast produces two million tons of cocoa yet processes just 20 percent. This is the kind of thing that has to change,” said Dagbo. (AFP)