If you read last month’s World Review, you will have noted the high number of new contracts in Africa that were awarded to Chinese equipment suppliers. This phenomenon is not unique to the cement industry, nor is Chinese involvement in African business limited to contracting. China’s direct investment in Africa hit US$14.7 billion in 2011, according to the Forum on China-Africa Cooperation (FOCAC), which met last month in Beijing. In total, China-Africa trade reached US$166.3 billion in 2011 and China maintained its position as Africa’s largest trading partner for the third year in a row.
Start your free trial »
Get started now for absolutely FREE, no credit card required.
The partnership is a fairly obvious one. Sub-Saharan Africa, which is our focus region this month, has numerous natural resources: oil, diamonds, gold, uranium, copper, coal, iron ore, the list goes on. What it lacks is the proper infrastructure, governance, investment, etc. to make the most of these resources. China, meanwhile, which is also home to more than its fair share of natural resources, including some 97% of the world’s rare earth metals, can offer the experience and investment necessary to help Africa grow. Indeed, FOCAC’s stated aim is to match ‘adequate capital, a strong industrial basis, and sophisticated technologies and equipment’ with ‘Africa’s advantages in resources, markets and labour costs’.
Chinese investment in Africa stems back to the 1960s, when African countries were finding their independence and China sought to establish a relationship with its fellow developing nations. Today, the disparity between developing nations is marked – the pace of development being very different from one to the next – and what better evidence of this than China’s generous US$20 billion loan commitment over the next three years?
Clearly, with such imbalances in resources and purchasing power, the relationship between China and Africa could not be an even-handed one. Though Africa is certainly gaining from its trade agreements with China and from the domestic opportunities Chinese investment is providing, China is reaping the benefits of a continent full of cheap labour and valuable minerals. Some have drawn parallels with the European colonisation of Africa, among them the South African president, Jacob Zuma, who spoke at the FOCAC meeting. “Africa’s commitment to China’s development has been demonstrated by supply of raw materials, other products and technology transfer,” he said. “This trade pattern is unsustainable in the long-term. Africa’s past economic experience with Europe dictates a need to be cautious when entering into partnerships with other economies.” Critics have also accused China of insufficient environmental and social stewardship. On the other hand, there are the many schools, medical centres, scholarships, etc. that China has established in Africa. Is this mitigation or social responsibility?
Whatever China’s intentions, it remains in Africa’s best interest to make strides in governance and infrastructure development in order to reach a point where it doesn’t need outside assistance to operate. The population of Sub-Saharan Africa is booming: at 1.02 billion today it is just 0.32 billion behind China; at current growth rates it will reach 2 billion by 2045. That kind of population will need a lot of looking after, but it also provides a big workforce. In the long run, it’s all good news for cement.