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Yellow peril in Africa? White folks should stop fretting.

May 14, 2015 - 1:08pm -- Nick Young

At the outbreak of Algeria’s war for independence in 1952, there were one million French settlers living in that country alone. Today, an estimated 250,000 people of Lebanese descent live in West Africa. Some two million people of Indian descent live in East and Southern Africa (not counting a million or so more on the islands of Mauritius and Réunion.) Numbers like these are worth bearing in mind when approaching Howard French’s book of anecdotal reportage, China’s Second Continent: How a Million Migrants are Building a New Empire in Africa. (Knopf, New York, 2014)

About a quarter of the French Algerians stayed on after independence and, at the other end of the continent, some 200,000 Britons still reside in South Africa. (An estimated five million UK passport holders, nearly 10 percent of the total British population, and including me, live outside of the UK.) A rump of British and French settlers clung on in the other lost colonies, as did their counterparts from Portugal, Belgium, Italy and Germany. European corporations of course also remained, with expatriate staff to oversee their operations. These included, to mention only a few with UK links: British American Tobacco, growing the weed everywhere it could, and marketing interesting brands such as Malawi’s ‘Life’ cigarettes and East Africa’s ‘Sportsman;’ the rapacious Lonrho (London-Rhodesian mining), famously castigated by Edward Heath, a British tory prime minister, as representing “the unacceptable face of capitalism;” the Anglo-DutchUnilever, whose tea estates supplied its Brooke Bond and Lipton brands while the company also does a roaring trade in Blue Band margarine, soaps, detergents, Vaseline and a range of creams to make African skin whiter, and that other Anglo-Dutch concern, Shell, a flagrant violator of Niger delta communities and environment.

Africa’s relative economic buoyancy in the 21st century has attracted a lot of new business. Foreign investment from the EU in sub-Saharan countries has grown fivefold since 2000 and remains four times larger than China’s. European investment is greatest in Nigeria and South Africa, and in extractive industries, but also embraces transport, telecoms, financial services, utilities and agribusiness.  European quality-of-life refugees and idyll-seekers have also made tracks in the tourist industry, setting up safari companies, backpacker bars and chic guest-houses. Their customers include a new wave of youngsters coming in their many thousands to spend a ‘gap’ year or two experiencing Africa as volunteer teachers, orphanage staff or NGO interns, and in many cases also enjoying the nightclubs, the booze, the ganja and the sex.

So it’s very likely that, all told, Europeans outnumber Chinese people temporarily resident in Africa. (I have not researched this in any detail; neither did French.) This is without counting North Americans: the diplomats staffing the United States’ huge embassies in virtually every capital, the aid bureaucrats and technocrats, the many missionaries—mostly morally conservative, fighting battles over sexuality and abortion that they’re losing at home—and the teachers in the American schools needed to support these enclaves. Canadians, Australians and New Zealanders can also be found in mining, oil, aid and tourist industries.  

After a hiatus following the demise of the Soviet Union, Russia is now returning to Africa. It is a major contributor to UN peacekeeping forces. It supplies arms and training to the militaries of Egypt, Angola, Nigeria, Sudan, South Africa, among others. It is actively pursuing nuclear reactor deals with Egypt and South Africa. Uganda has just contracted a subsidiary of Rostec, a Russian state arms manufacturer, to build an oil refinery on the shores of Lake Albert; Rostec had already sold Sukhoi fighter jets to Uganda, and the refinery deal may well be tied to new orders. It may also signal Russian determination to push harder in the ongoing scramble for Africa’s energy sector.

Israeli arms sales to Africa are small by comparison with Russia’s but rising. Israeli, Africa-focused entrepreneurs include the controversial billionaire, Dan Gertler, who owns huge mining and oil concessions in the Democratic Republic of Congo, and appears to have its political class tucked in his deep pockets, enabling him to buy state assets for a song and sell them for a fortune.

Arab states are meanwhile looking to Africa for the farmland their oil-rich deserts lack, bringing their sovereign wealth funds and investors together with African heads of state in regular Arab-Africa Investment Forums, and handing out soft loans and grants as sweeteners for business deals.

Turkey, too has convened various Turkey-Africa Cooperation Summits, established new embassies (and flag-carrier Turkish Airlines routes) across Africa, and increased development aid to the continent to more than USD 770 million in 2012. Two-way trade (Turkish iron and steel for African pearls and gemstones) has soared.

And then there are Asians. China’s much-discussed ‘voracious appetite for resources’ is shared by many of its neighbours. Japan is notoriously resource-poor—which didn’t stop it becoming an industrial powerhouse on the back of resources obtained elsewhere, including from China. (Indeed, the American scholar, Deborah Brautigam, argued in her 2009 book, The Dragon’s Gift, that oil deals Japan struck with China in the 1970s provided a model for China’s later operations in Africa.) For decades, Japan has been a substantial, though largely unsung, aid donor to Africa. It is now ramping up aid and investment—in part, it seems, to counter Chinese influence on the continent, but also because it needs a secure supply of natural gas (especially after the Fukushima nuclear disaster) and rare earth minerals (which China has in relative abundance but is unwilling to sell to Japan.)

Korea and Malaysia are also hot on the trail of African resources, including land. According to some reports,  Malaysia’s foreign direct investment in Africa exceeded both China’s and India’s in 2011. Petronas, the Malaysian state oil company, is an important upstream explorer in a dozen African countries and a major producer in troubled Sudan.  Its subsidiary, Engen, is the continent’s biggest fuel retailer, with an oil refinery in Durban and 1,600 gas/petrol stations.  Malaysian agribusinesses compete with Singaporean companies in the other oil business: palm oil. Having spent the past 50 years logging Indonesia to establish plantations, to the chagrin of orang-utans and biped conservationists, the Asian companies are now moving into West Africa’s endangered forests. In 2008, the Korean industrial conglomerate, Daewoo, obtained a 99 year lease over an area of Madagascar equal to roughly half of that country’s cropland—but the deal was aborted after it helped provoke political unrest and a coup d’état.

Daewoo’s engineering and construction division, meanwhile, is becoming a significant player in Africa’s construction market, where Korean companies have won contracts worth more than USD 70 billion. Daewoo’s ongoing projects include a USD 1.8 billion power plant in Morocco and a USD 160 million bridge linking Botswana and Zambia, while their national competitor, Hyundai, is building a new, USD 125 million bridge over the Nile in Uganda. (Both bridges are financed by Japanese development aid.) Daewoo’s and Hyundai’s vehicle divisions are at the same time beginning to claim market share in Southern and East Africa, although not yet emulating the success of LG, much less Samsung, in electronic and digital stuff.

These Asian tigers come with significant soft power. Both countries offer numerous, fully funded bachelors and postgraduate university scholarships. Korea (like Japan) has substantial and growing grant aid and volunteer programmes. Korean Christian churches also send many missionaries to Africa. They have established their own school here in Kigali, Rwanda (where I live), and they also run an excellent patisserie, far better than anything the Belgians left behind.

I haven’t spotted any Vietnamese yet, but no doubt they’re booking their tickets.

People of south Asian descent are more numerous and conspicuous. Traders have been crossing the Indian Ocean for at least 2,000 years, but it was British imperialism’s need for labour to build railways and to toil in mines and plantations that saw the transplanting of souls in a westerly direction, not much more than a century ago. Local, forced labour did not suffice, so Indians were shipped in to fill the gap. Many died, but some survivors managed to establish themselves as small traders and, by the mid-20th century, their families were prominent in commerce. (In British East Africa the colonial authorities banned them from farming). This mirrored developments in South East Asia, where indentured Chinese labourers on British rubber plantations evolved into a major, commercial force. The post-colonial position of these groups was precarious. Chinese communities in Malaysia and Indonesia endured sporadic, property-smashing riots, even pogroms. Idi Amin expelled many thousands of ‘Ugandan Asians’ in 1972. In Malaŵi, Mozambique and Kenya, Indians were subjected to various limitations on what they could own and where. Life under apartheid was not entirely comfortable for South Africa’s million or so people of Indian descent.

But even in Uganda some hung on. Their elite still owns many of the country’s biggest businesses, in hotel, banking, real estate and agro processing. The less affluent south Asian population is constantly refreshed by new immigrants from India and Pakistan arriving to set up or work in restaurants, grocery and computer shops. In small, upcountry towns you will now generally find at least one Indian and one Chinese ‘supermarket’ (though that seems too grand a term), and often the managers of both operations will be equally recent arrivals. Newcomers from south Asia include not only petty traders but also service industries penetrating markets where the diaspora has less historic presence—such as Kigali, where Dr. Argwal’s Eye Hospital opened just last year.  My barber in Kigali is Pakistani.  I don’t know how long he’s been here because he doesn’t speak enough English to tell me, and my Urdu is even more limited.

Investment from India is growing steadily and, if not quite matching China’s, is of the same order of magnitude. Notable players include ONGC, the state-owned oil and gas company, which has assets in the Gulf of Guinea, Angola and Mozambique; Bharti Airtel, which operates phone networks in 17 African countries; the TATA conglomerate, which mines iron ore in Ivory Coast and South Africa, coal in Mozambique and soda ash in Kenya, as well as manufacturing ferrochrome in South Africa, where the group is also involved in power generation and luxury hotels; Essar, which has gas exploration and electric power supply licences, mines coal in Mozambique and until recently operated a dilapidated oil refinery in Mombasa.  Atlas Mara, led by an energetic young man whose family was expelled from Uganda, is making sizeable waves in financial services and property development. In Ethiopia, Indian companies have, controversially, leased at least 600,000 hectares of farmland, the largest deal of its kind in the country.

So: the big picture is of a continent that is more open for business than in past decades, with more players piling in from all points of the compass. (Brazil didn’t get the mention it deserved in my whirlwind tour). With growth elsewhere flat-lining or slowing, Africa seems on the way to becoming many investors’ ‘second continent,’ one of the few places capable of delivering fat returns. China has been an important player in this process, very likely helping to ‘crowd in’ foreign investment. There are almost certainly risks for Africa here, as well as opportunities: notably, the risk that political elites will gobble up available resource rents leaving their semi-literate masses with little or nothing. But China did not invent that development model, and the processes unfolding across the continent are much more complex and multi-polar than a Chinese conquest of Africa.

Huge theory, scant evidence                                                                   

French’s book is more nuanced than its title suggests, but it lacks historical depth, overlooks the wider context I’ve just sketched, and offers no evidence for the dramatic claim that its title advances.

French believes that he is:

witnessing . . . the higgledy piggledy cobbling together of a new Chinese realm of interest. Here were the beginnings of a new empire, a haphazard empire, perhaps, but an empire nonetheless. [170]

Higgledy piggledy and haphazard are almost certainly right. The Communist Party after Mao has been more responsive to its subjects’ views than Western democracy and human rights lobbies could see, but its ‘reform and opening’ process—which I spent 12 years witnessing myself in China—was tentative, experimental and often fumbling, as acknowledged in its leadership’s frequent refrain of “feeling for the stones to cross the stream.” Much she same is doubtless true of the ‘going global’ policy.

But the empire claim is specious. In an epilogue, French sketches a hasty but explicit analogy between China’s current interest in Africa and Japan’s invasion and settlement of Manchuria (northeast China) in the 1930’s. This is silly. There was nothing remotely “haphazard” about Japanese imperialism and there is no echo of its sheer violence in China’s current development bank diplomacy and trade. French, however, argues that Tokyo planned (but never managed) to settle five million people in Manchuria. And he observes that:

No one knows how many Chinese have set themselves up on African soil in recent years, but if anything, the widely used figure of one million, which I myself have adopted here, seems quite conservative. [267]

The essential structure of his argument thus seems to be: i) Imperialist Japan planned to send a lot of people to Manchuria; ii) there are a lot of Chinese in Africa now; iii) therefore, China is building a new empire in Africa. It would need some compelling evidence tightly packed between these wonky pillars for the case to have any chance of standing upright. But in fact there is little else in the book to support its main claim, or to justify the lazy elision, in consecutive sentences, of a “realm of interest” and “a new empire.”

What we get, instead, is a series of road trips punctuated by interviews with a few dozen Chinese government and corporate officials, traders, entrepreneurs, and farmers. These are readable and credible accounts of significant human interest, and anecdotal reportage of this kind can offer useful insights into migration patterns, strategies and outcomes. Push factors in the cast’s departure from China were that they found their homeland too crowded, competitive, polluted and corrupt. Pull factors were rumours of Africa as a land of opportunity where they could own cars and get rich. Some came entirely under their own steam, competed on the streets with petty African traders hawking socks, and worked upwards into electrical goods and beyond. Some started out as translators or other staff with large Chinese corporations, and found ways to remain. One was contracted by an established ‘beauty salon’ as, we are invited to infer, a sex worker.

French’s vignettes do not, however, support his “new empire” thesis. Many of the interviewees liked the “freedom” they enjoyed in Africa, but not many planned to remain permanently. Making money and getting home seemed to be the median aspiration. (Shuai Yuhua, the most sympathetic and thoughtful of the interviewees, hopes to retire to France, where he was already living before an old school chum invited him to Mali to help out as interpreter and informal ambassador for the China Geo-Engineering Corporation.) Only three of the interviewees had bought land and were farming—one in Zambia, one in Namibia, one, rather unpromisingly, in Mozambique. Now that pioneer individuals have established themselves, others are very likely to follow, but it is clear from French’s account that this is an informal process, not one driven by Chinese government policy or material support. (This is in marked contrast to migration within China, where for two decades government cadres at all levels arranged to bus peasant girls into factory-dormitories, to make stuff for the likes of Nike and Apple.)

Informal Chinese immigration may well become a sensitive issue but this doesn’t make it imperialism. Human beings have migrated around the world since the emergence of the species and our current economic orthodoxy holds that ‘factor mobility’ helps to create wealth.  That doesn’t stop fortress Europe letting African migrants drown in the Mediterranean moat rather than ‘encouraging’ them, and it doesn’t stop some South Africans butchering migrant workers from neighbouring countries.  Indeed, xenophobia is rife in many places, in reaction, perhaps, to the accelerated pace of recent globalisation, but also to the shortage of local opportunities—especially in Africa.  But most African governments have so far judged that Chinese investors help to create local opportunities. (That judgment seems to be shared by the government of Canada, where the city of Richmond, a satellite of Vancouver, is now the world’s first city outside of China with an ethnically Chinese majority population. Does this make British Columbia part of China’s ‘empire’?)  And the stories of African construction sites manned by thousands of unskilled or low-skilled Chinese workers, if ever true, are no longer so. I have not researched this systematically (neither has French), but in my seven years in East Africa I have seen dozens of Chinese construction sites and the proportion of Chinese workers on them has been steadily declining; those remaining are clearly and invariably in supervisory positions.  My guess is that governments have demanded more and more ‘local content’ of Chinese companies, just as they have increasingly demanded it from their own: a work permit for a non-East African expatriate in Kenya, whether working in a bank or an NGO, now costs USD 4,000. It’s doubtful that Chinese construction companies pay that much, given that their contracts are wrapped in relatively cheap finance packages, but the African policy pressure for local content is tangible and evidently producing results.  African governments are not passive, helpless imperial subjects.   

French weaves into his encounters some other big questions about China in Africa, usually rhetorically, inviting us to make the final jump to conclusions the text has primed us for. Can the Chinese state, with its ostensibly apolitical ‘win-win’ business rhetoric, avoid the messiness of African politics? Obviously not. Do Chinese entrepreneurs offer bribes? Probably. (French devotes several pages to an apparently shady real estate deal in Senegal but in the end it remain just that: apparently shady. Much is insinuated, nothing firmly established.) Do Chinese companies build crap quality infrastructure? Often, yes. Are Chinese traders suffocating local manufacture by flooding markets with cheap, poor quality goods? Yes, probably. The questions are legitimate but hardly new; the answers we’re primed for are only partly right, because incomplete.

There’s nothing uniquely Chinese about bribery. Chinese infrastructure may not be top quality but is not necessarily bad value for money: it comes very cheap, and no-one else is doing as much to plug the yawning infrastructure gaps that economists of all stripes routinely deplore as a major ‘development challenge’ for Africa.  Cheap imports can indeed harm local industry, but the text book case here is the damage done to African farmers by the dumping of subsidised European and American produce. Local textile industries are undoubtedly suffocated by imports from China (and elsewhere: ‘traditional’ African prints now come largely from Thailand and Indonesia), but also by the second-hand clothes and footwear trade—the Western cast-offs, often collected under falsely charitable pretences, in which hundreds of millions of Africans dress.

Jobs and resources

Moreover—precisely as Deborah Brautigam predicted in 2009—Chinese companies are now beginning to relocate factories and jobs in leather tanning and footwear to, notably, Ethiopia. The Huajian shoe factory opened outside Addis Ababa in 2012 and employs 3,200 Ethiopians. The parent company is planning to invest USD 300 million over the next decade in a new light industry complex which, it says, will create 50,000 jobs. Lin Yifu, former Chief Economist at the World Bank, has said that China will have to shed 85 million manufacturing jobs in the coming years as wages for unskilled Chinese workers rise, and that Africa is the likeliest destination. Long shifts in low paid factory work may not be appealing to the predominantly Western consumers of the shoes Huajian makes, but this does seem to be a foot on the ladder of the industrialisation that many Africans have long dreamed of, but which a century of European imperialism did little to advance.

In other respects too, China’s impact deserves a more balanced assessment. In 2004, when China’s Exim bank made large loans to the government of Angola, to be spent on Chinese firms building infrastructure (without the money passing through the Angolan government) and to be repaid in future oil shipments, the Western world at large cried foul. The deals lacked transparency and competitive tendering, undermining global efforts to improve natural resource governance, critics charged. Many stand by that critique but, interestingly, others have moved on. Brautigam was, again, among the first to argue that infrastructure-for-resources deals at least ensure that African resource-supplying countries end up with some physical assets (rather than seeing all the money eaten by their elites). This view has gained some traction. Last year, the World Bank commissioned and published a discussion paper on Resource Financed Infrastructure which suggested that some version of such deals should be developed and adopted more widely. Several invited commentators agreed. Paul Collier, one of the UK’s foremost development economists, noted that:

The opaque nature of infrastructure-for-resources deals is indeed worrisome. But the key reason for this is that there is a monopoly situation in the supply of such deals. If there were several package deal providers—for example, if bilateral donors teamed up with their national resource companies and construction companies—then the value of RfI deals could be determined through competition even if internally they remained opaque. [p. 71]

In other words, if you can’t beat them, join them. Ten years ago, international donors like the UK definitely thought they had a duty to educate China in how to ‘do’ international development.  It is intriguing to see the fields of influence now starting to pull the other way, with Chinese practice impacting on the ‘traditional’ donors, including a revival of interest in infrastructure. (See, for example, the UK’s Emerging Africa Infrastructure Fund; it is also noteworthy that the UK, France, Germany and Italy have decided to join the new, Beijing-led Asia Infrastructure Investment Bank, despite the firm opposition of the United States.)

Yet it is certainly true that many Western diplomats, aid and business people feel uncomfortable with, even threatened by, China’s growing presence and influence on the continent.  These are the feelings French speaks to and echoes.  Yet this kind of paternalistic and post-imperial anxiety contradicts the virtues those same people typically advocate: economically, global markets, free trade and competition which is not a zero-sum game but has room and at least some wealth for everyone; socially and culturally, that newly applauded thing: diversity.

White folks should stop fretting. In almost any foreseeable future, Africa will remain an important, probably increasingly important, “realm of interest” for Europe and the Americas, and the West will remain important to Africa.  And it’s not up to Westerners to teach Africans how to deal with China. The natives will have to work it out for themselves. In this respect, I applaud French for finding room to pass on these words of luminous clarity from Albert Osei, “a Ghanaian national who had been country directory for the World Bank in in Guinea and in Burkina Faso:”

The fear that China is going to come here and rape us of our resources is nonsense . . . The Chinese need our resources and the key question is what price we get for them and how much transformation is done locally. All the rest is meaningless . . .

With fifty-four countries in Africa, there’s not much leverage that any single one of us can have.  But if we work to cut deals together we can get much better terms. We can also enlist China to help us build and infrastructure that lets us trade much more with each other . . .

China’s involvement should help us to change the terms of engagement with the West, in order to gain greater equity, more parity. If the West is jealous of China, we should say to them, ‘Train our people and give them a bigger role in your companies. Don’t complain about the Chinese. Help us move up the value chain. Do this and we will love you.’ [p. 207]

Kigali, April 2015