Africa needs to 'play smart' in trade with Asia
Roy Laishley
Africa's success in avoiding the worst of the economic crisis that
has swept the industrialized world has been due in large part to the
remarkable growth of trade and investment with China, India, Brazil and
other "emerging" developing countries. In the last three years Africa's
trade with China has doubled, reaching US$106.7 bn in 2008.
While China dominates in terms of sheer numbers, trade and investment
with other emerging markets, such as Brazil, India and Malaysia, has
also been rising sharply, reducing Africa's dependence on traditional
partners in Europe and the US and fuelling the continent's impressive
growth in recent years.
About one-third of Africa's total trade is already with markets in
emerging or other developing countries. China alone is now Africa's
second-largest single trading partner.
Although the European Union (EU) as a whole continues to dominate
Africa's trade, that dominance is receding, especially in imports: the
EU now accounts for only a little over a third of the continent's inward
trade.
Analysts hope these new ties will help Africa rebound from the
current global slump but a new UN study argues that African governments
and companies must play smart if they are to reap the full benefits of
South-South trade: "Whilst some emerging economies have a strategy for
Africa, Africa does not have a strategy towards the emerging economies,"
notes the UN Office of the Special Adviser on Africa (OSAA) in the new
report. Having a strategic approach is vital, the paper says, because
Africa is much less important to its new trading partners than they are
to Africa, and ending dependence on commodity exports is vital to the
region's development goals.
Raw materials
The rapid growth in trade with emerging economies in recent years has
not led to a significant change in the makeup of Africa's exports. Raw
materials, particularly oil and minerals, still dominate, as they did 10
years ago.
A few major producers dominate the continent's trade with the new
markets. Algeria, Angola, Nigeria and South Africa provided 82percent of
Brazil's imports from Africa in 2007 and 53 percent of China's,
according to the OSAA report. Last year, just 10 countries accounted for
79percent of the continent's entire trade with China, the South African
Centre for Chinese Studies reports.
China's trade with Africa is driven by the need to secure long-term
supplies of raw materials, particularly oil and minerals, to fuel its
economic development.
The Chinese authorities aim to get 40 percent of their imported oil
from Africa, from the current 30% and they are seeking to do this mainly
through 'natural-resources-for-infrastructure' arrangements.
In these, African governments agree to long-term supply contracts in
exchange for loans to finance the construction (usually by Chinese
companies) of power stations, railroads, water and sewerage systems and
other projects.
In Angola, China will get oil in exchange for some US$5 bn in loans
and other investments to develop everything from houses and farms to
ports and railways. China now takes 30 percent of Angola's oil exports.
Guinea and Gabon have struck similar deals to supply iron ore. China
now takes 60 percent of Sudan's output. The Democratic Republic of the
Congo (DRC) has negotiated a US$9 bn swap of copper and cobalt for the
development of a new mine, plus a wide range of infrastructural
development.
Controversy and uncertainty
Recently a number of these arrangements have run into obstacles. The
DRC deal has been criticized by the IMF (International Monetary Fund),
for example, on the grounds that it may deepen the country's debt
burden.
The problems come against a background of criticism of the trade and
investment practices of some emerging market countries. An agreement to
allow China's NFC company to reopen the Luanshya mine in Zambia brought
protests by the main opposition party which pointed to a history of
labour problems at another mine run by the NFC, where a number of miners
were killed in an explosion in 2006.
A 2005 study of the Tanzania construction industry by the
International Labour Organization pointed to concerns over employment
conditions in Chinese companies.
In addition, a number of non-governmental organizations have called
on China and other emerging-market investors to stop doing deals in
countries with authoritarian governments or widespread human rights
abuses.
- Third World Network Features
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