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China’s Short-Term Challenge in Africa

I’ve often observed some very poorly crafted policies by U.S. State Department in various African nations that seem entirely focused on reducing the influence of the Chinese, failing to take into account long-term strategic objectives for the region.

China has unarguably outpaced and outwitted Western businesses and governments in expanding their footprint in Africa over the past decade, but we shouldn’t necessarily be concerned about it.  In many countries, China is stepping in to accomplish projects that Western developed nations either can’t or don’t want to be involved in, and is helping transform the infrastructure of these countries in ways that is mutually beneficial to both parties.  But China’s charm offensive does have an expiration date.

Writing for CNN, Peter Elgen points out some of the challenges faced by Chinese investment in Africa that pose some limits to their future growth in the region – namely, how many jobs can they continue providing?

But some 90 percent of Sino-African trade is still based around natural resources – oil, ores, and minerals. And exports of natural resources by themselves do not help Africa to develop as we can see from the examples of Nigeria and Angola, Sub-Saharan Africa’s two largest oil exporters.

First, oil and mining are not labor intensive industries. So while natural resources may create impressive headline growth figures, they do not necessarily translate into widespread job creation.

Second, as we saw in the Netherlands in the 1960s and Norway today, large oil and mineral reserves can distort the local currency, pushing up prices of other exports, such as agricultural products, and making them much harder to sell overseas.

Third, without careful management, oil and mineral revenues have often fuelled corruption which has a severely negative impact on a country’s development. It’s notable, for example, that China is not yet one of the supporting countries for the Extractive Industries Transparency Initiative (EITI), an initiative to promote transparency and accountability in the governance of natural resources.

Away from the oil and mining industries, critics of China say they don’t see much evidence of China advocating for Africa on global issues either.