The Rise of the BRICS in Africa. Developmental or Self-Interest?

Table of contents:

ABSTRACT:

Introduction

China in Africa: Prizes for New Development

The Pitfalls of China-Africa Relations

Conclusion

Bibliography

ABSTRACT:

Based on the Africanist theory of International Relations, the paper examines how the rise of the BRICS countries, particularly China, reshaped the economic and geopolitical realities in Africa for the past two decades. Across infrastructure financing, trade, investment and aid, there is no other traditional Western Power with such colossal engagement in Africa than China. The Chinese companies invest enormously in all across Africa by bringing new technologies, creating jobs, developing skills for the local Africans and immensely contributing to the Africa state’s public revenue. The recent Africa-China economic relationship has threatened the dominance of the traditional ‘Great Powers' in the fields of economics and geopolitics. However, the paper will shed light on the challenges of the Sino/Africa relations from the African perspectives particularly how the Chinese workers and the ‘cheap' and ‘substandard’ products overflowing African domestic markets. Considering both sides of the coin, China's involvement in Africa is perceived positively by Africans, as such China is a significant partner who has generated multiple prospects for African development despite Africa’s development move is relatively sluggish.

Key Words: Development, BRICS, China, Africa

Introduction

Over the past couple of decades, the world has seen a substantial geopolitical and economic shift. This shift is more pronounced in the Global South where the emerging powers have created new South-South partnership; making Africa an essential player in the new economic and political phenomenon (Carmody, 2013). Such changes are remarkably led by a select group of developing countries, BRICS powers. In his report, Building Better Global Economic BRICs, Jim O'Neil, Goldman Sachs economist pioneered the ‘BRICs’ acronym in 2001 (O’Neill, 2001). O’ Neil forecasted that by 2039, the BRICs states would outdo the world's traditional economies and emerge as ‘the engine of new demand growth and spending power' (Wilson, 2003). Throughout this paper, the term BRICS will be used to refer to Brazil, Russia, India, China and (‘South Africa’ which later was included in 2010). As of 2016, the total GDP of all BRICS countries are estimated to be approximately 16.58 trillion U.S. dollars (Statista, 2018) which has grown from US$2.5 trillion as of 2000 (Moyo, 2009). Furthermore, they represent about 41 percent of the world's populace and nearly 30 percent of the world's land area (BRICS, 2012). According to IMF (2017), the share of BRICS in the global economic growth accounts for 38 percent and their growth is snowballing much more rapidly than foreseen. Despite the growing political and economic influence regarding size, structure and growth performance, the usefulness and validity of the BRICS have risen a considerable debate within the academic circles (Armijo, 2007). Carmody (2013) argues that such speedy growth will challenge the dominance of the Western ‘Great Powers' in the fields of economics, social and geopolitics in the world at large and Africa in particular.

In response to the above question, however, the consideration will be given to the primary driver of the BRICS countries and Africa's single chief trading partner: China. The Chinese involvement in Africa has no doubt stimulated rapid economic growth notably the mid-2000s when Africa’s GDP growth averaged close to 7% per (Dollar, 2016). As such, China has crafted its policy towards Africa, China-Africa Policy, in 2006. Recent China’s African Policy purposes to advance a new kind of strategic partnership with Africa ‘featuring political equality, mutual trust, win-win economic cooperation and cultural exchange’ (Xinhua, 2015).China has thus far devised its strategic plan for engaging with Africa in the aspects of politics, economics, security and social. In this regards, critics argue that Africa cannot be considered as a single ‘state' particularly when it is dealing with China (Sun, 2014). Schoeman (2008) suggests that the bond between China and ‘Africa' is not a two-sided per se but a series of bilateral dealings between China and over forty-two African states. This reality, therefore, signifies ‘Africa' cannot be generalised, though there could be a possibility for simplifying about Africa, provided that scholars permit the fact that the nature of these relations might vary within African countries on the basis of the economic, social and political impact of their engagement with China (Zafar, 2007).

Many African expressed interest in China's path to development and pictured the same lessons to be replicated in the continent. However, this view is debatable though China's success in poverty alleviation is unmatched. The Chinese model of infrastructure development, as reasoned by Ezechukwu (2015), inspires Africa's quest for economic growth. This is because China has experienced the similar predicaments with Africa and has managed to decrease the number of its population living on $1.25 per day from about 80 % in 1980 to 14% by 2010 (Ravallion, 2013).The Chinese economy expanded by 9.9 percent in 2005, and the National Bureau of Statistics of China predicts that it would further increase by 6.5 percent in 2018 (Taborada, 2018). Moyo (2009) argues that ‘China’s GDP had grown by almost US$4 trillion since 2000 – meaning China has, in fact, created another seven Indias (at its 2001 size), nearly three Italys and more than two Frances’. As per today, China filled up the second position of world’s oil consumption after the US, and it is foretold that Chill will overtake the US by the 2030 (Agency, 2017). China's imports of oil, minerals and other vital natural resources are also expanding by as much as 20% per year (Review, 2016).Such growing demand for natural resources a made China attracted to Africa as it currently gains about 28 percent of its oil and gas from Africa (Prof. Ajakaiye, 2006).

With this background in mind, the Africanist theory of International Relations will be used to fully explain how the narrative of China’s rising profile has reshaped the continent's international relations. This does not mean that the other vital theories (i.e. Marxism and Liberalism) will be overlooked, but their fit in the notion will also be briefly examined. Drawing heavily from the liberal theories, the rise of China primarily signifies a challenge to traditional Western powers and has threatened their efforts to promote liberal norms in Africa. However, the rise of China attracted the attention of key African states who have seen few substantial economic reforms with implementing the tenets of the so-called ‘Washington Consensus' whose chief objectives were to privatise and liberalise the African economics in the 80s and 90s(Wade, 2011). By looking at it from a different angle, many scholars hold the view that the upsurge of China has sustained the old patterns of dependence and domination in Africa's development. While African states show considerable agency when it comes to the issue of how to engage and with whom, the rise of China does not fundamentally alter the politico-economic structures shaped by colonial and post-colonial styles of governance on the continent. This primarily supports the Marxist interpretations which hold the view that China has the same motivations as the West – raw materials and markets- which would rather keep Africa remain subordinate in an unequal global system. However, the above two theories are opposed by popular and elite African opinions which are mainly positive about China's engagement with Africa (Dollar, 2016). Africanist scholars such as Moyo (2012) and Prof. Ajakaiye (2006) critically argue that the emergence of China has generated new opportunities for African development. This is because China's policy of non-interference helps sustain weak African states as China itself has experienced a great deal of imperialism and was concerned to African sensitivities in this regard (Schoeman, 2008). Unlike the Western powers, China did not intrude in Africa’s domestic politics as part of their policies of taming satellite states (Hodzi, 2018).

The remaining part of the paper proceeds as follows: the first section will be an in-depth analysis of how China creates new opportunities for African development with particular emphasis on the strategic and economic interdependence, global governance and how China's development model stimulates African growth. The second section examines the critical aspects of Sino-Africa partnership in the light of the Chinese migrants and ‘substandard’ and ‘cheap’ Chinese products in the African domestic markets. Both sections will draw living examples from real cases which will offer empirical pieces of evidence of how the trends and patterns of relationships changed over the years, and it would further explore the benefits or burdens of the new South-South connections vis-à-vis the engagement of Africa’s former colonial powers from the African perspectives. Finally, the conclusion gives a summary and critique of the findings. The heart of my argument, like Moyo (2012) and Ezechukwu (2015), lies with the fact that China generates multiple new opportunities for African development; and China's closeness to Africa means that African states find alternative development partner despite their position in a shifting global order is slowly progressing.

China in Africa: Prizes for New Development

Over the past couple of decades, Chinese activities in Africa have progressively developed and deepened. Although often called an “emerging donor,” the relationship between Africa and China is not a new chapter, but the economic partnership fast-tracked after 2000 when China's development model turned out to be particularly resource-intensive whereas its domestic supplies of energy and minerals were declining (Dollar, 2016). The Chinese interests in Africa in the early days of the 1960s were primarily focused on politics, seeking support for their allies during the Cold War era and isolating Taiwan diplomatically to join the world governing bodies, including the United Nations (Lyman, 2005). Nonetheless, as Chinese economy expanded in the late of 20th Century, their primary interests in Africa was shifted towards building economic ties rather than nurturing political relations. By 2009, China has overtaken the US as Africa's largest trading partner (Ighobor, 2013; Dews, 2014) while their bilateral trade expanded from US $ 10 billion in 2000 (Ofodile, 2008) to US $ 220 billion in 2016 (CARI, 2016).

By referring to examples drawn from over 1050 Chinese companies operating in Africa, Irene, et al., (2017) has discovered that more than 300,000 jobs have been created for African employees, approximately 65 percent Chinese enterprises deliver skills training, and nearly 30 percent of the Chinese firms launched new technologies. With the particular emphasis on these areas, this section of the paper examines into how the rise of China created new opportunities for African development vis-à-vis the prospects provided by the traditional Western powers. A significant and developing body of literature has investigated on three critical aspects of the China-Africa relations: infrastructure finance, utilisation of natural resources, and lack of conditionality of the dealings.

Traditionally, it has been argued that Africa’s slow relative progress was due to the weak and inadequate infrastructure development (Broadman, 2007; Dollar, 2016; Ezechukwu, 2015; Moyo, 2009). The Chinese investment has, therefore, come at a time when Africa leadership has been in search of infrastructure finance (Vivien Foster et al., 2009). The majority of Chinese investment in Africa is now directed towards building infrastructures such as transport, roads, railways, bridges, hospitals, stadiums, school, hydropower plants, refineries and so forth. According to a white paper published by Information Office of the State Council of China, Chinese direct investment “overseas direct investment (ODI)” in Africa was estimated to be US $ 26 billion in 2013, with an annual growth rate of 20.5% (China, 2013) making more than forty African states to profit the funding and investment opportunities(Schoeman, 2008). Given the right guidelines and collaboration between China and Africa, these Chinese investment projects can develop the skills and transfer knowledge and new technology to the African people, revive the capacity of the local industries, create jobs and ultimately increase the state revenue. Furthermore, the Chinese infrastructure-resource loans explain what they mean about their ‘win-win’ economic cooperation: ‘a country uses its natural resources to attract and guarantee an infrastructure loan from China on better commercial terms than it is likely to get from commercial banks’ (Bräutigam, 2010) This means that the loans from Chinese banks will be used by the African governments to construct new infrastructures such as Ethiopia-Djibouti Railway (Istvan & Zoltán, 2018) whereas Africa’s natural resources will be used by China as a financial security to guarantee repayment (Bräutigam, 2010).

Though Africa is rich in energy and mineral resources which can potentially transform the continent’s economic development, the African leaders failed to utilise the resources fully. Therefore African's abundant and uncultivated natural possessions have been a ‘curse’ than a blessing resulting wars, civil strife and widespread corruption (Tutton, 2010). But there seems light at the end of the tunnel for Africa's development. China is very keen to benefit Africa's plentiful natural resources (i.e. minerals, petroleum, metals and timber) to fuel and sustain its economic growth in the benefit of Africa. In this area, Chinese companies have supported African countries to kick-off a mutually joined industry chain, transforming resource advantages into economic benefits (China, 2013). In essence, Africa provides a continued supply of oil, minerals, and other vital resources whereas China offers a fresh source of revenue to African countries generating new opportunities for African development (Ezechukwu, 2015). Such partnership is thus beneficial to both sides creating further prospects for African states, particularly those countries which are rich in natural resources. (China, 2013). The most significant opportunities for African states are a rapid increase of income generated as a result of high demand for Africa’s resource exports, and China’s continued demand for natural resources-particularly oil- has genuinely sustained the prices of Africa's oil exports (Kuo (2016); EIA, 2016); thereby the degree of foreign currency accessible in Africa is secured as a result (Haroz, 2011). African states try to utilise the “complete package" presented by China which enhanced Africa’s international trade, technical know-how and their unwavering diplomatic support in global platforms (Madavo, 2007).

Trade plays a pivotal role in China-Africa relations providing with new prospects for African development. The recent economic integration between China and Africa are particularly significant since they come at a time when Africa’s overall percentage of exports in the global market is in steady decline (Broadman, 2007). China's trade with Africa constitutes only about 3% of China's global business, but it has been growing quite phenomenally. For example, in 1995, total trade with China was only $4billion. By 2012, the total volume of Sino-Africa trade reached the US 198.49 billion (China, 2013). However, Africa may not account for a significant proportion of trade with China; China estimates for a massive amount of Africa's global business. It should also be noted that like it is in other parts of the world, China maintains a trade deficit with several African countries. Although oil exporters such as Algeria, Angola, and Sudan had substantial trade surpluses with China (Haroz, 2011).China also permitted 16 African countries, including Ethiopia, Kenya, Uganda, and Zimbabwe, as destinations for Chinese tourists. This pushed the number of Chinese tourists in Africa to 11.3 million in 2016, an unprecedented increase from 110,000 in 2005 (Woods, 2017) and it is expected to better trade relations and contribute to Africa’s economic growth (Chen, 2018).

Following China's trade and investment in Africa is development aid, usually in the form of concessional loans. Though official statistics of Chinese assistance are inaccessible and remain small in comparison to flows of support from the West, China's development aid has been increasing and offers distinct opportunities for African development. The delivery of Chinese funding is based on strategic economic and foreign policy interests as well as China's historical experience in development. A significant opportunity provided by Chinese aid in Africa is the similarity of its terms to the ODI loan facilities without policy conditionality. In place of the usual policy conditionality, China requires the observance of the one-China policy. Therefore, countries that want to benefit from Chinese aid must be prepared to sever diplomatic ties with Taiwan. Chinese assistance is spread across every country in Africa with which China has diplomatic relations, including those that are wealthier, such as Botswana, Namibia, Mauritius, and South Africa (Brautigam 2008). For African countries that have been rejected by the international community for their record of authoritarian rule, human rights abuses or because of their relatively weak governance, the Chinese model serves a better alternative to the West. As such, China is very responsive to the needs raised by African leaders because Chinese aid is engrained within China's strategy to secure natural resources and a more comprehensive foreign policy towards Africa (Sun, 2014).

China’s massive lack of conditionality for engaging in trade, investment and aid with Africa (regarding good governance and respect for human rights) makes China an attractive trading partner for many African nations. China purposely presents itself as an alternative partner to the Western conditionality-driven model of trade and development (Madavo, 2007). The rapidly increasing China-African trade volume stands as evidence of this appeal and China's proactive and comprehensive approach to Africa has made it the most dynamic actor in the region. China has shown its commitment to enhance the trade partnership and promote economic interdependence by establishing preferential trade agreements across the continent (Anon., n.d.). Following the most recent China-Africa summit in South Africa in December 2015, China President Xi Jinping pledged US$60 billion of support for African development (Dollar, 2016). Furthermore, the Chinese government declared that it would open up China's market to Africa by letting 440 export items from African states to enter China tariff-free. China assured to create three to five trade and economic cooperation zones in Africa over a three-year period, and these trade agreements have enormous potential to increase African exports to China (Report, n.d.).