Win win partnership?

China has prioritised Africa as a strategic partner at both the political and economic level and already its drive for raw materials has initiated a new scramble for Africa, the long-term implications of which are uncertain – but a new book argues that there can be a Win Win Partnership if southern African governments pursue policies that are based on achieving long-term socio-economic and development goals.

Claude Kabemba's picture

Director of the Southern Africa Resource Watch (SARW)

August 13th, 2012

China has prioritised Africa as a strategic partner at both the political and economic level and already its drive for raw materials has initiated a new scramble for Africa, the long-term implications of which are uncertain – but a new book argues that there can be a Win Win Partnership if southern African governments pursue policies that are based on achieving long-term socio-economic and development goals.

The book from the Southern Africa Resource Watch (SARW) – Win win partnership? China, Southern Africa and the Extractive Industries ­– adds to the growing literature on the role of China in southern Africa but does so in three distinct and important ways.

Firstly, the book is developed by an institution that is firmly rooted in southern Africa. While there are many Western institutions that produce interesting research on China-Africa relations, this is often developed to answer questions that are important to policy makers in developed countries. The policy perspectives of southern Africans and the interests that southern African research serves are quite different.  Therefore, this research is intended to serve both civil society and state actors across this region.

Secondly, much of the research that exists has focused on macro-level economic growth. And while the overall picture of how Chinese activity and investment is driving an economic boom on the continent is important to understand, the studies that have been carried out by SARW and its partners are a critical addition because they provide local-level experiences and practical examples of the ways in which Chinese investments affect various communities in the sub-region.

Lastly, this research provides much-needed nuance. The research shows that Chinese investment is neither an unqualified boon nor is it a bane. Governing elites tend to overstate the development benefits of Chinese investment, while the critics of Chinese investment understate them or deny them entirely. The challenge for the countries of the region is, therefore, not how to deter Chinese investment but how to ensure that the positive developmental potentials are enhanced.

Most importantly however, a thorough reading of this research makes it clear that the real challenges and opportunities related to Chinese investment must be exploited by southern African states.  Indeed, as the editors conclude, “the degree to which China helps to develop rather than to exploit the region depends on Southern African governments and their citizens more than it does on the attitudes and strategies of Chinese investors.”

Indeed, the central challenge for African governments is to ensure that interaction with China is mutually beneficial, both politically and economically – and that the relationship becomes a Win Win Partnership.

The so-called “China problem” in resources can more accurately be folded into a larger set of concerns around the shortcomings of African governance in managing foreign investors in the mineral commodities sector, rather than any particular Chinese strain of malfeasance.

In southern Africa, Chinese companies are now known for pollution, human rights abuses, weak safety and health conditions, and poor labour practices. While China might be dominating the headlines, many other companies (including western, Indian and Brazilian) cannot be exempt.  Extractive companies regardless of their origin are taking advantage of the weaknesses of governance structures in most southern African states.

Given China’s apparent lack of interest in African governance and human rights issues, the implementation of Beijing’s Africa policy largely contradicts the African reform agenda. An appropriate policy response from Africa is required to ensure a mutually beneficial China-Africa relationship.

In this context, policy options and dialogue processes become critical in advancing the interests of southern Africa’s economic development, human security and democratisation in the face of new challenges. The process of ensuring a win-win relationship with China should include the following:

  • Building and maintaining an efficient and effective mining public administration;
  • Developing the competencies to run the extractive industries;
  • Strengthening tax regimes;
  • Building linkages between the extractive industries and local economies;
  • Using China’s massive finances to support regional infrastructure development; and
  • Ensuring that Chinese companies are no longer let off the hook regarding corporate social responsibilities.

Ineffective governance and commercial regulation will inevitably allow for a poor result from any foreign involvement option. Southern African nations need to be more steadfast in pursuing their national interests and achieving their long-term goals.

China is in Africa primarily to satisfy its own economic access to strategic resources. China will use any loophole in the relationship with Africa to access these resources cheaply whenever possible. It is in the interest of Africa to ensure a mutually beneficial outcome in its dealings with China and to build local capacity to meet the challenge.

As many observers have pointed out, China has a clear strategy for Africa, but Africa has no strategy for China. The onus is on individual African countries and African institutions to provide appropriate regulatory frameworks and good governance. The responsibility does not lie with Beijing.

The findings of the research from specific southern African countries that are included in this book can be extrapolated to other countries on the continent. The research on the relationship between Angola and China has suggested a desire for mutual benefit, but the results have been disappointing.

The study of China-DRC relations argues that China represents an opportunity for the DRC, but Chinese companies have an obligation to abide by Congolese laws and regulations and respect international norms and standards of the extractive industries. China should not be allowed to follow practices which undermine the fight against corruption and good governance.

Research into the China-Mozambique relationship has revealed that within the forestry industry there is a lack of accurate reporting regarding the amount and location of trees felled, and thus there is significant illegal export of unprocessed logs.

From a short-term business perspective, the relationship between Chinese buyers and South African commodity producers is mutually beneficial. But the present Chinese business model for engaging South Africa’s ferrochrome industry presents both negative and positive features. Chinese investors are seeking supply at the lowest possible cost and all beneficiation is carried out by stainless steel manufacturers in China.

On the positive side, Chinese investments in the form of joint ventures with South African companies offer the prospect of building more rewarding relationships with Chinese capital. Through joint ventures, Chinese companies are also exposed to existing corporate social investment programmes. The Sinosteel-Samancor relationship, for example, offers a good model for Chinese business partnerships with South African companies, which have well-established CSI programmes.

The research on China-Zambia relations explored various aspects linked to the benefits of doing business based on Chinese foreign direct investment into the extractive industries. Government needs to reform and define how this sector should operate – and make operational the Extractive Industry Transparency Initiative (EITI), which the government has already agreed to in principle.

Meanwhile, large Chinese corporations whether state-owned or privately owned have entered into “win-win” joint venture operations with the Zimbabwe state enterprises and private indigenous investors. Chinese companies operating in Zimbabwe are not all the same. There are large corporations and there are small-scale individual investors. The latter group of investor’s operations, in the main, tend to capitalise on the excellent bilateral relations between Harare and Beijing to ease themselves into the mining sector, and the majority of them have generally ignored rules that have been laid down for those wishing to participate in this sector.

What is clear from the research is that Chinese trade with Africa will continue to grow. More credit will be provided for Africa to access natural resources, and China is expected to step up its infrastructure building in the continent. At the same time, China’s development assistance will increase significantly, while investments in a wide range of African commercial sectors will continue to proliferate.

The long-term objective is for southern African countries to devise, and implement, policies that ensure a 'win-win strategy', which implies a win for China and its companies – and a win for all southern African citizens, not just the political and economic elite.

About the author(s)

Claude Kabemba is the Director of the Southern Africa Resource Watch (SARW). In 2006, the Open Society Initiative for Southern Africa (OSISA) asked him to spearhead the formation of SARW. He holds a PhD in International Relations (Political economy) at the University of the Witwatersrand (Thesis: Democratisation and the Political Economy of a Dysfunctional State: The Case of the Democratic Republic of Congo). Before joining SARW, he worked at the Human Sciences Research Council and the Electoral institute of Southern Africa as a Chief Research Manager and Research Manager respectively. He has also worked at the Development Bank of Southern Africa and the Centre for Policy Studies as Policy Analyst. Dr. Kabemba’s main areas of research interest include: Political economy of Sub Saharan Africa with focus on Southern and Central Africa looking specifically on issues of democratization and governance, natural resources governance, election politics, citizen participation, conflicts, media, political parties, civil society and social policies. He has consulted for international organizations such Oxfam, UNHCR, The Norwegian People’s Aid, Electoral Commissions and the African Union. He has undertaken various evaluations related to the work of Electoral Commissions and civil society groups interventions in the electoral process in many African countries. He is regularly approached by both local and international media for comments on political and social issues on the continent. His publication record spans from books (as editor), book chapters, journal articles, monographs, research reports, and newspaper articles.

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