Trade entanglement: Africa weighs competing attention from world’s top economies, whether China’s no-strings approach or US lectures; China’s President Xi with Tanzania’s President Kikwete, top, and, below, US President Obama in Senegal (Reuters; White House)
CLEVELAND: During a weeklong trip to Africa, with stops in Tanzania, Senegal and South Africa, President Barack Obama announced a new model of engagement between the United States and Africa, based less on aid and more on trade and partnership, with his country helping Africa “build Africa, for Africans.” Through several US-Africa economic initiatives launched during his visit, especially regarding trade and energy, Obama strives to catch up with China, which has created strong partnerships on the continent. Obama arrived three months after Xi Jinping visited Tanzania on his first foreign trip as Chinese president in March 2013.
During the trip, the US president indirectly juxtaposed the US and Chinese trade and investment proposals, suggesting that US investors would support local economic capacity, not simply consume its raw materials, eyed by China, given its ever-growing industrial capacity.
The US and China are both interested in ensuring employment for their citizens, gaining access to valuable resources and securing new stable trade partners. Nevertheless, China will likely win the battle over Africa, due to its policies of non-interference in internal affairs, especially regarding human rights and democracy, lagging for many African countries.
Tanzania was a logical choice among Obama’s destinations, given that the US and the African country have had longstanding economic relations. According to Obama, Tanzania has continuously been one of the best US partners in Africa. The US has provided aid to promote transparency, address health and education issues, and target development indicators to sustain progress. In turn, Tanzania exports agricultural commodities, minerals and textiles to the US, while importing wheat, chemicals and machinery.
China will likely win the battle over Africa, due to its policies of non-interference in internal affairs.
One key initiative announced by Obama was Power Africa, a $7-billion program combining public and private funds and loan guarantees, aimed at ensuring cleaner, more efficient electricity generation capacity. He suggested the program will build on “Africa’s enormous power potential, including new discoveries of vast reserves of oil and gas, and the potential to develop clean geothermal, hydro, wind and solar energy.” An indirect implication is that the US could make use of new resource reserves in Africa for both Power Africa and its own national interests. Obama visited the Ubungo power plant, run by US-based Symbion.
Another key project on Obama’s agenda was launching Trade Africa, a new partnership between the US and sub-Saharan Africa “that seeks to increase internal and regional trade within Africa, and expand trade and economic ties between Africa, the United States, and other global markets.” The partnership will be initially implemented in the East African Community, or EAC: Burundi, Kenya, Rwanda, Tanzania and Uganda. Among its original goals, Trade Africa intends to “double intra-regional trade in the EAC, increase EAC exports to the United States by 40%, and reduce by 15% the average time needed to import or export a container from the ports of Mombasa or Dar es Salaam to land-locked Burundi and Rwanda in the EAC’s interior.” This suggests that the US wants to assist these countries in improving regional trade capacity.
Despite indirect suggestions that the US, because of its support of local economies, is a better economic partner for Africa than China, the two global players have similar goals and approaches. China has already massively supported local African economies, by building much needed infrastructure, including roads, ports and bridges in multiple African countries.
The two global players have similar goals and approaches for Africa – development, job opportunities and access to natural resources.
Chinese companies, either building infrastructure or involved in other businesses, have also provided job opportunities. While it’s true that China brings most white-collar workers to develop infrastructure projects, the majority of blue-collar staff is African. For instance, the 2010 construction of Chinese-funded Imboulou Hydroelectric Dam in the Democratic Republic of the Congo, employed more than 2,000 locals and 400 Chinese construction workers; at the China-Benin Textile Company, there are 5 Chinese employees and 1,100 local staff members.
This is partly because in many African countries, especially those enduring prolonged periods of war, there is an acute penury of highly-skilled workers. Given this context, the US would most likely have to bring its own white-collar workers to develop energy projects. Almost inevitably, the two countries would end up applying a similar employment model: Highly skilled laborers include their own nationals, and less skilled labor comprises African locals.
Of course, one of US and China’s key objectives is to benefit from Africa’s abundant natural resources. Tanzania possesses significant quantities of gold, diamond, iron, uranium and natural gas, while Burundi has nickel, uranium, kaolin and gold. China has made significant investments in Sudan and South Sudan, known for its oil resources, and Angola, with major reserves of oil, gas and diamonds. Moreover, at this moment, oil represents 66 percent of China’s exports from Africa, while minerals and metals represent 30 percent. US imports from Africa consist of 89 percent oil.
The African continent is an increasingly active market, with six of the world’s fastest growing economies and projected to grow by 5 percent in 2013. China surpassed the US as Africa’s largest trading partner in 2009. In 2012, China invested more than $40 billion in African countries and promised $20 billion in aid during the upcoming three years. That same year, total trade between China and Africa was $128 billion, while Africa’s trade with the US was $100 billion. As African countries’ economies grow, trade relations will become more profitable.
Other rising global powers, such as
Brazil and India,
have started claiming their piece of the African pie, too.
Despite many similar interests in African countries, one key difference could determine whether China or the US wins over Africa: their approach to countries’ respect for human rights and good governance. China has a policy of non-interference in internal affairs with its partners, whereas the US advocates for democracy and human rights, often conditioning aid receipt on efforts to achieve certain standards. During his recent trip, Obama encouraged African countries to strengthen good governance and hold human rights abusers accountable. Many African countries are far from the standards called for by the US, some due to ongoing conflict, like the Democratic Republic of the Congo, others due to political disinterest, as in Uganda. Therefore, these countries, hungry for economic partners, might be more inclined to work with China, almost strictly interested in economic pursuits, rather than the US, which seeks social and political involvement in internal affairs and will scrutinize every move.
At the same time, people in other African countries, like South Africa, are increasingly disillusioned with the US and criticize US double standards. During his visit in South Africa, people protested against Obama for the use of drones in the Middle East and failure to close Guantanamo Bay.
South Africa is among Africa’s most prosperous nations, constructing strong economic relations with both the US and China. Nevertheless, since 2010, China has become its largest trading partner. During his visit to South Africa, Obama emphasized that the country is a “critical partner.”
South Africa is one of the few countries in Africa in the privileged position of efficiently joggling between the economic interests of China and the US. It’s a stable democratic country. Many other African countries, possessing more resources than South Africa, such as Sudan and Congo, cannot boast the same political circumstances and, therefore, do not have the same bargaining capacity.
By losing ground on the continent, the US might also lose to China the great power battle for influence in Africa. While the U.S. and China might be fighting for supremacy, other rising global powers, such as Brazil and India, have started claiming their piece of the African pie. According to a Chatham House Report, during the past decade, Brazil raised its trade with Africa from $4.2 billion to $27.6 billion, with oil and other natural resources comprising 90 percent of its imports from the continent. Both nations perceive Africa as an excellent consumer market for their manufactured goods. Regardless of who wins the battle over Africa, Africans might see their resources sucked up with few considerable improvements to show in their lives.