Is Africa Turning East? China s new engagement in Africa and its implications for Africa s development perspectives

Transcription

1 Is Africa Turning East? China s new engagement in Africa and its implications for Africa s development perspectives Gerald Schmitt, German Technical Cooperation (GTZ), Africa Department Africa Regional Consultative Conference of the Donor Committee for Enterprise Development November 2007 Africa Department

2 Overview 1. The challenge 2. China in Africa: facts and figures 3. What s in it for Africa? Short and long term effects 4. Is Africa loosing out in the long term? Recommendations to African governments, donors and the private sector p. 2/15

3 The challenge African countries should always strategize to compete with the Asian Tigers on both local and international markets. Africa has come of age, so the leaders must be able to negotiate agreements that would be on a win-win basis. Quotes from President John Agyekum Kufuor at the first Business Roundtable Conference in Accra organised by the Economist Intelligence Unit in October p. 3/15

4 China in Africa? China s Aid to Africa (1) China's foreign aid expenditure to Africa ,60 1,40 in billion US $ 1,20 1,00 0,80 0,60 0,40 0, estim. year p. 4/15

5 China in Africa? Major Donors (2) Official Development Assistance to Sub-Saharan Africa by Major Donors, 2006 (Billions of US$) p. 5/15

6 China in Africa? Chinese FDI (3) China's Direct Investment in Sub-Sahara-Africa ( ) Million US $ p. 6/15

7 China in Africa? Trade relations (4) Composition of Africa s exports to China in the year 2004 others; 14% electronic; 1% steel; 3% copper; 1% magnesium; 1% diamonds; 3% timber; 3% tabacco; 1% cotton; 4% ore; 5% petrol; 64% p. 7/15

8 China in Africa? Trade relations (5) Composition of Africa s imports from China in the year 2004 others; 12% footwear; 5% mechanic and electric products; 41% iron and steel; 5% hightech products; 8% clothing; 11% textile and yarn; 18% p. 8/15

9 China in Africa? Summary (4) Rapid growth of Chinese ODA, FDI and trade with Africa since early 90s > still increasing! No strings attached to China s ODI, but One China principle and highly tied aid (70%) Promoting a win-win partnership and respecting the sovereignty of African governments, especially what concerns governance issues Greenfield investments in African commodities and access to markets; largely driven by private sector Trade pattern typical for commerce between developed and developing countries (commodities manufactured products) p. 9/15

10 What s in it for Africa? (1) Africa in a winning position! accrued competition between donors > better choice for African governments Chinese (greenfield) investments: widen the fiscal space, contribute to Africa becoming part of the world market and create jobs Access to cheap consumer goods, especially appreciated by the poor South-South Learning on equal level, no educational discourse linked to conditionalities p. 10/15

11 What s in it for Africa? (2) But what about the long term? Resource rich countries: benefit from Chinese investment and rising world market prices; gains from extractive industries need to be managed carefully and invested in diversifying the economy (resource trap) Resource poor countries without manufacturing capacities: cheap manufactured goods accessible by the poor; benefit from growing demand for agricultural products; so far little incentive for private sector to climb further up the value chain (restricted to supplying commodities?) Resource poor countries with industries: accrued competition with imports from China; potential benefits from trade agreements favouring manufacturing in Africa p. 11/15

12 What s in it for Africa? (3) And what about standards and Chinese immigration? Standards and norms: Chinese companies in Africa said to disregard international and national standards; negative track record in export of timber, workers rights and environmental standards > long term impact on Africa s growth perspectives? Chinese immigration into Africa: up to 1 million Chinese said to live in Africa today; competing with traders and entrepreneurs even in the informal sector > positive or negative effects on Africa s development perspectives? p. 12/15

13 Is Africa loosing out in the long term? (1) Recommendations to African governments: China has an Africa policy. But does Africa have a China policy? > proper long term strategies for engagement with China urgently needed! Active support and incentives for the diversification of the economy and further processing of commodities in Africa Recommendations to donors: Support capacity development for the elaboration and implementation of long term strategies for economic development and for analysing and negotiating trade agreements Improve efficiency of ODA as well as coherence of trade, economic and development policies Support private sector development on a broad scale p. 13/15

14 Is Africa loosing out in the long term? (2) Recommendations to the private sector: Make use of upcoming opportunities Participate actively in shaping the policy environment for private sector development and sustained growth Accept the Chinese challenge, improve own business efficiency and the competitiveness of goods produced in Africa in the world market! p. 14/15

15 Thank you very much for your attention! p. 15/15