The Next 2 Billion: SinoAfrica Rising

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The combined populations of China and the fifty-three countries that make up Africa account for well over 2 billion people or 1/3 the population of the entire world. The African continent holds the people of three United States with a combined continental GDP that’s just over an estimated 1.08 trillion dollars per annum. In comparison the United States GDP in 2007 was an estimated $13.8 trillion ^[1]! China (which is half the landmass of Africa) currently holds a population slightly larger than one African continent (960 million) combined with the population of one United States (300 million). That’s 1.4 billion people in a land area that’s slightly smaller than the U.S.! The nominal GDP of China is an estimated $3.4 trillion and in 2007 it was ranked 4th after the United States, Japan, and Germany.

The total landmass (this number includes water and terrestrial properties) of the United States is an estimated 9.8 million km² ^[2]. The total landmass of China is 9.5 million km² and is slightly smaller than the United States (acording to the CIA World Factbook) ^[3]. [Note: The size of the U.S. in comparison to China is often disputed and other sources essentially reverse these estimates to make China slightly larger than the U.S.]. Africa, on the otherhand, has an estimated landmass of 30.2 million km² and covers 20% of the Earth’s land area and 6% of the total surface area. If you were to visualize this, the combined landmass of China and the United States together fit into the African continent nearly one and a half times.

So put it in perspective, the African continent is almost twice the size of U.S. and China individually but thirteen times poorer than the U.S. and three times poorer than China with a population slightly smaller than China’s. We’re talking about the entire continent of Africa because the individual countries don’t even come close to comparing and the disparity in numbers would be enormous. (In any case, it illustrates how poor the entire continent is without needing to go into country by country detail.)

In a recent article for FastCompany Richard Behar wrote this stark take on sub-Saharan Africa:

An unfathomably vast terrain comprising 49 nations, the sub-Sahara represents nearly one-fifth of the earth’s landmass. Yet its total economy is tinier than Florida’s. Here, 300 million people get by on less than $1 a day. Until they don’t: It is the planet’s biggest tomb, where compared to the 1960s, twice as many children under the age of 5 are now dying each day from disease; a bottomless badland where $500 billion of Western aid since World War II (more than four Marshall Plans) has barely made a dent in the poverty; a region whose market share of world trade is shrinking by the hour as it gets left behind, perhaps permanently, in the dust of globalization; a place so desperate for everything — cash, trade, investment, infrastructure — and so powerless to negotiate strategically, that it’s pretty much up for sale to the highest bidder.

In her article “Chinese Activity in Africa: Feeding the Dragon” Grace Augustine of NextBillion similarly writes:

…it is difficult to draw generalizations across the entire African continent, which encompasses distinct political, geographical, religious, and industrial realities across the diverse nations. Across the Sub-Saharan, GDP per capita ranges from less than $200 to more than $7,000. But on a macro level, although the continent represents nearly one-fifth of the earth’s landmass, the total economy is smaller than that of Florida and 300 million people (about the same size as the U.S. population) live on less than $1 a day.

What those amazing numbers don’t fully reveal is the potential SinoAfrican trade has for drastically changing the economies of both China and the African continent.

The Next Two Billion

China is a nation bloated with people but starved for natural resources. The African continent has an abundance of both resources and people, but for many reasons it’s failed to capitalize on either. Richard Behar is right when he said that Africa is being left behind despite all globalization and prosperity occurring around it. The next two decades will be critical for Africa as it struggles to keep up with the increasingly advancing world it was already lagging behind. However, China has more people than the entire continent of Africa and four decades ago was arguably no better off economically. Now it’s growing at a rate that is literally sending shock-waves through the Western World. To sustain that growth it’s looking for allies and alliances in countries that don’t share the same reservations about Chinese diplomacy as the West. Enter the African region.

Today, China is not only roused, she is devouring the world for breakfast. In just a few years, it has become the world’s top consumer of timber — as well as zinc (with 30% of global demand), iron and steel (27%), lead (25%), aluminum (23%), and copper (22%), along with nickel, tin, coal, cotton, and rubber. The entire sub-Sahara currently uses one-twentieth the amount of steel China does. And although China is the planet’s second-biggest consumer of oil, behind the United States, it’s gaining fast. One-fifth of humankind lives in China, and an increasing number of those people are seeking a consumerist version of xiaokang, or “well-being.” If their per capita GDP (now about $6,500) approaches South Korean levels in the next 20 years, as it is on track to do, Chinese consumption of aluminum and iron ore will increase fivefold; oil, eightfold; and copper, ninefold.

As Sunter, the author and futurologist, puts it, “China is putting 1.3 billion people through an industrial revolution with neither colonies nor substantial indigenous resources besides coal. The only way it can do this is by establishing long-term supply contracts with resource-rich countries.”

African governments seem to welcome the idea…

It is no surprise that most Africans are welcoming Chinese investment and products. The history of traditional Western aid and investment in Africa is one of a nagging “I correct you because I want what’s best for you” parental-like stronghold over the continent. Tired of “the politically motivated, finger-wagging approach of western governments,” Africans have welcomed China’s emphasis on pure business. Numerous sources quote the lack of political motivation, as well as societal or environmental demands, as one of the primary reasons that Africa is welcoming the Chinese investment. ^[4]

The Chinese have no desire to be involved with Africa other than the sheer need for cheap resources and trade. By trading with Africa for minerals, timber, oil etc., China can bypass many reservations the Western nations have about it’s human rights policies. Likewise, many African leaders (who also don’t have great histories of their own when it comes to human rights) could also care less, they’re starving for infrastructure, investment and the mass production needed to scale economies. Where American and Europe in the past have penalized China and African nations in the past for their polices, the two nations have now found a natural alliance with one another.

Between 2001 and 2005, both bilateral trade and Chinese FDI in Africa grew about fourfold. FDI from China to Africa amounted to $100 billion between 1990 and 2004. In terms of exports, the majority of the outbound trade to Asia is in natural resources. According to the World Bank report Africa’s Silk Road, the greatest percentage of African exports to Asia are crude oil (62.2%), sawlogs and veneer logs (4.91%), iron ore and concentrates (4.59%), and diamonds (3.3%). Although there has been optimistic chatter about a nascent manufacturing export sector, there are no value-added products within the top 20 exports. ^[5]

What can the future possibly hold for the African nations now that China is interested?

Measuring The Extent of China’s Involvement in Africa

The full extent of China’s involvement in Africa is hard to measure. In an interview with Richard Behar, Africa statistical researcher for the World Bank Xiao Ye responded when asked for dataset that lays out the full extent of China’s economic involvement in Africa saying, “As far as I know, China no longer releases foreign direct investment to Africa country by country.” It’s no surprise, the Chinese government has long been known to operate with a great deal of secrecy when it comes to internal information.

That hasn’t stopped speculation, however. Jian-Ye Wang’s research from her working paper “What Drives China’s Growing Role in Africa?” reveals…

Between 2001 and 2006, Africa’s exports to China increased at an annual rate of over 40 percent, rising from $4.8 billion to reach $28.8 billion in 2006. During the same period, Africa’s imports from China quadrupled to $26.7 billion.

In their article for the New York Times Lydia Polgreen and Howard W. French investigate further:

Chinese officials and their African allies like to call their growing relationship a win-win proposition, a rising tide that lifts all boats in China’s ever-widening sea of influence. This year [published in 2007], China pledged $20 billion to finance trade and infrastructure across the continent over the next three years. In Zambia alone, China plans to invest $800 million in the next few years. From South Africa’s manganese mines to Niger’s uranium pits, from Sudan’s oil fields to Congo’s cobalt mines, China’s hunger for resources has been a shot in the arm, increasing revenues and helping push some of the world’s poorest countries further up the ladder of development. ^[6]

Economic Implications and Indications

China obviously sees a future for moving forward with Africa as a partner and is investing money as well as resources in realizing that dream. In the 2008 ebook Exploring ChinAfrica, G. Kofi Annan (no relation to Kofi Annan) writes:

Since 2003, China has overtaken Japan as the second largest consumer of petroleum after the United States. In the search for oil to fuel its infamous production cycle, China has begun pumping billions of dollars into Africa with most of the money focused on oil producing nations like Sudan, and Nigeria. The LA Times reports that “China’s demand for resources has driven up prices, propelling signiﬁcant GDP gains in many countries. China has educated thousands of African university students, and it sends Africa hundreds of doctors and advisors each year. Chinese ﬁrms are building roads, rehabilitating infrastructure and bringing cellphone service to places that land lines never reached”.

While the infrastructural beneﬁts of this relationship is generally positive a BBC article points out how “Chinese ﬁrms are a little less ethically constrained than their Western counterparts” which can encourage human rights violations by African governments.

The obvious benefit for Africa here is that a ChinAfrican alliance in trade and business has the potential to stimulate African economies in ways they’ve rarely seen before. As China continues to grow, it’s going to need oil, wood, natural gas, agricultural import and more cheap labor than it even has within it’s own borders. The potential for Africa nations to take advantage of this offers enormous hope for the continent, but also carries the fear that Chinese diplomacy in the region will be even worse than colonialism over the past two centuries.

Despite those concerns, the way forward seems to be increased trade with China, if only for the immediate gratification of cash. What are the implications of more Chinese activity in Africa? Using China’s example, can African nations follow suit? Grace Augustine writes…

A working paper issued by the World Bank in February of this year, titled “Lessons from China for Africa” is focused on the fact that “other developing countries struggling to grow and reduce poverty are naturally interested in what has been the source of this impressive growth and what, if any, lessons other developing countries can take from China.” For those who are looking solely at economic indicators, China has lifted 300 million people out of poverty with unimaginable speed. China certainly did not achieve this success through a dependence on Western aid and structural adjustments. So, could China do the same for Africa? ^[7]

Chinese Expatriates in Africa

The Asian move into Africa has been part of the continents history for hundreds of years now. In the 70’s during Idi Amin’s rule in Uganda there was a well known forced expulsion of all Asians living in the country including Indians, Chinese, Saudi Arabian’s and more. By the thousands, Asians had to either return to their own countries or seek asylum in countries like the United Kingdom ^[8], Kenya and Germany ^[9]. His argument was that they were creating too many businesses and that the danger of them dominating the economy was too great. Well he was partially correct, after they were extradited he placed local people in charge and the entire economy nearly collapsed ^[10]. Entrepreneurship can’t exactly be taught, and it certainly can’t be forced. What Idi failed to see in Uganda was that culture, self-motivation and experience created successful entrepreneurs, not race. Likewise, simply giving someone a business because they were born on your land has absolutely no bearing on their skills, aspirations or interests. In fact, many of the Asians forced out actually were born in Uganda during a time when it was a British colony so essentially they were targeted out of a racist and irrational fear. It could also be said that since the Asians who left were the bankers and business owners, things went downhill because of the quick transition and the chaos that likely ensued. Whatever the reason, businesses began to fail as the direct result of their owners being forced to leave, something that would set the countries economy back at least twenty years. Ironically, things didn’t begin to turn around until Uganda’s current leader Museveni took power in the 90’s and encouraged people from the Asian continent to return without restriction.

So the story of Asians in Africa is a long one that has as many intricacies as there are countries in Africa. Each country has it’s own story to tell. What’s true about the present is that Asians are coming to Africa for opportunity as investors or entrepreneurs in great numbers. According to Exploring ChinAfrica, there are an estimated 750,000 Chinese people living in for extended periods in Africa. That number doesn’t include the number of people who’ve fully expatriated, and people from other continental Asian nations which is similarly high.

What’s spurring the growth in numbers? Many things from China’s interest in global expansion, to word-of-mouth from successful entrepreneurs to the opportunity to dominate emerging markets early on.

During the previous wave of Chinese interest in Africa in the 1960s and ’70s, an era of radical socialism and proclaimed third-world solidarity, European and American companies held sway over economies in most of the continent. Here and there, though, the Chinese made their presence felt, often in drably dressed, state-run work brigades that built stadiums, railroads and highways, crushing rocks and doing other labor by hand. Today, in many of the countries where the new Chinese emigrants have settled, like Chad, Chinese-owned pharmacies, massage parlors and restaurants serving a variety of regional Chinese cuisines can be found; the Western presence, once dominant, has steadily dwindled, and essentially consists nowadays of relief experts working international agencies or oil workers, living behind high walls in heavily guarded enclaves.

…

The Xinhua News Agency recently estimated that at least 750,000 Chinese were working or living for extended periods on the continent, a reflection of deepening economic ties between China and Africa that reached $55 billion in trade in 2006, compared with less than $10 million a generation earlier. ^[11]

In Conclusion

America and Europe once dominated Africa in both policy, trade and development. If there’s any indication that the world climate is changing, American involvement seems to be on the decline while Chinese involvement here is on the rise. On the ground here in Kampala, Uganda it’s rather rare to meet Americans. The foreign development workers are largely European, expatriate students are often European or Australian and foreigners who’ve become entrepreneurs here seem to be overwhelmingly from the Asian continent with China representing in large numbers. It’s not rare to find businesses with mainly Ugandan staff and mainly Chinese management. It’s hard to find fault with people who come to live here because of the opportunities they can’t find in their own countries. Isn’t that why many people expatriate?

What is clear is that the government of China has an agenda. Whether you like or or not, it’s not up to China to police themselves when it comes to Africa. In this scenario Africa leaders need to look out for the best interests of their people wile taking advantage of the promise China’s interest offers. If history can serve as a lesson, many people have come Africa offering the world, giving nothing and taking everything. Only Africa can ensure that it never happens again.