Unbalanced China-Africa trade recipe for backlash

Monday, November 25th, 2019 00:00 |
China-Africa trade. Photo/Courtesy

China’s aggressive foray into Africa in the last decade or so was welcomed with both arms by African countries fed up with being hectored, patronised, and lectured by Western governments who had also become very stingy with their money. 

China came offering huge monies for massive infrastructural projects. Africa fell into China’s bear hug. A marriage made in heaven. Or so it seemed.

But somewhere down the line, something seems to have come badly unstuck. It’s now clear China has absolutely no intention of assisting Africa to develop its productive capacities to boost the living standards of her people.

Africa is simply a resource supplier, and infrastructure built under the Belt and Road Initiative (BRI) is simply to facilitate the evacuation of those resources.

What’s the current state of ties between Africa and China?

Trade deficits between China and African countries have spiralled out of control. Kenya National Bureau of Statistics data shows that between 2014 and 2018, Kenya’s imports from China stood at a staggering Sh1,668.3 billion, while exports stood at a paltry Sh46.2 billion. 

Floodgates have been opened for cheap and counterfeit manufactured goods from China, from shoes to fish to electronics, drowning local production. 

China is offloading excess nationals onto Africa, where they now compete with Kenyans in petty trade. Now, Chinese are into jua kali and are selling mitumba and electronics in Nairobi’s Gikomba and Kirinyaga Road, respectively.

Worse, they have captured the entire supply chain, from Guangzhou to Mombasa to Nairobi, locking out Kenyan competitors importing similar goods.

In contrast, mzungus would never be caught dead trading in River Road, let alone Gikomba.

So, where is the relationship between China and Africa headed? First, increasingly debt distressed African countries are headed for a showdown with China.

From Addis Ababa to Cairo; Gaborone to Nairobi and Luanda to Juba, African countries are grappling with deepening debt stress thanks to huge loans from China. The loans are mainly commercial, short-term, whose terms are usually shrouded in secrecy.

Already Djibouti, Zambia and DR Congo have been flagged as the most likely to default. Botswana and Ethiopia have already been forced to seek a renegotiation of their loan terms to stave off default.

The chickens are coming home to roost, and widespread default is now a looming reality. Many Chinese-funded projects will be abandoned, others will become white elephants, and strained relations characterised by endless tension over debt looms.

Secondly, it’s now obvious ties between Africa and China are a one-way street. Incredibly, Kenya has been unable for over 15 years of supposedly very strong economic links to make any significant inroads into the Chinese market of 1.3 billion people. Clearly, the expansion of trade is the least of China’s priorities.

In contrast, the US government launched the African Growth and Opportunities Act (AGOA) that saw countries like Kenya develop thriving industries for American exports.

The European Union has had the Economic Partnership Agreements for decades, which allows African, Caribbean and Pacific countries duty-free exports to the EU. Kenya has developed a huge economic ecosystem exporting to the EU.

Thirdly, the increasing “invasion” of Chinese nationals into African community space will become the flashpoint for the simmering tensions between China and Africa.

Expect inter-racial tensions to spill over into conflict. It is not for nothing that Chinese nationals are now one of the largest contingents of foreign nationals in Kenyan jails. 

The Western honeymoon in Africa lasted for decades because it was clothed with a huge dose of reciprocity, especially market access, and many grant-driven community development initiatives. Call it enlightened self-interest!

China’s mercantilist approach that completely ignores the fragile nature of African economies and communities is a recipe for disaster.

China must wake up to its responsibilities as a global leader, which comes with onerous responsibilities of egalitarianism, and ethically and morally responsible behaviour. 

China must urgently craft a market access programme that allows the duty-free access of African goods to its huge markets, stop killing local industries.[email protected]

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