An article in the Nation caught my eye this morning. Apparently, local CEOs believe that Africa is somehow immune from the global downturn and are planning “huge expansion” in the coming year. While I commend optimism, sometimes blue-sky thinking can go that little bit too far. But what interested me most was a little snippet halfway through the article, concerning the role of China.
Chinese outward foreign direct investment (OFDI) has risen to almost 20 times its level in 2000, and China is an increasingly influential player in Africa. While any foreign investement is to be welcomed, it is difficult to shake the feeling that, in the long term, it will be Chinese interests rather than those of Kenyans or Africans in general that are best served.
Chinese companies setting up in Africa are to be praised for expanding into the “Dark Continent” and providing jobs to those indigenous people that they hire. But for long-term progress, jobs need to be maintained and money generated needs to stay within the local economy. Repatriated profits will do nothing for nations aiming to develop, nor will swamping a fragile local market with cheap imports that do nothing to support or sustain local industry.
China is going to be a world leader in the next few years: in trade, in aid, in economic power. It already effectively owns the USA, on account of its currency reserves and its power as an exporter. That China sees fit to invest in Africa is a good thing. However, making sure that any trade agreements between African nations and China are equitable should be a priority for all businesses and governments. The long-term implications of any deals need to be tackled to ensure that any Chinese imports do not have an adverse effect on any local businesses that compete in the same field.
[Image by ZSoolt]