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GATSIOUNIS: China biggest beneficiary of its African largess
Improved infrastructure may be more burden than help
Question of the Day
When the new Chinese-funded African Union headquarters was unveiled recently in Addis Ababa, Equatorial Guinea’s president, Teodoro Obiang Nguema Mbasogo, hailed the $200 million spectacle of marble and glass as “a reflection of the new Africa.” Ethiopian Prime Minister Meles Zenawi called it a symbol “of the African renaissance.”
Indeed, China’s infrastructural push here - taking the form of smooth highways, gleaming towers and generic multipurpose stadiums - can make for an uplifting contrast on a continent where a lack of infrastructure is estimated to shave off 3 percentage points of growth a year.
But it’s a myth that Chinese infrastructure is opening up Africa to its economic potential. It may, in fact, hinder that potential.
As with the African Union headquarters, many Chinese projects use Chinese labor and materials, minimizing skills transfer and stunting local production.
The sheer extent of Africa’s infrastructure needs poses another problem. The World Bank estimates that Africa will have to spend $93 billion a year to close its infrastructure deficit. It’s currently spending about half that, of which Chinese projects make up 20 percent. As a construction manager working in the Sudan and Ethiopia told me, “You finish one project, and by the time the next one is done, the first one needs repairs.” This is limiting synergies and raising the host country’s cost burden.
The scope of China’s projects do little to overcome this challenge. Most are on a bilateral basis, not regional, and furthermore are not accompanied by a realistic, long-term vision or investment plan. Here in Uganda, China is building a four-lane toll road from the capital to the airport and a hospital. Mostly, though, it’s undertaking prestige projects meant to gain influence with decision-makers, including the Foreign Affairs Ministry, towers for the president and prime minister, and a football stadium.
There’s also a strong likelihood that Chinese interest in Africa’s infrastructure will wane in time. This is because China is not in Africa out of magnanimity, but rather to extract resources and boost its soft-power reach. Once those are secured, there will be less reason to invest in infrastructure. Also, returns on infrastructural projects tend to be very long-term, and the economic and legal risks are high in many African countries. A number of Chinese-sponsored projects - including an oil refinery in Angola, a highway in Nigeria and a fiber-optic project in Uganda - have stalled because of funding or legal wrangles with the host partner.
Once the projects are handed over, the host partner often lacks the culture of maintenance and funds to sustain them. One of China’s biggest infrastructural projects on the continent, the $500 million Tan-Zam Railway connecting Tanzania and Zambia, is instructive. Completed in 1975, it reportedly was by 2008 “on the verge of collapse due to financial crisis.”
Another problem is that Chinese projects too often respond to symptoms, not causes. Take the 100-bed hospital the Chinese handed over to Uganda last month, meant to ease congestion at the country’s main hospital, Mulago. Once a regional star, Mulago now frequently runs out of medicine and electricity. Patients lie on hallway floors. At the heart of this life-threatening dysfunction is corruption and mismanagement, something more financing won’t fix. “Do you build a new school if the one you have is not performing well?” asks Jared Osoro, an economist at the East African Development Bank in Kampala. Mr. Osoro says Chinese plans don’t look deeply enough at what ails Africa.
Rwandan President Paul Kagame is of a similar view. Reflecting on the new African Union headquarters, he said, “[The building] is only a symptom of a much bigger problem - the problem being that Africa, in my view, should not be where it is today. We need to find a way out of this Africa, we need to work hard, be smart in many ways and do things in such a way that will get us out of this situation.” In other words, China’s infrastructural projects, tangible and conspicuous, often obscure the continent’s more pressing needs, from good governance to access to health improvements and relevant education.
Isaac Shinyekwa of the Economic Policy Research Center at Makerere University in Kampala sees direct foreign investment that cultivates local expertise and production as a greater force of development than Chinese infrastructure: “If we can’t add value to our products and export them, how will the infrastructure benefit us?” The center estimates that of 4,000 Ugandan products given preferential treatment by China, just 5 percent offered a real comparative advantage, and most of those were in raw materials. The trade gap stands at $200 million.
None of this is to suggest China’s infrastructural work on the continent is for naught or that only China will reap benefits. China’s $3.3 billion investment in 10 hydropower projects across Africa could help boost the continent’s hydropower potential from its current usage of 7 percent to 30 percent. Highways like the 16-lane one being built between Nairobi and the satellite town of Thika should boost efficiencies and productivity. The planned light rail in Addis Ababa should ease congestion. The Benguela Railway refinanced with Chinese money is improving commerce in Angola.
Ioannis Gatsiounis is a contributing correspondent for The Washington Times.
© Copyright 2014 The Washington Times, LLC. Click here for reprint permission.
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