China has invested billions in Africa, constructing roads and bridges and extracting natural resources. But critics say the benefits have not been evenly shared, with many African countries now saddled with enormous debt. The picture on the ground is complex, said a panel of speakers in the Tradeshift Sanctuary at Davos on Thursday, and the relationship holds lessons for the future of global trade.
“It’s certainly the case that China is doing a lot of trade; it’s the biggest investor in Africa. But if you believe in trade, that’s a good thing,” said Cherie Blair, founder of Omnia Strategies and the Cherie Blair Foundation.
What matters is that investments are made on fair and reasonable terms, she said.
“Whether perhaps in the past they have given unwisely, China today is very conscious of the fact that in today’s world there are certain standards of behavior,” Blair said.
The world is more interconnected and governments and brands are held to higher standards, she said, and that puts pressure on powerful nations to act justly.
“The idea that what happens in Africa stays in Africa is no longer something anyone can rely on,” Blair said.
As a lawyer, however, she does worry that smaller nations may be cajoled into signing contracts they don’t fully understand. These countries need expertise internally to ensure they get fair deals, she said.
Chin Okeke, Managing Director for Eclipse Live Africa, said some responsibility rests with African nations themselves
“As a Nigerian, I think it’s important we look inwards to make sure we have the right governance in place to ensure there’s less corruption and to ensure funds are used properly,” he said.
“There’s no question the Chinese are in it for the Chinese,” Okeke said. “The question is whether Africans are in it for Africa.” In some instances, leaders struck “selfish deals” that have benefitted only individuals, he said.
A younger generation is keen to change that, he said, but today there is more talk on social networks than action.
But the issue is bigger than China and Africa; it’s about the environment for global trade that we want to see in future. The choice is between a partnership model that benefits everyone, or an attitude of “how much money I can get,” Blair said.
The west, in particular, has an incentive to nurture a fair environment because its power and influence are only going to decline. By 2050, Blair noted, the economies of Britain, France and Germany will be far behind those of India, Brazil, and China.
“What we’re talking about is a world where population size and market size are going to represent your power,” she said.
China is only the biggest of many countries investing in Africa. The U.S. has belatedly expanded its efforts there, but it should not view Africa as a zero-sum game, the panelists said.
“We don’t want to be in the middle of a pig fight, to be honest,” Okeke said.
If other nations want to succeed in Africa, they need to bring a better approach than came before, he said. “Not just loans, but investment partnerships where we develop Africa instead of enslaving it with more debt.”
Cultural integration is also important and in Africa, it hasn’t happened fast enough, said Stephany Zoo, Head of marketing, branding, and communications at BitPesa.
Chinese businesses in Africa tend to build their own dorms and restaurants, she said, creating an “exclusionary culture” that is a barrier to cooperation.
“The Chinese language carries so much culture and understanding inside it. It’s difficult to internalize those business nuances if you don’t understand the language,” she said.
She believes many people have underestimated African governments. “There’s a narrative around infanticizing African leaders,” Zoo said. “But they know what they want; they’re prepared.”
Other countries would be wise to do the same.
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