Africa rising in partnership with China Mahamat AdamChina Daily Updated: 2006-01-13 05:56
Africa currently represents just over 1 per cent of world trade. This share
in world trade volume is much lower than what it was in the 1960s and 1970s when
most countries on the continent became independent.
At independence, most economies in Africa were based on the export of raw
materials (such as agricultural produce, minerals and oil) and the import of
manufactured goods and services. Africa's trading partners then were basically
former colonial powers. Foreign currencies earned through the sale of raw
materials were used to import manufactured goods and for infrastructure
construction.
The system worked relatively well until the late 1970s when prices of export
commodities from the continent tumbled on the world markets. Despite increases
in export volumes, revenues kept decreasing. In the meantime, prices of import
commodities (manufactured goods) kept swelling, making it hard for the continent
to ensure adequate supply of machinery and other equipment needed for building
infrastructures and establish a manufacturing industry.
With reduced import revenues and purchasing power, Africa's share in world
trade and commerce thus plummeted.
Unlike some Asian nations such as Republic of Korea, Malaysia or Singapore,
which also became independent during the same period, African nations failed to
diversify their economies relying heavily on agriculture. Manufacturing and the
services sectors have remained as insignificant as they were 40 years ago.
Over the past few years, however, signs have emerged of the African economy
picking up. Africa is gradually consolidating its share in world commerce albeit
slowly. The emergence of China as a major world trading power, dramatically
increasing its imports from Africa, has had a boosting effect on Africa's
external trade.
Moreover, more and more Africans are turning to China for their imports and
to attract investors from China. Just over a decade ago, invite a Chinese
company to do business in Africa and you would most likely be considered mad.
Likewise, ask an African that he can import almost everything from China and he
would most probably laugh at you.
The continent is economically backward and its economy insignificant. Africa
is gradually coming to terms with this backwardness. Its share in world commerce
is growing. Experts believe two main reasons have contributed to the new vigour:
diversified exports and multiple sources of imports. Some would also add the
return of political stability in many countries that have previously been in
turmoil. We believe that the first two reasons have been more instrumental as
the civil wars have never prevented the plundering of Africa's natural
resources.
New oil discoveries and exploitation in countries like Equatorial Guinea,
Angola and throughout the Golf of Guinea have significantly increased the volume
of Africa's exports. Though slowly taking shape, industrialization in Africa is
becoming a reality and this has also contributed to boosting export volumes with
high value added goods. But by far the most important factor to this swelling
trade volume is the multiplication of sources of imports and export
destinations.
African countries have been drifting away from decades-long unproductive and
unfair trade relations with their former colonial powers. China's emergence as a
major trading power has given Africa an unprecedented opportunity to not only
sell its abundant natural resources at reasonable prices but also buy cheaper
manufactured goods.
China's economy has been expanding at an astronomical rate with near double
digit GDP growth over the past two decades. To sustain this rapid growth, China
not only needs raw materials but also markets for its manufactured goods. Africa
with its huge natural resources can not only cater for China's need of raw
materials to power its economy but also avail of the opportunity to broaden
co-operation scope and attract more Chinese investments, especially in mining
and infrastructure development.
Gone are the days when co-operation between China and Africa was concentrated
mainly on state-to-state co-operation, political support in international
affairs and economic assistance.
Sino-African relations have evolved over the years. "The new trend in
Sino-African relations is towards strengthening economic co-operation, expanding
trade and investment" says H. Komidor Njimoluh, Minister Counsellor at the
Embassy of Cameroon in Beijing.
In 2004, Sino-African trade volume reached US$29.5 billion compared with
US$19 billion in 2003; that is 58.9 per cent growth rate year-on-year. In the
first quarter of 2005, bilateral trade volume reached US$7.6 billion and it is
estimated to exceed US$30 billion by the end of the year. A senior economist at
the Chinese Ministry of Commerce (MOFCOM) predicts that trade volume will top
the US$100 billion mark in the next five years.
Encouraged by the government to invest overseas and seek market shares for
their products and services, Chinese multinationals have also recently made
significant headways into the continent.
The phenomenal trade volume increment observed over the past few years is set
to continue as more Chinese businesses get interested in the African market and
more Africans get to discover the new economic powerhouse that China has become.
The volume of containers leaving Chinese ports for Douala, Durban, Dar es
Salaam, Mombassa or Tripoli has grown manifold over the past few years.
There are plenty of opportunities for Chinese investors in Africa, from low
cost housing to mineral exploitation and agricultural development. The image of
Africa as a continent torn apart by wars, plagued by diseases and its people
living in abject poverty is being gradually replaced by a more realistic image
of a safe and attractive place for investment with innumerable business
opportunities.
There are now daily flights from Beijing, Guangzhou, Shanghai and Hong Kong
to major cities in Africa. Is it the beginning of a new era and a model of
success story of South-South co-operation? We are tempted to answer in the
affirmative.
The author is the general manager of Africaccess Consulting Company
Limited, a Sino-African trade and investment consulting company based in
Beijing.
(China Daily 01/13/2006 page4)
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