Thursday, May 13, 2010

China in Africa

Howard French has an article in the Atlantic describing the significant investments China is making to build infrastructure across Africa. Chinese investment in Africa currently exceeds $100 billion annually. China’s approach to development differs from the west. The west provides support primarily in the form of grants and heavily subsidized loans. China’s focus is on trade and investment in commercially viable enterprises.

In this model, China provides infrastructure development to Africa. In return, China gets access to the continents vast natural resources including iron, cobalt, copper and other minerals needed to feed its enormous manufacturing based economy.

The key question is if this openly capitalistic, investment based approach can offer sustainable development for Africa. Or, is China gaining access to the continents mineral resource for short term unsustained infrastructure improvements.

History shows that this concern is well founded. French illustrates this by describing a trip on the poorly maintained Tazara train line in Tanzania. The Tazara train line was built by the Chinese in the early 1970’s. It is as an example how mismanagement and corruption led to this big past investment failing to realize its potential.

Simply building infrastructure is not enough. In order to take full advantage of physical infrastructure improvements, investments to train the human capital needed to maintain the infrastructure is also needed. It is not necessarily the obligation of foreign investors such as China to do this, but if the goal is to help the continent develop, it is essential.

It all boils down to educating to empower the local population.

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