Padraig Carmody: The New Scramble For Africa

The shift in the world’s economic balance, from West to East, represents significant challenges and opportunities for Africa. The continent is now a major supplier of crucial raw materials and, as importantly, a new one-billion-strong market for manufactured goods and services.

This development is nothing new. Indeed, it has been commented upon so widely that the book’s very title has become something of a cliché. But Padraig Carmody’s book does offer to untangle the ramifications of the new scramble for commodities.

The book begins, after a short introduction, with a chapter that explores the new scramble, comparing and contrasting it with the old scramble. Carmody makes a very important point here: the idea that Africa is passive and powerless in this process is erroneous. Yet the power resides with the continent’s elites even if the rewards tend to accrue disproportionately to external players, namely the multinational corporations that operate on the continent.

Of course, the spectre of China’s influence and economic power is writ large throughout the book, but it acknowledges that China’s trade impact on Africa is sometimes overemphasised. A revealing IMF graph that tracks Africa’s exports to major world economies in 2008 reveals that the US accounted for more than double China’s imports from Africa in that year.

Oil the strategic imperative

Whether the IMF was able to accurately capture all the relevant data, or whether the trade figures have changed in the intervening years that coincided with the financial crisis, is open to conjecture. The US imports were mainly of African oil, and three times the size of China’s imports of this commodity. Stimulated by the US’s African Growth and Opportunity Act, designed by the Clinton administration in 2000, Africa’s oil is of growing strategic importance to the US.

Yet China’s trade with Africa is still hugely significant, in 2008 roughly equal to the combined total of Brazil, India and France, even if it is still dwarfed by the US’s trade figures. Although not commented upon in the book, it is significant to note that at the first meeting of the Forum on China-Africa Cooperation (FOCAC) in 2000, just three African heads of state attended. By the time of the third FOCAC, in 2006, leaders from 48 African countries travelled to China, the largest-ever number of African leaders to meet outside the continent.

And it is also interesting to note that just as China is taking a greater interest in trade with Africa, China’s experience in poverty reduction has increasingly informed African thinking and policies. China’s success at tackling poverty has been achieved with a slow, progressive liberalisation of the economy, based on China’s own judgements regarding the country’s competitive strengths. This is in stark contrast to the consensus of the Bretton Woods institutions that argue for the ‘big bang’ approach, i.e. everything at once, as being best for Africa.

In the following chapter, old economic power interests and strategies in Africa are analysed and the tired, old attitudes of the West re-examined. For example, Carmody draws attention to the criticism levelled at the 2005 Commission for Africa report. This was neatly summed up by one observer at the time, and is quoted in this book: “There was no recognition [in the report] that the rich world’s lifestyle and rapacious use of Africa’s resources had created and continues to create unsustainable economies [in Africa] in the first place. The message, loud and clear, is: ‘Africa is at fault and Africa has to change with our help’.” But the general anxiety among the Western powers is, Carmody says, that China’s influence may block the West’s prescriptive change for Africa.

The book sketches the resource interests and strategies of the European powers, especially the UK and France, and repeats that famous dictum of the late President Omar Bongo of Gabon regarding the Françafrique relationship. “Gabon without France is like a car without a driver. France without Gabon is like a car without petrol.”

Playing catch-up

Both the EU and Japan have been playing catch-up with the US and China in recent years, as if suddenly waking up to the prospect of losing their influence in the continent – in the case of the EU, mainly inherited from the colonial era. Despite this, the author posits that the US is “dramatically increasing its investment and presence in Africa, partly in response to resource competition”.

To illustrate this new reality, the example of the Chad-Cameroon oil pipeline is drawn upon. Originally to have been developed by French oil company Elf, it was later taken up by a consortium led by the US oil super-major ExxonMobil (with World Bank support) at a cost of $3.5bn. French interests in Chad were consequently eclipsed by the US, but not entirely eliminated.

Meanwhile, in neighbouring Sudan, Chinese investment in a pipeline from the interior to an oil terminal at Port Sudan on the Red Sea, guarded by 5,000 Chinese ‘private defence contractors’, became the first example of the Chinese being permitted to develop their own oil facilities in Africa. Between these two pipelines in Chad and Sudan lies what Carmody describes as a “geopolitical fracture zone or shatterbelt in Darfur and Western Chad, where external powers support different governments and rebel factions”. This attests to the true price to the continent of the current resource competition scramble in Africa, which often costs more in humanitarian terms than simply the economic exploitation that is taking place.

Part of the scramble is, in fact, originating from within Africa itself, with South Africa taking a close interest in the region. Partly, Carmody suggests, this is because South African companies are generally too small to compete in the world’s developed economies.

Post-apartheid, South African corporates were unleashed on the rest of Africa and by 2005, only eight of South Africa’s top 100 listed companies had resisted developing operations to the north of the Limpopo. Significantly, the export-import ratio with the rest of the continent  – which had stood at 6:1 in South Africa’s export favour, has recently dropped to about 2:1. Carmody thinks this may be partly due to increasing amounts of re-exports from the rest of SSA – for example, the copper cathodes, produced in Chinese-operated SEZs in Zambia being exported to China via Durban in South Africa.

It is the new economic powers emergence on the continent, i.e the BRICS, that are central to this book. China’s amazing growth is undoubtedly predicated by the country’s ability to source commodities from Africa.

Describing China’s ‘scramble’ master plan, Carmody quotes Mark Leonard, who argues: “China will literally transplant its growth model into the African continent by building a series of industrial hubs linked by road, rail and shipping lanes to the rest of the world. Zambia will be home to China’s metal’s hub, providing copper, cobalt, diamonds, tin and uranium. The second hub will be in Mauritius, giving China a trading hub that will permit 40 Chinese businesses preferential access to the 20-member states of Comesa that stretches from Libya to Zimbabwe and Swaziland as well as easy access to the Indian Ocean and South Asian markets. The third zone – a shipping hub – will probably be at Tanzania’s commercial capital Dar es Salaam.”

While China’s influence in Africa is much more prominent, India is also a powerful player. For example, a duty-free tariff preference scheme allows for imports from 34 African countries. And half a billion dollars in aid, mainly in the form of technical training and assistance, has been announced by Delhi – as well as credit lines of $5.4bn that will be established by next year. The balance of trade between Brazil and SSA shows, unsurprisingly, that while Brazil exports mainly manufactured goods and food, it mainly imports primary commodities such as oil, coal and minerals. In fact, Brazil is experiencing a rising trade deficit with SSA – specifically Nigeria and Angola with oil trades, and South Africa with coal – and this trend looks unlikely to reverse. Carmody notes that Petrobras (Brazil’s state-owned oil company) has plans to invest $3bn by next year, mainly in Nigeria and Angola. Interestingly, China is now Brazil’s largest trading partner.

Carmody writes (in completing the BRICS roundup) that Russia does not have the same trade imperatives within Africa as the other BRICS, as it is so energy rich. That means, the author believes, that Russia’s involvement in Africa is unlikely to be as intense as its BRICS partners. Nevertheless, state-owned gas company Gazprom has significant operations in Nigeria.

Beyond the BRICS, Turkey and Malaysia are singled out in the book as increasingly joining the new economic powers in Africa.

Thanks to the book’s wide focus and outstanding clarity, we are offered something of a seminal study of the nature of resource and market competition in Africa. While it lacks some of the more recent ‘scramble’ developments (the book appears to have been completed in 2010) and does not really tackle the emerging economies’ exports into Africa, it still represents a full account of the ‘new scramble’ phenomenon, undoubtedly the continent’s most important economic development of recent decades.