There has been keen interest in the build-up to the US-Africa Leaders Summit, which some African political observers have described as a move by President Barack Obama to checkmate the gains made by China and other Asian nations in Africa in the last decade. Wanjohi Kabukuru reports on why Africa is everyone’s interest today when only 50 years ago nobody would have anticipated that China could offer a counter-balance to the US.
The story of Africa’s unpredicted growth has been the refrain of the past decade. But in addition to the impressive GDP growth figures of late, reports such as the 2011 African Development Bank’s (AfDB’s) “The middle of the Pyramid: Dynamics of the Middle Class in Africa” reveal that Africa’s middle class tripled in the last 30 years to reach 313 million people in a population of 1.1 billion. The increase in high net-worth individuals was also captured in this report which noted that by 2008 some “100,000 African nationals had a net worth of $800bn.”
According to the AfDB, Africa’s economic growth was 4% last year (compared to a global rate of 3%) and foreign direct investment is set to increase and will surpass the $43bn reached in 2013 by the close of 2014. The World Bank says that this increase will be largely due to natural resources, notably new oil and gas finds in the western Indian Ocean rim covering Somalia, Kenya, Seychelles, Tanzania, Comoros, Mozambique and Madagascar and the South-west African coastal belt of Namibia and Angola all the way to Nigeria.
It is these impressive money-linked statistics that are the core of discussions at the US-Africa Leaders Summit. The agenda itself is revealing.
The key areas of discussion in Washington will be trade and investments, peace and security and general development plus tapping the demographic dividend of the youth. According to the US Secretary of Commerce Penny Pritzker, the US will be seeking to invest in agriculture, infrastructure, finance, consumer goods, electricity and ICTs in Africa.
In calling for this meeting the US has simply used a well-known script perfected by China, Japan, India, Korea, Turkey, Kuwait and lately the European Union (EU).
China is the author of this script. It lays out red carpets and hosts African leaders in Beijing. More than the red carpets, lavish military parades and fancy dinners under chintzy chandeliers, African leaders leave the Great Hall with huge development cheques and one-on-one meetings with top Chinese leaders.
The Chinese led the pack a decade ago and outfoxed their competitive Asian neighbours in seeking to win over Africa. Sinohydro, CNOOC, SINOPEC, China Road and Bridge Corporation (CRBC), and China Wu Yi are now household names in Africa. Infrastructure touching on airports, roads, railways, ports, waterworks have seen the Chinese almost taking a major part of what was once the preserve of the UK, France, Portugal, Italy, Germany and the Dutch who colonised the continent.
The Chinese were evidently rewriting the rules of the game that was once a monopoly of the US and Europe.
In July 2012, during the China-Africa cooperation summit, then Chinese President Hu Jintao made a pledge of $20bn as a credit facility to Africa, due to cover the period 2013 to 2015. His successor, President Xi Jinping, reiterated this promise when he visited Tanzania, South Africa and the Republic of Congo in March 2013. And in the same year some 170 special forces of China’s People’s Liberation Army (PLA) were for the first time in history dispatched for a UN peacekeeping mission in Mali. The PLA Navy has also dispatched over a dozen fleets to escort cargo and oil tankers in the volatile Gulf of Aden. These moves by the Chinese have rankled its competitors.
Just like China, Japan has also been keen to adhere to the “principle of reciprocity”. In January this year Prime Minister Shinzō Abe visited Mozambique, Ethiopia and Côte d’Ivoire, which was in line with what he had said at the TICAD conference. “Africa will be a growth centre over the next couple of decades,” Abe said. According to the US Energy Information Administration (EIA) Japan is the largest importer of liquefied natural gas (LNG), and the third largest importer of oil after the US and China. Abe’s visit to Mozambique, which is a new frontier for LNG, could not have come at a better time.
In what appears to have been a bidding game at an auction over resources, haggling between Japan and China has intensified. Seeing that the Japanese had offered more, the Chinese sweetened their deal when its Premier Li Keqiang came calling and visited Ethiopia, Kenya, Nigeria and Angola in the middle of this year. Keqiang said that China was topping up the $20bn it had offered initially with an extra $14bn and the China-Africa Development Fund, which had a kitty of $3bn, was also increased to $5bn.
So how does the US compare? Going back some two decades ago, it is surprising to note that the US had a head start in Africa. All that the Chinese did was reinvent a US idea to suit its interests. It has worked for Beijing at the expense of Washington.
For the last two decades the influential US Corporate Council on Africa (CCA) has been hosting biennial US-Africa Business Summits. The 9th biennial summit held last year in Chicago discussed infrastructure, finance, agribusiness, capacity building and ICT. In other words the US is no stranger to this kind of arrangement, but this was limited only to the private sector. In the year 2000, then US President Bill Clinton signed the African Growth and Opportunity Act (AGOA) whose objective was to stir economic growth and increase US trade and investment in Africa by encouraging some 40 African nations to export their goods to the US with no tariff inhibitions. Another aim of this law was to boost Africa’s integration into the global economy.
Incidentally, to be eligible to participate in AGOA certain conditionalities, notably labour rights, a commitment to corruption, poverty reduction and freeing up of their respective markets – had to be met. AGOA has been in existence for 14 years and its successes pale in comparison with Africa’s trade with the Far East.
“In 2013 Chinese-African trade surpassed the $200bn mark for the first time, making China Africa’s biggest trading partner,” President Jinping said in early February. Premier Keqiang has pledged to push this figure to $400bn by 2020. According to the office of the US Trade Representative the two-way trade between the US and Africa totalled $63bn.
Just how did China redraw the rules of the game and become an active player in Africa where the major powers had an almost unassailable lead for close to a century?
Fifty years ago nobody would have anticipated that China would offer a counter-balance to the US. Matters have taken a new twist especially with the entry of the BRICS (Brazil, Russia, India, China and South Africa), all of whom are flexing their new-found wealth and economic muscle to reconfigure a new global economic order.
The US and its European allies seem to have learnt rather late that their credit bureaucracies, overzealous aid priorities and tough conditionalities, like tying rights to aid, were no longer the vogue in the continent. During the signing of the Mombasa-Kampala-Juba-Kigali high-speed railway agreement with the Chinese, Museveni paid tribute to the Chinese government. “China has stood with the people of Africa since 1949 in the anti-colonial struggle.
It was only the Soviet Union and China who supported [us] when Africa was colonised,” Museveni said. “China is concentrating on real issues. They don’t give lectures on how to run local governments and other issues I don’t want to mention.” The main “issue” that Museveni stopped short of mentioning is of course the insistence by President Obama’s administration on strapping development aid to gay rights, which has rankled badly with most African governments.
To seal the gaps on aid deficit and meet the tightly controlled trade requirements necessitated by the rules and high tariffs set by the EU and US, Africa seems to have shifted to China and Japan, who have accommodated them.
At present a third of China’s oil comes from Africa and according to the International Energy Agency’s (IEA) World Energy Outlook 2013, China is set to overtake the US as the largest importer of oil in less than a decade.
As China made inroads in Africa with heavy investments in oil, gas, infrastructure, hydropower and general business, it rapidly disrupted the near monopoly of the Europe-US axis of interests. France, Portugal, Spain, Italy, Germany, Netherlands and Britain have had a foothold in the continent stretching all the way back to the 1888 Berlin “scramble for Africa” conference, when they traded the continent among themselves, leaving in the 1960s and late 80s. However they still retained a stranglehold over the continent, especially the economies. This status is now being tested.
For the first time they are being challenged and their worst mistake seems to be their condescending attitude towards the continent. The Far East economies saw this as an opportunity and not an obstacle. They have exploited it pretty well. The story is different today. That the US and its allies have been caught napping is the reason we have several universities and think-tanks in the west dedicated to the sole purpose of tracking Chinese financing into Africa.
When Obama visited Tanzania his tone had drastically changed and he no longer spoke of gay issues. He spoke of investing $7bn in Africa’s electricity and John Kerry, US Secretary of State, waxed lyrical about another $100m for military aid, $7m for water and sanitation and Microsoft investing $100m. This was pocket change as compared to what Abe, Jinping and Keqiang were talking of. The Chinese and Japanese leaders pledged a collective $70bn for roads, bridges, railways, investments, agriculture, education and power.
Obama had finally come to terms with the reality that the West’s approach to Africa was a hindrance to US interests and a boon to its competitors. “I do not see the countries and peoples of Africa as a world apart; I see Africa as a fundamental part of our interconnected world – partners with America on behalf of the future we want for all of our children,” President Obama said. “That partnership must be grounded in mutual responsibility and mutual respect.” Such words, echoing Museveni’s own, have never been in the lexicon to describe the relations between Africa and the US.
The US and EU have had a long relationship with Africa and losing to the Chinese in the way they have floundered signifies a serious error of judgement for Washington and Brussels. Much as the US may downplay being second fiddle to the Chinese juggernaut’s hold in Africa, two questions emerge. Why was it necessary for the US to engage African leaders at the highest level now and what will the US do different?
This Summit will try and outdo the Chinese and the Japanese who are now key partners in whatever happens in Africa due to their investments. One thing is for certain: should the US choose to be mean or generous at this Summit, it must bear in mind the words of Johnny Carson, a former US Assistant Secretary of State for Africa who said: “Choices have consequences.”