The Demons That Still Haunt Africa
By Alex Perry/Eldoret, Laura Blue/London
High up in the mountains of the northern Rift Valley is the village of Kiambaa, a place of maize farms and mud huts where the air is so light and pure, it is said to hold the secret of Kenya's world-beating distance runners, who train in the surrounding hills. On New Year's Day, a mob of several hundred people armed with machetes, clubs and bows and arrows surrounded Kiambaa's tiny tin-roofed church, where up to 200 men, women and children were huddled. The mob freed those who gave up mobile phones or money, raped the women, then closed the doors on the rest, heaped mattresses and dry maize leaves against the entrances and set them alight. The Kenyan Red Cross pulled 17 bodies from the ruins. Survivors put the death toll at 35.
At least one body, that of a young man called James, lay in a nearby field, where he collapsed after running out of the church with his hair and face on fire. Daniel Mwangi Nganga, 37, whose disabled brother was hacked to death in the family home as the crowd approached the church, recognized the killers as friends and neighbors. "We went to school together," he says. "They used to come to our homes. We prayed together." He searched for an explanation. "We just don't know what happened."
It wasn't supposed to happen in Kenya. Until a few weeks ago, this country of 37 million was a poster nation of the African renaissance, a term adopted by South Africa's President Thabo Mbeki to describe the continent's economic and political resurgence in recent years. After three decades beset by genocide, famine, AIDS and wars as obscure as they were endless, much of Africa is thriving. Soaring demand for resources like oil, timber and minerals--especially from China--has pushed annual economic growth for sub-Saharan Africa to more than 5% for four years running and is inching toward 7%, according to the International Monetary Fund (IMF). Conspicuous activism by Western politicians, philanthropists and rock stars has helped relieve the continent's debts and deliver billions in development aid. There is less war and more democracy. Peace reigns in the old battlegrounds of Angola, the Ivory Coast, Liberia, Mozambique, Rwanda and Sierra Leone. Almost all African countries have held multiparty elections in the past 15 years.
Kenya is one of the stars of this revival: it has held elections regularly since independence in 1963, its economy grew 6.4% in 2007, and it has been a stable exception to turmoil in East Africa. But the outbreak of violence there following last month's presidential elections threatens that progress. A potential implosion in Kenya is especially worrying to the U.S. because the White House sees it as a frontline state in the war on terrorism, a bulwark against its volatile, jihadi-infested neighbor Somalia. Terrorists have occasionally slipped across Kenya's border, as in 1998, when al-Qaeda simultaneously bombed the U.S. embassies in Kenya and Tanzania, another neighbor. In 2007 the Bush Administration gave the government of President Mwai Kibaki about $1 billion in military and other aid. And there are special-operations soldiers based in Kenya at Manda Bay, on the coast just south of Somalia. The instability in Kenya has so alarmed the Administration that Secretary of State Condoleezza Rice reached out for help to an unlikely ally: Democratic presidential contender Barack Obama, whose father was from western Kenya and who has relatives near the city of Kisumu, the scene of some of the worst violence. Obama recorded a message, aired on the Voice of America, calling for calm. On Jan. 3, the day of the Iowa caucuses, he spoke with South African Archbishop Desmond Tutu, who had flown to Nairobi, the capital, to see if he could negotiate a peace. In the days since his Iowa victory, Obama has had near daily conversations with the U.S. ambassador in Nairobi, Michael Ranneberger, or with Kenya's opposition leader, Raila Odinga. Obama was trying to reach Kibaki as well.
Whether Kenya can be pulled back from the brink will reveal much about Africa's future. The nation embodies the best and worst of the continent--its vitality and economic potential but also its poverty, corruption and tribalism. So long as those conditions persist, crises like the one afflicting Kenya will continue to haunt Africa, stunting its growth and hurting its people. The outcome in Kenya may well determine whether Africa's renaissance sustains itself--or turns into another nightmare.
Roots of the Rage
The psychology of the bloodletting that has killed more than 500 Kenyans and forced hundreds of thousands to flee their homes may remain a mystery. Other questions are easier to answer. The immediate cause? A civilian coup by Kibaki, following a close race with challenger Odinga in the Dec. 27 general election. Three days after the vote, on live television, paramilitary police stormed the Kenyatta International Conference Center, where the vote was being counted and Odinga had a substantial lead. Minutes later, the head of the election commission declared Kibaki the winner. Kibaki was sworn in later the same day. That decision fanned simmering resentment against Kibaki's tribe, the Kikuyu, the largest of Kenya's 42 tribes. Though Kikuyus make up only 22% of the population, they dominate government and business. A 2005 report by the Society for International Development, a civil-society monitoring group, catalogued how Kibaki had packed his Cabinet, state corporations, the judiciary and provincial administrations with his tribesmen. The tribal animosities have been festering at least since 1963, when British colonial farmers sold their properties to wealthy Kikuyus, allowing them to encroach on the ancestral land of Luos, Kalenjins and others in the Rift Valley. Some blame also goes to the father of the nation, Jomo Kenyatta, a Kikuyu who founded the ruling Kikuyu cabal.
In Nairobi the epicenter of the violence was Africa's largest slum, Kibera, where a million people live in tin shacks and clapboard huts--without sewerage, hospitals or jobs--a five-minute drive from some of the city's most luxurious homes. Richard Dowden, director of the Royal African Society in London, describes Kenya's poor as the "explosive dispossessed," ready to erupt into violence.
They did. Starting on New Year's Eve, tens of thousands of Kalenjin and Luo tribesmen tore through the Kikuyu sections of Kibera, mirroring violence across the country. Few seemed to care whether Kibaki and his tribe would fight back. "If there's civil war, it is the Kikuyus who will lose," says Titus Odiambo, a Luo fish trader. "It's their buildings that will burn. We don't have anything at stake." Some Kikuyu gangs struck back, but tens of thousands simply fled to the central highlands, where they are the majority tribe.
After a week of violence, Kibaki and Odinga came under heavy international pressure--and intensive lobbying by African leaders like Tutu and Ghanaian President John Kufuor and by U.S. Assistant Secretary of State for African Affairs Jendayi Frazer--to reach some sort of compromise. But the question of who would rule was unresolved, leaving many Kenyans worried that the furies unleashed by the stolen election would lurk close to the surface, ready to break out at any time.
As Goes Kenya ...
What makes the unrest in Kenya most alarming is that its root causes are maladies that still plague other, less stable African states. The first is poverty. Despite Kenya's overall economic growth, 58% of its people are poor (defined as living on $2 or less a day). U.N. studies show that the gap between rich and poor is wider in Africa than anywhere else in the world. Despite the continent's recent economic growth, the number of its poor grew from 288 million in 1981 to 516 million in 2001.
The second malady is corruption. Kenya ranks eighth from the bottom on the list of the world's most corrupt countries, compiled by the watchdog group Transparency International. Kibaki's government and that of his predecessor Daniel arap Moi have been dogged by allegations of dirty deals running into hundreds of millions of dollars. Kibaki's former anti-corruption czar John Githongo went into self-imposed exile in Britain in 2005 after he became disillusioned by the President's lack of commitment to fighting graft and faced death threats. The government, he tells TIME, had "abandoned promises to equitably share power and economic opportunity, reform the constitution and fight corruption." Fixing the election result, he says, was "like throwing a match into a fuel drum."
As in Kenya, so in Africa's other powers. Africa is the also the world's most corrupt continent, with 36 out of 52 countries afflicted by rampant graft. In Nigeria the Economic and Financial Crimes Commission says the country's rulers stole $400 billion from 1960 to 1999. In South Africa barely a week goes by without a new corruption scandal among the business and political élite. A week after he was elected leader of the ruling African National Congress, Jacob Zuma was indicted on one charge of racketeering, one of money laundering, two of corruption and 12 of fraud in connection with bribes paid by a French arms company. (He denies all the charges.)
Finally, Africa's democratic institutions remain weak. Like Kibaki, many African leaders have a hard time accepting an unfavorable verdict from the electorate and walking away from office. "Democracy in Africa is not what is understood in the West," says Catholic bishop Cornelius Korir, whose cathedral in the town of Eldoret, north of Kiambaa, has become a refugee camp for 9,000 Kikuyus. "Since their wealth depends on power, our leaders are never ready to admit defeat." Incumbents like Kibaki, Zimbabwe's Robert Mugabe and Uganda's Yoweri Museveni are among those who tried to alter their country's constitutions--some successfully--to cling to power. African voters are to some extent complicit in the undermining of democracy. When given an opportunity to vote out one corrupt leader, they often elect another, hoping he will be more generous with his ill-gotten gains.
Reason for Hope
So what can be done--for the people of Kenya and their 788 million fellow sub-Saharan Africans? For the West, part of the answer lies in holding African governments accountable for the graft and misrule that sow popular disgruntlement. The West largely contents itself with the appearance of democracy in Africa, not the reality, and gives billions of dollars in aid to corrupt governments. "The World Bank runs around establishing anti-corruption commissions," says Joel Barkan, a senior associate at the Center for Strategic and International Studies in Washington who was in Kenya for the vote. "They have been singularly ineffective." In Kenya the IMF and the World Bank suspended aid in 2006 but later resumed it. Threats to withdraw U.S. and other aid appear to have persuaded Kibaki to offer to share power with Odinga.
Ultimately, the emergence of a more peaceful, prosperous Africa depends on Africans themselves. That provides the strongest case for optimism. Some of Africa's most thriving states are places that recently seemed beyond hope. Rwanda, where tribal violence escalated into genocide in 1994, is reviving with relatively little corruption and subsiding tribalism. The IMF expects Liberia, shattered by civil war from 1989 to 1996 and again from 1999 to 2003, to post economic growth of 13.3% this year. There is hope for Kenya too. After all, the majority of Kenyans chose not to join in the tribal violence. Many civil-society institutions are strong and cut across tribal lines. Journalists, church leaders, women's groups, lawyers, tourist operators and even some politicians have united to condemn both the mobs and Kibaki, calling for an end to the killing and for the President to quit.
Still, memories of Kenya's unhappy New Year's Day won't fade easily. On Jan. 2 in Mathare, another Nairobi slum, a mob of people torched a gas station, burned three buses and two jeeps and slashed a Kikuyu man in the head with a machete. They chased another down a narrow mud alley and, when he slipped, beat him to death with rocks, then stole his wallet and shoes. There was nothing on the body to identify him, no one in the area knew him, and within hours he joined hundreds of corpses at mortuaries across Kenya, awaiting claim. Unknown. But not forgotten.
Mixed Picture
[This article contains a complex diagram. Please see hardcopy or pdf.]
With reporting by Joe Klein/New Hampshire
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( 2.9 / 1326 )http://www.reuters.com/article/topNews/ ... 5220080103
Kenya's crisis spreads gloom over Africa
Thu Jan 3, 2008 7:48am EST
By Barry Moody - Analysis
NAIROBI (Reuters) - Kenya's sudden spiral into chaos after years as a regional anchor has badly set back Africa's democratic progress and will strike a heavy blow against the economies of a wide swathe of neighboring nations.
In a few turbulent days since a tarnished election on December 27, Kenya has gone from democratic hope to disaster, from a country seen as an island of stability in a dangerous region to a new trouble spot torn by ethnic bloodletting.
The election, which Kenya's opposition says was rigged to re-elect President Mwai Kibaki, ended a year in which democratic hopes in Africa had already been dented by a totally discredited poll in Nigeria and turmoil in the politics of South Africa, the continent's economic locomotive.
"This is the greatest setback to Africa's reputation since the 60s. Kenya has an iconic status, seen as synonymous with Africa," said Kenya expert Michael Holman.
But analysts do not believe Kenya's crisis will contaminate other nations politically.
"The politics of every country in Africa are very, very separate. African politics are all local and all personal ... I don't think it has any wider implications at all," said Richard Dowden, director of the Royal African Society.
Control Risks senior Africa analyst Chris Melville agreed: "While Kenya is at the heart of an unstable region, we do not consider that the current situation will significantly contribute to regional instability in the short-term."
Before President Mwai Kibaki's hurried swearing-in on Sunday, the conduct of the poll had been praised by monitors and there was optimism Kenya would make another major step with the first handover by a president defeated at the ballot box.
Kibaki's first victory in 2002 was a democratic watershed after 24 years of oppression under Daniel arap Moi.
But Kibaki's inauguration, after results had appeared to clearly show Odinga heading for victory, uncorked the most dangerous force in Kenya -- tribalism.
At least 300 people have died in clashes between Kibaki's Kikuyu tribe and an alliance of others led by Odinga's Luo.
ECONOMIC IMPACT
Kenya's economy, thriving before the election, is at a near standstill and this is where the greatest regional knock-on is expected.
"Kenya has the largest economy by far in the region. Nairobi has got the largest population of a city and most diversified industrial base between Cape Town and Cairo for that region," said Tom Cargill, Africa program manager at the Chatham House think-tank.
"So it is going to have a serious impact because other countries rely on Kenya for its economy."
Kenya's port of Mombasa and the single road snaking up to Uganda and beyond are vital for the economies of the whole region. The impact of the crisis is already being felt with petrol pumps running dry in Uganda and Burundi and rationing imposed in Rwanda.
"The Mombasa-Nairobi road is the only way into Kenya, Uganda, Rwanda, Burundi, eastern Congo, southern Sudan and most of northern Tanzania," Dowden said, adding that Kenya was also the base for aid operations into Somalia, Sudan and eastern Congo.
"The implications of Kenya going a bit wobbly are pretty serious for the whole region."
The road to Uganda, slow and badly maintained even in good times, runs close to some of the worst areas of ethnic tension and bloodshed over the last week.
"The longer this crisis goes on, the more that road is at risk not just from looters and so on but from those who want to hold either the country or the region to ransom by attempting to cut it," Cargill said.
And the shock setback in Kenya, one of the continent's strongest economies, could undermine general sentiment about Africa, some analysts say.
"There is going to be a global impact on people's appetite for taking on risks in a region that appears from the outside to be incredibly fragile and able to turn one election into chaos," said Columbia University Professor Josh Ruxin, who runs development projects in Rwanda.
Many analysts say Kenya's reputation for democracy and stability was exaggerated even before the vote.
They suggest Western powers had turned a blind eye to blatant rigging in previous elections, as well as deep problems of wealth disparity and tribalism, because of Kenya's value as a strategic ally and base for the United Nations and NGOs.
Whatever the outcome of Kenya's crisis, perhaps its greatest impact will be deep pessimism about democratic change in Africa.
"What is happening is a big setback for democracy ... Once the people who were in opposition get into power, they no longer wish to respect democracy. You ask yourself what purpose these elections serve," said Penda Mbow, Professor of History at Dakar's Cheikh Anta Diop university.
(Additional reporting by James Macharia in Johannesburg, Diadie Ba and Alistair Thomson in Dakar; Editing by Giles Elgood)
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( 3 / 845 )Ghana reflects progress in Africa
By CHRIS TOMLINSON, Associated Press Writer1 hour, 12 minutes ago
Coby Asmah is a success in a part of the world that is hardly ever equated with success.
The design and printing business he launched from his dining room table 14 years ago now employs 54 people. He drives a new gold SUV, dresses as sharply as any Madison Avenue executive and vacations in the United States. And despite winning U.S. citizenship, he has chosen to stay in Ghana.
Asmah belongs to an Africa all but unknown outside the continent — one of growth and business opportunity, with a tiny but rapidly spreading middle class.
Fifty years after Ghana became the first African country to gain independence, Africa's economies are expanding by 5.4 percent a year — compared to a world average of 4.2 percent — and are projected to hit almost 7 percent next year. Investments are up. Banking firm Merrill Lynch & Co. concluded that Africa now offers investors as much potential as Russia.
These signs of economic hope come as the world is increasingly aware of its broader stake in Africa. Rich countries fear any disruption in the flow of resources out of Africa, which now rivals the Middle East in the quantity of oil it sends to the United States. Terrorism has revealed the danger of failed states, and hundreds of thousands of African immigrants flee to America, Europe and the Middle East every year.
The picture across the 48 countries of sub-Saharan Africa is still very much a patchwork. But a yearlong exploration by The Associated Press shows that progress — while fragile — is finding a foothold, in spheres ranging from democracy to education. Perhaps most strikingly, after few results from five decades of advice and $568 billion in aid, today's developments in business, education, government and other areas are being led by Africans themselves.
There is a new sense among many Africans that it is up to them to rethink their continent and challenge the West to do the same. The change shows up all over — in newspaper editorials, in a regional partnership for African leadership, in the revamping of the African Union, in a newly aggressive stance for fairer terms in agricultural trade, and in the confidence of entrepreneurs like Asmah.
"The change of thinking has been coming from Africa," says economist George Ayittey, a Ghanaian teaching at American University in Washington, D.C. "Civil society in Africa is becoming more and more empowered and emboldened, and they are driving the agenda."
___
Signs of prosperity are everywhere in this country of about 23 million people on the west coast of Africa. New roads are choked with cars, construction cranes dominate the skyline and shops brim with televisions, air conditioners and luxury goods. Real estate prices in the capital, Accra, rival those of an average American city, with a four-bedroom home in a nice area selling for over $500,000.
Asmah's office and printing press are located in a middle-class neighborhood of older homes converted for business.
Asmah, 42, was an artist in the Ministry of Education in 1993 when he first started selling graphic designs to friends. Soon he was ready to give up the secure government job, which for most of Africa's history was the hallmark of success.
He launched Type Company with money borrowed from family and friends. Business grew rapidly — almost too rapidly. Type Company had to outsource printing to others in Ghana, and the quality fell.
So Asmah bought a state-of-the-art, custom-made printing press and other equipment from Germany for more than $1 million. He diversified into security printing for banks, colorful packaging for local products and annual reports for dozens of businesses, which, like his, are homegrown and growing.
"Once you have a solution to someone else's problem, you have a business," says Asmah, whose polished appearance and calm demeanor project the image he wants for his high-end designs, despite a cluttered office full of computers and printers. "There is a lot of opportunity, because here, there is not a lot that is done right." Things not done right trip up businesses like his. It took five years to persuade a bank to help him lease $10,000 worth of equipment. Financing in Africa is hard to get, with high interest rates and stringent requirements. Government tariffs on paper and ink also drive up his costs, and he can't compete with preprinted imports because they are not taxed.
But Asmah says the odds of success in Africa are greater than anywhere else, including America.
Asmah is part of what economist Ayittey calls Africa's "cheetah generation" — young entrepreneurs who are fast, smart, adaptable and ready to tackle Africa's problems. Eventually — and it will take time — he predicts the cheetahs could overtake the bureaucrats and dictators who blame Africa's problems on colonialism and don't address them.
It is already happening in Ghana. Democracy is strong, and the economy is growing by 6 percent a year. The World Bank recently praised Ghana as one of the leading business reformers in the world. Ghana's debt is down by more than two-thirds, and inflation is under control.
Economic stability in turn draws investment. Foreign investment in Africa rose to a record $39 billion in 2006 from $31 billion just a year earlier, only partly because of oil revenues.
"It's a young economy and anyone who looks into that will see that Ghana is a safe terrain to be in," notes Asmah, who says his business exceeds $1 million a year in revenue and brings profits of 30 percent. "Returns on investment here are 20 percent higher than anywhere else."
___
Accra's first suburbs sprawl northward from the Atlantic Ocean, low-slung bungalows that stretch out on generous plots surrounded by high brick walls. Wide roads are laid out in a perfect grid. The neighborhood is in various stages of construction, but the shade trees around the more established homes hint at its future charm.
Mavis Boakye, 30, shares one of the new four-bedroom, cream-colored bungalows with her banker husband, her four-month-old son and her mother. Every workday morning, she climbs into a taxi for the 45-minute drive into her office in town.
Boakye is a department head at Type Company who supervises the digital graphic design team. The daughter of a poor civil servant laborer, she spent two years of mandatory government service producing drawings for Ministry of Health brochures. Afterward, she went straight to work because she could not afford university.
Now Type Company is paying $800 a month for her to go to university part-time, and she lives a solidly middle-class life. She and her husband watch Christian satellite television on a Sony Corp. home theater system. They shop at a new mall. They eat pizza at a South African fast food chain, and belong to a middle class sometimes nicknamed "black diamonds."
"I am making three times or four times what my father was making, and sometimes he looks at me and marvels and says, `I am happy you are doing well in life,'" Boayke says.
Boayke is an example of how wealth from companies is slowly trickling down through communities, in a part of the world where each worker supports six people on average.
In 2000, Africa's middle class of 12.7 million people made up just 2 percent of the population, according to the World Bank. By 2030, it is expected to more than triple to 43 million, or 4 percent of the population.
However, Africa remains overwhelmingly poor. Ten percent of the world's poor people now live in Africa, and that is expected to rise to 13 percent in the next 25 years.
The best hope for the poor could be private enterprise, which creates 90 percent of the jobs in developing countries. But business is dragged down by a lack of education, unreliable power, bad roads, disease and a long list of other problems.
Choking bureaucracy means that it takes 95 days to start a business in Tanzania, 138 days in Ghana and 177 days in Chad. In Australia, it takes one day.
Recently, African countries have begun to cut business costs and red tape, according to the World Bank. Ghana lowered corporate taxes and slashed paperwork at customs. Tanzania has reduced the cost of starting a business by 40 percent. Kenya is simplifying its business licenses.
Boayke has been bitten by the entrepreneurial bug herself.
"The plan is that in three years, I will start something on my own," she says. "My husband wants me to start now because he thinks I will make more money, but I think I need to make more contacts before I start."
___
Near the port in Accra, the Ghanaian government has set up duty-free industrial zones to spur international trade. Hand-painted logos adorn the walls of the warehouse-style buildings, and their large wooden doors open off the loading docks. At lunchtime, women sell hot meals of beans and rice to workers in the shade of the eaves.
This is where Nora Bannerman's factory makes dresses and clothes sold in American department stores and lab coats worn by pharmacists at Walgreens and CVS in the United States.
Bannerman, who has made clothes since she was nine years old, is an icon in Ghana. She wears designer sunglasses as she drives through town in her cobalt-blue Mercedes Benz. She will not reveal her age except to say she was born in the Gold Coast, Ghana's name before independence. Her fashion design school has trained more than 100 students, and many have since set up their own businesses.
Bannerman's story shows how globalization both helps and hurts Africans in their desire to move ahead.
Easier trade gives Africans access to millions of people with money to spend, and Bannerman's designs sell in the United States, France, Germany and Switzerland. But it also brings competition, especially from China, which plays a growing role in Africa.
China imports raw materials from all over Africa, such as Ghana's timber and minerals. In 2005 Ghana's trade with China increased 35 percent to $816 million, making China its top trading partner. And China is investing — it loaned Ghana $30 million to build a national fiber optic network.
Yet China also floods the world with goods so cheap that Africans can't compete. Bannerman says Chinese companies mass-produce, without permission, her designs and traditional African fabrics at prices below her cost of production.
"China has been going all over Africa, picking out the good ideas," says Bannerman, sitting in her factory office. "While we were still doing high-value, hand-woven kente cloth, China came out with kente prints that are selling well to the United States."
Bannerman says her American buyers constantly pressure her to cut prices. But she won't and can't cut wages — the U.S. African Growth and Opportunity Act requires African exporters to meet human rights standards that do not apply to China, because of international trade rules.
Bannerman also has to pay high taxes on all imported cloth and thread that further raise her costs to export. And she competes within Africa against second-hand clothes from international donors that are not taxed.
She says all she and other African business people need to succeed is a fair playing field. "We don't want a situation where we are asking for aid all of the time," she says.
Africa has a long history of international trade. The 1st century gold coins of the royal families of Axum, in present-day Ethiopia, have been found as far away as India. Yet the continent today accounts for only 4 percent of global trade.
On the roads in almost every town, small-scale entrepreneurs balance on their heads everything from vegetables and ice cream to DVD players and television aerials as they sell to drivers stuck in traffic. But most of those goods come from overseas — $273 million left the continent in 2005.
Capital inflow to some African countries, including Ghana, is now rising. And so is hope.
This year's study by the Pew Global Attitudes Project found that despite crushing poverty, majorities in nine out of 10 African countries surveyed believe their lives will be better five years from now. Surveys in 12 African countries from 1999 to 2006 by the Afrobarometer Network, an independent research group, also found growing optimism.
Asmah says Africans can and will work hard to succeed, and he is trying to spread the wealth in his country.
He supports a business plan competition that gives advice to 60 promising entrepreneurs and helps them build contacts, in partnership with business promoter TechnoServe and Google.org, the Internet company's philanthropic arm. The top 20 winners get a jump start in their new enterprise.
The name of the competition: "Believe, Begin, Become."
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( 2.9 / 281 )A Helping Hand
Contrary to how they're seen in the West, Chinese companies are a force for prosperity and peace in Africa, an expert says.
Newsweek Web Exclusive
Updated: 4:42 PM ET Nov 29, 2007
Yang Guang, director of the Institute of West Asian and African Studies of the Chinese Academy of Social Sciences, says that China and the United States "do not have strategic conflicts" in Africa. He notes that Chinese companies are attracted to the improved investment environment in Africa, but they make up only a fraction of total investment on the continent. Chinese companies are becoming more aware of principles of corporate social responsibility, Guang says. He states that China's investment in Sudan has helped the Sudanese people by allowing the country to develop economically.
The media likes to talk about China's thirst for African oil, but oil investments are just one part of China's investments on the continent. What other areas are Chinese firms involved in?
Chinese investment is involved in many sectors. At the beginning it was concentrated on a few sectors, such as resource development, including oil, agriculture, and fishing. But nowadays you can see Chinese investment in many manufacturing industries, such as textiles, consumer electronics, and China has also invested in tourism, telecommunication, and construction of roads. So it is much broader than it used to be.
China is a latecomer in the investment market in Africa. Chinese enterprises began investment in Africa in the late 1980s, but the value of investment has increased rapidly. So by the end of 2006, the accumulated amount of Chinese investment in Africa totaled 11.7 billion U.S. dollars. This is not a big number, if you compare it with the total direct investment or inflow into this continent. If you look at the 2005 figure, the total Chinese direct investment in Africa was 400 million U.S. dollars, but that made up only 1.3 percent of the total inflow of direct investment in Africa that year. The amount of Chinese investment in Africa should not be overestimated.
Of these investments, are the bulk of them from state-owned companies?
I don't have the exact figure about how much state enterprises invest in Africa and how much the private sector contributes to it, but if you look at the number of enterprises, that may tell you something. China has, in total, about eight hundred enterprises investing in Africa, but out of this total number, only a little bit more than one hundred enterprises are state owned. The rest of them all come from the private sector.
There's been a lot of criticism of China's policy of non interference in the countries it invests in, but what about the practices of these private enterprises? How can you characterize their investment philosophy and the way that they operate in Africa?
For the private enterprises, their behavior when investing in Africa is basically driven by some commercial motivations, like enterprises worldwide. First, this is partially because of the change of the domestic market in China. In recent years, we can see a kind of relative saturation of the domestic market with some labor-intensive products, such as textile and consumer goods. So it is harder for private businesses to sell their products in a domestic market at a satisfactory price.
On the other hand, they are also attracted by the improvement of the environment for investment in Africa, because in recent years the entrepreneurs in China have become aware that Africa has changed a lot. First, this is a continent with a great potential of resources. Secondly, this continent has been maintaining a moderate, fairly high, gross rate for about a decade. And thirdly, African countries are increasingly opening up to the outside world and welcoming foreign direct investment. So, in this case, Chinese enterprises are attracted.
There is a movement among Western companies toward better business practices and the practice of corporate social responsibility. Is that something these Chinese companies are adopting as well?
For the Chinese enterprises, there's also a growing awareness of this importance. This is not only for Africa, but they are also aware that without achieving a kind of win-win solution, without helping the local people to see the result of development, investing countries will not sustain their achievement in this continent. So we can see, especially the large-scale Chinese companies, they have already begun to pay attention to this, and are doing a lot of things in this regard. For instance, many of them are involved in building schools and hospitals for the local people where they have their investment, and they also pay attention to the localization of labor, to hire more local laborers.
According to Chinese statistics, last year the total number of Chinese in Africa, including those who do not do business, the total number was 80,000. But the same year, last year, the [number of] jobs created for local people was about 70,000. Seventy thousand jobs were created for African countries by investment in this continent by Chinese companies. What is new is that some Chinese big firms, such as CNPC, the leading oil company, have begun their first reports of corporate responsibility since last year. So things are coming and I think they will pay more attention in the future. If they want to be good competitors in the market, they will have to fulfill better their corporate responsibilities.
What are some of the challenges that China has encountered as a relatively young investment presence on the continent?
There are a lot of difficult things. First, a lot of enterprises in China are not familiar with this continent, and that is why they often come to us for advice and consultation about everything—from the law of investment, to the local customs—this is something they have to learn. Another problem is that they are not familiar with the kind of labor union system in Africa, the labor union system is quite developed in some African countries, but this system is a bit different from the Chinese labor union system.
Some of them also face the problem of the frequent changes of policies, and this is also something that they have to be prepared to face. Language is also an important issue, because a lot of Chinese companies don't have enough staff speaking good English or French or Portuguese to communicate with the local people. So this is also something they have to improve, and they have to be more familiar with the legal system of their recipient countries. So there are many, I won't say difficulties, but a lot of areas where they have to learn.
Many people are characterizing the United States and China as competitors in Africa. What is your perspective on that?
I don't think we can say that in an absolute way, because of course we cannot avoid business competition in several fields, but if you look at the issue as a whole—first, China and the United States do not have strategic conflicts in Africa. Secondly, if you look at business sectors where China and the United States invest, there is kind of a division of labor, because the United States is very good at investing in resources development and industries—oil, gas, minerals. Of course China also invests in these fields, but China also invests in a lot of labor-intensive industries—textiles, consumer electronics. And in those sectors the Chinese enterprises have a competitive advantage and the competition with the American business circle in those sectors is not that visible.
And even for resource development, we cannot consider it to be a kind of strategic competition, it is just competition at business level. China, the United States, and African countries have shared strategic interests, because China and the United States are both oil importing countries, so nowadays we face the same challenge in the international oil market, with a very high price and with the possibility of supply disruption.
Because both countries are major consumers and importers of oil, we have to contribute together to increase the producing capacity of oil. If the world has larger producing capacity, then both the United States and China will be much safer. And if you look at the interests of Africa, for many of them oil and gas represent the means for capital accumulation for their development. And they don't have the technology, they don't have the financial capacity, so they need foreign companies to transfer technology and to invest in their countries to develop this development potential.
But one might also argue that it places their strategic interests at odds. For instance, somewhere like Sudan—it's created somewhat of a foreign policy conflict there.
There are different understandings about the issue of Sudan, but the Chinese understanding is for a country as poor as Sudan, the first priority is the basic needs of the people, and to see their living standards increase. Economic development is the top priority for this country. Therefore, if we want to help these people to resolve their problems, then we have to start by resolving their development problems.
It has been true, in my view, that in practice the Chinese understanding is correct, because during the past few years this country went from a net oil importer to a net oil exporter. The fiscal budget has improved significantly, the economic growth rate is also rapid and, interestingly, the oil income has also contributed to the resolution of domestic conflicts. If you look at the CPA [Comprehensive Peace Agreement], you may find that one of the components is the distribution of oil income. It is distributed on the basis of 50-50, so in other words the black people in the south can also benefit from this and poor people can also benefit from this result of oil development.
Chinese companies are very proud of this contribution to the Sudanese people. The United States argues that this is not a good regime, with a dictatorship and things like that, but Chinese foreign policy is non interference in domestic affairs and actually it is very hard to see whether a regime is a dictatorship or not. You have to find a commonly acceptable standard, so if this kind of standard does not exist, you cannot impose a one-sided view onto the others.
I believe that, due to the different cultural backgrounds, due to the different levels of economic development, it would be hard to find a uniform model of political development for the African countries. The best way is probably to observe and respect the efforts of the African countries in exploring their own way of political development. Otherwise, if you try to impose a model on them, there is little chance to succeed.
There have been quite a few reports saying that Chinese firms sell military equipment to the Sudanese government, and some people say that equipment is being used for violent purposes in Darfur.
China is an exporter of conventional arms, but this is done in the framework of international law.
I don't think China has provided conventional arms to the Sudanese government in order to fight against the tribes in Darfur. China has not done that. You can see weapons made in China in many places of the world, and it is very hard to say how they get these weapons. I don't know if the Sudanese government got the weapons directly from China, they may have gotten them from anywhere. So it is hard to say—if you find a weapon made in China, it doesn't mean that China supports this kind of war. This is not logical, because there are a lot of transfers of weapons worldwide.
Do you think China offers a viable model of economic development for Africa?
If you look at the Chinese policy toward Africa, now officially announced by the government, there is a new component, which is mutual learning at the cultural level. Experience of development is also part of the cultural things. I don't think China is a model of development for African countries, because African countries have their own national circumstances. They cannot copy the others, what they can do is just explore their own ways of development.
China's Helping Hand to Africa
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( 3 / 726 )China’s African Misadventures
Beijing has dramatically outpaced its rivals in Africa. But at ground level, things don't always look so rosy.
By Scott Johnson
NEWSWEEK
Updated: 1:17 PM ET Nov 24, 2007
The town of Catumbela, in Central Angola, sits on a sprawling, fertile plateau planted with plantains and mangos. At the far end of town is a defunct paper mill. There, for several months earlier this year, a group of Chinese railway engineers and laborers camped out in the shadow of two idle smokestacks. The team was one of several sent to this isolated stretch of Angola's interior to build a railroad that will one day connect the African hinterlands to the Atlantic port city of Lobito, several hundred miles to the west. It's a $2 billion project and a colossal dream—a way to bypass Angola's sparse, decrepit roads, which like so many in Africa are strewn with land mines and liable to be washed out by flash floods.
There's only one problem: work has stalled. Along the railroad line at least 16 camps that once bustled with Chinese workers and equipment have been abandoned or shut down completely. In those that remain, row upon row of front-loading bulldozers, steamrollers and forklifts sit unused under the sleepy eyes of Angolan soldiers. And the Chinese? "They're gone," says a scrawny guard at the entrance to Catumbela's paper mill, as he stares disconsolately at the tracks. "I don't know when they're coming back—they ate their dogs and left."
Africa has rarely been kind to the grand visions of others—whether Dr. Livingstone or Bono. The Chinese are finding, to their surprise, that they're no exception. The Lobito railroad has fallen victim to a high-level dispute between the Angolan and Chinese governments. So have dozens of other deals, including another $2 billion contract, to build an oil refinery in Lobito. The American Embassy says that project will now most likely be awarded to Bechtel. "The Chinese thought they'd come in here and make a killing," says a Western diplomat in the capital, Luanda, who was not authorized to speak on the record. "Now they're facing the reality—it's hard to do things here."
Overall, China's push into Africa has been remarkably successful. Chinese companies are sucking up oil from Sudan, cutting down timber in Guinea and mining copper and zinc from the Congo. Beijing recently bought a major stake in South Africa's Standard Bank to fund infrastructure projects throughout the continent. And the Chinese are far outpacing their Western rivals. China has opened more embassies in Africa than the United States has, and is even investing heavily in countries, like Rwanda, where the immediate returns are murky at best. Last year trade between Africa and China topped $50 billion. By 2010 it's projected to reach $100 billion.
But all that money—China has extended $11 billion in loans to Angola, more than the World Bank—doesn't mean the Chinese working in Africa are insulated from the continent's troubles. Kidnappings, killings and death threats have plagued Chinese workers from the Niger Delta to the eastern reaches of Ethiopia, where rebels ambushed and slaughtered 17 Chinese oil workers last year. Angola is now China's biggest supplier of crude oil, and Chinese money helped propel the local economy to a 24 percent growth rate last year. But it's also a chaotic, corrupt country that has only recently emerged from a vicious civil war. For Chinese businessmen and workers, it's turning out to be a sobering, even dangerous place.
Chinese laborers are venturing deep into the lush Angolan countryside, not just the capital and larger cities. Tens of thousands of Chinese-made PMN-2 mines are still buried there, remnants of the Angolan civil war, which killed more than a million people. De-mining crews are digging the explosives out of the ground, but nowhere near fast enough for the Chinese. So the foreigners improvise. "With a front loader we push the dirt and if there's a mine there it explodes," says Zhou Zhenhong, manager of Kaituo Construction and Enterprises. "It's faster that way, and less expensive than being late."
The costs, however, can be more than monetary: on Oct. 24 a Chinese laborer for the Chinese telecom giant Huawei was digging a trench for fiber-optic cable near the southern town of Benguela when a mine exploded, killing him. Two co-workers were also injured. "We've tried to tell them to be careful and they just shrug their shoulders," says Rebecca Thompson, who directs a Norwegian de-mining NGO in Luanda.
Western executives—hidden behind the walls of their villas—have bred a certain kind of resentment in Africa. In Angola the much more numerous and adventurous Chinese are suffering from another. Perhaps as many as 100,000 Chinese workers have spread out across the country, many breaking rock on highways or pouring concrete at construction sites. Most live in isolated camps. Few speak English; fewer still speak Portuguese.
State-owned Chinese companies prohibit any type of fraternization between their employees and Angolans. If a worker becomes romantically or sexually involved with a local, he's quickly hustled back to China. "Africans and Chinese think differently," says Xia Yi Hua, a regional director for China Jiang Su, a massive construction conglomerate with offices across Angola. Xia has been in the country for four years, and his company still sends him shrink-wrapped packets of Chinese food from back home, along with regular sets of chopsticks. Everything in his office comes from China. One coffee table is made of Angolan wood, he admits, but he flew in a Chinese carpenter to fashion the table.
Racist stereotypes are common: both sides accuse the other of looking or behaving like monkeys or pigs. The Angolans claim (without good evidence) that the Chinese eat their dogs. At most work sites Chinese supervisors oversee black laborers, which has created friction. "You Chinese come to Angola and order us around, but in your own country you are suffering," says an Angolan who works for a Chinese company. (He asked not to be named for fear of losing his job.) At one Chinese-run construction site NEWSWEEK visited, hungry workers begged for food, saying their Chinese bosses never fed them. (The bosses say that's not their responsibility.) Angolans laying fiber-optic cable for Huawei near Benguela say they must dig 16 feet a day, or else they won't be paid their $5 daily wage. They claim their Chinese bosses only use one Portuguese word, cavar, which is repeated again and again: dig, dig.
The tensions go all the way to the top of the food chain. The Chinese say Angolan government funding for the Lobito railroad has dried up mysteriously; the Angolans say the Chinese stopped working because of mines along the route. Western diplomats in Luanda, who customarily speak only on condition of anonymity, suspect that the dispute has to do with kickbacks but cannot prove anything. They say that the government's finances are incredibly murky, and its dealings with the Chinese murkier still. "Is it all getting stolen? I don't think so," one Western diplomat says of the billions in oil money flooding into Angola's treasury. "[But] it's not clear to me that there's anyone in the government who can actually tell you where all the money is. If there is, it's going to be somebody like Al Capone's bookkeeper."
Even China's success in Angola is creating headaches for its businessmen. The handful of business hotels in Luanda are booked months in advance. Good luck finding a cab—the city has only one official taxi service—or renting a car, which can go for as much as $12,000 a month. Rents for houses in Lobito are double that. The extremes of poverty and wealth are deep, and worrisome. Where there are roads in Luanda—much of the city remains a hive of rock-strewn dirt tracks—they are choked with bright yellow Hummers and souped-up Chevy Blazers. Chinese-built mansions for Angolan ministers loom grotesquely on Luanda's hillsides, just above shantytowns where millions of refugees took up residence during the worst years of war.
For Mr. Li, a local director for the Guang Xi construction company, the boom is a mixed blessing. Li, who asked that only his last name be used, lives in a cavernous supermarket warehouse in Lobito, with sheets hung on clotheslines to create sleeping areas for his 20 workers. He spends much of his time slogging around the city, begging for the cement his crew needs to build bases for cell- phone towers. On a recent day visiting potential suppliers, he returned long after dark with 12 small bags of cement, all bought at retail prices. "Everything is waiting, waiting," he says, worried about the pace of his project. A Brazilian company has promised to build two new cement factories in Luanda, but so far work hasn't begun.
Beijing takes the long view in Africa, figuring its investments now are building good will for the future. But every economy the Chinese help revive becomes that much more attractive to their rivals, too. Already American firms Bechtel and KBR are bidding for infrastructure projects in Angola. Oil giants ExxonMobil and Chevron are increasing their presence in the country. The Brazilian firm Odebrecht is building a highway to compete with the Chinese railroad to Lobito, South African companies are repairing the electrical grid near the oilfields in northern Angola, and the Portuguese are horning in on construction projects in and around Luanda. "In this country, you can get projects for $10 million and do $1 million in profit," says Zhou Zhenhong, the construction executive, over lunch at a seaside restaurant in Lobito. For that kind of money, a lot of people will be willing to put up with the same hassles as the Chinese.
URL: http://www.newsweek.com/id/72028
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