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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( 3 / 533 )Wars in Africa wipe out aid gains
A report on armed conflict in Africa has shown that the cost to the continent's development over a 15-year period was nearly $300bn (£146bn).
The research was undertaken by a number of non-governmental organisations, including Oxfam.
It says the cost of conflict was equal to the amount of money received in aid during the same period.
This is the first time analysts have calculated the overall effects of armed violence on development.
The report says that between 1990 and 2005, 23 African nations were involved in conflict, and on average this cost African economies $18bn a year.
It concludes that African governments have taken encouraging steps at a regional level to control arms transfers, but that what is needed is a global, legally-binding arms trade treaty.
The president of Liberia, which is just starting to recover from a long civil war, Ellen Johnson-Sirleaf, also wrote the preface to the report.
She told the BBC "the proliferation of weapons is a key driver in armed conflicts".
"We need to restrict the supply of guns to African conflict zones - and an arms trade treaty is a vital way to do this", she said.
Ongoing burden
The BBC's Johannesburg correspondent Peter Biles says that some costs of war, such as increased military spending and a struggling economy continue long after the fighting has stopped.
READ THE FINDINGS
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Liberia's Defence Minister, Brownie Samukai told the BBC's Network Africa programme that to his knowledge expenditure this year alone included sums of $11m and $35m "for training, equipment, facilities, buildings and construction - a combination of these types of expenditure."
The researchers say that although the number of armed conflicts is falling in Africa there is no room for complacency, with little hope of a swift settlement in either Sudan or Somalia.
And some experts argue that Africa actually needs to increase its arms spending.
Haneelmoed Heitman - the Africa correspondent for Jane's Defence - told the BBC "in a lot of countries the primary problem is that the national security forces are too small, too ill-equipped and too ill-trained to actually provide any sort of security".
He cites the example of Cameroon which has some 12,500 troops to cover around 400,000 sq kms with no transport or reconaissance aircraft.
"Without helicopters for tactical movement", says Mr Heitman, "it's physically impossible for them to deploy to counter banditry or insurgency".
He concludes that most African countries need to spend more on military equipment - but primarily on transport such as helicopters to allow them to mobilise to deploy against the "bad guys".
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( 2.9 / 451 )Russia Enters the Race for Africa's Riches
Russians take their place alongside the Chinese in a battle for resources to fuel their growing empires.
By Owen Matthews
Newsweek International
Oct. 15, 2007 issue - Late on a Friday night at the Simba Saloon in downtown Nairobi, music by the Kenyan pop sensation the Boomba Clan is playing, and the ties are coming off. At the bar, banker types in expensive suits swap news of the latest bank IPOs and mineral concessions, the must-have gossip in Africa's biggest boomtown. Some of the conversations are in English. Some are in Chinese. And increasingly, many of them are in Russian, as Moscow begins to give both the West and Beijing a run for their money in the race for Africa's riches.
Today, emerging-market giants are fighting for oil, gas and metal ore in Africa as energetically as 19th-century European colonialists grabbed land on the continent. Recently, the Chinese have been the most aggressive, with more than 700 companies active in 50 countries, according to Standard Bank of South Africa. China is now Africa's second largest aid donor and trading partner, behind the United States, with trade up fourfold to $40 billion since 2000. But Russia, the second most active emerging-market power in the area, is gaining. While trade with Africa is only $3 billion a year (up threefold since 2000), Russian companies flush with cash have sunk over $5 billion into buying up African assets since 2000— and that's not counting $3.5 billion of oil exploration deals that will come online before the end of the decade. China, meanwhile, has put $6.64 billion into Africa over the same period, a large part of it through the China Development Bank—but much of that money has been sunk into infrastructure projects like telecommunications, electric power, water conservancy, transportation, agriculture more properly described as development aid. Pushed by the profit motive, and by a Kremlin eager to build economic empires, Russian businessmen are heading south. Africa, like Russia in the early 1990s, is full of basket-case economies with great mineral wealth—and the Russians reckon they know how to deal with those conditions.
Russia has strongly encouraged its companies to buy assets around the world because it suits President Vladimir Putin's philosophy of restoring his country's international position. Recent energy deals in Algeria have gone hand in hand with $4 billion in arms sales from Moscow. Russian businesses interested in South Africa have gotten a boost from a deal Putin made with President Thabo Mbeki to expand nuclear cooperation. Last September Putin made a whistle-stop tour of Africa, with several top Russian oligarchs in tow—including Viktor Vekselberg, who pledged to invest $2 billion in metal and mining projects in Africa, adding to holdings that include vast Kalahari manganese reserves he has owned since 2004. "I want to see Russia regaining its close partnership with Africa," Putin said, waxing lyrical about Soviet influence on the continent.
While the Chinese are staking ground in Africa mainly to power their burgeoning cities and manufacturing sector, Russians see the deals differently. Russia is the world's largest energy exporter, and has plenty of its own metals and minerals. But rich Russian companies want to extend their global reach while they have the money, and with oil topping $80 a barrel in recent weeks, the time is now. There's another motive too, analysts say: moving empires beyond the reach of the Kremlin serves as insurance against future political changes in Russia.
Over the last three years, four top Russian metal companies—Norilsk Nickel, Rusal, Renova and Alrosa—have invested more than $5 billion in sub-Saharan Africa alone. Russian oil giants Lukoil, Rosneft and Stroytransgaz have signed major exploration deals in Algeria, Nigeria, Angola and Egypt worth more than $3 billion. Earlier this year, Lukoil snapped up 63 percent of a field off the Ivory Coast in a production-sharing agreement with the Nigerian owners. That came shortly after a $2.2 billion Chinese deal in the same area.
While the Chinese are focused almost solely on buying commodities, the Russians have that in mind and more. Economic growth in sub-Saharan Africa is expected to hit 6.7 percent this year, and the region's debt burden has fallen from 80 percent of GDP a decade ago to about 30 percent. Economic reform is gaining momentum in places like Zambia and Kenya, and countries like South Africa, Kenya and Nigeria now boast a growing consumer class. The Russians see that, and are fast expanding from oil into financial services, telecommunications and retail. "Africa is ready for the kind of huge growth we saw in the former Soviet Union—from retail to telecoms to manufacturing," says Roland Nash, a strategist at the Moscow-based investment firm Renaissance Capital. "It just needs an injection of capital and expertise."
Russian banks, which have learned at home how to navigate a treacherous market, are fast outpacing Western private equity investors such as the Washington-based Emerging Capital Partners and even South African hedge funds. It's a Russian investment house, Renaissance Capital, that is pioneering services that will soon allow billions of dollars in outside money to be channeled into sub-Saharan African businesses (ex-South Africa). Last year Renaissance organized the biggest IPO in African history—a $350 million sale of stock in Access Bank of Nigeria, which pushed the bank's value to $2 billion. And a new Africa Fund launched by Renaissance this month is expected to reach its $1 billion cap by spring—making it as large as the total of five funds put together since 2000 by Emerging Capital Partners, previously the largest private equity investors. "We're at the beginning of a major transition," says Steven Jennings, CEO of Renaissance. "We've been in Russia and the CIS since 1992—we know about early-stage capital markets. There is a different culture in Africa, of course—but the challenges of imperfect legal systems and so on are the same."
It's not clear that Russia and China will be better or worse for Africa than the earlier Western arrivals turned out to be. South Africa has been a model for sustainable growth in the region, but South African corporations eager to expand throughout the continent may be winnowed out by Chinese or Russians who can pay cash for practically any asset they fancy. China in particular is building railways and roads, which conveniently run mainly to mining areas. What's more, critics say soft loans could lead to a new cycle of dependency—this time tying African nations to the purse strings of emerging-market powers. "Even interest-free loans need to be repaid," says Sanusha Naidu of the Centre for Chinese Studies at South Africa's Stellenbosch University. "And African governments, which finally have money to use following the writing off of their debt by Western donors, might find themselves reburdened."
Local leaders reply that they've been receiving Western aid and following Western business and development models for decades without seeing returns. "They feel that countries such as Russia, China, India and Brazil can bring something new to the table," says Naidu. Certainly they can bring plenty of cash. As the ties come off on the dance floor, and cocktails worth two weeks' wages of a Kenyan laborer are split, it's unclear what else the new conquerors will make of Africa's future.
With Karen Macgregor in Durban
© 2007 Newsweek, Inc.
URL: http://www.msnbc.msn.com/id/21162105/si ... ek/page/0/
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( 3 / 289 )Is Western aid making a difference in Africa?
By Danna HarmanThu Aug 23, 4:00 AM ET
"Is this really how to save Africa?" asks Tanzanian columnist Ayub Rioba, a day after Bill Clinton has left Africa. "We appreciate generous and humane contributions from people like Bill Clinton," he writes in The Citizen, a respected Tanzanian national daily paper. "But we [Africans] must also show that we are doing something. We cannot sit just like couch potatoes waiting for others to come and give us medicine."
"We have been made permanent recipients of aid, funds, scholarships, food, medicine, from developed countries.... And what exactly do we do with all that aid and assistance and help? Almost nothing. Since we gained independence, almost 50 years ago, we have been receiving aid permanently, and statistics today indicate that we are becoming poorer!" adds the columnist.
Outside attention to the continent has fueled thousands of successful programs ranging from eradicating smallpox and reducing infant mortality rates to helping more children go to school and more farmers get microloans. But, despite the aid, the number of poor people in Africa has almost doubled in the past decade.
Burdened as Africa is with government debt, trade barriers, droughts, and sickness, some 46 percent of Africans survive on less than a dollar a day. Nearly half of those make do with less than 50 cents a day, according to the development policy research unit the University of Cape Town in South Africa. According to the United Nations, life expectancy on the continent is falling, averaging just 46 years, in large part because of AIDS.
There are different schools of thought when it comes to explaining Africa's decline – and how to stop it.
Mr. Rioba fits squarely in the "governance first" camp, which argues that the onus is on Africans to better their own governments and behavior – not on outsiders.
For decades, countries such as Zaire (now the Democratic Republic of Congo) under Mobutu Sese Seko received billions of dollars in aid and loans – much of which was squandered by corrupt and incompetent officials.
Against this first camp sits the so-called "poverty first" camp, often represented by Columbia University economist and UN Millennium Project director Jeffrey Sachs, who says the solution to Africa's problems lies in tackling poverty, and that this can definitely be achieved with sufficient aid.
A third group believes in aid, but argues it's not the quantity that is problematic, it's the way it has been administered.
If ending poverty were so simple, argues William Easterly, a professor of economics at New York University, why has the $2.3 trillion spent over the last five decades not done more? "The biggest difference between Sachs and me is that he thinks aid can end poverty and I think it cannot," he says. "The end of poverty comes about for home-grown reasons, as domestic reformers grope their way towards more democracy, cleaner and more accountable government, and free markets," he says. Mr. Easterly says aid can certainly help alleviate the suffering of the poor, but that "the problem with aid is the people implementing the aid projects have weak incentives because they are never held accountable for results."
Mr. Sachs, in turn, poses: Is $2.3 trillion really so much? That sum, he says, is "from all donor countries in the world to all developing countries for all purposes," which means, if you work it out, around $16 per person per year in the developing world.
"To say that aid was gargantuan and that it failed is a cruel joke. It was neither gargantuan, nor did it fail when it was applied in good faith for developmental purposes (rather than for the cold war, or to ship US grains or to pay high-priced consultants)," he argues.
Sachs points out that the US spends more than $600 billion per year on the Pentagon, and less than one-hundredth of that in help for all of Africa. "One day's Pentagon spending would pay for all the bed nets [to stop malaria] for every sleeping site in Africa for five years," he charges. "People are hungry. People are dying. There are countless proven and effective ways to help, and which can extricate people from poverty in the long run. The drama is whether American politics can rouse itself to take note," he says.
In his quest for spreading this message and increasing aid, Sachs often turns to superstars, and many have embraced his ideas and his can-do attitude. Bono calls him "my professor." Actor Brad Pitt sings his praises. Madonna is a big supporter, and Angelina Jolie filmed a 2005 MTV special, "The Diary of Angelina Jolie & Dr. Jeffrey Sachs in Africa" that promotes his work. Vanity Fair, in its recent Africa issue billed him an "adviser to the UN and movie stars" and a "savior" of developing nations.
"Sachs offers very simple, concrete, and measurable solutions to specific developmental problems," says John Prendergast of ENOUGH, a group with a mission to "prevent genocide and mass atrocities" in Africa. "He doesn't necessarily have answers to major crises like Darfur and eastern Congo, but he does have important responses to malaria, dirty water, and bad sanitation. That is an important baseline for further socioeconomic development in the long run."
But Easterly is not impressed, calling Sachs a "messianic crusader who ... skillfully uses celebrity and media for the cause." Celebrities "love" Sachs, explains Easterly, "because he promises a huge payoff to Western aid efforts and describes the problem as easy to solve, if you just have a few celebrity videos and concerts." Easterly suggests aid dividends will almost always be modest. The solution requires donors to help continuously and be accountable for results. But he says, that is just "not as ... appealing to the People magazine crowd."
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