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."
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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."
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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."
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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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( 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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