Concrete plan to meet targets a game-changer for continent

CHINESE President Xi Jinping’s announcements in South Africa this week have been a gamechanger for the African continent. The People’s Republic of China and South Africa have signed agreements worth over R94 billion, and President Xi is expected to announce huge financing for development projects in Africa over the next five years.

What Africa needs to lurch forward with its developmental programme is financing, infrastructure, labour-intensive industries and skilled human resources. All of which the People’s Republic of China (PRC) has pledged to work with Africa to achieve as part of a blueprint for Africa’s development.

What sets the PRC apart from other development partners is that it has allocated huge sums of money to make this wish list happen, and has listened to African leaders about their need for industrialisation and beneficiation. It has actually etched out a concrete plan of how these key needs are to be realised in the next five to 10 years.

There is every reason to believe that the PRC will make good on its promises, as its own national interests will also be well served. China will be able to deepen its access to a market of more than 1 billion people and ensure sustained access to Africa’s natural resources.

This is a win-win formula as the PRC’s expanding middle class opens up a range of export opportunities for African countries. Africa also needs to sell its raw materials to China for its continued growth. The International Monetary Fund estimates that Africa’s growth in recent years has been close to 6 percent, the highest in 30 years, due in large part to the PRC’s growing investment.

Even with the PRC’s economic slowdown as part of its “new normal,” it will still import commodities worth over $10 trillion (R143 trillion) from Africa. In just the first half of this year, China already contributed to 20 percent of Africa’s economic growth. We can expect a doubling of the continent’s trade with China by 2020, going from its current $200 billion to $400bn.

The Forum on China-Africa Relations (Focac), currently underway in Sandton, is an “historical, grand event” as it is only the second summit held at the level of heads of state, and this time on African soil. But more importantly Focac, after a long incubation of over 15 years, is now more than ever speaking to Africa’s needs, creating a synergy between China and Africa’s development strategies. This is a dynamic collaboration given that the combined population of the PRC and Africa totals 2.4 billion people, or a third of the world’s population.

One of Africa’s greatest challenges is inadequate infrastructure, and without the ability to move goods and materials, poverty and underdevelopment will not be effectively addressed. This is the area in which the PRC possesses the greatest know-how, and it has committed itself to the creation of an efficient transport network across the continent that will form the basis of regional integration.

In this way the PRC will lay the foundation for Africa’s long-term economic growth. The PRC has already completed a major rail link of 700km between Ethiopia and Djibouti, and is engaged in new rail projects in Nigeria and Angola, and is creating links between Tanzania, Kenya, Uganda, Rwanda and South Sudan.

What is critically important in the PRC’s infrastructure drive is the fact that it intends to build in value chains that will promote local management capacity, local ownership and employment.

In assisting Africa with the building of railways, highways, airports, ports and power plants, the PRC will use Africa’s iron, steel and cement, and utilise African labour, thereby creating employment. The PRC has identified South Africa as a hub for the manufacturing of rolling stock for railways, which could see South Africa manufacturing pools of carriages and engines that could be leased in southern Africa.

The PRC has acknowledged that industrialisation is another weak link in Africa’s economic transformation, with the continent’s industrial output accounting for 0.7 percent of the world total. This comes at a time when the PRC is undergoing its own economic restructuring and industrial transformation.

It can now afford to transfer some of its low-end labour intensive industries and technical skills to Africa. It has promised the transfer of entire industrial chains to countries like South Africa, Zimbabwe, Ethiopia, Tanzania, Kenya, Egypt and Morocco. An example of one such industry is Chinese shoemaking companies, which have set up in Ethiopia and Kenya. These workers are now producing for a market in China of 1.3 billion.

South Africa has led the way in pushing for the PRC to assist Africa with its industrialisation, manufacturing and beneficiation at source. If the PRC could finance and assist with widespread beneficiation of Africa’s natural resources, one of the most important visions of the continent would be realised, which would pave the way for greater economic independence and ultimately economic freedom.

Global Eye is published weekly on a Friday