Investment May 2010

The Next Empire

All across Africa, new tracks are being laid, highways built,ports deepened, commercial contracts signed—all on an unprecedented scale, and led by China, whose appetite for commodities seems insatiable. Do China’s grand designs promise the transformation,at last, of a star-crossed continent? Or merely its exploitation? The author travels deep into the heart of Africa, searching for answers.

In spring 2008, Congo’s beleaguered government unveiled a package of Chinese investments totaling $9.3 billion, a figure later reduced, for complex reasons involving International Monetary Fund pressure, to $6 billion—still roughly half of Congo’s GDP. China will build massive new copper and cobalt mines; 1,800 miles of railways; 2,000 miles of roads; hundreds of clinics, hospitals, and schools; and two new universities. Speaking before the parliament, Pierre Lumbi, the country’s infrastructure minister, compared the package to the Marshall Plan, and called it “the foundation on which the growth of our economy is going to be built.”

In exchange, China will get almost 11 million tons of copper and 620,000 tons of cobalt, which it will extract over the next 25 years—a “resource for infrastructure” swap that China first pioneered, on a smaller scale, in Angola in 2004. Congo will choose from a menu of Chinese construction companies—pre-vetted and supplied with credit by China’s Export-Import Bank—which typically begin (and end) their work quickly, dispatching hundreds or thousands of workers to do the job.

Much of the Chinese mining activity will center around Lubumbashi, founded by Belgium in 1910 and built up with forced labor in the 1930s. Lubumbashi has long lived by the whims of distant global markets, its booms unfailingly followed by busts. The Belgians, British, Americans, South Africans, and even the Congolese themselves, under Mobutu, have all enjoyed runs there.

During my visit, the city was drenched in seasonal rains, but it bathes year-round in a deep-set shabbiness. Still, traces of charm and bygone ambition survive. An imposing whitewashed courthouse faces a large traffic roundabout circling an antiquated steam locomotive once used to haul copper-laden cars. The once grand European-style post office still stands, though its concourse is given over to Chinese merchants selling cell phones from rickety glass cabinets.

Evidence of Chinese industry is not hard to find in Lubumbashi. In many neighborhoods, Chinese road crews are busy sealing muddy, potholed avenues with asphalt. They’re also paving an old dirt route east to Kiniama, and building another road west, to copper-rich Kipushi.

Well before the new ore-for-development deal was signed, the city and its surroundings had become a sort of new Promised Land for Chinese fortune seekers. As copper prices rose fourfold between August 2003 and August 2008, thousands of migrants descended on the region, like forty-niners during the American gold rush. They were drawn by word of mouth about the mineral riches and the ease of doing business here. Congolese officials were reputedly easy to bribe. Visas could be cheaply bought, and so could mining permits, often in the name of poor Congolese front men.

Under a white-hot afternoon sun, I made my way to a vast, Chinese-dominated industrial zone at the city’s northern edge, where copper-smelting operations sat behind high walls. There, I met Li Yan, a brisk, 30-ish man who manages a medium-size copper-mining company. Li’s company, with its giant smelting oven, heavy rock-crushing equipment, and half-dozen oversize trucks, looks well funded and well run. But he shook his head in disgust as he spoke to me about the copper rush. “There’s a belief among Chinese people that they can realize anything,” he told me. “But the people who came here had no experience and no preparation. It was like children running around, really a mess.”

Many Chinese fortune seekers had hired African work gangs to dig for copper, sometimes even in Lubumbashi’s red-clay streets. “They were profiteers and speculators,” said one local businessman. “Congo got nothing from them.” Most of them dug “no more than 20 feet deep, which requires no investment at all.” The government belatedly tried to reassert control, requiring all those who mined copper to smelt it as well, and to make more-substantial investments in equipment, in order to generate more jobs and tax revenue and to make the industry more sustainable. In response, small operators scrambled to build small, inefficient furnaces. In 2008, as prices tumbled from $9,000 a ton to a low of $3,500, the makeshift smelters closed down and the Chinese owners fled, leaving their Congolese workers unpaid and the landscape littered with industrial refuse.

Beijing’s giant construction package, of course, is on an entirely different scale than the fly-by-night mine operations that have come and gone in Lubumbashi. But the conditions under which the deal was signed were in many ways similar to those under which many Chinese fortune seekers had obtained their permits. Negotiations, conducted in secret, were entrusted to one of President Joseph Kabila’s close personal confidants, a man without a government portfolio. Since then, questions about whose interests are being served by the deal—those of everyday Congolese, or merely those of Kabila’s cronies—have multiplied.

In the center of Lubumbashi, just off the roundabout with the old locomotive, I met with Kalej Nkand, director of the Congolese Central Bank for Katanga province. Inside, the bank faintly resembles a musty warehouse—cavernous, dimly lit, and mostly open. It was getting toward lunchtime, and a half-dozen employees sat at metal desks scattered about the office’s large open floor. One woman pecked at an antiquated computer; the rest read old newspapers or dozed.

Kalej, a dapper young technocrat in a finely tailored olive suit, welcomed me into the deep chill of his office. In polished French, he told me that Congolese desperation had enabled the worst aspects of the early Chinese copper rush. “Most of these arrangements were negotiated at a time of great difficulty for the Congo because of the war,” he said. “It was too easy for people to come, get their product, and take off.” He described the big new Chinese package as “bait,” with “terms that were a bit unconventional,” but nonetheless appealing to a war-torn and bankrupt country.

For the rest of our conversation, Kalej studiously avoided criticizing the deal, often leaning forward and rocking slightly with his hands clasped before his face as he weighed his words. In Congo it was commonly said that President Kabila had bet his presidency on relations with China; for an official to say anything critical could be career-ending, or worse.

“We’ve got to remember the expectations of the populace,” Kalej said. New roads built under the auspices of the deal will link “rural areas with urban centers. People will be able to get their goods to market. The price of produce and other goods will go down.” Such were the dreams for Tazara, too, I thought, remembering the depressing little market in Kapiri Mposhi.

There was also the nettlesome question of where the new roads would actually go. Many of the package’s details have not been released publicly. Word on the street has it that the first, 275-mile section in the long, arching route chosen for the gigantic highway project will lead from Lubumbashi to Pweto, a one-gas-station town of 20,000 people on Lake Mweru that has no industry and few natural resources. Pweto is the hometown of Augustin Katumba Mwanke, the man who negotiated the deal, and he has reportedly built a palatial residence there; with the highway in place, he’ll be able to get to it from Lubumbashi in a few hours rather than the two days or more required now.

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Howard W. French is an associate professor at the Columbia University Graduate School of Journalism. He is the co-author, with Qiu Xiaolong, of Disappearing Shanghai: Photographs and Poems of an Intimate Way of Life.

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