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.

The company that will build the highway, China Railway, has been laying down another road leading out of Lubumbashi. It stretches eastward, and a crew of dozens of Chinese is working fast to scrape the existing dirt track smooth and complete the building of drainage culverts, before laying asphalt. This one, I discovered, leads to the regional police chief’s estate, an immense domain complete with artificial lakes and luxurious guest houses, all enclosed behind a 10-foot-high electrified fence. As we passed, my driver warned nervously that the area was under electronic surveillance and stopping or slowing down would not be prudent.

A prominent Congolese lawyer who is part of a loose citizens’ network that is investigating the Chinese package said the deal will leave Congo in the same position it was in after decades of exploitation by Belgium. “We could have said, ‘You can have our copper, but we want some of it transformed here.’ We’ve negotiated for billions of dollars without determining if those investments are productive, without thinking through the sequencing of things, without thinking about the creation of a metallurgy industry. We have cheap labor and abundant electricity,” so refining would make economic sense. “But we negotiated without experts and without analysis.”

I asked whether the huge building program—the roads and schools and hospitals—would produce dividends, and he shook his head grimly. “Six billion dollars in infrastructure is not development. Schools with desks are not going to educate our population. A road is not going to develop this country … Schools require a school system, and they need teachers. In this climate, roads last only 10 years without maintenance, and the Congo has no capacity in this regard.”

Gilbert Malemba N’Sakila, a former law-school dean in Lubumbashi, expressed similar doubts: “The Chinese are not even making use of Congolese talent. They hire laborers, and that’s it.” Management and technical expertise are provided almost exclusively by Chinese workers. “When they pack up and go, the Congo will be left with nothing, not even an upgrade in our human resources. Our earth will be dug up, emptied, and left that way.”

These views echo—and are informed by—those in Zambia, Congo’s copper-rich neighbor to the south, which has a much longer record of business dealings with newly capitalist China. Zambians enthusiastically welcomed investment in 1998, when the China Non-Ferrous Metal Mining Company bought a mothballed copper mine at Chambishi, near the Congo border, for $20 million and promptly invested $100 million in its rehabilitation.

Things turned sour, though, when the new Chinese managers banned union activity and began paying Zambian employees less than the $67-a-month minimum wage. In 2005, more than 50 Zambians were killed in an accidental blast at an explosives factory that served the mine; witnesses said that Chinese staff members had fled the scene moments before the explosion, failing to warn the African employees. A year later, during protests over back pay and work conditions, a Chinese supervisor opened fire on Zambian workers with a shotgun, wounding several.

The turmoil at the Chambishi mine quickly bled into Zambian politics. Michael Sata, the leader of the Patriotic Front party, made China’s business practices and growing presence in the country big issues in the presidential election of 2006; China threatened to cut off relations with Zambia if he won. Sata, whose party was young and relatively small at the time, won 28 percent of the vote. In the 2008 election, he won 38 percent, losing the election by just two points.

Few Zambians have been lifted into the middle class by Chinese mining activity, and today, Sata remains unrelenting in his criticisms of China. “Our [Chinese] friends are too numerous, and we know their resources cannot sustain them,” Sata told me in his Lusaka office, taking phone calls from constituents and filling out a lottery card as he reeled off a catalog of reproaches. “Zambians do not need labor being dumped here. The Chinese are scattering all over the world, but there is no such thing as Chinese investment, as such. What we’re seeing is Chinese parastatals and government interests, and they are corrupting our leaders.”

“The idea that big influxes of wealth will help Africa has never really panned out,” Patrick Keenan, an Africa specialist at the University of Illinois, told me. “When the path to wealth goes through the presidential palace, there are enormous incentives to obtaining power and to holding on to it. This kind of wealth incites politicians to create economically wasteful projects, and it relieves them of the need to make politically difficult choices, like broadening the tax base.”

Indeed, the same objections raised by the Zambian aid critic Dambisa Moyo—that foreign aid breeds corrupt, lazy, and ineffective government—can be applied toward any foreign investments that focus on mineral extraction, especially ones that deliver cash and services directly to governments with no conditions attached. All things considered, resource-based or infrastructure-driven development—even development as massive as the ongoing Chinese wave—appear unlikely to lead to a meaningful African renaissance.

China’s rise, it is worth noting, did not begin with highways or factories or gleaming cities. It began with agriculture and rural development. “It is true that China has pushed infrastructure development, but that only began two decades after economic growth had taken off,” says Justin Yifu Lin, who is the chief economist of the World Bank and the highest-ranking Chinese national in any international financial institution. “Providing economic incentive to farmers, incentives to workers, attracting foreign investment—those were the priorities at the beginning.”

Many African farmers, Lin told me, “would strongly benefit from simple technology, like cheap diesel pumps to irrigate their fields.” Chinese involvement in agriculture, he believes, could make a big difference. Through investment and demonstration, Chinese farmers could serve as an important catalyst in an African economic takeoff, much as they did a generation ago in China itself.

But agricultural transformation is the most unlikely part of the Chinese project. Farming, of course, takes place in plain view, and foreign encroachment on fertile land raises passions; African governments are likely to find it easier and more profitable to sell oil and mineral rights. Song Tingming, an official at a Chinese agricultural trade group, told the Economic Observer that he believes the best time for China to develop agriculture overseas has probably passed, because the purchase of farmland has become a hot-button issue, with Korea and some Persian Gulf states having already made or attempted big farmland investments in Africa.

And ironically, while Beijing is extremely well-positioned to help Africa improve its governance—a second area of great need throughout much of the continent—it seems deeply reluctant to do so. No developing country has understood the importance of a strong, results-oriented public administration better than China. But so far, in part because of China’s history of subjugation by Westerners, as well as its defensive stance over its human-rights record, Beijing has remained attached to its rhetoric about noninterference.

Everywhere I traveled in Africa, people spoke in defense of conditionality—the attachment of good-governance strings to loans from the West. “Many people look at Western conditions as a good thing, because nowadays so many things can be discussed openly, unlike the past—like corruption, for example,” said John Kulekana, a veteran Tanzanian journalist. “There are no more demigods here, and that is because of the growth of civil society, which has received lots of help from the West. Former ministers are called to account for their behavior. We are building accountability.”

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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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