China shoves US in scramble for Africa
A presidential visit followed by United States Secretary of State Hillary Clinton’s African tour cannot conceal a stark reality: China has overtaken the US as Africa’s top trading partner.
That is one of the main problems facing Clinton on a seven-nation jaunt meant variously to spread Washington’s good governance message and shore up relationships with its key oil suppliers on the continent.
US officials are keen to trumpet a 28% jump in 2008 in trade with sub-Saharan Africa to $104-billion, even if the increase is attributable mainly to the high price of oil, which accounts for more than 80% of US imports from Africa.
However, there is another statistic that says more about the direction of development on the poorest continent: this decade’s tenfold increase in trade with China to $107-billion last year, narrowly eclipsing the US.
The financial and then economic crisis that has pushed US and European economies into recession and forced their companies to crimp overseas expansion is only likely to accelerate the trend, analysts say, despite the regional goodwill towards US President Barack Obama, whose father was Kenyan.
“Obama has had some sort of effect, but that’s waning pretty quickly,” said Martyn Davies of Johannesburg-based regional investment consultancy Frontier Advisory.
“Reality is heading back in and the reality is that the crisis is accelerating the geo-economic shift of Africa towards Asia, centred largely around China,” he said.
Another scramble for Africa
In contrast to Obama’s one day, one country (Ghana) trip to Africa last month, in February Chinese President Hu Jintao was in Mali, Senegal, Tanzania and Mauritius—none of them rich in oil or minerals—offering a shoulder to lean on as the global recession started to wash up on African shores.
Elsewhere, Chinese companies have shown little let up in their push for African minerals, with Zonghui Mining Group signing a $3,6-billion copper agreement with Zambia in July.
Industrial and Commercial Bank of China (ICBC) is also working on up to 60 deals with Africa’s biggest bank by assets, Standard Bank, in which it bought a 20% stake for $5,6-billion in 2008.
Nor is China the only emerging economy seeking a slice of a continent estimated to hold a third of the world’s mineral resources, and a billion people slowly finding they want—and can afford—things such as life insurance and iPhones.
The $23-billion bid by cellphone company Bharti Airtel to tie up with South Africa’s MTN Group, Africa’s biggest operator by subscribers, is the latest and biggest example of an Indian company on the prowl in the region.
Brazil is also making its presence felt, with offers of technology and know-how to boost food and biofuels production in Africa, where only a fraction of potential arable land is under cultivation.
In June, Russian President Dmitry Medvedev flew in to Egypt, Namibia, Angola and Nigeria—the last two being Africa’s biggest oil producers—to underscore Moscow’s intentions not to be left out in the cold.
For sure, the increased competition does not mean the world’s biggest economy is throwing in the African towel, especially given that Angola, for instance, accounts for 7% of its oil imports.
It is more likely that US companies will have to fight harder to get what they want, to the benefit of African countries now offered a wider range of potential sources of investment, said Razia Khan, head of Africa research at Standard Chartered in London.
“There is some sense of the US having to do more to underscore its relevance in the continent,” Khan said.
“But it is difficult to argue that the influence of one power is rising at the expense of the other. Africa’s policymakers prefer a more multilateral approach, with a number of development partners and a number of options open to them.”
Clinton’s trip takes in Kenya, South Africa, Angola, Democratic Republic of Congo, Nigeria, Liberia and Cape Verde.—Reuters.