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Feature
PowerList 2008
constraints holding back sufficient economic $50bn by 2006, up 40% on the previous year.
growth was identified as the cost of doing Bilateral agreements focused on developing
business on the continent. infrastructure with construction deals to
World Bank studies indicated that the build or renovate roads, railways and ports.
indirect costs of exporting from Africa (18% China’s top trading partner in Africa has
to 35% of total cost) compared very poorly been Angola, emerging from a gruelling,
to indirect costs in China of a mere 8% of bitter civil war, where loans and investments
total cost. While efficient African enterprises topped $11bn in 2006, according to China’s
were able to compete with Asian firms in Ministry of Commerce – the majority of the
terms of factory-floor costs, indirect business deals being inter-governmental agreements.
costs – especially transport infrastructure – Angola now vies with Saudi Arabia as China’s
were recognised as an ‘important emerging top oil supplier, in the first quarter of this year
constraint to future growth’. [2008] supplying 690,000 barrels a day.
In short, it was estimated by the African South Africa was China’s second biggest
Union’s New Partnership for African African trade partner in 2006. Chinese
Development that for Africa to meet its investments and trade deals in the country
transport infrastructure needs, it would exceeded $9bn with energy, coal and, to a
require investment of some $22bn a year (5% lesser extent, other minerals and metals
of GDP), plus another $17bn for operations being the commodity lynchpins underwriting
and maintenance – in other words, all of the agreements between the two countries.
GDP percentage gains of recent years. Egypt, Sudan, Nigeria and Libya also attracted
That is where China and the other BRIC significant Chinese investment interest.
countries (Brazil, Russia, India) came in. China In June 2007, the Chinese government
‘Many african countries have been hard hit
by the recent rise in food coMModity prices,
which has caused real hardship for soMe of
the poorest people’
made a stunning series of deals and displaced announced it would create a fund to help mobile-phone company in terms of subscriber
Africa’s traditional Western trading partners Chinese companies invest in Africa, initially numbers) is an indication of the opportunities
in its bid to secure African commodities. In earmarking $1bn, but intending to eventually that Indian corporates have identified on the
return, China offered expertise and capital to fund it with up to $5bn in seed capital. It is continent.
upgrade African infrastructure – with none of a clear example of the Chinese way of doing Last year, World Bank economist Harry
the usual strings attached. business, with heavy state involvement even Broadman wrote in his report, ‘Africa’s Silk
Trade between China and Africa exceeded in ostensibly commercial enterprises. Road: China and India’s New Economic
India’s interest in Africa is no less intense Frontier’, that the growing African trade and
but is driven more by the private sector. Two investment by China and India, particularly
companies stand out in particular: Arcelor in sub-Saharan countries, ‘is one of the most
Mittal, the world’s largest steel producer, significant features of recent developments in
which has continent-wide investments, and the global economy’.
Tata, a huge conglomerate with more than 60 So with this flood of new investments, what
divisions, but best known for its car, bus and could possibly be worrying Africa’s leaders?
truck assembly lines across Africa. Firstly, many African countries have been
An India-Africa summit in New Delhi, co- hard hit by the recent rise in food commodity
organised by the Indian government and prices, which has caused real hardship for
Federation of Indian Chambers of Commerce some of the poorest people in Africa.
& Industry, featured many major Indian The continent is also bracing itself for
companies, such as Tata, Mahindra (another the fallout from the West’s credit crunch.
automotive company) Kirloskar (engineering Margaret Mwanakatwe, the managing
equipment) and Ranbaxy (pharmaceuticals) director of Barclay Bank Ghana, told me in
that have African operations, all of which an interview earlier this year that she was
report high levels of growth. concerned that a recession in the West,
Although called off last July, the created by the speculative housing boom
proposed $70bn merger between India’s that had been allowed to flourish in the US
Reliance Telecoms and MTN (Africa’s largest and Europe in recent years, would impact on
remittances from the diaspora.
Margharet Mwanakatwe is worried about The Overseas Development Institute’s
the effects of a recession in the west (left). Humanitarian Policy Group believes that
runa Alam (top); Dr Mo ibrahim (right). formal remittances worldwide amounted to
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