Observations of an expat: Africa

It is big. It has deserts, jungles and rolling veldt. It is wracked with disease, poverty, tribal divisions, civil wars, political instability and corruption. Millions are trying to escape it.

It is Africa. It is the future. Or at least its natural resources are.

The US Geological Survey has identified 34 key minerals that a 21st century developed country needs. Twenty-nine of them are in Africa.

In the case of one of them – cobalt – 70 percent of the world’s known resources is in the war-wracked Democratic Republic of the Congo.

Africa’s potential, and the West’s growing dependence on its resources is the major reason for a string of recent high-profile American visits to the continent. Vice President Kamala Harris has just returned from a three-nation tour. She was preceded in the recent past by Secretary of State Antony Blinken, Treasury Secretary Janet Yellen and US ambassador to the UN Linda Thomas- Greenfield. In December, the Biden Administration hosted an Africa Summit in Washington for the continent’s political and business leaders.

But the America’s African initiative could be too little too late. Twenty years ago the US was Africa’s biggest trading partner followed by Britain, France and Germany. Today the West’s trading figures with Africa are dwarfed by China.

And with trade comes political influence and access to the minerals needed for computers and batteries for a green, prosperous and secure future.

The West is big with aid. The US leads the pack. Last year it gave African countries a staggering $6.2 billion in humanitarian aid – twenty percent of all the aid received. European countries and institutions combined provided about half of the continent’s aid. China was not even in the top ten.

Beijing is not big on aid. It is ginormous on win/win investment and trade. Chinese investments in Africa are currently estimated to be worth $2 trillion and are generating $200 billion a year in trade. There are an estimated 20,000 Chinese technicians and managers nursing Beijing’s investments which are primarily in infrastructure projects such as ports, airports, roads and railways.

It has not been clear sailing for China.  Almost all of Beijing’s investments are in the form of loan capital and economic mismanagement in Kenya and Zambia has pushed those countries to the edge of default. There is also concern among Africans that  Chinese investment in mining has focused on extracting the minerals and transporting them back to China for processing. African countries would like cash to build processing plants because that is where the value added money is.

But the Chinese investment has reaped some political dividends for Beijing. Seventeen African countries followed China’s lead by abstaining in the most recent UN vote condemning the Russian invasion of Ukraine. Two supported Russia—Eritrea and Mali. China’s influence is growing in the Global South.

One of the reasons for the Chinese success in Africa is that their investments are politically blind. They are only concerned with making money and gaining influence. America, on the other hand, puts a heavy premium on investments that encourage democracy and American values. Kamala Harris chose Zambia, Tanzania and Ghana to visit because they were relatively more democratic than other African countries.

America also uses aid and investment to impose moral as well as political values.  The most famous example was President George W. Bush’s strings to US aid to combat the AIDS epidemic in Africa. To qualify a country had to promote the use of condoms, preach sexual abstinence as part of the solution and condemn prostitution.

Africans, no more than anyone else, like to be preached to about how they should live their lives. But they are not too fussed about the source of their foreign investment. Just as in most countries, the politicians want cash that creates jobs and steady growth (although in the case of many African countries the cash should include some dash for their Swiss bank accounts).

If the Biden Administration is reawakening to the continent’s potential, as it should, than it is an opportunity for Africans to play Washington against Beijing to obtain the best deal for Nairobi, Pretoria, Lusaka….

 

* Tom Arms is foreign editor of Liberal Democrat Voice and author of “The Encyclopaedia of the Cold War” and “America Made in Britain". To subscribe to his email alerts on world affairs click here.

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8 Comments

  • UK foreign direct investment (FDI) in Africa is heavily focused on the extractive sector and in South Africa. The low penetration of UK FDI beyond mining and financial services and in other countries suggests that there are opportunities as well as challenges to increase the role of British investors in boosting African economies.The increasing population and growing middle class in Africa – expected to account for over 40% of the population by 2030 – bring growth and increased sophistication in consumption, presenting substantial opportunities in sectors where the UK has a strong comparative advantage, including financial services and insurance.
    According to UNCTAD, “The largest holders of foreign assets in Africa remained European, led by investors in the United Kingdom ($65 billion) and France ($60 billion).”
    The continent has the potential to become a major player in renewable energy eclipsing the middle-east as a supplier of energy over-time. The Truman doctrine may not be the best foreign policy approach in Africa. The Chinese State capitalism approach seems to one more amenable to Africa leaders. The $2 trillion figure Tom writes of appears to be the value of Chinese business in Africa since 2005 China’s Influence in Sub-Saharan Africa with $300 billion in current investments dwarfing those of Britain and France. Chinese state loans are often secured on natural resources like copper mines.

  • Mark Frankel 16th Apr '23 - 7:52am

    Excellent and informative article. The UK needs to be much clearer about what is going on in Africa, rather than wallowing in post-colonial guilt. One point: George W. Bush’s strings to US aid to combat the AIDS epidemic weren’t moralistic but hygienic and designed to prevent the spread of disease.

  • Slightly off comment but I have had an email from a relative who is officer in South African navy. Their is or was some disquiet among the officers especially white officers at the recent naval manoeuvres with the Russians and Chinese that their govt. tried to keep quiet.

  • Zachary Adam Barker 16th Apr '23 - 11:06pm

    A very thought provoking and well written article. Thank you Tom Arms.

    The acquisition of Rare Earth’s is a developing to be a resource curse/blessing much as oil has been in the past and still is. It will strengthen the elites that profit off of them including the political ruling elites. In this way our deepening trade in them could help exacerbate inequality in the most unequal region in the world.

    Due to the environmental costs of Rare Earth’s I believe it is only right that our party should consider allowing more domestic Rare Earth mining from a strategic point of view it makes sense to maximise access within our borders while China and Russia take advantage of what nature has given them.

    There is also an environmental justice argument? Why should poor countries suffer environmentally for the demand rich countries have for green technologies powered by Rare Earth’s?

    I would also like to see more development of Space policy to explore the possibility of mining Rare Earths either from the Moon or other planetoids. The economies of scale are potentially massive and any potential carbon costs from mining will be irrelevant since they will be outside the atmosphere.

  • Zachary Adam Barker 16th Apr '23 - 11:22pm

    There are so many issues to discuss about Africa. One that is often overlooked is the displacing of Western (in particular French) military personnel with Russian mercenaries in the Sahel, which is experiencing a worsening West African wide Jihadist uprising.

    Russia sees a big opportunity to launch a charm offensive against the Global South (which includes Africa) which we have been asleep at the wheel to pay attention to, never mind counter.

    I would love to see our party develop a policy for a kind of Democratic Scramble for Africa. Encouraging a West wide (including ourselves) friendly competition to bring about security, peaceful and trade cooperation with African states. We need to think about what we can offer African countries. Some of that might be helping them with climate change adaptation.

    But we need to act to stop Russia and China giving the impression to the Global South that the West no longer offers anything else for them.

  • Several years ago, I made a suggestion which never got anywhere. Although it did win an honourable mention in Ashdown Prize. It was to launch what I called development bonds. This would involve commercial bonds being floated in Western countries for approved infrastructure projects in the developing world. Wealthy individuals and organisations would be encouraged to invest in the bonds by being granted tax relief on the repayments.

  • Infrastructure development bonds sounds like a good idea, Tom. One of the big problems for African states is the risk premium that comes with any lending to politically unstable states making borrowing costs expensive relative to developed economies.
    There are comparable tax reliefs for investment by individuals in small growing companies like the Enterprise Investment Scheme and venture capital trusts. These have relatively small caps of up to £2m for individual income tax relief, but can raise quite large investment funds collectively.

  • Peter Hirst 17th Apr '23 - 5:11pm

    Western countries need to stop tying aid and trade deals to ideological positions such as mentioned above with HIV. As long as we tie grants and loans to conditions we have no chance against China. With no conditions at least we will have a level playing field.

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