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Wednesday, 19 September 2007

Deal or no deal?

BBC News report that China has signed a deal to loan the Democratic Republic of Congo $5bn to develop infrastructure and mining.

"This is the largest single loan to any African country of the$20bn that China has pledged to finance trade and investment in the continent over the next few years. A first phase of $3bn will finance big transport infrastructure projects in the DR Congo, including a 3,400km (2,125 mile) highway between the northeast city of Kisangani and Kasumbalesa on the border with Zambia. There will also be a 3,200 km (2,000 mile) railway to link the country's southern mining heartland to the main Atlantic port of Matadi in the west. Additional plans provide for the construction of some 30 hospitals, more than 100 health centres and two universities"

In exchange, China will get rights to DR Congo's extensive natural resources, including timber, cobalt and copper. I have this worrying feeling that Kabila may be selling his people at price a price their grand grand children may regret. For one thing, I can only see one way China would make sure that she gets the return on her investment in a very unstable country. On the inseparability of economic and military help see the blog here.

5 comments:

  1. Its with great dismay that I read that DRC is contemplating obtaining a $5 Billion dollar loan from China that will entitle the lenders free reign over the country's natural resources. This kind of stuff is unthinkable in the west. I would like to blame China but that is premature.

    I would like to think that given the current economic conditions in DRC $5 billion dollars will just be a small drop in the ocean of financial mismanagement. In DRC there is a massive political blackhole and as good as the intentions maybe I doubt that its worth giving somebody a free reign over the resources. Doing that is creating an unstable economic and social conditions that will lead to a critical situation in the future.

    I think $5 billion in exchange of a country's resources sounds like a bad nightmare. It seems somebody lacks strategic leadership, vision and planning. Leaders in African and in particular DRC should not just think about now but guard against exploitation. Perhaps its a good idea to learn from the past, there is a risk that if this goes unchecked there maybe a future Zimbabwe in the making. Africa needs assistance but not this kind which will only serve to fatten the already bloated Chinese economy.

    Why is it that Africa looks to others as solution providers. The problem within DRC can only be solved effectively through first creating a stable social and political environments that in turn provides the base for thriving economic conditions.

    I just feel that if the story turns out true, DRC risks jumping from a political hotspring into a sweet smelling but fat loaded chicken fried rice. The rich gigolo from the east might turn out to be worse than the thieving rich romeo from the west.

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  2. Is there any way these deals can be declared null and void?

    These tinpot leaders don't have the wherewithals to sell their nation's assets like that.

    There should be input from all kinds of organisations, monitoring, etc.

    I think the primary role of the AU and SADC should be to regulate the sale of the region's natural resources.

    Maybe there should be an ATO, an African Trade Organisation, with the power to veto these deals, and at least have some minimum standards, for instance that all these raw materials are sold near market prices.

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  3. I would like to draw your attention to one of my write-ups on my Issues Over Matters column earlier this year. These are exactly the issues I raised then.


    CHINA’S UNSTOPPABLE MARCH FORWARD

    By Gershom Ndhlovu

    In the last two weeks, there has been debate in Britain on government proposals to introduce Mandarin Chinese in the country’s schools alongside other established foreign languages like French and German arguing that China is becoming an important player in the international economic arena.
    In another instance of Chinese influence in the British economy is the landing just before last Christmas, of the largest sea freighter plying the seas that was carrying Chinese goods ranging from portable MP3 players to Christmas trees and just about anything used in everyday domestic life in Britain.
    Just over 18 months ago, there was an outcry among European Union bureaucrats in Brussels on the flood of cheap Chinese-made goods in the EU which it was argued was killing the manufacturing industry in Europe. Most European companies and chain stores are sub-contracting the manufacturing of goods to China where labour costs in particular, and manufacturing costs in general, are cheaper than those in Europe.
    The EU wants to restrict how much of Chinese goods these companies and chain stores can import per year. Although this matter is quiet for now, it is merely simmering in the bureaucratic corridors of the EU.
    Indeed, China, closely followed by its neighbour India, is set to overtake Britain as the fourth largest economy in the world in the next few years. The biggest economies are USA, Japan and Germany, but such is the relentless march of the former socialist country to economic progression which is threatening to swamp not only small and underdeveloped countries like Zambia, but bigger and developed countries like Britain.
    China is said to be the workshop of the developed countries who use it for the manufacture of consumer goods largely because labour costs are very low in that part of the world in a phenomenon known as “sweat shop” production in which labour is not very highly valued, but just a mere appendage of the production process.
    The difference between the goods that are manufactured for the European market and those that end up at Kamwala in Lusaka, Karyako in Dar-es-Salaam or Markato in Addis Ababa is that those destined for Europe are of very high quality while the latter are cheap imitations or rejects that cannot enter European markets.
    The question though is that is China as philanthropic to Third World countries as it appears to be, or is it simply out of economic necessity that it is extending its reach in Africa to gain access to the continent’s raw materials to fulfill its row as the workshop of the developed countries? The answer is, most likely.
    China appears to be an all-weather friend of Africa, but its emerging capitalist entrepreneurs are simply looking for cheap raw materials and more markets for their excess produce rather than helping Africa to emerge out of its economic doldrums which is only possible if there is real technology transfer and human resource development by building universities on the continent rather than the construction of sports stadia.
    Even the loans that African governments are procuring from China will prove to be millstones in the future when China takes over, if it ever does, the control of the Bretton Woods institutions, or if it sets up parallel institutions under its direct control as it becomes even stronger economically.
    At the rate China is developing coupled with its philanthropic approach to Africa by providing the much needed aid, it is little wonder that it can afford to arm-twist the poorer African countries over the “One China” policy over Taiwan.

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  4. "China appears to be an all-weather friend of Africa, but its emerging capitalist entrepreneurs are simply looking for cheap raw materials and more markets for their excess produce rather than helping Africa to emerge out of its economic doldrums which is only possible if there is real technology transfer and human resource development by building universities on the continent rather than the construction of sports stadia." - Gershom

    It appears in this context the Chinese have fulfilled your demand. They plan to build 2 universities and will deliver substantial infrastructure that will develop markets. So actually what China is offering is very goodd. The problem is what China is asking in exchange.

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  5. WHAT AFRICANS NEED IS A SECTION OF THE AFRICAN UNION WITH REPRESENTATIVES FROM EACH COUNTRY TO AJUDICATE ON THE PART OF THE ORDINARY PEOPLE WHO DON'T EVEN UNDERSTAND THE IMPLECATIONS OF NICE THINGS WITHOUT ANALYSING THEIR ACTIONS.

    if you look at this closely you will see africa in the era our ancestors gave land away for mirrors or sophisticated items from the west.

    its amazing that we have not moved an inch,what gives someone the confidence to entice you with the bitter pill second time arround.

    good luck my children

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