The biggest institution of any states is government. “A government is an institution entrusted with making and enforcing the rules of a society, as well as with regulating relations with other societies.”
I have deliberately included the above definitions because many people do not consider governments as institutions; but I have also chosen the word ‘Institution instead of government because societies have several institutions, and with the theme at hand it is not just governments that are attracted to China but several other institutions, both public and private.
Why then this attraction?
There is an old proverb that says “a friend in need is a friend indeed”. Over the years, China seems to have developed a knack to identify needs and respond to them promptly. Take for example the support China gave to the Southern Africa Frontline States (FLS), in particular Zambia and Tanzania – committed to ending apartheid and white minority rule in South Africa and Rhodesia.
When the western world-supported apartheid regimes were economically strangling these FLS, China could have taken the route chosen by Cuba that sent thousands of soldiers into Angola to stop the American/South African stooge Savimbi’s UNITA.
But China, just over two decades out of its own liberation war, decided that sending troops on the ground was not the solution; instead, it decided to free the countries in question from economic strangulation. China built the TAZARA railway (originally known as Tanzam); thus freeing landlocked Zambia from economic dependence on Rhodesia and South Africa, in addition to boosting business for the Dar es Salaam port.
The project, built from 1970 to 1975, was at its completion the longest (1,860km) railway in sub-Saharan Africa. At a construction cost of US$406million then, close to equivalent of US$3billion today, China killed so many birds with one stone:
China told Africans liberation movements that:
- Political liberation goes with economic liberation.
- China has joined the group of nations that provides foreign aid.
- When it comes to building infrastructure China is the ‘King’.
The TAZARA railway features in African geography school textbooks. Thus, young people who were in high schools during the 70s are today’s leaders across the continent. And the Chinese mastery of infrastructure sank into their conscious and subconscious minds.
The purpose of any business venture is profit maximisation.
Since then, several African countries have looked to China and Chinese companies for infrastructure development. Just recently, the China Road and Bridge Corporation completed an ambitious Kenyan standard gauge railway, Mombasa Nairobi, at a cost of US$3.6billion – 90 percent of which was a loan from the China Exim Bank with Kenya putting in the remaining 10%. The railway is part of China’s ‘One Belt, One Road’ Initiative.
The Mombasa Nairobi leg opened passenger rail service in June 2017, and freight rail service in January 2018. The ambitious project is expected in future to connect almost the entire Eastern Africa from Mombasa continuing onward to Kampala, Uganda’s capital city. It will further run to Kigali in Rwanda with a branch line to Juba in South Sudan, Eastern DR Congo, Burundi, and Ethiopia. If this dream materialises, the whole of Eastern Africa will be rail-linked.
The above are just examples; it would be very difficult to enumerate China’s infrastructure in Africa – hydropower generation, transport, ICT and water projects etc. The most recent being planned is the 1,445km long crude oil pipeline from Hoima, western Uganda, to Tanzania’s Tanga Port that will be jointly constructed by the French oil giant Total and China National Offshore Oil Corporation (CNOOC), worth US$3.5billion.
Does it sound strange that Uganda and a French company would partner with a Chinese institution? The answer is no. Business is business, and the purpose of any business venture is profit maximisation.
Every country has the right to develop its economic models:
The Chinese do not have to accept 1776’s Adam Smith “Wealth of Wations” philosophy and his mercantilism. Actually, China has been able to demonstrate that some of Adam Smith’s advice is not wholly correct. For example, Smith rejected government direct involvement in market activities, and instead emphasised that governments should serve just three functions: protect national borders; enforce civil law; and engage in public work. China has demonstrated that government can partner with the private sector for better good, and this irritates the western classical economists.
There are all sorts of accusation against China as the emerging super power. I have no intention of discussing all these accusations in this article. Allow me, however, to discuss today one of the most outstanding: so-called ‘Chinese currency manipulation’. Let’s get the facts right. Currency manipulation, and at times outright robbery, has been going on for centuries – and were actually part of western economic models.
In his 1972 book ‘You gotta cry to laugh!’, the Nigerian Author Peter Enahoro describes the unfair world of currency exchange. I will not try to provide the exact quote in a book that I read more than 45 years ago. I will however paraphrase my most memorable part of the book.
He describes how rich his grandfather was in roughly the following words: “My grandfather was a billionaire, so rich that he had to employ several porters to keep drying his cowries, the valuable currency from decaying. Then the white man came and introduced his currency with no exchange rate whatsoever. Imagine that some creatures came from Mars and introduced their currency – with no exchange rate. The next day the Rockefellers would be in the street, hats in hand begging. Enahoro’s intentions were not to write a satire. He was making a very serious economic complaint.
Enter the Americans: As far back as the 1950s, the USA, was involved into serious currency manipulation and currency fraud. In 1958, the United States of America, taking advantage of an artificially strong dollar, started to accumulate, annual foreign-exchange deficits, resulting partly from the costs of maintaining U.S. forces overseas. At that time, contemporary China was only 10-years old and not in a position to influence world economic affairs.
While Europe at first tolerated this manipulation, and even outright robbery, by the mid-1960s the then French President General de Gaulle was already complaining that the USA was exporting its inflation. By 1971, the American economic situation needed emergency measures.
President Nixon, a man not known for a lot of decency, and his Secretary of the Treasury John Connally – who also served as the 39th Governor of Texas, conned the world by abruptly suspending the convertibility of dollars to gold: thus abandoning the then internationally accepted Gold Standard, wherein the value of any currency had to be backed by its gold reserves. It’s absurd how the European and Japanese accepted this raw deal. The rest of us then had little say.
From the time Nixon manipulated the rest of the world to abandon the gold standard in favour of the dollar standard, we were all automatically indebted to the USA. Every time I want to buy a car from Japan, a TV set from South Korea; every time I want to buy tiles from China; wine from France or South Africa, every time I want to buy rice from Thailand, Sugar from Zambia, Cement from Tanzania etc. an American institution gets some commission because we are transacting through the dollar! No wonder small and medium importers from countries like Nigeria and Kenya are taking the big risk and increasingly using crypto-currencies as the preferred medium of transaction with Asian countries.
So, if tomorrow China, the 2020 second-largest economy in the world and biggest infrastructure developer in Africa, is able to help Africa skip that American commission on US dollars should the world complain?
In the 1950s and 70s, America exploited its world influence to export its economic problems through an overvalued dollar. Let us assume that the accusation against China of undervaluing the renminbi – also known as the Yuan – are true, and assume that I am the Minister of infrastructure of the Republic of Rwanda that has put infrastructure delivery at the top of its development agenda.
According to the 2020/2021 budget estimates, government will spend Rwf122.7 billion (that’s about US$128million) on key infrastructure projects. So, if I was the minister who is going to hire a Chinese road construction company to do roads or hydroelectric power generation, and according to China exchange rates US$128million is worth 869million Yuan, that will give for the sake of this argument 5,000km of road networks and three hydroelectricity dams.
But according to some USA or other western bureaucrats, US$128million is actually worth 500 billion Yuan; that is almost two-thirds, and by this exchange rate I will get 3,000km of network, and two hydroelectric dams. Who would I, as the minister of finance, listen to?
China is not colonising Africa, nor are African leaders a bunch of fools. No one denies that Africa has a bundle of problems, and that many of its leaders are corrupt – but they are not all just a bunch of fools that year after year go to Beijing for the Forum on China-Africa Cooperation (FOCAC).
If the 50 heads of state and government, from countries that have become beacon for western democracies like Ghana, Botswana and Senegal, and those that are led by CEO-types of leadership like Rwanda and Mauritius, year after year go to China, are they simply going there to misrepresent us? And if they are, then we are equally to blame. As the saying goes “a country gets the leader it deserves”. I will attempt to analyse this ‘recolonisation’ accusation in my next article.
Without making my personal argument, at least for the moment on the so-called recolonisation, allow me to quote two among prominent leaders regarding the China-Africa relationship:
“Africa is not a zero-sum game. Our growing ties with China do not come at anyone’s expense. Indeed, the gains are enjoyed by everyone who does business on our continent.” – Paul Kagame at FOCAC 2018
“In the values that it promotes, in the manner that it operates and in the impact that it has on African countries, FOCAC refutes the view that a new colonialism is taking hold in Africa as our detractors would have us believe.” – South Africa’s Cyril Ramaphosa at FOCAC 2018
>>>The writer is veteran journalist, journalist and former head of Public Relations/Corporate communication at the Common market for Eastern and Southern Africa, (COMESA) contact; [email protected]