Wednesday, November 01, 2006

What happens to Africa with Chinese cash?

Certainly in a part of the world as wracked by poverty as Africa, it is hard to not to be happy when anyone comes in with loads of cash for local investment.

Loads of cash seems to be what China is dropping on the continent in exchange for natural resources. Hopefully, that investment is putting local people to work on ground there but the Economist here asks the right questions, what else is Africa getting? Know-how? Greater transparency and efficiency?

These questions shouldn't, of course, be restricted to Chinese investments happening in Africa, but all foreign investment there.

If Africa really wants to benefit from this trade, individual African countries should band together to up their negotiating power and extract more for their people and their individual countries than piles of money (which undoubtedly will be misspent in several quarters.)

When I was in South Africa on vacation a while back, there was a lot of debate on TV about the benefits of doing more business with the Chinese (and again, this discussion should be extended to all powers, the US, EU, etc.) If Africa is just selling away its resources and getting little else in return, then this sort of trade will provide little more than a few poorly-paid local jobs.

I'm not advocating any sort of protectionism here, open trade between Africa and China could be a good thing. I guess what I'm saying is that Africa should negotiate for more broad investment in their countries, perhaps to beef up local infrastructure such as roads and energy transmission. There should also be some sort of real oversight with teeth to ensure that any foreign money coming into individual countries is well spent.

Africa and China | Wrong model, right continent |

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