China, India to Boost Africa's Economy

By Eddyson Lugangwa Posted 20 September 2006 @ 09:39 am EET     Print     Reprint     E-Mail     Comments

Kampala (IBTimes.com) - Africa'S deepening engagement with Asia's two economic giants-China and India-holds enormous potential for economic growth in Africa, according to a new report by the World Bank, released September 9.

The sudden, massive surge in trade and investments by the two countries in Africa, the report argued, are poised to yield a vast impact on the continent's economy.

A caveat though is noted, with the report titled: Africa's Silk Road: China and India's New economic Frontier, warning that such optimism depends on the quick elimination of "asymmetries within the regions' relationships" and accelerated opening up of each other's economy to the other.

Asymmetries refer to all the factors that cause the immense unevenness in the flow of resources between Africa and the two countries.

Such imbalances pose the risk of eroding the benefits that may be accruing especially to Africa as a result of the growing roles of China and India in the continent and global economy at large.

"This new 'Silk Road' potentially presents to Sub Saharan Africa-home to 300 million of the globe's poorest people and the world's most formidable development challenge-a significant, and to date, rare, opportunity to hasten its international integration and growth," remarked Mr Harry Broadman, the World Bank Africa Region Economic Advisor and author of the study.

China has lately gone on an aggressive charm offensive across the continent, snapping up deals for supplies of copper, timber, oil and other commodities plus cooperation agreements in energy production, minerals extraction, infrastructure development, tourism, real estate and others.

In a sweeping trip in June this year, the country's Prime Minister, Mr Wen Jiabao visited Seven states: Egypt, Uganda, Angola, Tanzania, Kenya, Congo-Brazaville and Ghana in what observers said was a mission to turn the region away from the West towards China as an emerging giant.

In Uganda, Jiabao held discussions with President Yoweri Museveni, dominated by commitments on trade and bilateral aid.

China has already financed a string high-profile projects in Uganda: it is constructing the country's multi billion State House in Entebbe, it also built the gleaming Foreign Affairs headquarters in the heart of Kampala and has also advanced a grant to the government of Uganda for expansion of parliament and Chinese construction companies will undertake that project.

Jiabao was preceded by President Hu Jintao who visited Nigeria, Morocco and Kenya in April this year on the same mission.

Sceptics of China and India's spreading economic presence in Africa have presented the two as no less greedy than the 19th Century European imperialism and suggested that Africa, again, will end up the loser.

While both say their commercial incursions into the continent are genuine and mutually beneficial to the two ends, critics say such talk cloaks the real voracious hunger for Africa's cheap raw materials so evident in the countries' interests and which has historically been the primary motive for all foreigners' forays into the continent. Data contained in the WB study for instance appear to rebut suggestions that the two regions are being mutually lifted by the commercial engagements between them.

The study's findings show that; African exports constitute only 1.6 per cent of what Asians buy from the rest of the world. China and India's African purchases constitute only 13 per cent of Africa's total exports. Africa accounts only for 1.8 per cent of the World's foreign direct investment flows while Asia accounts for 20 per cent.

Nevertheless, such disappointing imbalances, World Bank suggests, can be remedied so that Africa can leverage the opportunities from its new partnership to propel itself forward and create prosperity for its hungry masses.

Notably, to maximise the benefits, it appears, Africa will have to tackle that that has been its bane for centuries: a lack of capacity to add value to raw materials and produce finished goods.