By Dr. Ian Clarke

Over the past decade China has taken a keen interest in Africa, with its leaders having visited the continent 79 times, to 43 different African countries. During this period the UK showed little interest in the continent, until Theresa May’s recent visit to Kenya when she demonstrated her dancing skills. The current American President has referred to African countries as ‘shithole countries’ , though we must acknowledge the massive amount of aid we have received from the USA to combat the Aids epidemic. The Chinese are interested in Africa as a sphere of influence because of its vast natural resources, and as a continent to trade with, and provide employment for its massive population.

China does not give aid in the form of grants, but is a source of easy credit and loans. These loans are based on standard commercial terms and do not have the ‘conditionalities’ which are preconditions from organizations such as the World Bank. These conditions are often hard to fulfill, resulting in non-utilization of funds. Chinese money is easy to access, but as with any easy borrowing, one must read the small print, since it usually comes at a cost.

While Chinese loans were initially welcomed by African governments because there were no strings attached, many governments are now concerned by the liabilities they are incurring, since the debt is collateralized. In the case of Kenya, 70% of their bilateral borrowing is from China, and they have collateralized Lamu Port against part of their debt, so if they default, China will own that port and have control of this route into East Africa. Sri Lanka had the same arrangement and has now defaulted and handed over their port to the Chinese as a consequence. The Chinese give loans on the same terms as banks; they do not lend money out of compassion. A bank will ensure that the property is mortgaged to them in case of default and the Chinese use the same business principles.

Chinese loans also facilitate Chinese contractors, who have become ubiquitous across Africa. These contractors have generally been competitive, often undercutting local contractors when they are bidding for work. I experienced this in KCCA where Chinese contractors tendered so low that local contractors could not compete. The other side of the coin is that Chinese contractors need to be closely supervised to ensure they deliver quality work, because they will cut corners if given the opportunity. However, as a generalization, the road construction they have carried out has been good quality at a reasonable price. The one big exception is the Entebbe Expressway, where the construction cost $9.3 million per kilometer, compared to average construction costs of around one million dollars per kilometer for single carriageway. This price did not include the compensation for acquisition of the land.

Like any country, the Chinese have their culture and way of doing business. In China, because of the political system, no Chinese business will grow and prosper without the blessing of the Chinese Communist Party and protection by some party official. Since the Premier Li Xingping vowed to root out corruption we now hear of various party officials being put on trial. The normal Chinese businessman feels that he must have a ‘big man’ as his protector, for which he is prepared to pay. This is why Chinese often flout basic rules and regulations, because they feel they are only answerable to their ‘big man’, and the bigger he is the more their sense of impunity.

A case in point is that of a certain Chinese company, which wished to establish itself in Uganda, and made a donation to a charity controlled by the wife of the Ugandan Minister of Foreign affairs. Unfortunately the transaction was routed through the American banking system and flagged by the U.S. authorities, who now wish to interview our Foreign Minister.

The Chinese are neither good nor bad, they are a-religious as we know it, amoral, and pragmatic, and will do what it takes to get the job done. If we accept fake goods being dumped in Africa, they will flood the market, but if we enforce higher standards they will acquiesce. If decision makers are susceptible to bribes, they will use bribery, but if Ugandans are patriotic, they will do business on our terms. If we accept shoddy work and do not enforce quality controls, they will serve up shoddy work. If we demand high standards, they will give them, but our engineers need to be watchful. If we allow them to do business by finding patronage under a ‘big man’, they will go that way, but if we insist that no-one is above the law and enforce the law, they will abide by it.

In other words, we may criticize the Chinese, but the ball is in our court: we set the standards; they simply sense what we want and give it to us.

Comments