Trade with, not aid to, Africa

Almost a week ago I wrote thatIn my opinion the US led West needs to re-engage with Africa, especially, and, in different ways, with West and South West Asia and the Middle East, too. These regions are the source of the great migration which threatens, even more than China’s ‘rise,’ Russian opportunistic adventurism and Islamist terrorism, to destabilize the world. This re-engagement needs to be more than Mr Miliband suggests and more than the World Bank can do on its own. Countries like Australia, Britain, Canada and Denmark and all the rest whose very essence is being changed by illegal migration need to do something, quickly and, indeed, radically to stem the flow of migrants … that means taking action at the source of the things that are making innocent people flee from their homelands, for their very lives, or give up on their homelands, in despair.

Now I see that The Economist is seized with the issue of a “new scramble for Africa,” and it says, in a recent (7 March 2019) article, that “The first great surge of foreign interest in Africa, dubbed the “scramble”, was when 19th-century European colonists carved up the continent and seized Africans’ land. The second was during the cold war, when East and West vied for the allegiance of newly independent African states; the Soviet Union backed Marxist tyrants while America propped up despots who claimed to believe in capitalism. A third surge, now under way, is more benign. Outsiders have noticed that the continent is important and becoming more so, not least because of its growing share of the global population (by 2025 the un predicts that there will be more Africans than Chinese people). Governments and businesses from all around the world are rushing to strengthen diplomatic, strategic and commercial ties. This creates vast opportunities. If Africa handles the new scramble wisely, the main winners will be Africans themselves.

The article in The Economist says that “The extent of foreign engagement is unprecedented (see Briefing):

  • From 2010 to 2016 more than 320 embassies were opened in Africa, probably the biggest embassy-building boom anywhere, ever.” I assume that means embassies, Screen Shot 2019-03-09 at 06.26.28proper, and consulates and trade missions, too ~ Africa has just over 50 countries and most already had some embassies and high commissions (which are from one Commonwealth member state to another). Canada has missions in 22 African countries, less than half, they are shown in blue on the map at the right;
  • Militarily, “America and France are lending muscle and technology to the struggle against jihadism in the Sahel.* China is now the biggest arms seller to sub-Saharan Africa and has defence-technology ties with 45 countries. Russia has signed 19 military deals with African states since 2014. Oil-rich Arab states are building bases on the Horn of Africa and hiring African mercenaries;” and
  • Commercial ties are being upended. As recently as 2006 Africa’s three biggest trading partners were America, China and France, in that order. By 2018 it was China first, India second and America third (France was seventh). Over the same period Africa’s trade has more than trebled with Turkey and Indonesia, and more than quadrupled with Russia. Trade with the European Union has grown by a more modest 41%. The biggest sources of foreign direct investment are still firms from America, Britain and France, but Chinese ones, including state-backed outfits, are catching up, and investors from India and Singapore are eager to join the fray.”

The article says that “The stereotype of foreigners in Africa is of neocolonial exploiters, interested only in the continent’s natural resources, not its people, and ready to bribe local bigwigs in shady deals that do nothing for ordinary Africans … [and, sadly, it says] … The stereotype is sometimes true. Far too many oil and mineral ventures are dirty. Corrupt African leaders, of whom there is still an abundance, can always find foreign enablers to launder the loot. And contracts with firms from countries that care little for transparency, such as China and Russia, are often murky … [and dangerous, for example] … Three Russian journalists were murdered last year while investigating a Kremlin-linked mercenary outfit that reportedly protects the president of the war-torn Central African Republic and enables diamond-mining there. Understandably, many saw a whiff of old-fashioned imperialism.

But the author(s) say(s) that most of what is happening, commercially, is beneficial for Africa: “Foreigners build ports, sell insurance and bring mobile-phone technology. Chinese factories hum in Ethiopia and Rwanda. Turkish Airlines flies to more than 50 African cities. Greater openness to trade and investment is one reason why gdp per head south of the Sahara is two-fifths higher than it was in 2000. (Sounder macroeconomic policies and fewer wars also helped.) … [and here’s a message for Justin Trudeau and Gerry Diaz of the Canadian Labour Congress, both of whom want to shout out African textile imports to “save jobs” in Canadian textile mills, “most of them located in Québec and Ontario“] … Africans can benefit when foreigners buy everything from textiles to holidays and digital services.

The Economist has four suggestions for Africa that are aimed at making things better fir Africans:

First,” it says, “voters and activists can insist on transparency. It is heartening that South Africa is investigating the allegedly crooked deals struck under the previous president, Jacob Zuma, but alarming that even worse behaviour in the Democratic Republic of Congo has gone unprobed, and that the terms of Chinese loans to some dangerously indebted African governments are secret. To be sure that a public deal is good for ordinary folk as well as big men, voters have to know what is in it. Journalists, such as the Kenyans who exposed scandals over a Chinese railway project, have a big role to play;”

Second, Africa’s leaders need to think more strategically. Africa may be nearly as populous as China, but it comprises 54 countries, not one. African governments could strike better deals if they showed more unity. No one expects a heterogeneous continent that includes both anarchic battle zones and prosperous democracies to be as integrated as Europe. But it can surely do better than letting China negotiate with each country individually, behind closed doors. The power imbalance between, say, China and Uganda is huge. It could be reduced somewhat with a free-trade area or if African regional blocs clubbed together. After all, the benefits of infrastructure projects spill across borders.” But we must realize that Africa is riven with social dissent, mostly based on ethno-linguistic (tribal) and religious differences;

Third,” the article’s author(s) suggest(s) “African leaders do not have to choose sides, as they did during the cold war. They can do business with Western democracies and also with China and Russia—and anyone else with something to offer. Because they have more choice now than ever before, Africans should be able to drive harder bargains. And outsiders should not see this as a zero-sum contest (as the Trump administration, when it pays attention to Africa, apparently does). If China builds a bridge in Ghana, an American car can drive over it. If a British firm invests in a mobile-data network in Kenya, a Kenyan entrepreneur can use it to set up a cross-border startup;” and

Last … [and I think this is the key ‘take-away in the whole article] … Africans should take what some of their new friends tell them with a pinch of salt. China argues that democracy is a Western idea; development requires a firm hand. This message no doubt appeals to African strongmen, but it is bunk. A study by Takaaki Masaki of the World Bank and Nicolas van de Walle of Cornell University found that African countries grow faster if they are more democratic. The good news is that, as education improves and Africans move rapidly to the cities, they are growing more critical of their rulers, and less frightened to say so. In 1997, 70% of African ruling parties won more than 60% of the vote, partly by getting rural chiefs to cow villagers into backing them. By 2015 only 50% did. As politics grows more competitive, voters’ clout will grow. And they will be able to insist on a form of globalisation that works for Africans and foreigners alike.

trudeau-un-20160920Canada’s Justin  Trudeau has taken great delight in publicizing generous donations to many causes but, Levon Sevunts  of the CBC‘s Radio Canada International, reported about a year ago, “Despite a welcome boost in the amount of money Ottawa spends on foreign aid, the federal government’s new budget puts Canada’s international development assistance well below the average spent by its peers in the Organization for Economic Co-operation and Development (OECD), say actors in the Canadian humanitarian and development community … [and, he said] … The money set aside for foreign aid is also barely enough to keep Canada at the same level of official development assistance (ODA) … [which is “a ratio used internationally to measure what portion of a country’s wealth its government spends on development assistance“] … as in the past …. [and, in 2018] … Canada’s ODA [was] about 0.26 per cent of its gross national income (GNI) … [which is] … well below the 0.32 average for the 29 Development Assistance Committee (DAC) countries and the 0.7 per cent target established by a 1970 Screen Shot 2019-03-09 at 07.14.45resolution of the United Nations General Assembly.” Aid may be weak, but direct investment in Africa, by Canadian corporations, is puny. That’s not surprising; investment in Africa is still very risky and no one can blame business leaders for seeking easier, safer profits in North America, Europe and Asia. Canada had an agency that was supposed to promote direct international development, but, in my opinion, it was poorly designed, from the very start, because it aimed to help with foreign aid rather than by encouraging (subsidizing and/or sharing a lot of the risk out of) commercial investment in developing (third world) countries. Canada has an agency for export development financing, but it isn’t designed to promote direct investment, either.

There is, in my opinion, a legitimate role for the Government of Canada, using taxpayers’ hard earned dollars which can be redirected away from aid to trade, see Dambisa Moyo, again, to promote (subsidize) Canadian commercial (private sector) investment in developing countries, especially in Africa. Canadian direct investment, by private companies, subsidized by the government taxpayer, can be helpful for both Africa and Canada … likely more helpful to Africa than are the current aid programmes and potentially profitable for Canadian companies and investors, too. Trade, not aid, is the better way for Canada to help Africa to help itself and, simultaneously, to help scale back the global migrant crisis and to counter growing Chinese and Russian influence in weak countries and to create economic opportunities for Canadian companies and Canadian workers.

—–

* image-20170228-18215-i0iugcThe Sahel is the geographic zone of transition between the Sahara, to the north, and the great African savanna, to the south. It has a semi-arid climate and it stretches across the entire south-central latitudes of Africa. It includes Mali, where the Canadian Forces are, currently, on a UN peacekeeping mission and it is also the “home” of some of the world’s largest concentrations of refugees.

 

 

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s