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The Rise of China and India in Africa

The Rise of China and India in Africa

Fantu Cheru | Cyril Obi | Gunilla Carlsson | Dot Keet | Kwesi Aning | He Wenping | Fredrick Mutesa | Peter Kragelund | Alex Vines | Sanusha Naidu | Liu Haifang | Sanjukta Bhattacharya | Alemayehu Geda | Atnafu G. Meskel | Peter Draper | Tsidiso Disenyana | Renu Modi | Linn Axelsson | Professor Timothy M Shaw

(2010)

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Abstract

In recent years, China and India have become the most important economic partners of Africa and their footprints are growing by leaps and bounds, transforming Africa's international relations in a dramatic way. Although the overall impact of China and India's engagement in Africa has been positive in the short-term, partly as a result of higher returns from commodity exports fuelled by excessive demands from both countries, little research exists on the actual impact of China and India's growing involvement on Africa's economic transformation. This book examines in detail the opportunities and challenges posed by the increasing presence of China and India in Africa, and proposes critical interventions that African governments must undertake in order to negotiate with China and India from a stronger and more informed platform.
Fantu Cheru is the Research Director at the Nordic Africa Institute in Uppsala, Sweden and Emeritus Professor of International Development at the School of International Service, American University in Washington, DC. Dr. Cheru's previous publications include: African Renaissance: Roadmaps to the Challenges of Globalization (2002); The Millennium Development Goals: Mobilizing Resources to Tackle World Poverty (2005); Ethiopia: Options for Rural Development (1990); The Silent Revolution in Africa: Debt, Development and Democracy (1989). His articles have appeared in Third World Quarterly, World Development, Review of African Political Economy, International Affairs, and Review of International Political Economy, among others. Dr. Cyril Obi is a Senior Researcher, and Leader, Research Cluster on Conflict, Displacement and Transformation at the Nordic Africa Institute, Uppsala, Sweden.In 2001, he was a fellow of the 21st Century Trust, Conference on 'Rethinking Security for the 21st Century', also held at Oxford. He is a contributing editor to The Review of African Political Economy, and is on the editorial board of The African Journal of International Affairs, The African Security Review and The Review of Leadership in Africa. The Nordic Africa Institute (Nordiska Afrikainstitutet) is a center for research, documentation and information on modern Africa. Based in Uppsala, Sweden, the Institute is dedicated to providing timely, critical and alternative research and analysis of Africa and to co-operation with African researchers. As a hub and a meeting place for a growing field of research and analysis the Institute strives to put knowledge of African issues within reach for scholars, policy makers, politicians, media, students and the general public. The Institute is financed jointly by the Nordic countries (Denmark, Finland, Iceland, Norway and Sweden).
'Readers will find the book to be both educative and critical.' Adebayo Olukoshi, African Institute for Economic Development and Planning 'World hegemonies are shifting from the Atlantic to the Pacific and the Indian Ocean. The rise of China and India, the relative decline of the US and the waning centrality of Europe will all have far-reaching impact on Africa. The new geo-political stratgey of the US expressed openly in the militarisation of the African continent would find the Eastern seaboard of Africa the weakest link in the Indian Ocean rim. Under the circumstances, a deeper understanding of the global situation and its impact on Africa is cricially important. The contributors to this book attempt to provide us with such an understanding. It is most welcome.' Issa G. Shivji, University of Dar es Salaam 'A timely work of scholarship that doesn't shy away from hard questions regarding the implications of Asia's rise for African development. It will be welcomed by academics, policy makers and students alike for its clear-eyed analysis, data and comparative insights.' Chris Alden 'A very valuable addition to a whole series of new and on-going debates about the character of China and India’s engagement with Africa.' Kenneth King, University of Edinburgh

Table of Contents

Section Title Page Action Price
Africa Now i
About the editors ii
List of tables vii
List of figures vii
Acronyms and abbreviations viii
Foreword xi
Introduction – Africa in the twenty-first century: strategic and development challenges 1
China and India as preferred partners 2
Exit the Washington Consensus! Enter the Southern Consensus! 5
Scope of the book 6
PART ONE | The big picture: China and India as emerging giants 11
1 | China, India and (South) Africa: what international relations in the second decade of the twenty-first century? 13
China–India and Africa: the historical context 13
Africa and China: convergent or divergent national and regional interests? 15
Africa and BRIC: from emerging economies to private capital and civil society 16
Africa and BRIC: compatible or competitive? 17
South Africa within CIBS (China, India, Brazil, South Africa Dialogue) and IBSA: dominator or facilitator of Africa’s interest? 19
Africa, China and IR from ‘Africa’: lessons from the continent? 20
2 | South–South strategic bases for Africa to engage China 21
Current African governmental engagements with China 22
Alternative strategic perspectives for Africa 23
Box 2.1 Investment conditions of Third World governments (late 1960s–70s) 24
3 | India’s African relations: in the shadow of China? 34
Post-cold war relations: a rediscovery 35
Broadening economic horizons: the quest for energy security 35
table 3.1 ONGC investments in Africa 37
table 3.2 Other oil companies in Africa 38
Trade and investment 39
table 3.3 India’s trade with Africa 39
Political and economic drivers 40
Box 3.1 The India–Africa Summit of April 2008: commitments made by India 42
table 3.4 Presence of Tata in Africa 1991–2006 43
figure 3.1 India’s active lines of credit as of March 2006 44
Development assistance 44
In China’s shadow? 45
Conclusions 48
PART TWO | China and India’s relations with Africa: a historical perspective 51
4 | China’s development cooperation with Africa: historical and cultural perspectives 53
Cultural cooperation: to make friends first 54
The evolution of Sino-African development cooperation, 1955–79 54
China–Africa relations in the post-1970s reform period 56
The post-1990 reforms 57
Reinventing cultural diplomacy in the service of globalization 58
Key programmes for promoting Chinese cultural diplomacy 59
Conclusion 61
5 | Engaging Africa: India’s interests in the African continent, past and present 63
India–Africa trade, past and present 64
From idealism to pragmatism: India–Africa relations since the 1990s 67
India–Africa and new regionalisms 71
India and China in Africa: competition or coexistence? 72
Conclusions 75
6 | Indian development cooperation with Africa 77
India’s African diplomacy in the post-cold-war period 77
Indian development assistance outflow: volume and instruments involved 78
Volume and composition of aid 79
table 6.1 Indian development assistance outflow 80
Development cooperation instruments employed 79
figure 6.1 Indian development cooperation instruments 81
India’s Aid and Technical Assistance Programme 81
table 6.2 India’s aid and technical assistance outflows 82
India’s lines of credit (LOC) programme 83
figure 6.2 Indian lines of credit outlay 84
Institutional arrangement for approving LOCs 84
figure 6.3 Institutions and activity flow chart for approval of an LOC 85
figure 6.4 Institutions and activity flow chart after signing of an LOC 86
table 6.3 Ongoing Indian development cooperation activities with African regional/multilateral bodies 87
Development cooperation with African regional/multilateral bodies 88
Are Indian lines of credit concessional enough to qualify as ODA? 89
table 6.4 Terms and conditions of Indian lines of credit 89
table 6.5 Indian aid, trade and investment flows in Africa: geographical distribution 90
But can Indian LOCs be technically considered as ODA? 89
Indian development cooperation: aid, trade and investment linkages 90
table 6.5 Indian aid, trade and investment flows in Africa: geographicaldistribution 90
If it is not ODA then is it Aid for Trade? 91
table 6.6 Financing for trade 91
What’s the issue of tied aid vis-à-vis export credit? 92
The role of Indian development cooperation in ‘oil for infrastructure’ deals 92
Conclusion 93
PART THREE | China and India’s growth surge in Africa 95
7 | China and India’s growth surge: the implications for African manufactured exports 97
Modelling the China–Africa relation in manufacturing exports 98
Are African exporters being displaced by China and India? 98
table 7.1 G2LSLS IV regression result: dependent variable log of third market imports 100
Is Africa stepping into the export space left by China and India? The ‘flying-geese’ theorem 101
table 7.2 Spearman’s rank correlation coefficient between the RCAIs of African exporters and the Asian drivers 103
table 8.1 Sectoral distribution of outward Chinese FDI stock 110
table 8.2 China’s OFDI outflows – regional distribution (stock) 111
Conclusion 104
8 | Chinese investmentin African network industries: case studies from the Democratic Republic of Congo and Kenya 107
Outward FDI: motivations and entry modes 107
figure 8.1 Positioning for emerging market companies 109
figure 15.1 China–Angola trade volume 194
Patterns of Chinese investment in Africa 110
table 8.1 Sectoral distribution of outward Chinese FDI stock, 2003–06 110
table 8.2 China’s OFDI outflows – regional distribution (stock), 2003–06 111
The impact of Chinese investment: case studies from Kenya and the DRC 112
Concluding observations 118
9 | The role of India’s private sector in the health and agricultural sectors of Africa 120
Indian investments in Africa 121
Indian private investments in Africa and the role of the EXIM Bank 122
Indian FDI and trade in the African agricultural and agribusiness sector 123
Indian private sector FDI in the African healthcare sector 127
Conclusion 130
10 | Navigating Chinese textile networks: women traders in Accra and Lomé 132
The politics of trade, women traders and textiles in Togo and Ghana 133
Navigating Chinese penetration of local markets: a tale of two traders 135
Conclusions 140
PART FOUR | The conflict–development nexus: a precarious balance! 143
11 | China and Africa: towards a new security relationship 145
Background to China’s Africa engagement 145
Expressions of soft power? From ‘resource grab’ to a mutually beneficial relationship? 146
China and the African Union 149
table 11.1 Ranking of countries by size of troop contribution to UN peacekeeping missions 151
Defining a new partnership? The intersection between security and non-political interference 151
What prospects for a new and dynamic partnership? 152
Conclusion 154
12 | The Darfur issue: a new test for China’s Africa policy 155
Darfur: a complicated issue 155
Darfur and the debate on ‘genocide’ 157
Darfur and its ‘links’ with China 158
China–Sudan economic relations 159
Oil revenues, positive economic growth and the birth of the CPA 159
‘Non-interference’ and the ‘responsibility to protect’ 160
China, Sudan and the United Nations 161
The ‘engagement approach’: China’s constructive role 162
The ICC’s verdict and the future of Darfur 164
Conclusions 165
13 | China and Zambia: between development and politics 167
The scope and content of Sino-Zambian bilateral ties 168
table 13.1 Chinese engagement in Zambia, 1967–2006 169
table 15.1 Number of visas issued to Chinese nationals 194
Non-Ferrous Company Africa Mining plc: a case study 173
Conclusions 177
PART FIVE | The scramble for African oil and resources 179
14 | African oil in the energy security calculations of China and India 181
China in global energy security 182
China’s strategic energy security calculations in Africa 182
India’s strategic energy security calculations in Africa 187
Conclusion 190
15 | China and India in Angola 193
figure 15.1 China–Angola trade volume (1995–2006) 194
table 15.1 Number of visas issued to Chinese nationals (2004–07) 194
Political and diplomatic relations 195
Financial and economic cooperation 195
Bilateral trade 199
Foreign direct investment 200
Extractive industries 200
table 15.2 China’s exploration and production assets in Angola 201
A special relationship? 202
Impact on poverty reduction 203
Putting it into context 203
India and Angola 204
table 15.3 India–Angola trade 205
Conclusions 206
16 | The price of ‘openness’: towards Chinese economic control in Zambia 208
Western donors and the shrinking capacity for autonomous investment policies 208
External actors, FDI and the Zambian economy 209
The scope of Chinese investments in Zambia 211
table 16.1 Sectoral distribution of Chinese companies in Zambia 212
Catalysing investments in Africa: Chinese state support for FDI 213
Conclusion 215
PART SIX | Conclusion 219
17 | Countering ‘new imperialisms’: what role for the New Partnership for Africa’s Development? 221
The tortured history of Africa’s regional integration experience 222
Revival of regionalism in Africa in the post-1990 period 224
NEPAD: a new beginning or another ‘false start’? 224
The limits to NEPAD: an evaluation and the way forward 226
Countering Chinese and Indian ‘imperialism’: what is to be done? 227
Action at the national level: engaging China and India 228
Regional platforms for engaging China and India 231
Conclusion 236
Notes 238
Bibliography 243
About the contributors 266
Index 268