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31 May 2014

In Africa, America promotes security, China does business.

Secretary of State John Kerry and Chinese Premier Li Keqiang both made high-profile visits to Africa within a week of each other this month. Kerry sought to resolve the continuing violence in South Sudan and the Central African Republic, Li came bearing aid and investment deals.
The United States could learn something from Beijing’s economic playbook.

The two leaders’ agendas could not offer a more vivid picture of the different priorities that each power pursues in Africa. Washington plays regional peacemaker, while Beijing focuses intently on its long-term economic interests.

China’s two-way trade with Africa, for example, has grown by 30 percent a year over the last decade. It is now Africa’s largest trading partner, importing largely natural resources.  More than 85 percent of China’s imports from Africa consist of petroleum, copper, iron, and other raw materials needed to build China’s growing domestic infrastructure and fuel its continued economic growth.

Meanwhile, US engagement in Africa is dominated by security issues — particularly counterterrorism, counter-piracy and efforts to resolve internal conflicts. During Kerry’s trip to Ethiopia, Angola and the Democratic Republic of Congo, he embarked on an ambitious security-related agenda aimed at promoting democratic elections; combating Al Qaeda in east Africa, and ending violence in South Sudan, eastern Congo and the Central African Republic.

Li visited two of the same countries (Ethiopia and Angola) the next week, as well as Kenya and Nigeria, to pledge $12bn in development loans to African nations and sign 60 agreements to invest in local energy and infrastructure projects.

During Li’s visit to Kenya, for example, China offered a $3.8bn loan to build a railway link between Kenya’s Indian Ocean port of Mombasa and Nairobi. The first stage of the line would link neighbouring Uganda, Rwanda, Burundi and South Sudan, increasing intra-regional transportation networks and trade that are crucial for Africa’s economic growth.

This $12bn in credit adds to the $20bn in loans that then-Chinese President Hu Jintao promised to African nations in 2012. Washington does little to promote US trade and investment in Africa — particularly when compared to Beijing. The US Overseas Private Investment Corporation, which encourages investment in emerging markets through financing, loan guarantees and political risk insurance, has dedicated just $6.3bn to support US investment in Africa since 1974. Meanwhile, the US Trade and Development Agency has provided only $90m since 1981 — roughly $3m per year — to facilitate US business in Africa.

Differences in the China and US trade figures in Africa also underscore the countries’ divergent priorities. Sino-African trade volumes, negligible in 2000, hit $198.5bn in 2012. By comparison, US-Africa trade in 2012 was half that, reaching roughly $100bn. Trade between China and Africa, meanwhile, is estimated to hit $280bn by 2015, according to Standard Chartered research.

Chinese imports from Africa overwhelmingly consist of natural resources, sparking strong criticism that China is seeking to “lock up” Africa’s resources. The United States, however, has recently upped its economic game in Africa. President Barack Obama announced the framework for a signature initiative, Power Africa, while visiting Senegal, Tanzania and South Africa last summer. This $7bn US project aims to improve electric generation in African nations.

Africans require both security and economic growth. Global powers like China and the United States do not need to choose between the two when focusing their foreign policy efforts. Even as Beijing pursues its economic agenda in Africa, for example, China has also begun contributing to regional security - providing troops to United Nations peacekeeping missions.

Similarly, as Washington seeks to defuse conflict and reduce security threats across the continent, it should do far more to promote trade and investment in ways that benefit both US business and African economies. By supporting Africa’s economic and commercial development, greater US business engagement can also strengthen security and stability throughout the region.


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