Asia In Africa

     

Asia and the Orient in Africa Many people are now showing greater interest and some concern about Asia’s and the Orient’s increasing commercial role in all parts of Africa; from mineral resource investment through to purchases of very large tracts of agricultural land. Some of the Asia’s and the Orient’s major economic powers are now investing heavily in Africa's assets, amongst these are China, South Korea and India and it is well noted that they take little or no interest in the local political issues, believing that they are there for commercial purposes and have no rights to demand social or political reforms, as part of any investment package. It should also be noted that some of the Gulf States are likewise showing greater interest in African resources, especially in agricultural land. This has caused considerable consternation in western democratic nations that believe that governance and social development must go along with any western investment. Thus, the west uses blackmail tactics in African countries where civil rights issues, general corruption and political wheeler-dealing are below the standards that the west find acceptable. Many of the reasons why Asian and Oriental nations are investing heavily in Africa are very basic Resources. Asia and China need base minerals for their manufacturing industries in order to compete with the western manufacturing countries and also, all need to be able to better ensure food security against competing western nations. These reasons are supported by the expanding economies of the participating countries whereby as their populations become richer or more middle class, there is an expectation of improved employment opportunity, improved incomes and with these, improved diets. These great pressures on Asian and Oriental economies have pushed these governments to invest in larger resource bases than they presently need and yet, secure the future ability to gather the resources. Thus, by creating surplus supplies of raw materials at reasonable prices, these economies hope to dominate the manufacturing base for many years to come. Therefore the Asian and Oriental nations have little choice other than to heavily invest now, regardless of the wishes of the western nations and thus, their investment activities are very high profile especially given the facts that these nations choose to ignore civil rights and other contentious issues that the west sees as problematical. To emphasise the point, China has cleverly written off the debts of some African nations and has added ten billion dollars worth of soft loans for infrastructure projects on the continent and have clearly stated that their interest is in base resources. Put this together with China’s ‘see no evil, hear no evil and speak no evil’ policy, they have offered a loss leader that is irresistible to developing African nations. Often, the west is perceived as being America only and although this is an incorrect perception, developing nations see some value in not only befriending Asian and Oriental countries but also that these countries openly refuse to become involved with governance or civil rights issues. Recipient nations have had to face two problems, albeit small in their eyes. One, wishing to stay friendly with the western states and to maintain the large amounts of money they put in towards development projects. Two, not wishing to endure the moral pressure to change their ways regarding civil rights and governance issues. In this, Oriental nations fit the bill very well and the African nations will openly invite the Orient into their back yard. By offering a further ten billion dollars in soft loans to African nations, China will be seen to benefit the health, education, social services and infrastructure development in direct competition with western nations and China’s policy in not commenting on civil and other rights issues will find many takers for its offer. With some of the Chinese soft loans being available for infrastructure improvement for roads etc, these of course

will be of benefit to the Chinese also, in that ores and other resources have to be moved. One incidental benefit may be to the remote farmers in being able to market their crops cheaper and more efficiently. Africa, with its vast untapped mineral, oil, agricultural land, forest and marine resources in is the primary target of many industrial nations, where governments’ are in great need of wealth creation and where poverty, climate change and food resources are problems. However, as many African governments have found western based wealth creation has given little benefit to the host countries, as profit migration is a major problem, or, how to keep a significant proportion of the profit created, in the host country. This is not necessarily about cash as much as the low value raw materials that are exported for processing outside of the supplying country and thus, the profit from these is created outside of resource country. Western governments insist on certain issues being addressed before funding is agreed and these include governance, civil rights, land reforms; improved health, education and labour laws and indigenous peoples issues over land and water rights. At the root of these demands from western funding agencies is poverty, as this is the most pressing problem of many areas of the world. Poverty alleviation is affected by education and employment opportunity and with many of the many manufacturing and processing industries owned and managed by foreign conglomerates; there will be little improvement in the educational and employment status of the general populace without the demands of western governments. One issue that must be kept in the public eye is the probability that whole communities will be relocated as foreign corporations take over large tracts of land for commercial mining or agriculture and the indigenous land and water rights involved should be protected. There are some drawbacks and restrictions for those investing in Africa and of these some are external, but most can affect production and distribution. Political instability. Long haulage distances. Power shortages. o Blackouts. o General shortages. o The cost of generating self-contained power supply. o International fuel prices Skilled labour shortages. Extreme seasonal changes. Civil and/or military unrest. External pressures. o General market volatility for base materials. o General market volatility in consumer markets. As time goes by, other factors will create problems for investors in Africa and many of these, related to the expected changes in climate. Climate change will create food production problems and water shortages and large numbers of populations will migrate and create a greater demand on local and international governments to provide support. In summary, it could be said that China is giving the African nations what they want and without the strings attached by western governments who are now calling ‘foul’. And although there are some concerns about a number of the African nations with poor civil rights and governance issues and although there some states in danger of failing, is it not the democratic right of sovereign states to determine who they do business with; without interference from western governments, keeping in mind that most African states have a history or tribalism? Without doubt, Asian and Oriental nations will benefit hugely; allowing them to build their stocks of basic resources, plus maintaining and increasing their trading positions with many emerging nation states.

twofer

– November 2009

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