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| Flying Geese Model |
The recent itinerary by the Chinese premier to some of the key African economies namely
Angola, Nigeria, Ethiopia and Kenya with a combined population of around 325 million people might have rattled
the Bretton Woods affiliates against
the increasing presence of Brics investments and lending to the African continent led by China in key
infrastructural projects. There has been an outcry based on comparisons between Sino Aid and Western Aid towards Africa which in my view is based on
one hand, the perceived lack of human rights ,substandard products/services,negation
of Social and Environmental Impact Assessment and corruption as
terms and conditions for advancing loans to key African countries by the Chinese in the eyes of the Bretton Woods wing while on the other hand, there has been a
growing resentment by the African states
on the tough conditions attached to funding of key projects with terms ranging
from Privatization, addressing public expenditure through employment freezing and or
retrenchment inter alia. However it must
be noted that the west's presence on the continent has been that of exploitation
during the colonial days and neo colonialism through major international aid
agencies that mainly practice palliative
economics. With the ever rising levels of educated middle income earners across
the African continent there is bound to
be great awareness on the type of diplomatic and trade engagements that will yield high returns and drive these
budding economies into self-sustaining economies. Yes China does realize that
it needs oil from Angola and Nigeria to
energize its economy and for the Ethiopians to leverage on cost of production while Kenya is seen as source of food and (entry to the landlocked states) for its
over one billion people inter alia while Africa needs capital expenditure to spur trade,the trade between these countries is
largely skewed in favour of china and more ironically to the west whom they
trade with more compared to china , the trade between Africa and the west is based on comparative advantage economics with no technology transfer.
China
itself received over USD200 million in 1978 from Japan in terms of
development aid though these was halted twice , first in 1989 after the
Tiananmen Square incident, and secondly in response to China's nuclear testing
in 1995 and eventually the agreement by
Japanese authorities to stop new
soft-yen loans to China from 2008,based on projections that china would not require any soft loan by then and that it will
have come of age economically, a leaf
that African countries can borrow from (Angola has been funding Portugal's banks though through individual capitalism), China has and still is a recipient of
donor funding despite joining the big brothers table. The big question is can
Africa assume the role of china when it was still getting aid from Japan. Back
to Geopolitics as China was signing loan agreement with Kenya totalling over
USD 5 billion on key infrastructural projects so was the World Bank advancing
over USD300 million to Tanzania to improve and reconstruct its railway line a
case of balancing business foes and
friends in the wake of the rising new
business frontiers and realignments hence the emergence of coalition of the willing in tandem with the Ethiopian, South Sudan,Uganda, Rwanda and Nigeria approach taken by his
excellency Uhuru Kenyatta on the African front while on the International front
the West have been busy investing in high end software technology thence the
presence of IBM research centre in Kenya
to the hardware infrastructural development in terms of roads, rail , airports
to access the markets for raw materials inter alia by the Chinese .
As
a cautionary , the Chinese did reiterate that they are not only after minerals
but on wider development mission;could this trigger the reduction of non-governmental organizations ? Moreover African
authorities need to understand that Chinese are experts in Escrow Agreements
meaning that they would want clear understanding on repayment terms as the
loans are managed by a third party but not the recipient and that they have a lot say
on whom the projects will be contracted to
this has its own disadvantages and merits as the funds are kind of tied
to the lender and the recipient loses on procurement processes, quality
assurance and labour issues.
What African states need to realize now is that
opening up infrastructure opens trade to goods and services however a caution
has to excised on creating tax haven policies that favour foreign firms when
they land into a flying geese economy.
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