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Challenges to the dragon: the cost of doing business in Africa

01/07/2011

Chinahas penetrated almost every corner of Africa; where others see trouble,Beijing, it seems, sees opportunity. A case in point is their involvement in Somalia–a country that annually tops the Failed States Index and is considered to be one of the most dangerous countries in the world.

Somalia has been mired in conflict for over two decades and currently has no effective government, yet the telecommunications sector in the country is thriving, largely due to Chinese powered equipment. According to a Wikileaks cables that was released last year, Chinese companies are “one of the few that are willing to send technicians intoSomaliato set up and maintain the equipment” in the country.

Chinese companies may have marched into volatile regions on the assumption their country’s policy of non-interference in the domestic affairs of other countries, was enough to protect them, but that has not been the case.

In recent years, Chinese nationals have been subject to the same attacks and threats as Western personnel in African conflict zones. 

In 2007 the Ogaden National Liberation Front attacked a Chinese petroleum and gas exploration base in southeastern Ethiopia, killing nine Chinese workers. 

On several occasions the Justice and Equality Movement (JEM) in Sudan attacked Chinese petroleum facilities and personnel in Southern Kordofan; the leader of JEM accused China of “trading oil with our blood.” 

The Movement for the Emancipation of the Nile Delta in Nigeria has  kidnapped more than a dozen Chinese nationals on the grounds that the oil-producing regions do not receive a fair share of the revenues.

According to former US ambassador toEthiopia, David Shinn, “The Chinese may have thought that they would be treated differently because they are Chinese but rebel groups don’t make any distinction.  If China is seen to be supporting the government when rebel forces are trying to topple that government, Chinese nationals will be treated like any other national group. These rebel organizations probably perceivedChina’s presence as support for the governments they were opposing.”

Acts of violence against the Chinese are not just limited to conflict zones. Even in relatively stable countries in Africa , locals are becoming discontent with Chinese nationals setting up small business and undercutting them.

“They should stick to direct investment, building roads, bridges and other big things we cannot do for ourselves. Why come all the way from China to sell plates?” asks Stella Sinkala, a vendor selling household items in Karikaoo, Dar Salaam’s biggest market where a number of new Chinese owned shops had popped up prompting the government to ban small Chinese small business from trading in the market earlier this year.

Discontent with the Chinese is compounded by reports of mistreatment of workers by Chinese employers. Last year Mozambique revoked the visas of three Chinese men accused of beating construction workers with a hammer and scalding them with boiling oil. At the same time 12 Chinese mine managers in Zambia were accused of shooting local workers.

Opposition leaders in Zambia now campaign on the anti-Chinese agenda.  The 2006 presidential candidate Michael Sata often referred to the Chinese as profiteers, not investors and threatened to “drive them out” if he won.

In many African nations, the anti-Chinese sentiment is fuelled by perception that Chinese companies often bring in workers  from China and pay their wages into accounts in China, thereby not creating employment or contributing to the economy of the country they operate in.

Deborah Brautigam, a professor of International Development at the American University Washington DC, says this perception is not entirely accurate.  “InAngolaandAlgeria, where Chinese companies are a relatively new presence, oil-fuelled construction booms have created shortages of skilled workers. Chinese companies here typically bring in at least half of their labour from home. But in Tanzania,Egypt and Zambia, where Chinese companies have been working for several decades, they tend to hire 80-90 percent of their workforce locally.”

However, Brautigam does agree that Chinese companies are “used to lax standards at home, frequently give few benefits, pay low wages, and have inadequate safety standards.”

On the whole, the majority of Africans still welcomeChina’s interest in the continent, but to avoid being portrayed as exploitative, Chinese companies need to clean up their business practices, pay fair wages in the local context and introduce health and safety standards across their business operations.

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