Traveling in Africa today reveals Chinese activities on the continent. All over the region, the Chinese are:
- building roads, power stations, & dams
- creating factories (furniture, for instance)
- mining for minerals and oil
The Chinese are dealing with legitimate governments independently, and they are keeping all of their promises and invariably extend help before taking their returns. China is one of the few nations that is actually looking at Africa as a raw material source and a market. They are investing in Africa, not merely supplying aid.
This is also visible in the figures below:
This is a different approach from the developed countries of the West. I am not saying that all is great with Chinese engagement in Africa. There is huge imbalance in power relations. The trade deficit is very significant.
However, China’s deal with Africa is clear. The Chinese have an interest in the crude materials in Africa, and they are building up economic relationships with various African countries. This counts much more than the aid given by Western counties.
With this economic approach, China gives also the opportunity to African countries to develop by themselves. In my blog post (found at
http://www.managementism.com/2012/when-will-it-be-time-to-change-our-economic-thinking-from-triadic-to-tetradic/), I describe the obstacles facing Africa before it can be treated as a preferred investment destination. The Chinese started doing business in Africa even while it is in an uncertain situation. The economic development of African nations will guide them toward more wealth and stability, so the continent as a whole can develop.
Why are other countries hesitating to do business with African countries?
Are the Chinese reckless in working with African countries?
Will China have an advantage as the first country to be doing business with African countries?
These questions and more must be answered. Nevertheless, I would not propose investing in Africa without looking to the foundation of the government. The events in Algeria and Egypt during the past two years demonstrate that not all African governments can survive.
However, today, some countries have sufficient stability to attract foreign investment, especially from European countries.