China offers real opportunity to Africa

PUBLISHED : Thursday, 29 May, 2008, 12:00am
UPDATED : Thursday, 29 May, 2008, 12:00am

Poor Congo! It can never get a break from meddling westerners. But what can it expect, since it is doing a multibillion-dollar deal with the Chinese. These days, anything involving China in Africa is automatically suspect in the west. Worse, this deal, estimated to be worth US$9.25 billion, involves valuable natural resources and will entrench China, for years, in the affairs of a key African country as big as Western Europe. And, as with many similar massive investment schemes across the continent, it is pitting Chinese (government-related) investors against western institutional lending and aid bureaucrats and mining companies.

This month, Pierre Lumbi, the infrastructure minister of the Democratic Republic of Congo, outlined to parliament what the country stands to gain from the mega deal. The mainland will set up joint ventures with Congo to exploit up to 10.62 million tonnes of copper and 620,000 tonnes of cobalt in coming years. In exchange, it will build for Congo 3,300km of roads and 3,000km of railways; hundreds of clinics, hospitals and schools, and two hydroelectric dams.

Sure, Chinese are not doing this out of the goodness of their hearts. Congo's Katanga region has some of the world's best deposits of copper and cobalt. The country is also a rich source of diamonds, gold, iron and uranium. But let's put this in context. After decades of brutal dictatorship and political turmoil encouraged in no small part during the cold war by the United States and Belgium, this huge country has fewer than 5,000km of tarred roads.

The ambitious project, if it succeeds, will link its mineral-rich south to its ports in the west and join the north to the south. It will integrate, for the first time, its economy and possibly create infrastructure for a country that has very little of it. Sure, there is no guarantee that the Chinese will deliver. But even if they deliver just half of what they promise, it will benefit the country enormously, which hitherto has been more newsworthy in the west for civil wars and exotic diseases like Ebola.

The Chinese are taking on enormous risks with the deal. The tonnes of resources sound good on paper, but some of Congo's mines and concessions are underdeveloped and dangerous to operate; others remain to be explored and developed. The technical and operational challenges are great. No western government or corporation would commit so much capital resources in a single enterprise because, as one analyst said of western investments in the continent in general, they mistake their own ignorance and prejudice for risk assessment.

So, here is a potentially good deal for Congo, and the International Monetary Fund is unhappy. Likewise some western mining companies, which signed dozens of contracts with the country during the last civil war. The chickens are coming home to roost for the companies in the latest sorry attempt at exploitation by the west.

The IMF had been negotiating an 80 per cent write-off of Congo's external debt when the China deal surfaced. Now it says it has to rethink the write-off, which would have also restarted a lending programme. It fears Congo may take on loans from China, which would be incompatible with its own loan reduction programme for poor countries.

Let's try to understand its logic. Poor nations only deserve so much help and no more. God knows they are so corrupt and undisciplined! This way of thinking is typical of the IMF and World Bank. But if poor countries were not corrupt and beset with problems, they would not be poor in the first place! If they could meet all the western governance standards to merit loans, they would have such model economies that they would be lending to the west instead.

China is offering real economic growth and opportunity to sub-Saharan Africa, something the west has never done. Poor countries need all the help they can get, from whatever sources they choose.

Alex Lo is a senior writer at the Post