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Howard French - Great Decisions

Howard French

Howard French is an associate professor at the Columbia University Graduate School of Journalismand author of Disappearing Shanghai. Previously, he was a senior foreign correspondent with The New York Times.

Transcript

Is recent economic growth in Africa cause for celebration?

Well, if you’re African and your incomes are rising, that’s cause for celebration. Fortunately this is happening for very large numbers of people, for the first time since early in the independence period when there was another big extended economic boom. So, yes, I think economic growth on a large scale is a source for celebration. The big drivers of this are urbanization and what’s called a demographic sweet spot. Africa’s population is growing very fast; but as it grows very fast, large numbers of people are entering the age of prime labor productivity. While this is happening, they’re moving to cities in rapid numbers. So African cities are exploding, African labor markets are growing very fast, and African productivity is rising. On the backdrop of all of this, Africa has acquired, in the last decade or so, a number of very eager new partners globally who wish to trade with Africa, to invest in Africa, and to acquire African resources. So all of these things come together to make this a moment of real economic opportunity for the continent.

What sectors are we seeing the strongest growth in?

It would surprise a lot of people to know that manufacturing is a very big growth sector. Services of all sorts are a very big growth sector. Internal trade is huge; which economists think is a very positive sign for Africa, because the continent’s economy has been historically very extroverted – in other words, everything was produced for exports. Little trade takes place between African countries – or even within African countries. So there’s a lot of demand internally, and for the first time since the independence era, a lot of trade is taking place across borders. Telecommunications is a very, very big driver of all of this – maybe, it’s hard to rank them – but perhaps the biggest driver.

Are democratic institutions rising in Africa?

You know the prevailing image of Africa is a continent driven by conflict. There was a piece that appeared in a prominent journal a few months ago that said, essentially, there’s conflict all over Africa. Although historically there’s been conflict in every corner of Africa, Africa is less driven by conflict today than at almost any time since independence. There are conflicts in Africa, but the most salient fact of Africa’s political state right now is that democratic institutions, in varying degrees of health, are springing up or have sprung up in a very large number of countries. So it’s increasingly unusual to see single party elections, concentrations of power, or no alternatives offered to the people.

Is agricultural growth a problem?

With the population due to double in the continent between now and 2015 – roughly a billion people now, two billion due according to the most commonly cited projections – the demand for food is going to obviously rise fast. This is a big question mark that economists pose about the continent’s future: Will agricultural productivity, which is very low in Africa, be able to keep up with the demand? Some countries have sort of got it and understand it’s not just a food security issue, but it’s a big economic opportunity for them to invest heavily in food projection. Lots of countries have not gotten it. A country like Nigeria, where you have very great potential for large-scale food production, is still very addicted to the monocrop; or the monoculture of oil. So a lot of food production in Nigeria is scant. There are lots of countries like that in Africa, so this transformation really has a long way to go.

Are there indicators of rising interest in Africa by China and Japan?

There are two sorts of big indicators. One indicator is that, starting early in the 2000s, China began to publish and sort of emphasize in its news coverage ever-expanding and rapidly expanding trade data with Africa. So, “We’ve past the 100 billion dollar mark; we’ve passed the 500 billion dollar mark,” and making up these numbers. But that’s the nature of the headlines one was seeing in that era, which reflected very rapid and large growth in trade between China and the African continent. The other big reflector of this, though, and the more interesting one for me was that one began to see in the early 2000s evidence of Chinese people pulling up their stakes in whatever their hometown was in China and simply moving to Africa to seek opportunity there. This was reflective of this sort of big, broad relationship with China. But it also said something very important about Africa. The Chinese people very, very often – really ordinary Chinese people – had come to understand that Africa was a place of great unmet potential where enormous opportunity existed; whereas we in the United States and the rest of the world saw Africa as a place of problems and a place of crises to be attended to or avoided. Even lower-middle class or working-class people in China had begun, as early as the last decade, to say, “Wow, Africa’s a real going places! If I simply can gather some savings and move there, there are all of these things that can be done there. And there’s opportunity! I can get rich! I can build a business! I can do lots of things!” That was for me the, really the most striking indicator of change in the continent.

Is there a supporting role by the Chinese government?

Well, there are two populations of Chinese, broadly speaking, who migrate to Africa. One consists of people who work on big projects – typically construction projects. So you go as part of a contingent of maybe 2,000 workers who have a two-year contract to build a highway, a port, or some big infrastructure project. And during the time of your stay there, you either proceed on your own or you come into contact with other Chinese people who are already on the ground there, and via their experiences discover this is actually lots of opportunity here. If I could only manage to set myself up in this or that business, I could really make a lot of money. I could have space to farm. I could build a nice house for myself, etc. So one population consists of these people who arrive in Africa as workers in long projects like that, which are typically state projects, and they stay on. And another group consists of people who are simply on their own. They get the work via one source or another; through Citron, Oonan, or a central part of China. And they almost blindly go to Africa based on kind of little snippets of information and a lot of faith; faith in themselves and in their ability to do what the Chinese call “chu-coo,” which means if I struggle hard enough, I can make it. And faith in the stories they’ve heard – sometimes by friends or relatives or acquaintances that have preceded them to Africa. Or things they have heard in conversation or online about somebody who started an ice cream business in Malawi, somebody who has a farm in Mozambique producing artificial sweeteners, or one little business idea after another. And so the process of fertilization takes place. And so people say, “If they can do that, I can do it too!” I’ve met hundreds of people like that, and the numbers, the sort of estimates that are out there – and these are really at best ballpark estimates – but the estimates that are out there say that maybe a million Chinese people have set up shop in Africa in the last ten years on this basis.

What’s the impact of Western criticism?

Well, you know I don’t see that. The biggest typical concerns are not about impact on local communities per se; it’s about the impact on local businesses, I would say. I think the first thing that needs to be said – if the one million migrant figure is even remotely accurate, and I think that’s an underestimate – if that figure is accurate, what’s most remarkable to me is that there have been so few incidents involving Chinese people in Africa. In other words, if you try to remember the number of stories you’ve read of actual riots, actual demonstrations, or actual conflict of any significant scale between Chinese people and Africans on the ground in Africa; you very quickly must conclude that there haven’t been that many stories like this. In fact, like a community issue, there haven’t been a lot of problems – certainly not very big problems. Industrially speaking, lots of issues have arisen. For example – and you may be aware I worked extensively from my book – Chinese people have, as they’ve done extensively in many other countries, taken over the local arts and crafts markets. Traditional artisanry produced by Namibian people is now produced by the Chinese people; they went and set up shop in Namibia and they saw these arts and crafts, and they sent samples back home. These things that were made very lovingly in Namibia are now being made at one tenth the cost industrially in China and re-imported into Namibia, and sold as Namibian arts and crafts. This puts Namibians out of business. It’s also something that creates resentment, you know, these are “our” traditions that you’ve taken over. Kenti cloth, which was a very traditional cloth produced in Ghana, has undergone this sort of copycat thing. Slippers, prayer slippers, which are worn by Senegalese Muslims, have been copied by Chinese, produced in factories in China, and re-imported into Senegal. And that’s devastated the industry for the cottage market for hand-made leather prayer slippers in Senegal. One place after another, industrially, these sorts of things have happened, and have been sort of stirringly disruptive of the local manufacturing sector.

Should China take the exploitation of workers into consideration?

First of all, it’s a real problem. Labor standards in China are themselves bad. They’re loose. They can be poorly articulated. They are generally very poorly enforced. Corruption is a very big problem in China, including industrial corruption and law enforcement corruption in the application of labor standards in China. So if you take people who are coming from a culture where all of those things are true, and you bring them to another part of the world where the governments lack the human capacity to enforce their own laws – where corruption is often itself a problem and where the experiences of industrial history is short – then I think it’s normal to expect that big problems are going to arise. And so Chinese have come as factory owners, as owners and managers of mines, and things like that; and very quickly have been able to ride rickshaws over the local work force.I’ve talked with many of these people, and the attitude of the Chinese sometimes is: yes, it’s true. They’ll say to you confidentially or off-the record: “Well, yes, it’s true that we do various things that aren’t very appealing or attractive, or we might even admit we cut corners when we can. But why aren’t the Africans complaining? We had to go through a stage where we had to suffer all sorts of shoddiness so we could get to this phase that everyone else recognizes as one of high growth and of rising power status. You know, if Africans want to develop, they’re going to have to learn how to develop.” That’s the Chinese self-justification; but to answer your question about the image of country, I don’t buy the justification at all. By the way, I don’t buy the argument that Africans must sacrifice standards across the board in order to develop; that Africans must forego the application of their own laws if they wish to have foreigners invest in their countries. I think there are big sorts of problems with that sort of argument. But the problems for the Chinese are very real. If the image of China is bound up in exploitation, then that flies in the face of the main Chinese propaganda argument about their embrace of Africa; that this is a win-win and we are on the side of our brothers of the South. We are all the same, we’ve had the same sorts of experiences, and there’s this great selfless solidarity between us. It will be hard in the long term to have it both ways. The real dilemma for China is that many of these employers are, in industrial settings, private companies. And so the Chinese state does not have an easy tool at its disposition to say to private employers – just like the American government can’t control private companies overseas, the Chinese government doesn’t have any easy means at its disposal to say to its private companies: “Listen, you need to respect local laws, or not cut corners, or not engage in corruption, etc.”

How do Chinese loans to Africa work?

First of all, there are lots of announcements and the announcements are not always real. The announcements are headline numbers, and they exist in the realm of theory. I don’t wish to say by that that China is not lending a lot to Africa, but the announcements and the numbers are two different things. It’s important not to get too bulled over a big announcement like this because very, very often they are not followed up or fulfilled completely or thoroughly. So the headline numbers and reality are often quite different. The way these things work is that China has a variety of state-funding institutions, most importantly an export-import bank. The export-import bank’s job is to essentially drum up business for these Chinese companies. So the export-import bank will approach Nigeria, for example, and say, “Twenty years ago you built a very nice capital in a place called Abuja, and it’s a very nice city. But as a capital city, it should probably have a subway. That’s kind of the image you want to project as having a modern capital. And so we have a package that we can offer you that will allow you to affordably build a new subway station.” And the Chinese come with a package, and the package starts with financing. So the export-import bank of China draws up a finance plan. They invite a limited number of Chinese companies to participate in a bidding process in China. Then the Chinese approach the Nigerians and say: “We’d be willing to lend you this x billions of dollars if you choose from this list of companies. We can strike a deal and you can pay us back.” Often there’s a mixture of a commercial rate and a subsidized rate, so there’s a non-commercial piece of a loan very often alongside a commercial one. And the advantages for China are manifold. This is not strictly speaking aid in the way aid is understood in the sense of strictly concessional lending. It’s not aid either in the sense of pure benevolence. I’m not attempting to make a moral judgment in what China is doing, but these are not essentially benevolent acts. This is China engaging in business, and the way this proceeds to work; for example Nigeria, to build a subway station in Abuja, chooses one of five Chinese contracting companies. The export-import bank makes guaranteed loans to that company. Most of that money goes to the company, who uses Chinese workers to build a big project using Chinese products. In other words, the steel, the cement, the cables, the optic fibers, the switching systems; all of that stuff will come from China. The workers will come from China, the designs will come from China, the engineering expertise will come from China, and the money will come from China. The problem from the African perspective is all of those things will go back to China. The engineering expertise will go back to China. The money will go back to China in the form of repaid loans. The materials won’t go back to China, but there’s a very real question that often isn’t thought through carefully enough about: What are, in the long run, the Africans are getting out of this engagement? Are they getting a transfer of technology and skills to the degree that they should if they wish to develop? Are they getting a boost to their own employment? Are they getting participation of their own financial markets and institutions? And the answer, generally speaking is, no. The Chinese government bank is lending to companies, and those monies will be paid in salaries and in expertise and in technology as well as interest back to China. So it’s almost a closed loop. Yes, it’s true, and it must be said, that you’ll get a very good subway system and it will be built for you quickly, and that’s a net plus. But what happens after eight or ten or fifteen or twenty years when the subway system starts breaking down or becomes obsolete, and you don’t have a trained workforce and you haven’t mastered the technology? How would you feel about it a generation hence? It may be a very different feeling. So it’s my own personal opinion that a lot of African countries rush into these arrangements not thinking to the real net benefits very carefully.

What gives China the edge? What can the U.S. do to compete?

I would say that there’s no reason to sound fatalistic that China has an edge over other countries. Brazilian companies are competing in Mozambique. Indian companies are competing very successfully with China over the development of natural resources in Mozambique; huge coal resources. Western companies are competing very successfully, again in Mozambique, over hydrocarbons, oil, and gas development. So there’s no inherent reason why Chinese companies or China should be seen as being invincible in Africa. The key difference here; the Chinese have the advantage of having vast and readily available financial resources of which they can marshal, because they have state-run banks to offer packages to African countries. So that’s a clear advantage. Right, so China does have a leg up, if you will, in the fact that it has a lot of money at its disposal and it has state banks, which are run in accordance with the government’s wishes and aligned with the state. So it can offer packages to African countries and can pull these together really quickly and execute these really quickly. But I think the more important advantage that China has is a realization that has taken place among Chinese at various levels of the society – from the very highest levels of the state party to increasingly and impressively the level of just ordinary Chinese people – that Africa is an important place; that Africa is where a lot of the world’s growth is going to take place and it’s worth getting your hands dirty and plunging in, and where you can not only afford to, but you have to, take a long view. The West and the U.S. in particular is really disinclined to think of Africa in those terms. I was really, really struck when we were travelling for my book to find that the Millennium Challenge Corporation, which is one of the big aid vessels that the U.S. uses to engage with Africa and other parts of the developing world, has over recent years, and stopped because of an act in Congress, put together projects for African countries and then had calls for bids for companies to carry out these projects. A new airport terminal in Mali, which I saw, is an example. I’m talking about projects in the range where you would think American companies would be salivating for this business; to go build a new airport, a new road, a new drainage system, or a new port in an African country, and virtually no American companies apply for the projects. They don’t put forward a bid. They’re not interested. They can’t be interested. And so Chinese companies have, until the recent past, filled that void. They say the Americans are lending money to build these infrastructure projects in Africa – we have tons of companies that would love to do that. And so because there have been no Americans that have taken up those offers until recently, Chinese companies were using American aid funding to build infrastructure in Africa. China in Africa: you have to understand, you have to be able to think of it in terms of opportunity, which exists on a large scale in Africa. The Chinese have done that, and we haven’t.