Issues in China-Africa Relations

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benefits from this partnership, African governments must articulate their own ... region towards the path of sustainable development, industrialization and self- sufficiency. .... North Africa recently has achieved the most gains, and SADC and ..... To understand and accurately describe the overall image of China's engagement.
Issues in China-Africa Relations

Edited by: Prof. Oyetola Oniwide

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Copyright © Oyetola Oniwide, 2017

All rights reserved. Apart from fair dealing for the purpose of research or private study, or criticism or review, and only as permitted under the Copyright Art, this publication may only be produced, stored or transmitted, in any form or by any means, with prior written permission of the Copyright Holder.

Published in November, 2017

ISBN: 978-9970-9573-0-9

Published by: College of Humanities and Social Sciences, Kampala International University, Kampala, Uganda.

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Issues in China-Africa Relations Copyright©2017 Kampala International University ISBN: 978-9970-9573-0-9; iii-iv

Editorial This book addresses fundamental issues in China-Africa Relations such as ChinaAfrica Investment, China-Africa Military Relations, Chinese aid to Africa and its advantages over Western aid, China vs. the United States in Africa, Media Cooperation and Educational Exchanges, Chinese Industrial Policy and Environmental Protection. Chapter one examines China‘s contribution to Africa‘s industrialisation, the situation, the challenges and the fears expressed by some African and other stakeholders. It suggests that for African countries to maximize the potential benefits from this partnership, African governments must articulate their own comprehensive China policy, which should include strategies for engagement beyond natural resources towards industrialization. Chapter two establishes that China has experience in non-interference, respect of development path choice and aid without conditionality, which can provide alternative for international community. It therefore recommends that China and Western countries should go hand in hand to explore better modalities and improve education aid to Africa. Chapter three is based on selected syntheses of discourse on Sino-US rivalry in Africa. The chapter provides a basis for reflection and discussion regarding the major actions and reactions taken by the U.S. and China to court Africa with a view to identifying implications of US- Chinese competition on Africa. Chapter four examines the challenges and prospects of peace and security. It analyses the drivers of insecurity that seem to have emerged from auspicious combination of factors that cut across all spheres of human interaction, that is, personal, institutional, lack of unity of purpose, conflict of interest, lack of standards of measurement, lack of technology, lack of resources and external manipulation and exploitation. The chapter further exposes the weaknesses characterizing states in Africa and suggesting ways of dealing with security situations. The role that China can play in enhancing peace and security in Africa is also explored. Chapter five postulates that China‘s foreign policy towards Africa is premised on the platform of South-South cooperation and therefore should not follow the Western trajectory of economic agenda but should focus on genuine technology

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transfer to the African continent in order for Africa to build its industrialization which is the bed rock for Africa‘s development Chapter six argues that despite the numerous challenges facing the region, subSaharan Africa has enormous opportunities and potentials capable of propelling the region towards the path of sustainable development, industrialization and selfsufficiency. In this regard, the region is capable of negotiating FDI inflows in terms and conditions that will be more beneficial rather than exploitative. Chapter seven is based on primary research involving interviews with investors, zone developers and operators, regulatory authorities, government officials, and other key stakeholders which were conducted in both Beijing and Ethiopia. The study integrates investigations into the agenda-setting behaviours of both Ethiopian and Chinese actors involved in the Eastern Industrial Zone initiatives, identifying who decides what and with what means, and for whom, for what purpose and with what consequences. Analysis of the zones‘ potential to have an effect on development in Ethiopia, the current obstacles faced and the potential benefits for all the relevant stakeholders are outlined. Chapter eight assesses the impact of infrastructure development projects that were implemented out of the China-Zimbabwe cooperation framework in Zimbabwe from 1980, when Zimbabwe attained political independence, to the year 2016. The chapter finally suggests how to enhance and broaden the impact of infrastructure development projects implemented under the China-Zimbabwe cooperation framework. Chapter eight examines how transport infrastructure developments are unfolding and the role that infrastructure could play in the integration of Eastern Africa economies. It also examines how the anticipated gains from the roads, railway and ports development are likely to spur unprecedented economic activities within the Indian Ocean Rim (IOR). On the whole, contributors of the chapters in this book have been able to make some fairly robust recommendations for African countries and their civil societies, for China, and for the West. Some of the chapters are empirical in nature while others have theoretical base. Each of them focuses on one specific issue or the other on China‘s deepening engagement with Africa; trying to proffer solutions to them. Readers are therefore advised to make proper use of the ideas presented in this book. Oyetola Oniwide November, 2017.

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Issues in China-Africa Relations Copyright©2017 Kampala International University ISBN: 978-9970-9573-0-9; v

Contents iii – iv

Editorial

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Contents

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Chapter One: China and Africa‘s Industrialisation: The Situation, The Challenges and The Fears from an African Perspective, Ukertor Gabriel Moti

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Chapter Two: Chinese Education Aid to Africa and Its Advantages over Western Aid, Yuting Zhang

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Chapter Three: China Versus The United States in Africa, Ekomolot A. Ongodia

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Chapter Four: Challenges and Prospects for Peace and Security in Africa: Why China matters? Percyslage Chigora

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Chapter Five: China‘s Foreign Policy and Africa‘s Political Economy: Interrogating Western Development Paradigm, Wilfred M. Tarabinah

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Chapter Six: Foreign Direct Investment and Sub Saharan Africa‘s Domestic Entrepreneurial Development: A Comparison between China‘s Inflow and United States of America‘s Inflow, Nkechinyere R. Uwajumogu and Ebele S. Nwokoye

101-121 Chapter Seven: The Eastern Industrial Zone in Ethiopia: Catalyst for Development? Philip Giannecchini and Ian Taylor 123-150 Chapter Eight: Impact Assessment of the China-Zimbabwe Cooperation on Infrastructure Development from 1980 to 2016, Clayton Hazvinei Vhumbunu 151-162 Chapter Nine: China‘s Transport Infrastructure Support in Eastern Africa: Security Implications for the Indian Ocean Rim, Joseph Onjala

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Issues in China-Africa Relations Copyright©2017 Kampala International University ISBN: 978-9970-9573-0-9; 1–17

CHAPTER ONE China and Africa’s Industrialisation: The Situation, The Challenges and The Fears from an African Perspective UKERTOR GABRIEL MOTI 1.0 Introduction Beginning with China‘s opening to the world under the leadership of Deng Xiaoping in 1978, through the ―emancipation of the mind”, the Sino-African engagement became less driven by ideological interests and more by commercial viability. Rising living standards and industrialization dramatically increased the consumption of energy and raw materials, raising China‘s dependence on imports of oil and minerals, in part from Africa. China‘s trade with African economies boomed, reaching almost ten percent of Africa‘s trade since 2008. Chinese outward Foreign Direct Investment (FDI) is supported by the government‘s ―going global strategy‖, which assists Chinese enterprises in becoming global multinationals through providing soft loans and other assistance to foreign investment projects, in particular in emerging markets. Chinese investments in foreign countries are often driven by enterprises with majority ownership by central, provincial or municipal governments. For African countries to maximize the potential benefits from this partnership, African governments must articulate their own comprehensive China policy, which should include strategies for engagement beyond natural resources towards industrialization. This chapter examines China‘s contribution to Africa‘s industrialisation. What is the situation, what are the challenges therein and the fears being expressed by some African and external stakeholders? It is an African perspective. 1.1 The General Situation Chinese banks have been increasingly involved in providing financial services to facilitate trade and investment projects in Africa. Most prominently, the ChinaAfrica Development Fund (CADF) was established in 2007 by the China

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Development Bank (CDB) as a $5 billion equity investment fund to assist Chinese companies in expanding into Africa. Beneficiaries have included Sino steel Corporation, China National Building Material and Hainan Airlines. The CADF also supports companies in the Chinese Economic Processing Zones in Zambia and Mauritius (future zones are currently being discussed in Nigeria, Tanzania, Liberia and Cape Verde.) These investments contribute to African development while helping China to diversify its $2 trillion external assets, currently mainly invested in foreign Treasury bonds with relatively low yields (Sandrey and Edinger, 2011). The expansion of Chinese commercial activities in Africa has led to a shift in public policy from a narrow focus on trade and investment relations to a broad range of development issues, especially industrialisation. China has pledged to expand its zero tariff treatment to 95 percent of the products of African least developed countries, and to provide $1 billion in loans to small and medium size enterprises. At the 2009 Forum on China-Africa Cooperation (FOCAC), China pledged $10 billion in concessional loans to Africa and emphasised the need to support Africa‘s efforts to attain the Millennium Development Goals, (now, Sustainable Development Goals ) address climate change, and overcome challenges in the areas of food security, energy and industrialisation. China provides Africa about $1.5-2 billion a year in aid (as defined by DAC‘s criteria for ODA), mainly allocated to countries with longstanding political ties to China (e.g. Egypt, Ethiopia, Mali and Tanzania) and resource-rich countries (e.g. Algeria, Angola, Congo, the Democratic Republic of the Congo, Nigeria, Sudan, and Zambia). China is also going through a ―development cooperation‖ learning curve with regard to its various aid, preferential trade access, soft loans and investment instruments. The evolution of Chinese assistance will not mean simply copying the aid modalities of traditional development partners, such as untied aid, conditionality, and budget support. However, it is likely that aid coordination with traditional donors will increase, and that China will pay increasing attention to the implications of its assistance for governance and the environment. It is important for Africa to engage China in its consideration of development cooperation policies, to ensure that China‘s aid is effective and complements, rather than competes with, aid from traditional donors (Shongwe and Moyo, 2011). This means Africa must take advantage of Chinese assistance and investment to industrialise. 1.2 The Industrial Situation Industrialization is the period of socio-economic revolution that transforms society toward a wider modernisation process, where social change and economic development are closely related with technological innovation. It is the extensive organisation of an economy for the purpose of manufacturing (Sullivan and Steven, 2003). Industrialisation has to do with production in very large numbers of products

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of a general nature, parts that can be used by many players, acting autonomously with their own purposes quite distinct from the purpose of the producers. Accordingly, individual manual labour is often replaced by mechanized mass production and craftsmen are replaced by assembly lines. Characteristic features of industrialisation include the application of scientific methods to solving problems, mechanisation and a factory system, the division of labour, the growth of the money economy, and the increased mobility of the labour force-both geographically and socially. The first transformation to an industrial economy, known as the Industrial Revolution, took place from the mid-18th to early 19th century in certain areas in North America and Europe, starting in countries such as Great Britain, followed by Belgium, Germany and France. In Asia, apart from Japan; where industrialisation began in the late 19th century, a different pattern of industrialisation followed. One of the fastest rates of industrialization occurred in the late 20th century across four countries known as the Asian tigers (Hong Kong, Singapore, South Korea and Taiwan), thanks to the well-structured societies, strategic locations, heavy foreign investments, a low cost skilled and motivated workforce, a competitive exchange rate and low custom duties (Rostami et al, 2013). Given its natural resource wealth, it is only natural that Africa exports a considerable share of its oil and mineral commodities. This is consistent with general trade theory. But most African states import many goods that require a large semi-skilled and unskilled labour base to produce. This is not so consistent with theory, as these African countries, with a large pool of unskilled labour, should be producing and exporting these goods. But the industrial base is weak. Most African countries have achieved only limited diversification from primary commodity exports to manufactures, and often small gains in diversification have been reversed quickly (Hammouda et al, 2006). The United Nations Economic Commission for Africa (UNECA) describes Africa‘s progress in diversification over the last few decades as ―slow and volatile‖. Progress has differed across regions. North Africa recently has achieved the most gains, and SADC and COMESA also have made progress, led by structural transformation in key economies (in the case of SADC, South Africa) (UNECA, 2007; 2014). The production of manufactures (value added as a share of GDP) in Africa has remained almost constant from 2004 to 2011, and has remained far below the average of its developing country peers. Manufactures accounted for only 10.9 percent of the GDP of the 20 largest African economies in 2011 (9.6 percent if South Africa is excluded, UNIDO, 2012). Fukunishi (2004) finds that manufactured exports equalled only 6 percent of Sub-Saharan Africa‘s GDP—a little over half of the 11 percent average for all low income countries—and the value of manufactured exports equalled 50 percent of value added in manufacturing, compared to 59 percent for all low-income countries. He concludes

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that the poor export performance is the key reason for the stagnation of the manufacturing sector in Sub-Saharan Africa (SSA). This situation has not significantly changed. Fukunishi (2004), Kaplinsky and Morris (2008) show that SSA‘s productivity is lower and that labour costs are higher than in other low-income economies (and in Asia in particular), and that these factors are accentuated by over-valued exchange rates, low Foreign Direct Investment (FDI) levels and small firm sizes in Africa. Although there are differences among African countries, in general high indirect costs and business-environment related losses impair the productivity of African firms. African gross productivity is only 40-80 percent of China‘s. The creation of competitive industrial capacity in African countries has been hindered by: (i) low investment; (ii) poor infrastructure services, resulting in higher production and transaction costs; (iii) high sovereign risk, poor governance and weak institutions; (iv) ill-advised industrial policies; and (v) generally rigid macroeconomic frameworks (UNECA, 2007). Africa‘s problems are accentuated by the small size and ethnic fragmentation of many countries that too often results in internal conflict, by the geographical nature of many landlocked resource-scarce states, and by the implications of letting Asia ―get too far ahead‖. Soderblom and Teal (2001) cautioned that improved macroeconomic policies alone may not be sufficient to boost economic growth. Policies that target improvements in the operational efficiency of firms, coupled with macroeconomic reforms, would help firms become successful exporters and substantially improve countries‘ economic performance. In general, political leadership is required to eliminate constraints on infrastructure, skills development, and entrepreneurship. 1.3 The Situation about what should Africa Produce? The desirable structure of African production is a matter of some controversy. Wood and Mayer (2001) argue that Africa should follow a land-abundant development path similar to that followed by the United States, rather than the model followed by the land-scarce Asian economies. The highest priority should be to raise exports, relying on Africa‘s abundant natural resources. They argue that even if Africa were to eliminate the policy constraints on manufactures production, so that manufactures export performance achieved its estimated potential, manufactures would still make up less than 30 percent of total exports, marginally above Latin America‘s 28 percent but significantly below the 60 to 70 percent levels in East and South Asia. The limited potential for manufactures implies that substantial increases in SSA‘s output and exports must depend on the expansion of natural resource-based activities. Eifert et al. (2005) confirm that African manufacturing and manufactured exports are high-cost relative to the continent‘s levels of income and productivity. Lederman and Maloney (2007) state that raw materials should be seen as ―neither a curse nor destiny‖, and can contribute to development when coupled with policies that support innovation. Knowledge, the

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availability of infrastructure, and the quality of governance together determine what countries produce and how they produce it. Other observers find that Africa‘s dependence on natural resources must be overcome because it limits development. Natural resource dependence has often been accompanied by widespread corruption, weak institutions, and rent seeking. Volatile primary commodity prices have imposed high levels of volatility on resource-dependent African economies, while these economies have only limited ability to protect the vulnerable. Investments in natural resources contribute little to the employment of the unskilled, and thus often have a limited role in reducing poverty. And resource-rich developing countries have often experienced slower growth than their non-resource-rich developing country peers since the 1960s. 1.4 The Situation of Africa’s Competitiveness? Determining what goods Africa is most suited to produce, given its resource endowments and input costs, is a difficult exercise. Export performance can indicate what products are competitive in global markets, although the level and commodity composition of exports are influenced by distorted trading regimes in many African countries, as well as import preferences offered by trading partners. Several aspects of African exports are worth highlighting, in terms of country breakdown, commodity composition, and in comparison to Asian exports. The bulk (89 percent) of Africa‘s exports to the United States are fuels or minerals, which account for more than 99 percent of exports from Nigeria, Algeria and Angola, and about 40 percent of exports from Egypt and South Africa. Fuels also dominated the only significant exporters among the medium-sized African economies. Textiles and clothing made up only 2 percent of exports (about $1 billion each from Sub-Saharan Africa and North Africa) to the United States, three quarters of this supplied by Egypt, Kenya, Mauritius and Lesotho. Nevertheless, textiles and clothing accounted for a significant share of Africa‘s manufactured exports to the United States, with other major products including transport-related goods (1.7 percent of total exports), base metals (1.5 percent), chemicals (1.3 percent), prepared foods (0.9 percent), and machinery and electrical equipment (0.6 percent)(Sandrey and Edinger, 2011). Apparel plays an important role in African manufactured exports. Ninety percent of textile and clothing exports to the United States were classified as apparel, which increased by 6 percent per year from 2000-08. In addition, imports into the US from AGOA countries from 2008 were some $1,151 million, with all but $13 million qualifying for AGOA preferences. Kaplinsky and Morris (2006) report that the nominal rate of tariff protection on apparel imports ranges between 16 and 32 percent, but with the exception of South Africa the AGOA suppliers to the US can incorporate duty-free imports of materials.

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They calculate that this raises the effective rate of the subsidy (the subsidy level that takes all factors into account and not just the tariff) to between 27 and 84 percent. Furthermore, Sandrey and Edinger state that ―this rate of subsidy is required for AGOA clothing producers to compete in the US market. This is because scales of production are low in SSA plants, and many producers suffer from poor bureaucratic and physical infrastructure‖. Collier (2007) goes further and states that ―what Africa needs is temporary protection from Asia in OECD markets‖. Finally, the European Union was an important market for North African apparel exporters, with EU apparel imports from Tunisia totalling €219.5 million, from Morocco as €111.3 million and from Egypt as €52.3 million. Imports from other African countries included those from South Africa (€12.4 million), Madagascar (€2.4 million) and Kenya (€1.3 million). Tellingly, while most African countries had tariff preferences into the EU under the old Cotonou Agreement (with these to be replaced by the Economic Partnership Agreements – EPAs), and South Africa has preferences under the Trade, Development and Cooperation Agreement (TDCA), these preferences are undermined by rules of origin constraints that are much more rigid than the AGOA rules offered by the US to African exporters (Naumann, 2004). Europe‘s imports from Lesotho, Swaziland and Mauritius were negligible, showing these countries to be entirely focused on the US market. The above is the situation in Africa and therefore the urgent need to engage China for rapid industrialisation. 1.5 The Challenges Without strong industries to create jobs and add value to raw materials, African countries risk remaining shackled by joblessness and poverty. Côte d‘Ivoire and Ghana produce 53percent of the world‘s cocoa. But the supermarket shelves in Abidjan and Accra, their respective capitals, are stacked with chocolates imported from Switzerland and the UK, countries that do not farm cocoa. This scenario is repeated throughout the continent in different contexts. For example Nigeria, the world‘s sixth-largest producer of crude oil, exports more than 80% of its oil but cannot refine enough for local consumption. In 2013 it spent about $6 billion subsidizing fuel imports, estimated former Finance Minister Ngozi Okonjo-Iweala. In such apparently baffling scenarios lies one of Africa‘s greatest challenges— and opportunities. The continent possesses 12 percent of the world‘s oil reserves, 40 percent of its gold and between 80 percent and 90 percent of its chromium and platinum, according to a 2013 report from the UN Conference on Trade and Development (UNCTAD). It is also home to 60 percent of the world‘s underutilised arable land and has vast timber resources. Yet together, African countries account for just 1percent of global manufacturing, according to the report.

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1.5.1 The Challenge of Dependency This dismal state of affairs creates a cycle of perpetual dependency, leaving African countries reliant on the export of raw products and exposed to exogenous shocks, such as falling European demand. Without strong industries in Africa to add value to raw materials, foreign buyers can dictate and manipulate the prices of these materials to the great disadvantage of Africa‘s economies and people. ―Industrialization cannot be considered a luxury, but a necessity for the continent‘s development,‖ said South Africa‘s Nkosazana Dlamini-Zuma shortly after she became chair of the African Union in 2013.This economic transformation can happen by addressing certain priority areas across the continent. First, African governments, individually and collectively, must develop supportive policy and investment guidelines. Clearly-defined rules and regulations in the legal and tax domains, contract transparency, sound communication, predictable policy environments, and currency and macroeconomic stability are essential to attract long-term investors. Moreover, incentives—such as tax rebates to multinational companies that provide skills training alongside their commercial investments—will help local economies grow and diversify. In addition, each industrial policy should be tailored to maximize a country‘s comparative sector-specific advantages. African countries must pursue beneficial economic strategies with their neighbours. Regional integration would help reduce the regulatory burden facing African industries by harmonising policies and restraining unfavourable domestic programmes. It would boost inter- and intra-African trade and accelerate industrialisation. Agriculture, which employs over 65 percent of the continent‘s population, according to the World Bank, could become a springboard towards industrialization. It can provide raw materials for other industries, as well as promote what economists call backward integration, in which a company connects with a supplier further back in the process, such as a food manufacturer merging with a farm. Sustained investment and improvements in infrastructure are also needed throughout the continent. 1.5.2 The Challenge of Infrastructure Countries everywhere, not just in Africa, cannot establish competitive industrial sectors and promote stronger trade ties if saddled with substandard, damaged or non-existent infrastructure. ―Developing industries require sustained electricity supply, smooth transportation and other very basic infrastructure facilities, which at present are still not enough to ensure operations,‖ said Xue Xiaoming, ViceChairman of the Nigerian Chinese Chamber of Commerce and Industry. This is a challenge the Chinese are willing to assist surmount in Africa.

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Africa‘s poor roads, railways and other transport networks, faulty communications, and unreliable and insufficient energy result in high production and transaction costs. It takes 28 days to move a 40-foot container from the port of Shanghai, China to Mombasa, Kenya at a cost of $600, while it takes 40 days for the same container to reach Bujumbura, Burundi, from Mombasa at a cost of $8,000, explained Rosemary Mburu, a consultant at the Institute of Trade Development in Nairobi. ―This represents double the time at 13 times the cost,‖ she said. The continent would benefit from a stronger economy blessed with less unemployment and higher incomes.
Historically, countries have succeeded by focusing on education in science and technology and promoting research. For example, in the 1960s and 1970s South Korea —like Singapore, Taiwan and Hong Kong—reformed its education system and made elementary and high school compulsory.
 From an adult literacy rate of less than 30 percent in the late 1930s, South Korea now boasts a literacy rate of nearly 100% and has one of the highest levels of education anywhere in the world, according to UNESCO, the UN‘s education agency. Its highly- skilled population has helped South Korea to become one of the world‘s foremost ex- porters of high-tech goods. Africa, the world‘s youngest continent, is currently undergoing a powerful demographic transition. Its working-age population, which is currently 54 percent of the continent‘s total, will climb to 62 percent by 2050. In contrast, Europe‘s 1564 year-olds will shrink from 63 percent in 2010 to 58 percent. During this time, Africa‘s labour force will surpass China‘s and will potentially play a huge role in global consumption and production. Unlike other regions, Africa will neither face a shortage in domestic labour nor worry about the economic burden of an increasingly ageing population for most of the 21st century. This ―demographic dividend‖ can be cashed in to stimulate industrial production. An influx of new workers from rural areas into the cities, if harnessed correctly and complemented with the appropriate educational and institutional structures and reforms, could lead to a major productivity boom. This would then increase savings and investment rates, spike per capita GDP, and prompt skills transfers. Reduced dependency levels would then free up resources for economic development and investment. Poor infrastructure across the continent is one of the primary barriers to development, trade and industrialization in Africa. It is estimated that Africa has an infrastructure financing gap of about $31 billion annually. China can actually help to bridge this gap. Chinese investment in African infrastructure has increased from $4.5 billion in 2007 to $9 billion in 2010; China is by far the fastest growing external source of infrastructure financing for the continent (Schiere and Rugamba, 2011). China is also helping to make it cheaper for African countries to improve their infrastructure by offering lower project costs.

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Without effective policies, however, African countries risk high youth unemployment, which may spark rising crime rates, riots and political instability. Rather than stimulating a virtuous cycle of growth, the continent could remain trapped in a vicious circle of violence and poverty. The continent‘s youth represent a huge potential comparative advantage and a chance to enjoy sustained catch-up growth. Or they could remain shackled in joblessness and become a major liability. Africa is ripe for industrialization. A strong and positive growth trajectory, rapid urbanization, stable and improving economic and political environments have opened a window of opportunity for Africa to achieve economic transformation. 1.6 The Fears 1.6.1 The Two Opposing Narratives of the China-Africa Partnership The China-Africa relationship which has great potential for stimulating industrialisation in Africa is interpreted through two diametrically opposed narratives. The pro-China narrative depicts China as a saviour and genuine partner of Africa. For the proponents of this view, China is a partner without a history of colonial aspirations and, in fact, shares with many developing countries a similar historical background. It also is a partner that provides much-needed funding with no conditional strings attached and that appears to understand Africa‘s priorities. Furthermore, it has a reputation among African countries for respecting other cultures and states. In contrast, the Sino-phobic narrative depicts China, as the new colonial power in Africa. Many western governments see China‘s engagement in Africa as a cause for concern (Rotberg, 2008). In their eyes, China is a spoiler of peace and security in oil-rich countries such as Sudan and a supporter of despots‘ countries such as Zimbabwe and Gabon, which are known for their very poor human rights records. Moreover, China is a resource- and energy-hungry giant, an exploiter of corrupt and incompetent governments, a trade opportunist and a massive polluter of the African environment (Rotberg, 2008). These are stereotypes intended to scare Africa engaging with China. 1.6.2 Africa’s China and the West's China: The Bless and Blame Game Needless to say, Africans understand and express their concerns about the trade imbalance, the relatively poor quality of some Chinese goods and services and the application of lower standards of environmental practices. The involvement of Chinese companies in corrupt practices, and low labour and safety standards have also been sources of serious debate in many African countries and have featured on election platforms in countries like Zambia and Senegal where a lot of urban renewal is being undertaken by China. The issue of Chinese migrants to Africa and their impact on local labour markets has provoked the backlashes of local communities. Despite the efforts of some African countries such as Ethiopia and

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Nigeria, the transfer of technology and skills from Chinese companies to Africa remains disappointing. China‘s industrialisation efforts in Africa need to improve on this image in concrete terms. Nonetheless, literature on the China-Africa partnership unjustifiably perpetuates the very negative perception; media outlets likewise report a highly skewed image against the dictates of raw facts (Maru et al, 2011), that provide a more positive view. Consequently, it is reported that China invests more in the extractive industry, which amounts to one-third of the total Chinese investment, than in other sectors (Maru et al, 2011). Compared to the United States and other developed countries, China's share in African extractive investment in the form of mining, for example, is lower but attains more critical coverage in the media and literature. The remaining two-thirds of China's investment in Africa is in construction, manufacturing and finance (Maru et al, 2011). The United States' major investment targets in Africa are Equatorial Guinea, Egypt, South Africa and Angola. The current discourse on China-Africa relations justifiably, but unsatisfactorily, focus on the interest of China in Africa, particularly in energy, natural resources, and markets for Chinese goods and services. The increasing numbers of Chinese migrants seeking work in Africa as well as their impact on local labour markets and their potential to cause conflict with local African communities has recently received extensive coverage. 1.6.3 The Fear of China as one of the Global Actors in Africa An overall mapping of global actors in Africa is very important to correctly assess the negative and positive aspects of China-Africa partnership in industrialisation. China is one of the many important actors in Africa's new economic, peace and security landscape that are competing for favourable relations with and within Africa. The China-Africa partnership is one of the multiple partnerships the African Union has developed including those with the European Union, India, Turkey, Latin America and the United States. Both the west and the east compete for Africa‘s resources and markets as well as diplomatic and security preferential spheres of influence. The pragmatic approach of China has elicited strong animosity from western countries not only due to its deflationary impact on western efforts supporting human rights and democracy, but mainly as a result of China‘s increasing influence on African governments and the control of Africa's resources and markets. Western countries and companies feel that Chinese companies beat them by resorting to bribery and corruption as well as other illegal means and violating international standards and norms of transparency and human rights. The observance of such international norms would prevent China from entering dealings in some African countries, but many western countries and companies have also been found guilty of similar violations in the past (Kaplinsky, 2008).

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To understand and accurately describe the overall image of China‘s engagement with Africa, the views of Africans are important. To many Africans, history matters. China, unlike the West, does not have a threatening historical legacy like the western colonial powers of the past. On the contrary, Africa and China share many similar historical backgrounds. Criticism from the West is seen by Africans with serious misgivings and reservations. Thus, it is not to be taken at face value. In Africa, the China-Africa partnership is blessed by the majority of Africans. Consequently, Africa‘s China and the West‘s China are different. To Africans, China‘s three major attractions are unconditional soft loans and access to capital, quick delivery of services and cheap goods, and its inspirational alternative development history. To Africans, it is as Deng Xiaoping once said: it does not matter if the cat is black or white, what matters is if it catches the mice (Naisbitt, 2010). The Chinese cat appears to be catching the mice of industrialization dream of Africa for now and it does not matter whether it is black or white. In this regard, there are three fundamental causes of shortcomings in the ChinaAfrica relationship. These are: 1) the weakness of African states and their legislative, regulatory and enforcement mechanisms coupled by self-serving governments; 2) the Chinese tendency to do business irrespective of concerns related to sustainability, business dealings that are clearly incompatible with the national interests of African countries, and corrupt practices; and 3) the deflationary role of China in the democratisation process in Africa. While addressing these shortcomings would require significant reforms on both sides, such reforms, if carried out, would contribute significantly to the sustainability of the China-Africa relationship especially in terms of Africa‘s industrialization (Kaplinsky, 2008). 1.6.4 The fear of lack of Clarity China is clear about what it wants from Africa: resource commodities, energy security, market access and international diplomatic support, particularly for its efforts to isolate and reclaim Taiwan. Africa's needs are not so clear. Africa needs China as it provides an alternative source of the highly demanded finance for Africa‘s industrialisation. Its companies deliver fast and cheap goods, services and loans that are impatiently and widely wanted by the public. In short, Africa needs China as a financier-supplier and deliverer. China‘s propensity remains to ensure its national interest through economic ties in Africa and its institutions are well prepared for this. The cardinal question is whether Africa is prepared to make the best out of this partnership and the competition between the west and the east. China‘s dealings in Africa reflect the character of the host states and governments. Chinese companies acclimatise quickly to the system of the partner state; with transparent systems Chinese companies operate in transparency. If faced by a corrupt system, they deal accordingly in a corrupt manner. Indicative of the weak legislative, regulatory and enforcement systems of African countries and their corrupt officials, Chinese and other companies exploit this weakness to their advantage. In this regard, Africans take the lion's share of responsibility for these

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weaknesses. However, China also shares the blame as it has contributed, albeit with a varying degree, to these weaknesses due to a lack of normative principles and mechanisms for oversight of its dealings in Africa. 1.6.5 The Fear of Delivery Versus Democracy China has aided African governments in meeting the exponentially increasing public demands for services and infrastructure more quickly. China has enabled African countries to meet some of the public demands for development particularly in infrastructure such as roads, buildings, bridges, airports, hospitals, schools, universities, and telecommunications. Many people are now used to such quick delivery of services by Chinese companies and it has created, and will continue to create, more of an appetite for Chinese companies in Africa. Moreover, one of the many historical problems that Africa is currently facing and shares is rampant poverty. The non-traditional Chinese development model exudes inspirational messages to many African leaders regardless of whether the development model could be replicated in Africa. China‘s unconditional and unqualified cooperation has allowed African governments to enjoy access to finance, expertise and development aid with no political conditions. Incumbent governments in these countries have gained some performance legitimacy. This undermines the efforts of the Western world for almost five decades to change the systems of governance in African countries with aid as a carrot. For many decades, African governments have been at the epicentre of governance and economic problems. Indeed, attributable to bad governance in post-independence African states and incorrect prescriptive policies of dominant powers and global governance institutions, African states are often ‗police states‘ strong only in securing government power. States in Africa are fragile, displaying the weakness and vulnerabilities of entities with limited control of their territories and the means to employ violence. States have become very strong in the wrong functions of the state such as repression, intelligence and surveillance to maintain power. In addition, they have become weak in the delivery of legitimately expected services such as law and order, peace and security, public utilities and major infrastructural developments. States are depicted as enemies of their own societies. With various external interferences and other internal causes, the roles of African states have been minimized, and non-state actors, mainly due to international support, offer many of the services that states are supposed to provide. Several western initiatives including the Washington Consensus came to empower Civil Society Organisations (CSOs) to deliver most of the soft, and in some cases, hard security in the name of private security firms. Done at the expense of states, this led to weak and nonviable states to carry out core state functions that could have given them legitimacy.

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With this increased legitimacy of non-state actors resulting in a backlash from states and attempts to stifle CSOs in many African countries. Some further argue, most often correctly, that China developed in very limited democratic space where the ‗one child policy‘ was imposed on the population, the armed forces were used to promote economic development, intellectual property rights were disregarded, and projects that utterly overlooked the rights of minorities and local communities were carried out. Thus, they say that Chinese development cannot be replicated in Africa due to these undemocratic characteristics and other cultural issues. China, through its unconventional development path and soft loans, has provided African governments with the possibility of tipping the balance of legitimacy for states at least in the delivery of some public goods. Consequently, China‘s engagement has also rekindled two kinds of ideological debates on development and the state. The first debate relates to how and why China quickly grew to become the second largest economy in the space of four decades. This constitutes a quest for inspiration and inquiry if the Chinese model of development could help African countries get out of poverty towards development. These quests for inspiration ranges from attempts to emulate to simply show case that poverty eradication and finally development is possible. The second debate refers to the role of the state in the development of a country. What place should African governments and states have in the economic life of the country? Should they be the deliverers of basic economic goods and drivers of economic development strategies or the watchman guarding the rules of economic game? 1.7 Inspirational Message from China: The Developmental State Many Africans are interested in the lessons Africa can learn from the unconventional development of China and the role of the state in this process. In 1978, China began a political strategy to build a dynamic economy. There are three stages to this strategy: doubling GDP in 10 years to feed and clothe the population; redoubling it again in 20 years for prosperity and in 70 years to make China a global modern economy (Wang, 2004; Naisbitt, 2010). Now, the per capita income of China has increased fivefold. There are two factors behind such a miraculous growth: 1) capital asset accumulation through high domestic savings, and 2) high productivity of the work force through training, which is in line with the Confucian value of education (Hu and Khan 1997). Traditionally, the main driving element for economic growth was considered to be capital and free competition among market forces. Under conventional thinking in economics, productivity was never taken as a prime force for economic growth. An average of 4 percent productivity is the highest ever recorded. This is distinctive of China‘s economic growth. The contribution of productivity to China‘s exceptional economic growth was the most unparalleled in the history of wealth of nations.

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This is untraditional thinking in economic development of the Adam Smith‘s tradition of the invisible balance of free market forces. How did China grow this fast? Can Chinese growth serve as a blueprint for African countries? There are many similarities between the pre-1978 China and many African countries including large populations with insufficient food, high levels of illiteracy and agrarian communities. In three decades, China got out of poverty and became the second largest economy. These policies illicit fear and concerns in Africa. On the other hand, China‘s fast economic growth inspires many Africans and motivates their leaders to play a similar role. This reinvented role of the state in development has been effectively embraced in the developmental state policy of many African countries. Easy access to soft loans has enabled many African governments to avoid the pressure of global governance institutions to meet norms of accountability and conditionality related to political and economic reforms. Through their work ethic and quick delivery, Chinese companies also infused the sense of urgency in the delivery of services and goods in Africa, helping African governments to think and carry out reforms in their investment policy (Wang, 2004, and Maru et al, 2011). But more importantly, it contributed to their performance legitimacy, indirectly increasing the chances of unpopular governments to stay in power. With its prioritisation of stability and development, its developmental state model indirectly depreciates the efforts towards democracy and legitimacy. The strong economic relations China has with countries and governments openly accused of human rights violations and authoritarian governance such as Sudan, Zimbabwe, Chad, and the Democratic Republic of Congo have led to the strong criticism of its regressive tendencies when it comes to human rights and democracy. China is also accused of lacking sufficient concern and initiative to support United Nations Security Council (UNSC) Resolutions on Darfur aiming to end the massive human rights violations carried out by all sides. According to Servant (2009), “In countries where relations with the West are problematic, China is benefiting from its policy of non-involvement in internal politics. Its relationship with Sudan, condemned by the United Nations over the situation in Darfur, is emblematic of a strategy untroubled by ethical considerations.‖ While many African leaders and politicians may consider China a model for the state-led delivery of public goods and services through its non-traditional inspirational economic growth and its efficient works in Africa, the Asian giant is also indirectly retarding Africa‘s progress towards peace and improved human rights in some African countries. In a nutshell, China is economically inspirational for Africa. However, politically, it is deflationary to Africa in terms of its human rights record, democracy and popular legitimacy. This is another fear. However, African governments must bear the primary responsibility for human rights violations and bad governance in their countries.

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1.8 Conclusion Why has Africa failed to emulate the rapid growth of Asian economies, supported by spectacular increases in manufactured exports? One problem is that Africa‘s economic policies, governance, and institutions have been far weaker than in many of the successful Asian economies especially China. Moreover, Africa‘s abundance of natural resources has starved manufacturing sectors of resources, while resource-rich economies (not only in Africa) have generally failed to achieve rapid growth, in part because of weak linkages between the natural resource sector and abundant unskilled labour, and in part because government control of natural resources has encouraged rent-seeking activities rather than productive investment. Africa‘s limited diversification poses grave threats to development, owing to the volatility of primary commodity prices and the failure to reap the potential gains from economies of scale and productivity advances available in manufactures. Africa needs to strengthen ‗the policy umbrella‘ through more stable macroeconomic policies, more dependable provision of government services, and expanded infrastructure investments, including support for regional trade (e.g. improved roads and border post management), which the Chines government is willing to offer. Regional and multilateral negotiations should address ‗tariff escalation‘, whereby imports of processed goods incur higher tariffs than imports of primary commodities, and should improve the value of tariff preferences by eliminating onerous and unworkable rules of origin. Dedicated geographic zones with less restrictive rules facing investment could support manufactured exports, although the extent to which such zones will further African development is uncertain. Finally, linkages need to be established between tariff and trade policies on the one side, and industrial policies on the other. In some cases (South Africa is the outstanding example), a combination of earlier unilateral liberalisation and bilateral, regional and multilateral agreements have limited the policy space to nurture industrial development. Africa needs China‘s delivery of easy soft loans, quick services and cheap goods. In return, it provides China with relatively untapped markets, huge natural resources and energy security. Africa and China also need each other for mutual support in global diplomacy, including the reform of the United Nations and the United Nations Security Council. Also, such support would bring about diplomatic backing from most of the AU's 54 member countries. China‘s partnership would continue to grow as Africans increasingly replace aid with trade and industrialization. Perhaps like the Southern warlords of Sun Quan and Liu Bei engaged in a huge battle with Cao, Africa needs to ―borrow arrows‖ from China for its industrialisation.

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References Collier, P. and Venables, A. J. (2007), ‗Rethinking Trade Preferences: How Africa Can Diversify its Exports‘, The World Economy, Vol. 30:1326-1345. Eichen-green, B. and Hi, T. (2006), ―Fear of China‖, Journal of Asian Economics, Vol. 17:226-240. Eifert, B., Gelb, A. and Ramachandran, V. (2005) ‗Business Environment and Comparative Advantage in Africa: Evidence from the Investment Climate data‘, Center for Global Development, Working Paper No. 56, February. Fukunishi, T. (2004) ‗International Competitiveness of Manufacturing Firms in Sub-Saharan Africa: Why has the manufacturing sector remained small?‘ Institute of Developing Economies. Discussion Paper No. 2, Chiba, Japan. Hammouda, B.H., Karingi, S.N., Njuguna, A.E. and Sadni-Jallab, M. (2006) ‗Diversification: Towards a New Paradigm for Africa‘, United Nations Economic Commission for Africa: Africa Trade Policy Centre, Working Paper Number 35. Hu, Zuliu and Khan, Mohsin (1997) ‗Why Is China Growing So Fast?‘ Economic Issues, International Monetary Fund Services, Washington, U.S.A, Kaplinsky, R. (2008) ‘What does the Rise of China Do for Industrialisation in SubSaharan Africa?‖ Review of African Political Economy, Vol. 35, No. 115: 7-22. Kaplinsky, R., McCormick, D. and Morris, M. (2007) ‗The Impact of China on Sub-saharan Africa‘, Institute of Development Studies Working Paper No. 291. Kaplinsky, R., and Morris, M. (2006) ‗The Asian Drivers and SSA: MFA Quota Removal and the Portents for African Industrialisation‘, Institute of Development Studies, Brighton. Kaplinsky, R., and Morris, M. (2008) ‗Do the Asian Drivers undermine Exportorientated industrialization in SSA?‘ Special Issue of World Development on Impact of the Asian Drivers on the South, Vol. 36, No. (2): 254-273. Lederman, D. and Maloney W. F., (eds) (2007) ‗Natural Resources - Neither Curse nor Destiny‘, World Bank publications, World Bank, Washington D.C. Maru, Makda, Abraha, Senai and Goa, (2011) ‗A New Imperialism? Assessing the Impact of Chinese ODI in Africa‘, a paper presented at a conference in October 2011, Cambridge, Massachusetts. Naisbitt, John and Naisbitt, Doris (2010), China‟s Megatrends: The 8 Pillars of a New Society, New York: HarperCollins Publishers. Naumann, Echart (2004), ―Rules of origin under EU-South African Trade, Development and Cooperation Agreement and Cotonou Agreement: the textile and clothing sectors‖, in ―The impact of Preferential Rules of Origin in the textile and clothing sectors in Africa‖, 2004, Commonwealth Secretariat, Economic Paper 65.

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Rostami, Raheleh, Lamit Hasanuddin, Seyed Meysam Khoshnava and Rasoul Rostami (2013), ―Industrialization and Sustainable Construction: A Case of Malaysia‖, Asian Journal of Microbiology, Biotechnology and Environmental Science, Vol. 15, No (2): 433- 440. Rotberg, R.I. (2008), ‗China into Africa: Trade, Aid and Influence, pp 137-154. Sandrey, Ron and Edinger, Hannah (2011), ―China‘s Manufacturing and Industrialization in Africa‖. African Development Bank, Working Paper 128: Tunis, Tunisia. Servant, Jean Christophe (2009) ‗China‘s Trade Safari in Africa‘, Le Monde Diplomatique, http://mondediplo.com/2005/05/11chinafrica (accessed 12 June 2016). Schiere, Richard and Alex Rugamba (2011), ―Chinese Infrastructure Investments and African Integration‖. African Development Bank: Tunis, Tunisia. Söderbom, M. and Teal, F. (2001) ‗Can African manufacturing firms become successful exporters?‘ Centre for the Study of African Economies-United Nations Industrial Development Organization Working Paper No. 4. Songwe Vera and Nelipher Moyo (2011), ―China – Africa Relations: Defining New Terms of Engagement‖ Africa Growth Initiative, The Brookings Institution: Washington, DC. Sullivan, A. and Steven. M.S. (2003). Economics: Principles in Action. Upper Saddle River, New Jersey: Pearson Prentice Hall Wang, Mengkui (2004) ‗China‘s Course of Modernization and its Outlook‘, China‘s Economy, China Basics Series, China Intercontinental Press, Pp. 46. Wood, A. and Mayer, J. (2001) ‗Africa‘s Export Structure in a Comparative Perspective‘, Cambridge Journal of Economics No. 25, pp. 369–94. United Nations Economic Commission for Africa (2007) „Economic Report on Africa 2007‟, United Nations, Addis Ababa, Ethiopia. http://www.uneca.org/era2007/ United Nations Conference on Trade and Development, (UNCTAD) Report, 2013.

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CHAPTER TWO Chinese Education Aid to Africa and Its Advantages over Western Aid YUTING ZHANG 2.0 Introduction Western education aid to Africa witnesses a development trend from project assistance to Sector-Wide Approaches (SWAps). The new modality was viewed as a prescription for the problems of project assistance in terms of fungibility, sustainability and coherence between donors. As defined by Foster et al. (2000:6), SWAps mean: ―All significant funding for the sector supports a single sector policy and expenditure programme, under Government leadership, adopting common approaches across the sector, and progressing towards relying on Government procedures to disburse and account for all funds.‖ Although the idea of SWAps described an attractive vision for development aid, provided key principle and guidance for donors, and bilateral and multilateral agencies, such as USAID and World Bank, has tried to move forward the new modality, the Western aid is still facing challenges from the lack of ownership and sustainable conditionality in aid. In contrast to Western aid, Chinese aid to Africa is kind of south-south cooperation, which follows different logic from DAC donors. Analysis of the challenges in Western aid modality and the advantage of Chinese aid may help to improve foreign aid to Africa.

2.1 Challenges in New Modality used by Western Aid 2.1.1 Lack of Ownership 2.1.1.1 Lack of Local Researchers’ Participation Education and Training Policy 1994 was a strategic framework in Ethiopia. Under this programme budget framework, pooling of technical assistance was used for capacity building during the process of programme implementation. However, there was evidence indicating the pooling of technical assistance hasn‘t been finalized.

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Apart from the war with Eritrea as a main barrier, another important reason for the failure was that the proposal was drawn up by donor-employed consultants rather than the result of cooperation, which means the lack of local participation and Government‘s sense of ownership. (Worku, 2002: 14) From 1980s to 1990s, the Working Group on Education Sector Analysis carried out a series of research on education sector in African countries. (UNESCO, 1989; Samoff, 1994;Samoff & Assié-Lumumba, 1996)The process of research indicated there were very limited chances for researchers from recipient countries to go through the whole process of research project and assessment host by aid agencies. Education sector analysis was still regarded as foreign initiative, which usually provided leadership for expatriates rather than local researchers. Lack of local researchers‘ participation makes it impossible for the Government to get any benefit from the result of research. These research findings might have been useful for the Government to negotiate with donors in next round of cooperation. Without full participation of local researchers, apparently expanded partnership seems not to realize Government ownership in programme implementation. It is still inevitable that donors play the role of experts providing knowledge and solution in aid programmes. The closer donors cooperate with each other, the more homogeneous expertise they can provide, and the less opportunity for recipient countries to express their own need. 2.1.1.2 Lack of Civil Society Participation According to Mundy et al. (2010), the active civil society organization in education sector includes ―national and international NGOs, parents‘ associations, teachers‘ unions, student organizations, faith-based organizations, private provider groups, community-based organizations, research organizations and networks or coalitions‖. Based on the evidence from Burkina Faso, Kenya, Mali and Tanzania, the chronic tension between these actors, especially in these undeveloped and aiddependent countries, makes barriers for their coherence and cooperation, which then limits the civil society organization to make significant policy gains. This limitation of civil society participation may be worse in the new modality because: First, SWAps take center planning as strategy, which means the decision are made on government level. What non-government actors can do is implementing centrally defined programme. Regional sector cooperation is neglected because of SWAps‘ focus on macro and national level strategy, like poverty reduction and economic growth. Take Tanzania as an example, civil society has created policy space for themselves through efforts like advocacy, research and media. However, Government still favors complementary service providers. There is no transparent and formalized institution for civil society engagement in sector-programme. (Mundy et al., 2010)

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Second, SWAps emphasize the cooperation between aid agency and Government, which may reduce the opportunity of direct dialogue between civil society organization and international agencies and donors. Without special cooperation strategy to include local civil society in the aid programme, it is very easy for them to be excluded. In Uganda, SWAps has been implemented in the health, education, water and sanitation and agricultural sectors. Many significant decisions are made in central government as achievement of cooperation between technical experts and donors. SWAps enforce this top-down decision making. (Land & Hauck, 2003:18) In addition, SWAps fail to take account of informal education and training system, which is good outside the public education system by providing access for millions students in many countries. As a result, related teachers, parents and private tutors are excluded from aid programme when it is implemented only in education sector. (UNICEF, 2004:9) 2.2 Aid Conditionality The conditionality, for which project assistance was criticized in the past, still exists in the new modality. Since donors usually enjoy more discourse power in terms of economic growth, politic system and professional knowledge, they may exert effect on policy making and choice of priority area in receiving countries through expectation of change to a certain direction. This expectation is still a kind of conditionality because it may decide whether the countries can get aid or not in the future. World Bank provided aid to Uganda education sector by sector adjustment credit, which indicated the way of funding distribution. Other bilateral aid usually set conditions in expenditure, accounting and audit when the aid is related to budget distribution and educational policy. (Foster, 2000:24-26) USAID use both of nonproject aid and project assistance to African education. In non-project assistance, USAID provide fund for Governments with the precondition that they promise to meet certain requirement related to policy and plan goals. This kind of condition is one of the means used by USAID to drive policy reform and commitment in recipient countries. (USAID, 1995:6) Aid without explicit condition doesn‘t mean recipient countries have ownership of their development. There may be implicit conditions in two ways. First, since the new modality emphasizes cooperation and ownership, donors tend to choose partners with desired governance institution, who already share political and economic interest with them. Developing countries have motivation to cater for donors‘ tastes in order to get aid from them. Second, conditionality has been shift from process to result. Donors can criticize the policy implementation by giving negative assessment of the achievement recipient countries got, which is a kind of condition for future policy and practice.

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2.3 Advantages of Chinese Education Aid to Africa 2.3.1 Adaptation to Local Situations and Focus on Actual Effect SWAps are not suited to all developing countries. According to Foster (2000:12), the new modality is more useful for those countries with good overall macroeconomic and budget management, high aid dependence, good sector policies linked to resources and high sector management capacity. For countries without good overall management and governance capacity, which is the foundation of SWAps, low level and targeted support is more suitable. As we all know, African countries, especially Sub-Sahara Africa, have relatively high aid dependence. However, they diverge from each other in terms of macro-economic management and governance capacity. There is no universal modality that applies on all occasions. Aid modality used in Africa should be selected and adapted to local conditions. More precisely, we should pay attention to the actual effect rather than aid modality. Considering the conditions in Africa, Chinese education aid to Africa mainly uses project assistance. In the least developed rural areas, infrastructure construction is the most urgent need. From 2007 to 2012, China has built more than 130 schools on different levels for Africa, most of which are located in remote villages with poor education infrastructure and transportation. (Niu, 2014; Ministry of Commerce of the PRC, 2012:25) All these infrastructure constructions are implemented through Complete Foreign Aid Project, which has specific target and is suitable for those countries that haven‘t been ready for SWAps. According to Measures for the Administration of the Complete Foreign Aid Projects issued by the Ministry of Commerce in 2015, the aid project includes government-funded project by assigned agent and self-built project by recipient countries. (Ministry of Commerce of PRC, 2016) Government-funded project means Chinese Government takes full charge of the whole building process or part of them and provides quality assurance and technical service. Self-built project means local government takes full charge of the whole building process or part of them with the financial and technical support given by Chinese Government. When the construction finished, local government takes charge of running and maintenance under the supervision of Chinese Government. This adaptation to local situations in project aid guarantees the funds are used for specified purpose only and encourages local government participation. The focus on actual effect lays sound foundation for long-term development of Africa education. 2.3.2 Capacity Building on the Premise of Equal Cooperation One of the preconditions of ownership is self-development capacity. However, the capacity building cannot neglect local government‘s independence and equal

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relationship between partners. Recipient countries have right to choose their own way rather than be sold of any development patterns in the form of foreign aid. Capacity building on the premise of equal cooperation requires two things. The first thing is shift of supervisor-supervisee relation to equal partners. The second thing is full participation, which includes cooperation between governments and cooperation with non-government actors as well. As for education aid, all stakeholders, like NGOs, individual donors, teachers and parents, deserve capacity building. Under the frame of Forum on China-Africa Cooperation, China-Africa relation has been transformed from infrastructure construction aid to economic and cultural cooperation. The Ministerial Conference in 2000 emphasized the cooperation in education and human resource development. The related policies included increase of international students to China, sending teachers to Africa, special fund for training professionals. The Ministry of Education has established ten training centers for education foreign aid in universities, who takes charge of training program and sending teachers. Take Zhejiang Normal University as an example, it has run more than ninety short-term seminars for 1863 senior administrators, teachers, principals in primary and secondary school, and presidents in university. Ministry of Education in cooperation with Ministry of Commerce has established Master Degree Training Program for Developing Countries from 2008, which aims to educate high-level talent for developing countries including African countries. The Ministerial Conference in 2009 approved Sharm El Sheikh Action Plan(20102012), which advocate ―20+20 China-Africa inter-University Cooperation Plan‖. This plan emphasized the support for formed brand project in China-Africa interuniversity cooperation to improve scientific research, teacher training, academic visiting, teacher and student exchange, curriculum development and joint graduate degree program. This plan also promised to enroll 200 mid-high level administrative staff in Master of Public Administration Program within three years. (Lou, 2014; Forum on China-Africa Cooperation, 2009) Based on training program and educational exchange, Chinese Government provided multi-level cooperation and dialogue with African countries. The valuable experience is learning and sharing on the premise of equal cooperation. Both of the capacity building and non-government actors‘ participation have been enhanced through training and cooperation. As a result, China realized the transition from ―giving one a fish‖ to ―teaching one how to fish‖, which may help to transform passive project aid to active development aid. 2.3.3 Pursuit of common interests without conditionality Western aid has been trapped in making recipient countries to choose development path or modality and change related economic and political institution. Nowadays, peace and development is globally recognized agenda. However, guiding by the instrumental value, DAC aid usually tries to realize donor‘s political interest by

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conditionality. Change of undesired political system has been viewed as precondition of aid effectiveness. Considering existing difference between developed countries and African countries in terms of economic and social development background, conditionality may interrupt the independent development process in recipient countries, which is not favorable for their longterm sustainable development. As a developing country, China has experience in dealing with similar problems during the development progress. It is easier for China to build the cooperation on pursuit of common interests. The change of China‘s role from recipient country to donor country may also provide valuable experience to African countries. China has never sold any kind of development modality to Africa through aid conditionality. What China provides is so called development-oriented aid, which means African people make the decision while China just plays the role of helper and facilitator. (Zhang, 2012) Chinese education aid to Africa follows the principle that aid is response to local development need rather than promotion of Chinese development path. In the aid project of building schools, African country and China form agreement and contract through negotiation. African country proposes location, design and other requirement. In 2006, Chinese Government released the first African Policy Paper, which indicated ―Chinese Government will give full play to the role of its ‗African Human Resources Development Foundation‘ in training African personnel. It will identify priority areas, expand areas of cooperation and provide more input according to the needs of African countries so as to achieve greater results.‖(Xinhua, 2006) In 2015, Chinese Government released the second Africa Policy Paper, which promised that ―China will expand cooperation in education with Africa, supporting educational development in the continent. It will provide more input in light of the social and economic development needs of African countries so as to achieve greater results, and help train more much-needed professionals for African countries, in particular, teachers and medical workers.‖(Xinhua, 2015) ―20+20 China-Africa inter-University Cooperation Plan‖ is another example of pursuit of common interests without conditionality. In this cooperation plan, education need in Africa higher education has been considered and combined with leading disciplines in Chinese universities. Now there have been many research centers and training bases in Namibia, Kenya and Sudan established in the form of Cooperation with Chinese universities. In a word, China never set conditionality in education aid to Africa, no matter in infrastructure construction, human resource training, or university cooperation. Development need in African countries is always the primary consideration. China just provides alternative and experience while African countries still have the power of decision making. The long-term expectation is mutual benefit and sustainable development.

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2.4 Conclusion Through transition from project assistance to SWAps, Western aid tried hard to deal with the lack of ownership and unsustainability in traditional aid. However, the change of modality cannot undermine the structured imbalance in donor-receiver relationship or realize independent development in recipient countries. As an emerging actor in foreign aid, China has experience in non-interference, respect of development path choice and aid without conditionality, which can provide alternative for international community. It is urgent for China and Western countries to go forward hand in hand to explore better modalities and improve education aid to Africa. Strategies include encouraging non-government participation, establishing full accountability, taking advantage of existing regional non-government organization in Africa as mediator of foreign aid, and enhancing dialogue between recipient countries and donors. Reference Foster, M., Brown, A., Norton, A. & Naschold, F.(2000). The Status of Sector Wide Approaches. London: Overseas Development Institute. Worku,S.(2002). Pooling of Technical Assistance in the Context of Sector-Wide Approaches: Ethiopian Case Study. UNESCO.(1989). Action Group on Sector Studies. Review of Recent Sector Studies and Preparation of a Sector Study Data base. Paris, UNESCO. Samoff, J.(1994). After Apartheid, What? A Review of Externally Initiated, Commissioned, and Supported Studies of Education in South Africa. Paris, UNESCO. Samoff, J. & Assié-Lumumba,N'D.T.(1996). Analyses, Agendas and Priorities for Education in Africa: Inventory and Analytic Overview of Education Sector Studies in Africa, 1990-1994. Paris, UNESCO. Mundy, K., Haggerty, M., Sivasubramaniam, M., Cherry, S., & Maclure, R.(2010).Civil Society, Basic Education, and Sector-wide Aid: Insights from Sub-Saharan Africa. Development in Practice, 20(4-5):484-497. Land, T. & Hauck, V.(2003). Building Coherence between Sector Reforms and Decentralisation: Do SWAps Provide the Missing Link? European Centre for Development Policy Management Discussion Paper No. 49. UNICEF.(2004). Potential for Education Sector Wide Approaches in East Asia. Hanoi:UNICEF. Foster, M. (2000). New Approaches to Development Cooperation: What Can We Learn from Experience with Implementing Sector Wide Approaches? London: Overseas Development Institute. USAID. (1995).Overview of USAID Basic Education Programs in Sub-Saharan Africa II, USAID Publishing. Niu, C.(2014). Education Aid and International Social Responsibility: A Comparative Study on School Construction Projects Cases in Africa

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between China and Japan. International and Comparative Education, (5):611. Ministry of Commerce of the PRC. (2012). China‟s Aid to African Countries. Ministry of Commerce of the PRC. (2016). Measures for the Administration of the Complete Foreign Aid Projects. Retrieved 07, 2016, from http://www.mofcom.gov.cn/article/b/g/201601/20160101243254.shtml. Lou, S. (2014). From Aid to Cooperation: Analysis Based on the ―20+20‖ChinaAfrica inter-University Cooperation Plan. International and Comparative Education, (5):1-5. Forum on China-Africa Cooperation. (2009). Sharm El Sheikh Action Plan (20102012).Retrieved 07, 2016, from http://www.fmprc.gov.cn/zflt/chn/dsjbzjhy/bzhyhywj/t626385.htm. Zhang, H. (2012). Development-Oriented Aid: China‘s Aid Model towards Africa. World Economy Studies, (12):78-83. Xinhua. African Policy Paper (2006). Retrieved 07, 2016, from http://www.gov.cn/misc/2006-01/12/content_156490.htm. Xinhua. African Policy Paper (2015). Retrieved 07, 2016, from http://news.xinhuanet.com/english/2015-12/04/c_134886545.htm.

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CHAPTER THREE China Versus The United States in Africa EKOMOLOT A. ONGODIA

3.0 Introduction The last two decades have witnessed a renewed external interest on Africa. At the center stage of this scramble is the Sino-US rivalry in the continent. Both countries are locked in an intense competition for Africa‘s natural resources, markets and strategic position. In this completion, the two countries have employed multiple strategies and tactics to ensure expansion and consolidation of their respective interests. Unsurprisingly, this competition has drawn animated debate both in the conventional media and research institutions. Why should Africa gain prominence at this point of time to both USA and China, and in fact to other powers? The reason is plain, Africa possess some of the largest deposits of natural resources in the world, ranging from fuel, oil, gas, rare metals, rare earth, non-ferrous and ferrous metals, to timber, fresh water, agricultural land and fast growing population. In addition to resource abundance, Africa remains the least developed continent, thus unable to effectively command the utilisation of her resources. This makes Africa appear terra nullius or a void to be filled. In this competition, it is the increasing prominence of China in Africa that has drawn a lot of zippy debate across a spectrum of academics, think tanks, policy makers and civil society. While some see Chinese in Africa positively, others perceive it as a threat (Osei & Mubiru, 2010; Wang & Zheng, 2012; Zhang et al., 2013; Dollar, 2016; Zhang, Wasserman, and Mano, 2016). This perceived Chinese threat has compelled the US to reevaluate its strategic political cooperation with the continent. Thus, in recent years, the US has shown a growing interest in Africa in order to ensure access to energy resources, maintain a geostrategic position and political influence in African countries, using several strategies and tactics to achieve its objectives. This chapter seeks to provide a basis for reflection and discussion regarding the major actions and reactions taken by the U.S. and China to court Africa. More fundamentally, it aims to answer the following question: What are implications of

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US- Chinese competition on Africa? The chapter is based on select synthesis of discourse on Sino-US rivalry in Africa. 3.1 China and Africa Historically, trade relations between China and Africa date back to the first Han Emperors of the Second Century B.C. (Shinn, & Eisenman, 2012). However, China‘s modern relationship with Africa is traceable to the Bandung Conference, held in Indonesia in April 1955 (Uchehara, 2009). The conference included twentynine Asian and African states that shared a common belief of exclusion from the bipolar world of the Cold War. The Bandung Conference produced a set of noninterventionist foreign policy principles that China adopted as its own. The Bandung Conference also laid the foundation for the establishment, in 1961, of the Non-Aligned Movement (NAM) consisting of countries independent of US and the Soviet Union. Hence China‘s modern relations with Africa spans for half century (Uchehara, 2009). During the 1960s and 1970s, China extended aid to some African countries and supported African liberation movements to reduce the legitimacy of U.S. and Soviet influence in the developing world. For example, China signed an economic and technical cooperation agreement with Guinea in 1960, a year after independence; subsequently provided an interest-free loan of $20 million to Ghana, the first African country to establish diplomatic relations with China; and recognized Mali upon independence and sent a trade mission the following year. Although China withdrew from the Non-Aligned Movement, it nevertheless remained engaged in Africa through the early 1970s. The TanzaniaZambia railway (1973-1976) remains China‘s biggest and most visible project in Africa. Through this engagement in Africa China achieved two important goals: recognition of Peoples Republic of China (PRC) in UN excluding Taiwan (Republic of China-ROC). The death of Mao Zedong in 1976 and the ascendancy of Deng Xiaoping, marked a shift of Chinese policy priorities on both foreign and domestic fronts. China became inward looking, preoccupied with her economic development. As Deng embanked on major internal economic reforms, Sino-African relations were put to back stage throughout the 1980s and 1990s. The success of Deng‘s reforms lifted China from a recipient of foreign aid to a donor nation. However, as President Hu Jintao remarked during a 2004 visit to Gabon, the Chinese people have not forgotten ―that it was due to the strong support of the vast number of developing countries, those in Africa included, that China successfully regained its lawful seat in the United Nations in 1971‖ (Hill, 2004). It was at the fiftieth anniversary meeting of the Bandung Conference that China renewed its interests in Africa. At the Conference, China seized the opportunity to position herself as the leader of the Third World and its readiness to support others (Edinger, Herman, &Jansson, 2008). The reengagement process started earnestly with Africa. In 2000 Sino-African relations saw a significant development with the institutionalization of the Forum on China-Africa Cooperation (FOCAC) through the Ministry of Foreign Affairs. This forum is based on the Five Principles of

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Peaceful Coexistence and it has been an effective instrument of soft power to establish a fair and mutually beneficial cooperation and a mechanism through which China is coordinating its activities in Africa. The forum is held every three years are expected to promote political dialogue and economic co-operation, with the long-term aim of common economic development and prosperity. Thus, the Sino-African relations, as defined by the then President Zeming are based on the principles of: „„sincere friendship, equality, solidarity and cooperation, common development and being oriented to the future‘‘ (MFA, 2002). In her engagement with Africa, China has stressed the historical context of shared experiences and hence the necessity for political solidarity and presenting the ‗Chinese Model‘ as appropriate (Alden, Large, and de Oliveira, 2008). Also known also as "Beijing Consensus", the Chinese Model serves as an example to developing countries because of non-interference principle (Power & Mohan, 2008). Its development assistance and economic support are unconditional and is not dictated by western values. Others such as Chris Patten, argue that while the US approach is based on an idealistic view of good intentions, the Chinese paradigm is much more objective, pragmatic, flexible and effective (Patten, 2009). Whist the US prescribes what Africa needs, adopting general plans with little adjustment to demand, Chinese strategy is based on research providing what local people need, and adopting plans to local conditions, which ―gives it a great deal of credibility as a partner with relevant recent experience‖ (Brautigam, 2009: 11). 3.2 What Are China’s Interests in Africa? China‘s renewed engagement with Africa is driven by a set of strategic interests. Firstly, like the U.S., China needs to ensure the access to energy resources, minerals and agricultural products, which are essential for its economic growth. After the U.S., China is the second largest oil consumer in the world and in 2014 became the net importer. This of significance to Africa as a top oil supplier for China has grown exponentially, with Angola being at the moment, the main supplier of China‘s oil imports (Anshan, 2006). Secondly, China seeks to expand its economic relations with Africa. The favourable conditions with access to the African markets, and in some cases the weaknesses of some African states are extremely attractive for China‘s economic expansion. China‘s economic engagement with African countries combines three main elements: aid, trade and investment. Chinese aid, which consists of grants, zerointerests loans, debt relief and concessional loans, is mostly perceived as development projects to produce quick and tangible results, which enable China to gain political influence in African countries. Nevertheless, it is the trade transactions between China and Africa that provide the most powerful evidence of China‘s emerging economic interests on the continent. Chinese-African trade has grown rapidly by a remarkable 26 percent per year since 1995, reaching a total value of US$170 billion in 2013 surpassing the U.S (Pigato & Tang, 2015).China now accounts for roughly 24 percent of SSA‘s total trade, up

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dramatically from a mere 2.3 percent in 1995(ibid). China‘s share in Africa‘s total trade has also been spectacular, rising to 13% from 3% a decade ago (Jones &Williams, 2012). Moreover, China‘s FDI stock in Africa in 2010 reached more than $13 billion (Pigato & Tang, 2015). China is also Africa‘s largest single source of imports, while the U.S. is its largest export destination (ibid). This economic trend in China‘s relationship with Africa is built upon its need for natural resources. The evidence of this is that fossil fuels and raw materials represent roughly 4/5 of Chinese imports originating from Africa and there are around ten African countries which account for 76% of all trade relations with China. In addition, the financial support from Chinese banks, notably China Export-Import Bank has had a vital role in strengthening its economic relations with Africa. It provides loans to governments and supports Chinese companies, which are normally state-owned, to invest in Africa through export credits, loans for overseas projects and international guarantees (Shinn & Eisenman, 2008). Furthermore, in order to take full advantage of the Sino- African cooperation, China has also established commercial and investment hubs called Special Economic Zones (SEZ), "which provide ―infrastructure corridors‖ that link African producers and markets in China" (Shinn & Eisenman, 2008 :5). Its low interest loans and its funding mechanism of exchange, known as the Angola Mode which is an exclusive economic funding mechanism in Sino-African cooperation: the payment of the loan for infrastructure projects is made in terms of natural resources. However, it has received strong criticisms among American officials, who argue that by pursuing this policy China allows countries to escape IMF and World Bank regulations and also restricts the access of U.S. companies in Africa. Thirdly, China seeks to become a major international player promoting a multipolar world, in contrast to the American ―bipolar system‖ (Xu Yi-chong, 2008), and at the same time wants to develop good relationships with all African countries to gain political support in regional and international forums. And lastly, China is seeking to end Taiwan‘s international recognition and replacing it with the recognition of Beijing. Generally speaking, Chinese interests in Africa are both economic and political interests. 3.3 What are US interests in Africa? The end of the Cold War marked a major challenge for American policy towards Africa. The difficulty in defining a set of national interests in the region which could make a more proactive foreign policy, made Africa to be seen as a national interest backwater, not deserving the attention from the top decision makers. For long USAfrica relations have been by a backyard policy approach in which Africa was not considered part of US strategic plan. (Thrall, 2015). After the Second World War, U.S. African policy was determined by a continuous effort to impose American values of democracy and human rights, constituting the base of the U.S. ―rhetorical commitments to Africa‖. However, the manner in which these objectives were pursued generally remained shaped by U.S. geostrategic interests –―containing the Soviet/Communism expansionism on the

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continent and building ideological affiliations with African countries‖ (Simeon, 2010:58). It wasn‘t until the second term of the Clinton Administration (1997-2001) that Africa started to gain a new significance, ―even if was still seen through the lens of ad hoc humanitarianism, rather than in a strategic manner‖ (Lyman, 2006:22 The increasing emphasis on economic links to Africa and its integration into global economy, have been the main principles of Clinton‘s foreign policy towards Africa. In order to encourage trade and investment, the Clinton administration adopted a trade bill, The African Growth and Opportunity Act (AGOA) (2000), designed to liberalise the trade between the U.S. and eligible African countries. Besides this, high priority was given to security issues and to the promotion of democratic enlargement.24 In spite of the continuing efforts of President Clinton to create a more effective African policy, the truth is that it was never defined in the context of a long-term strategy. Over the course of the Bush administration (2001-2009), Africa was perceived as being―a scar‖ on the conscience of the world. Thus, because of moral imperative obligation of the U.S., the grants for humanitarian intervention associated with poverty reduction and aid driving, rather than investment, have substantially increased(U.S. aid to SS grew from roughly $1.94 billion in 2002 to an estimated $7.08 billion in 2012)( Alexis Arieff et al, ―U.S. Foreign Assistance to Sub-Saharan Africa: The FY2012 Request‖, Congressional Research Service Report R41840, May 20, 2011, 5). Nevertheless, the events of 9/11 led the Bush administration to engage with Africa from a ―war on terror‖ perspective, increasing the foreign aid and its military presence in various regions, especially in the Sahel and East Africa. However, despite the adoption of a large number of new development programs (For instance: President‘s Emergency Program for AIDS Relief (PEPFAR), Millennium Challenge Corporation (MCC).). African policy under the Bush administration continued with the failures of previous administrations. The absence of a careful strategic vision and lack of coordination between the different agencies prevented the establishment of a coherent and articulated policy in the African countries (Walle, 2009: 11). Only by the end of his second term (2004-2009) and due to the potential growing importance of African oil, did Africa become a new strategic importance for U.S. interests. Coincidently, it was then that the U.S. seemed to finally understand the growing magnitude of Chinese influence in Africa. The mandate of President Obama brought high expectation, even if unrealistic. Early in his term, Obama indicated that he planned to develop a set of more comprehensive and effective policies towards Africa attempting to mix the economic and security interests in the region with some adjustments to the development agenda. On his visit to Ghana in 2009, Obama highlighted the importance of good governance arguing that ―Development depends upon good governance. …And that is a responsibility that can only be met by Africans"(Accra International Conference, 2009). The visit of the Secretary of State, Hillary Clinton (2009), on the other hand, was directed to more specific economic issues. As Johnnie Carson puts it“In this time of economic crisis, it is important that the United States and Africa work cooperatively as a major trading partners‖ (cited in

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ORI, 2009) While U.S. African policy under the Obama administration seems to be more engaging, it is also clear that it has stayed consistent with the long-term trend and interests. Numerous programs from the Bush administration have been kept in place, such as Africa Command (AFRICOM), and key allies on the continent have not changed much (White, 2010:27). In reality Obama's strategy in Africa is a solidification of existing policy rather than a statement of new policy (Walle, 2009). Nevertheless, today more than ever Africa is becoming a priority region for U.S. interests. 3.4 Economic Interests There is no doubt that natural resources, especially oil, are the key motives that brought together the U.S. and China in getting involved in Africa. As Walter Kansteiner, the assistant secretary of State for Africa noted, “African oil is of national strategic interest to us‖( Crawley, 2002). This growing importance of oil was highlighted as top priority for the U.S. due to some factors that should be mentioned: ―(i) the rising domestic energy demand, (ii) new discoveries and production of oil in Africa, (iii) and new players moving into the continent‖ (YiChong, 2008:19); (iv) the growing instability from traditional American suppliers, such as Middle East. Currently more than 20% of the U.S.‘ imported oil has its origins in Africa.30 New oil and gas discoveries, especially in West African countries, such as Nigeria, and Angola, have made the continent more attractive to the U.S(). In addition to oil and gas interests, there are many other natural resources of extremely high importance to the U.S. economy, such as raw gems, and precious metals and minerals. Besides this, the U.S. is also seeking to expand its trade and investments in Africa and this is illustrated, in part by the expansion of total U.S. trade (imports plus exports) with sub-Saharan-Africa (SSA). Since 2000 U.S.Africa trade has increased 221% growing from $29.4 billion in 2000 to over $94 billion in 2011.32 In the year 2000, trade with Africa made up 1.5 % of total U.S. global trade, and Africa‘s share had grown to 2.6% by 2011 (Jones & Williams, 2012:8) However, unlike China, which is engaging with Africa by using economic instruments, the U.S. is less involved in promoting strong business ties in Africa. In fact, Foreign Direct Investment (FDI) has been largely stagnant. SSA countries are relatively minor destination of U.S. FDI. Africa, as a whole hosts about 1% of total U.S. FDI being largely concentrated in mining and extractive industries, which together comprise some$29 billion of the $54 billion total stock of U.S. FDI in Africa. 3.5 Geostrategic and Security Interests A number of security issues, especially counterterrorism, became priority in the list of U.S. interests in Africa. After the bombing of U.S. embassies in Nairobi (Kenya) and Dar es Salam (Tanzania) in 1998 and the attacks of 9/11, the United States realized that Africa posed a serious security threat (Pham, 2007). The ―war on terrorism‖, predicated on the notion that weak states can bring instability to Africa

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nations and the fear that al-Qaeda-type organizations could become established in African failed states, has been Washington‘s rationale for its growing military presence in Africa. The National Security Strategy of 2002 is an example of these terrorist concerns: ―In Africa promise and opportunity sit side by side with disease, war and desperate poverty. This threatens both a core value of the United States – preserving human dignity – and our strategic priority – combating global terror‖ (The White House, 2002). Consequently, the U.S. considers to have the moral obligation to ensure stability in Africa, leading it to install military programs in several countries. In 2007, in an attempt to find an appropriate response in fighting terrorism, the Bush administration announced the creation of AFRICOM (Klare & Volman, 2006: 303) aimed to protect and defend the national security interests of the United States by strengthening the defense capabilities of African states in order to deter and defeat transnational threats and to provide a security environment conducive to good governance and development‖ Klare & Volman, 2006). More recently, the deployment of approximately 100 American military personnel to Uganda, to advise military units in capturing or killing the Lord‘s Resistance Army leader, Joseph Kony, can‘t hide the purpose of containing the spread of terrorism in that region. A key question, for some, is whether the response to fight this small radical organization has an ulterior motive to achieve strategic interests, since this is a region that is becoming a new oil producing spot. To some authors, such as Michael Klare and Daniel Volman, the establishment of U.S. military bases in strategic African regions also seeks to help to ensure the access to natural resources and ―fight indigenous forces that might threaten the free flow of oil exports and other minerals‖ (Klare & Volman, 2006:303). Additionally, many American and African observers believe that this new political enhancement is the beginning of a longer U.S. military presence in Africa, in order to indirectly ensure free access to strategic resources; to observe China‘s rise closely on the continent; and to create a secure environment for oil companies(Cruz & Stephens, 2010; Habiyaremye, 2011).

3.6 US Strategies 3.6.1 Economic The Chinese initiatives and economic successes discussed in the previous chapter have been followed closely by the U.S. In 2000, the same year that China established the FOCAC, the Clinton Administration introduced a comprehensive U.S. trade and investment policy for the African continent - the African Growth and Opportunity Act (AGOA). Since then, AGOA has been the main economic act to strengthen the U.S. Africa relationship, and the only successful economic response to China in Africa and it also has had a predominant role in acquiring oil and natural resources. In fact, energy resources have dominated the products imported from Africa under AGOA. Since 2000 exports under AGOA have increased from $8.15 billion in 2001 to $53 billion in201161, 90% of which have been energy related products.62 Also, during the first term of the Bush Administration (2001-

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2004), the Millennium Challenge Corporation (MCC) (2004), a multi-billion dollar program which provides assistance for ―compact agreements‖ to reduce poverty and stimulate the economic growth, was established. The Obama Administration has also been involved in promoting a more proactive U.S economic response to China in Africa. Like his predecessors G.W.Bush and Bill Clinton, Obama has embraced AGOA to demonstrate that the U.S. commitment is more than just foreign aid, military ties, and special bilateral deals. It is a partnership in building the capacity for transformational change. On his official visits to Africa in2009, Obama has clearly expressed his wish to help African states to develop economically and treat them as potential valuable international partners. Furthermore, Hillary Clinton also visited Africa in 2011, voicing U.S. desire for sustainable investments in Africa: ―We want a relationship of partnership not patronage, of sustainability, not quick fixes. We want to establish strong foundation to attract new investment‖ (Secretary Of State, 2011). It is important to note, the official visits have been a mechanism used by the U.S. leaders to contribute to a greater U.S. engagement in Africa. However, the number of U.S. official visits to Africa in contrast with the Chinese has been highly inferior, showing once again how different methods drive different foreign policies().64 Although AGOA has contributed to increase US-Africa trade, ―the achievements of AGOA have by and large been below expectations‖ (Brookings, 2011, p. 3). In particular, it has not contributed to any visible economic transformation of African economies and has not been able to stimulate American investments in Africa (Cargill & Vines, 2010). More recently, in an attempt to encourage the U.S. and Africa to do business together, the White House has announced a new U.S. Strategy for Sub-Saharan Africa.66 In an attempt to spread the pillars of this new strategy, on July 31 2012, the Secretary of State Hillary Clinton embarked on an official journey to several African countries. Apart from strengthening the U.S.–Africa commercial relations, Clinton‘s visit has also been interpreted as an attempt to counter China‘s influence in Africa. According to Viano, ―The U.S. wants to use this visit as a manoeuvre to limit the influence of China… cautioning African leaders not to strike deals too easily with China‖ (Viano, 2012). This strategy comes only a few weeks after the Forum on China-Africa Cooperation (FOCAC) in Beijing. However, coming a bit too late in the game, only six months left in his term, Obama‘s strategy is rather a solidification of existing policy than a new policy, and it doesn‘t really establish new economic initiatives and major innovations in US-Africa trade relations. It‘s evident that the visits, speeches and meetings haven‘t resulted in delivering major economic agreements and diplomatic initiatives, apart from small programs, grants and loans. The institutional fragmentation and the lack of coordination between many American agencies deeply contrasts with the Chinese way of acting, making it difficult for the U.S. to achieve concrete economic objectives, especially as China gives African countries an alternative way of doing business and more bargaining power.

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3.6.2 Security and Military Strategies Apart from economic responses, the U.S. has also been using military initiatives and tactics, aimed mainly at combating terrorism and containing local threats to try to secure the safe flow of natural resources from Africa. The U.S. has used a variety of security assistance programs and established military bases in Africa to enhance its military influence (Volman, 2006.). As a result, the U.S. is now involved directly and indirectly in military and surveillance operations against an expanding list of regional enemies. They include: al-Qaeda in the Maghreb in North Africa; the Islamist movement Boko Haram in Nigeria; possible al-Qaeda-linked militants in post-Qaddafi Libya; Mali‘s Islamist rebels of the Ansar Dine, al-Shabaab in Somalia; Joseph Kony Lord‘s Resistance Army (LRA) in the Central African Republic and Uganda; and guerrillas from al-Qaeda in the Arabian Peninsula across the Gulf of Aden in Yemen (Turse, 2012). However, the fight against terrorism can be seen as a strategic tactic whose goals go beyond mere"war on terrorism". Many authors() argue that at a strategic level by increasing military presence in Africa the U.S. may target the access to natural resources and indirectly China‘s intensive presence in Africa. Although empirically it is more difficult to examine this, China is at least one of the potential reasons for U.S. military presence in Africa, and the US Africa Command (AFRICOM), seen by China as “unpleasant and out of sorts”(), has been the main instrument in achieving this goal. Peter Pham stated in 2007 that AFRICOM‘s main objective is “protecting access to hydrocarbons and other strategic resources…ensuring that no other interested third parties, such as China, India, Japan, or Russia, obtain monopolies or preferential treatment‖ (William, 2008). By using U.S. troops as part of the new African Command, some authors argue that the U.S. is intending to increase its presence in certain oil-rich areas, such as Sudan, Libya, Angola, Nigeria, Uganda, Kenya, ensuring in this way a beneficial investment climate for American oil firms and weakening China‘s relations with African governments. Moreover, AFRICOM‘s presence may threaten the political influence that China has established both on the continent and in international bodies. Another consideration in the implementation of AFRICOM is to help to control strategic waterways and important ports around the continent. Since mid-2000 the U S Navy has significantly increased its presence in African waters, especially on the West African coast. In addition to other goals, such as combating piracy, illegal fishing and illegal trafficking, the fact remains that oil forms the primary interest and determines the nature of U S policy towards West Africa and AFRICOM activities (Klare & Volman, 2006; US AFRICOM Public Affairs, 2011). The activities intended to fight terrorism and provide security could be classified as ‗hard power‘, whereas other programs, such as military training and education programs, and humanitarian projects, are intended to build ‗soft power‘. As Nye observes: ―the military can sometimes play an important role in the generation of soft power‖ (Nye, 2008:106). However, the AFRICOM military programs appear not seem to generate soft power, since suspicions and skepticism has been raised regarding its main motives, making it harder to find partners for the implementation of the program. The diminished credibility of American policy as a result of the

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Iraq war, as well as the incapacity of the Department of Defense in adequately explaining how the command will help African countries, aroused a fear that the U.S. was militarizing its foreign policy in Africa (Warner, 2011). As Michelle Ruiters, a senior researcher at the Institute for Global Dialogue puts it ―AFRICOM would destabilize an already fragile continent and region, which would be forced to engage with U.S. interests on military matters‖ (Ruiters, 2010: 204). China, on the other hand, at the moment does not use military pressure to achieve agreements with African countries; it uses a ―soft power‖ policy based on flexibility, consistency and pragmatism, which in turn provides transparency, legitimacy, accountability, visibility and recognition among African countries. 3.6.3 Political Dimension To understand US actions in Africa, it is important to acknowledge the rivalry between the U.S. and China in the international context. Since the late 80‘s, China‘s rise is viewed with uncertainty and anxiousness in the U S. Its rapid economic growth, its rising power and influence in the world, ―raised the specter of a new global rivalry for power and influence (Friedberg, 2005:7). The prevalent debate in the US has focused on two main schools of thoughts: liberalism and realism. The main opinion in the U.S. is that a rising China has reshaped the existing global order and challenged the global leadership of the U.S. (Zhou, 2011: 626). American realist school argues that China poses a ―big challenge‖ (CNN, 2012) for the U.S. and a great power rivalry between the two is inevitable. In addition, realists defend that China‘s growing economic power and influence in the world, will translate into increased military power and allow China to reshape the rules and institutions of the international system to better serve its interests(Brzezinski & Mearsheimer, 2005). On the other side, proponents of the liberal perspective suggest that U.S. officials should pursue an engagement policy instead of a containment one, since they believe that by reinforcing bilateral economic exchanges and institutional ties will create shared interests and reduce the uncertainty of a belligerent China. Liberal authors consider that the expansion of China‘s involvement in the international institutions will promote communication and mutual understanding, reducing at the same time the prospects for conflict (Brzezinski & Mearsheimer, 2005). These two main visions have also influenced the debate on China‘s engagement in Africa. There are four key concerns that dominate U.S. discussions with respect to the Chinese presence in Africa. The first major concern is defended by the realist followers who argue that the growing Chinese interest in Africa will directly affect the U.S. interests in ensuring access to African oil. According to Brookes and Shin (2006), Chinese investment in the African oil sector is a way of deliberately blocking the supplies to importing countries and keeping the U.S. out of African markets, advocating that the only way to ensure U.S. interests in Africa is through increased economic and military presence on the continent. The second concern is focused on structural aspects regarding how China conducts business in Africa - calling into question the fundamental values of the West,

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particularly human rights, transparency and good governance practices (Hilsum, 2005:18-19). Some authors fear that its strong sense of autonomy, independence, and no strings attached policy can easily cease the long efforts of the U.S. to "improve" the African regimes regarding their transparency, governance and corruption. Furthermore, another realist perspective argues that Chinese expansion in Africa is part of an overall strategy to challenge U.S. leadership in the world. According to this vision, China‘s growing economic and strategic power contributes to a major change in the balance of power over strategic and economic influence on the African continent, which can bring a high potential for conflict and a change in terms of world leadership (Bernstein & Munro, 1997). Finally, a liberal and optimistic view, seeking to calm "the spirits", claims that ‗‗the current state of China-Africa links is not a significant foreign policy threat to America‘s interest in Africa‖ (Yi-Chong, 2008). According to this view, China‘s engagement in Africa should be seen as an opportunity for the U.S. since there are many areas for cooperation between the two countries (Wilson III, 2005). In brief, it is obvious that the U.S., like China, intends to pursue a ―soft power‖ policy with African countries. Both countries have been very active on the African continent, but always cautious in their speeches and in diplomatic and political initiatives. In reality the two pursue their interests always ―under the veil of moral superiority‖ (Yi-Chong, 2008:15).

3.7 Chinese Strategies in Africa 3.7.1 Public Diplomacy and Soft Power China‘s approach to Africa has undergone changes in the last decade, with noticeable emphasis on public diplomacy and soft power. The shift underlines the reality that economics and trade, long the plank of Sino-Africa relations, are insufficient in promoting the kind of long-term, sustainable relationship that both Africa and China desire. It is these policies that Hu Jintao referred to at the 2012 FOCAC as a ―new type of China-Africa strategic partnership‖. The rise of China as a big global power player has aroused anxiety over its hegemonic potential-the ―China threat theory‖. The ―China threat‖ has been the main obstacle for improving China‘s international image (Wang, 2008).To redress the China threat theory, China embarked on a campaign to change this international view and make the world accept the rise of China as a power. China proclaims a peaceful rise, directed towards contributing to a harmonious world, and by offering and creating strategic opportunities (Wang, 2008). The peaceful rise strategy means China is trying to get the outside world to accept its rising power. The task of projecting this image of a trustworthy China, cooperative, peace-loving country and a responsible player in global affairs falls to soft power diplomacy (Zhang, Wasserman,& Mano, 2016).). Thus in recent years, China has sought to supplement its traditional use of hard power with soft power, by paying more and more attention to public diplomacy. As explained by He Wenping, Director of

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African Studies in the Chinese Academy of Social Sciences, ―with its rapidly growing economy, China has begun to cultivate the attraction of its language, culture, political values and diplomacy around the world. Africa is perhaps the most important testing ground for the promotion of Chinese soft power‖ (Sun, 2014). Soft power, according to Joseph Nye, ―arises from the attractiveness of a country‘s culture, political ideals, and policies‖ and results in ―a more favorable public opinion and credibility abroad‖. It is ―the ability to get what you want by attracting and persuading others to adopt your goals‖, by opposition with hard power, which resorts to economic incentives and military strength – the famous ―carrot and stick‖ diplomacy – to influence others‘ behaviors. China‘s current African policy takes its roots in a corpus of soft power policy proclamations and official principles designed from the outset to be attractive to leaders from the developing world, and China‘s endorsement of this concept in its quest for African resources and political support is quite clear (Nye, 2004). In 2006, Chinese leadership officially outlined their foreign aid policy towards Africa in a paper, China‟s African Policy. This foreign policy is based on Five Principles of Peaceful Coexistence: 1) mutual respect of sovereignty, 2) mutual non-aggression against other sovereigns, 3) mutual non-interfere in internal affairs, 4) mutual benefit and equality, and 5) peaceful co-existence (Jiabao, 2004). In FOCAC ministerial meetings, China has underscored strengthening personal bonds and civilizational ties that serve as the underpinning for stronger political, economic, and commercial relations. To develop such connections, China has expanded media people-to-people contacts, cultural exchange programs, and educational and training initiatives that enable Africans to spend time in China, learn Chinese language and culture, and engage Chinese counterparts. At the same time, China has engaged in a range of health projects and activities. Over the past few years, China has greatly expanded the number of Chinese-owned news outlets operating in Africa as means of presenting a ―Chinese face‖ in a media environment historically dominated by the West (Wu,2012). China‘s rise is accompanied by mounting anxiety on the part of the international community. Beijing is conscious of the need to provide an alternate perception of its rise by addressing tensions surrounding it. Fijałkowski, Ł. (2011). 3.7.2 Media Power Media is underpinned as China‘s key soft power component in Africa. Early 2009, China allocated $6.6 billion specifically towards expansion of its media in Africa (Akkermans, 2009). While the official Chinese news agency Xinhua, has been in Africa, by 2009 it had expanded to more than 28 bureaus in English and French (Shinn & Eisenman, 2012; Zhang, 2013; Helge Rønning, 2014). At the beginning of 2011, Xinhua‘s television station, ―CNC World,‖ was launched. A year later the

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state-run Chinese Central Television (CCTV) set up ―CCTV Africa‖ in Nairobi as the first broadcast overseas (McKenzie, 2012). In the same year, China Daily entered the African market (BBC, 2012).These media developments allow China to compete with the Western media such as Reuters, BBC, CNN, and Voice of America. The strategic importance of media in China‘s foreign policy was underlined by Liu Guangyuan, PRC Ambassador to Kenya in a speech on ChinaAfrica media cooperation in Nairobi, Kenya: In this era of fast development of information and globalization, media play a crucial role in the transformation of international relations and foreign policies. Unfortunately, in today‘s setting, dominant information mainly flows from the few developed countries to the developing countries. Stories and information from developing countries are often edged out. This reality creates a serious gap that affects how developing countries view themselves and the rest of the world (Guangyuan, 2013). Ambassador Liu stressed the importance of the media in China‘s relations with Africa thus: To realize the dreams of both China and Africa, our media must play a significant role. First, our media must break the monopoly of the current international discourse. . . . Second, our media should report China-Africa friendship positively . . . to nurture greater cooperation, friendship and partnership among our people. . . . Third, our media should serve common development interests shared between China and Africa (Guangyuan, 2013). At the governmental level media exchange is vigorously promoted. In 2012, the first high- level China-Africa media cooperation forum was held in Beijing. This forum was attended by more than 200 delegates from 42 African Counties. China has also made inroads in the publishing industry in Africa. CHINAFRICA Media and Publishing Ltd .Its activities include China‘s culture, opinions, economic and social development, including the challenges during its development,‖ with special attention to ―hearing African voices in a bid to understand their needs to develop relations with China.‖(Xinhua, 2012) 3.7.3 Cultural Diplomacy In 2010 Premier Wen Jiabao wrote in, the People‟s Daily that China would more actively engage in ―culture promotion,‖ underlying the notion that soft power had become a key concept in contemporary international relations. In the context of Africa, this involves disseminating a positive narrative to Africans through media, culture, and people-to- people exchange. Culture has been identified as a key tool for conveying the messages of peaceful development and harmonious coexistence. It is increasingly identified as ―a mission more arduous and critical to guard national cultural security and to boost national

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soft power and Chinese culture‘s international influence‖. The significance of culture as adjutant of China‘s diplomacy was underlined by President Xi Jinping during his trip to Africa in 2013 when he called people-to-people exchanges ―an important pillar for the new type of strategic partnership between China and Africa,‖ adding that it provides a ―soft propellant‖ and ―spiritual impetus‖ for the entire relationship (Jinping, 2013). People-to-people exchanges have always been a part of China‘s engagement Leaders Forum to promote exchange among young intellectuals and aspiring leaders (MFA, 2011; 2012). The programs build on previous successful people-topeople initiatives, such as the China-Africa Joint Research and Exchange Program, launched on March 30, 2010, to promote exchanges between scholars, think tanks, and intellectuals. So far, that initiative has reportedly completed 64 projects, including research programs, seminars, academic exchanges, and book publishing (MFA, 2012). To intensify these relations, the 2012 FOCAC included a strong civil society/people-to-people theme, calling for greater interaction between non-official Chinese and African actors, such as universities, think tanks, and nongovernmental organizations (NGOs). This was followed by various progammes in 2011 and 2012 which included The China-Africa People‘s Forum to enhance exchange between African and Chinese NGOs; the Forum on Local Government Cooperation to create formal linkages between subnational Chinese governments and African counterparts; the China- Africa Think Tank Forum to promote academic exchange; and the China-Africa Young Leaders Forum to promote exchange among young intellectuals and aspiring leaders (MFA, 2011, 2012). Linked to the China-Africa Think Tank Forum is the Think Tank10+10 Partnership Plan, which aims to link ten think tanks in Africa with ten from China to form longterm academic and exchange partnerships. The plan is supported by the Chinese Ministry of Foreign Affairs and organized under the auspices of the Beijing Action Plan of the 5th Ministerial Meeting of FOCAC, which was held in Beijing in 2012(South African Institute of International Affairs, 2013). According to the Chinese-issued communiqué, the thinking behind the plan is to create new ―theoretical thinking‖ on Sino-African relations and contribute to ―uplifting the discourse power of developing countries in international affairs‖ (MFA, 2013). Over the years the scope and scale of Chinese scholarships has greatly increased. At the 2012 FOCAC, Hu Jintao promised to train 30,000 Africans offer 18,000 scholarships, and build cultural and vocational skills training facilities by 2015(Jintao,2012). For comparison, the 2009 FOCAC Action Plan offered 5,500 scholarships and promised to train 20,000 Africans by 2012(FOCAC, 2009). In total, China claims to have offered more than 20,000 government scholarships to African students, trained more than 30,000 African professionals, and sent to Africa more than 350,000 technicians, young volunteers, and agricultural experts (Xuejun, 2012). The Confucius Institutes (CIs) have played a major role in the global transmission of Chinese language and culture.

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In the cultural dissemination strategy the 38 Confucius Institutes (CI) and 12 Confucius Classrooms (CC) operational in 27 African countries play a pivot role(). Confucian teachings and principles with their unequivocal focus on humanity, education and harmony are expected to bind ethnic Chinese all across the world and attract other countries to China, through their non-dogmatic virtuous appeal. Indeed, Confucian thoughts are most representative tenets of a ―global‖ doctrine that the CPC is comfortable in identifying with and disseminating across the world. Taking off in 2004, the CIs were originally designed to promote Chinese language and culture. Over time their mandate expanded from cultural interaction and exchanges to academic collaboration. Their programs now depend on the scope demanded by host countries. Confucius Institutes are expected create improved awareness of Chinese language and culture which will orient Africans increasingly toward China. Confucius Institutes are clearly a central element of Beijing‘s efforts to cultivate young Africans who, according to Ambassador Tian, ―know China, enjoy Chinese culture and are willing to carry forward China-Africa friendship‖( Xuejun, 2012). By 2012, China had built 31 Confucius Institutes and five Confucius classrooms in 26 African countries (China-Africa Economic and Trade Cooperation, 2013). Speaking at a 2012 Conference of Confucius Institutes in Africa, Tian Xuejun, Chinese Ambassador to South Africa Tian noted that Confucius Institutes are ―more than a place for African people to know Chinese language and culture‖; rather Confucius Institutes are ―the ‗cultural business card‘ of China,‖ intended to ―promote Chinese culture so as to present a comprehensive, dynamic and vivid picture of China to the whole world, at the same time, showcase the image of the Chinese nation and people as open, peace-loving and hardworking‖.( Xuejun,2012). Besides all these, other cultural packages include popularization of Chinese sports notably martial arts and table tennis. In addition Chinese cuisine is fast taking root in Africa. In 2012, ministers of culture from China and Africa, for the first time, held their own forum at the FOCAC. Forty-five African countries participated and marked the year of ―African Culture Focus‖ in China, with African exhibits and performances taking place countrywide (Xinhua, 2012). Under the ―Sino-African Cultural Partnership Program, China and Africa have expanded cultural exchange.‖ The program aims to build 100 cultural institutions in China and Africa and establish a human resources and cultural business development component to help African nations develop their cultural industries (Zhang Rui, 2012). Although Chinese soft power is growing, Chinese officials recognize the challenges ahead. As one MFA official put it, ―Right now, cultural attraction and awareness is lacking, like a stool that is missing a leg. Chinese weak soft power in Africa is a function of weak soft power influence globally.‖ Time, according to the official, is on China‘s side: ―As China‘s soft power increases globally, so will our soft power increase in Africa‖ (Hanauer & Morris, 2014). There are likely limitations to China‘s soft power, however, as European football and American pop music are

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tough competitors for influence among African youth; as David Shinn noted, ―Chinese opera just does not cut it in Africa‖( Hanauer & Morris,2014) 3.7.4 Health Diplomacy Health diplomacy is the other key component of Chinese public diplomacy that is increasingly gaining prominence. Medical cooperation between China and Africa dates to 1963, when the Chinese government dispatched a medical team to provide supplies and medical assistance to the Algerian government(Anshan,2011).Since then, Chinese medical aid in Africa has expanded substantially to include medical teams, anti-malaria campaigns, medical training and cooperation, and financing for clinics and hospitals. In general, China views medical aid as an important component of South-South relations and of China‘s broader soft power goals on the continent. Since 1964, more than 20,000 Chinese medical personnel have reportedly provided services in Africa (Yin, 2013). Among the 1,700 current Chinese aid projects in Africa identified by U.S.-based Aid Data, more than one-tenth are health-related, consisting mostly of medical staff, infrastructure projects, and medicine donations (Yin, 2013.). Another report estimates that the Chinese government had given $864 million in medical aid over the past five years (Fan, 2013). China is involved in a range of health projects in Africa which anti-malaria campaign, construction of medical facilities. China is also using medical academic exchanges. It has established the Ministerial Forum of China-Africa Health Development, an annual meeting for discussing the expansion of health cooperation mechanisms between China and Africa. In addition, China‘s Center for Disease Control and Prevention launched five training workshops over the past three years on such topics as ―Infectious Diseases Prevention and Control‖ and ―Prevention and Control of Malaria and Schistosomiasis‖ (National Institute of Parasitic Diseases; Chinese Center for Disease Control and Prevention). The ―International Roundtable on China-Africa Health Cooperation‖—a Chinese governmentsponsored forum on China-Africa health cooperation—recently completed its fourth conference in Botswana. The Botswana Conference focused on research and development—in particular ―building Capacity for research‖ and ―technology transfer‖ in Africa—as priorities (Ogodo, 2013). All these have proved to be fruitful vectors of soft power in the continent. Among its most recent initiatives, Beijing plans to begin trial operations of Chinese-built ―container hospitals‖ in either Cameroon or Namibia by the end of 2013 (Jiao,2013).Each hospital consists of ten containers with rooms for ―general clinics, waiting patients, treatments, a pharmacy and back-up power supply‖ (Jiao, 2013). These portable hospitals were developed for long-term service use near suburban villages with limited access to medical care. China‘s focus on infrastructure and training has made tangible contributions to African health care needs, it is accused of operating outside the framework of many

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international health organizations, such as the World Health Organization. However, there are signs that China is shifting towards more collaboration with the other institutions. Of recent began working with organizations such as The Gates Foundation and the World Health Organization on malaria and HIV/AIDS treatment (Ungerleider, 2011). Calls for China to align its efforts with those of the global health organizations may prompt Beijing to augment its top-down, bilateral approach to Africa with multilateral efforts in the coming years. 3.8 Implications for Africa Sino-US completion in Africa has generates positive as well as negative implications for Africa both in the short and long run. The completion offers Africa an opportunity to reinvent itself and position itself as the continent of the 21 st Century. It allows Africa to redefine its engagement not only with the two dominant powers but with the other powers as well. From this, both Sino-US competitions in Africa can either be beneficial or bad. That Africa is benefitting from the Sino-USA competition is obvious. China is providing Africa with vital infra-structure in such as roads, power dams which are enhancing socioeconomic development and intra-African trade. Infrastructure has the potential to provide greater economic and market coherence and scale to a fragmented continent. In terms of trade, China has supplied Africa with cheap consume goods that have been able to rescue the continent from the negative effects of liberalization reforms enforced on it from the 1980s to date. It is also observed that the encouraging( over 5%) economic growth that Africa registered in the last decade is a result of China‘s demand for natural resources particularly minerals. A similar observation can be made for the US. In addition Africa has benefitted from in the health sector. Faced with devastating diseases notably HIV/AIDs, Malaria, and Ebola, both the US and China have made tremendous interventions to curb the scourge of these diseases. Driven by the competition, both countries have increased Direct Foreign Investment in Africa, although still small compared to other regions. Politically, the US insistence and active support for democracy and human rights issues is gradually gaining an impact in Africa. From capacity building perspective both countries are extending to Africa educational and training facilities in a wide area of fields. In some instances Africa is also gaining political and diplomatic support particularly from China in for a as the WTO. There are also some limited gains in technology transfer from both countries. Clearly, Sino-US competition in Africa has provided the continent with a ‗window of opportunity‘ in navigating the international community that has not existed since the Cold War era of SovietAmerican competition. The Sino-US Africa competition carries several dangers. It is potentially divisive, thus undermining continental integration. As the drive for natural resources intensifies, resource conservation considerations run the risk of relegation. This can

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spell disaster for Africa, which may wake up to find out that the resources have depleted. Besides depletion, the continent will find itself trapped in climate change effects. The two countries have no coherent technology transfer policy to Africa. Had such a policy existed Africa would have seen mineral and timber processing plants. In fact an Iron and steel industry could have been established in the Democratic Republic of Congo. At the policy it is quite clear that the engagement agenda is set by the two countries thus leaving Africa to play the second fiddle. Africa must find its voice in redefining the Sino-US competition on her own terms own terms, not on either Western or Chinese terms although there are significant interests of convergence with either power. Keeping in mind that lowest common denominator in international relations is power and interests, Africa needs to interrogate her relations with the two powers. It is only through critical interrogation of theses relations can Africa develop the ability to advance her interests. By this Africa should be able to locate where her interests converge with either power. In otherworld‘s Africa must develop an adroitly calibrated diplomatic strategy with the two powers that makes her visibility felt. As it is now Africa is but an object of this engagement politico-diplomatic strategy towards her Sino- US competition. Briefly, the Sino-US-Africa issue is an appropriate point-of-departure for interrogating where Africa is headed in its overall international relations, especially since other powers are also looking at Africa‘s natural resources. From the African vantage point, this raises the question of agenda setting on the continent: Whose agenda? An African agenda for Africa? Or a Chinese, US agenda for Africa? References Akkermans, J. (2009). China plans 45 billion Yuan media expansion, Morning Post Says. Bloomberg.com, January 12, 2009. Alden, C. (2000). From neglect to ‗Virtual Engagement‘: The United States and its New Paradigm for Africa‖. African Affairs, 99, 355–371. Alden, C. Large,D. and de Oliveira, R. S. (2008). China returns to Africa: A Rising Power and a Continent Embrace. Columbia University Press: New York. Alexis Arieff et al,(2011). U.S. Foreign Assistance to Sub-Saharan Africa: The FY2012 Request. Congressional Research Service Report R41840 Brookes, P., and Shin, J. (2006). China's influence in Africa: implications for the United States. The Heritage Foundation, No. 1916. Brautigam, D. (2009). The Dragon's Gift: The real story of China in Africa. New York: Oxford University Press. ―China Will Be Africa‘s All-Weather Friend and Partner: Chinese President,‖ People‟s Daily Online, May 30, 2013.

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CNN, W. S. (2012). Kissinger: China poses 'big challenge' for U.S.", June. Retrieved from CNN: http://edition.cnn.com/2011/POLITICS/06/12/kissinger.china/index.html Crawley, M. (2002). With Mideast Uncertainty, US turns to Africa for oil. The Christian Science Monitor Cruz, J. D., and Stephens, L. K. (2010). "The U.S AFRICA COMMAND (AFRICOM): Building partnership or neo-colonialism of U.S.-Africa Relations? Journal of Third World Studies, Vol. 27, No.2, 193-213. Edinger,H.Herman, H. &Jansson,J.(2008). New Impulses from the South: China‟s Engagement of Africa. Centre for Chinese Studies. Stellenbocsh University. Stellenbocsh. South Africa Friedberg, A. L. (2005). The Future of U.S.-China relations. Is conflict inevitable?‖ International security, (30) 2: 7–45. Fijałkowski, Ł. (2011).China‘s ―Soft Power‖ in Africa? Journal of Contemporary African Studies, (29)2: 224. Guangyuan, L. H.E. Ambassador(2014). Deepen China-Africa Media Cooperation and enrich the China-Africa community of shared destinies. Speech at the seminar on China-Africa Media Cooperation on 18th November 2013, Chinese Embassy in Kenya, November 19, 2013. As of January 22, 2014: http://www.fmprc.gov.cn/eng/wjb/zwjg/zwbd/t1100583.shtml Helge R. (2014). How much ‗Soft Power‘ does China have in Africa? Paper presented at the international conference China and Africa Media, Communications and Public Diplomacy, 10 - 11 September 2014 Beijing Hill, J. (2004). China Covets African Oil and Trade. Jane‟s Intelligence Review, Hilsum, L. (2005).The Chinese are coming. New Statesman, 4 July 2005. Jones, C. V., and Williams, R. (2012). U.S. Trade and Investment Relations with Sub-Saharan Africa and the African Growth and Opportunity Act‖. Congressional research service: 1-45. Klare, M., and Volman, D. (2006). America, China & the scramble for Africa's Oil". Review of African Political Economy, (33)108: 297-309. Lyman,P.N.(2006). More than Humanitarianism: A Strategic U.S. Approach toward Africa Report of an Independent Task Force. The Council on Foreign Relations McKenzie, D. (2012). Chinese media make inroads into Africa. CNN, September 25, 2012. As of August 15, 2013: http://edition.cnn.com/2012/09/05/business/china-africa-cctv-media Munemo, J., (2013). ―Examining Imports of Capital Goods From China as a Channel for Technology Transfer and Growth in Sub-Saharan Africa‖, Journal of African Business, 14(2), pp. 106-116. Nye, J. (2008). Public diplomacy and soft power. The Annals of the American Academy of Political and Social Science, 616. Nye,J.(2012).Why China is Weak in Soft Power. Nye. (2011). The future of soft power. New York. Public Affairs Ogodo, O. (2013). China-Africa Joint Medical Research to deepen. SciDev.Net, July 5, 2013. As of July 26, 2013:

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http://www.scidev.net/global/health/news/china-africa-joint-medicalresearchto-deepen-.html Osei, B., & Mubiru, A. M. (2010). Chinese trade and investment activities in Africa, African Development Bank‟s Policy Brief, 1 (4):1-12. Patten, C. (2009). What next? Surviving the twenty-first century, (s.l.), Penguin. Pengfei, Z. (2012). CCTV Africa‘ and ‗I Love Africa‘ Mobile TV launched in Kenya http://english.cntv. cn/20120112/106326.shtml Power, M., and Mohan, G. (2008). The geopolitics of China‘s Engagement with African Development. Geopolitics, 15(3): 462-495 Renard,M.(2011). China‟s Trade and FDI in Africa. African Development Bank Group Sergio G. (2014). Changing the Narrative China‗s Media Offensive in Africa. International Policy Analysis.Friedrich Ebert Stiftung Shinn, D., & Eisenman, J. (2012). A historical overview of China-Africa Relations. In China and Africa: A Century of Engagement: 17-55. University of Pennsylvania Press. Simeon, H. (2010). The new U.S.-China rapprochement: A View from Africa. Journal of US-China Public Administration, (7).2. Sun,Y.(2014).Africa in China‟s foreign policy. John L. Thornton China Center and Africa Growth Initiative. Brookings. The White House (2002). National security of the United States of America. The White House (2012). U.S. Strategy towards Sub-Saharan Africa Tian, Xuejun, Chinese ambassador to South Africa, ―Friendship and Cooperation for a Better Future of China-Africa Relations,‖ speech to the South African Institute of International Affairs (SAIIA), ———, ―Remarks at the South African Institute of International Affairs,‖ Johannesburg, SouthM Africa, July 17, 2012b. As of July 30, 2013: Thrall,L.(2015).China‟s Expanding African Relations: Implications for U.S. National Security. RAND Corporation, Santa Monica, Uchehara, K. E. (2009). China-Africa Relations in the 21st Century: Engagement, Compromise and Controversy. Uluslararası İlişkiler, 6 (23): 95-111 Ungerleider, N.(2013). Bill Gates and the Chinese Government Want to Take on World Hunger,‖ Fast Company.com, October 31, 2011. As of July 26, 2013: http://www.fastcompany.com/1791617/bill-gates-and-chinesegovernment-want-take-world-hunger Walle, N. V. (2009). US Policy towards Africa: The Bush Legacy and the Obama Administration. African Affairs, 109/434, 1-21. Wang. (2008). Public Diplomacy and the Rise of Chinese Soft Power. Annals, AAPSS, 616.) Wang, L., & Zheng, J., (2012). ―China‘s Rise as a New Paradigm in the World Economy: Preliminaries‖, Journal of Chinese Economic and Business Studies, 10(4), pp. 301-312. Yi-Chong, X. (2008). China and the United States in Africa: Coming Conflict or Commercial Coexistence? Australian Journal of International Affairs, 62(1): 16-37.

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Wenping,H.(2008). China‘s Perspective on Contemporary China-Africa Relations in Chris Alden, Daniel Large, and Ricardo Soares de Oliveira, eds., China returns to Africa: A Rising Power and a Continent Embrace, New York: Columbia University Press : 157 Wu, Y. (2012). The Rise of China‟s State-Led Media Dynasty in Africa. Occasional Paper N.117.China in Africa Project, South African Institute of International Affairs. Wu,Y. (2016). China‘s Media and Public Diplomacy Approach in Africa: Illustrations from South Africa. Chinese Journal of Communication, (9):1: 81-97 Yin,B.(2013). Reality check casts doubts on Chinese health aid to Africa. The Guardian, June 10, 2013. As of July 26, 2013 Zhang, R. (2012). Culture Forum Hosts African Officials in Beijing. China.org.cn, June 19, 2012. Zhang,X., Wasserman,H. and Mano,W.(2016).Eds. China‟s Media and Soft Power in Africa Promotion and Perceptions. London: Palgrave McMillan

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CHAPTER FOUR Challenges and Prospects for Peace and Security in Africa: Why China matters? PERCYSLAGE CHIGORA 4.0 Introduction The African insecurity situation is treated as if its roots lay no more than a few years in the past rather than decades or centuries. Lessons learnt from history of Africa presence images founded on slavery, colonialism, and racism. Recent look on Africa reveals that end of colonialism and systems of oppression like apartheid have not ended. In fact they have surfaced in changed form, assuming the same role of facilitating exploitation and oppression of Africa. Post-colonial Africa has been ravaged by insecurity situation ranging from war to poverty. War in earnest has retarded socio-economic development and spawned thirteen million displaced people and five million refugees. (African Union, 2004).The causes and consequences of these wars in Africa are multifaceted. Often historical, structural, and ecological factors have shaped the socio-political environments in which conflict occurs. External and internal actors and processes have also interacted in influencing the dynamics of local conflict, be it conflict over the demarcation of borders, ethnic and religious-rivalries, feuds over increasingly scarce resources or political opposition. There appears to be an overall failure to dealing with issues of war whilst others have come and gone (Sierra Leone, Liberia, DRC) some have continued and new ones emerging (Somalia, Sudan, South Sudan, and recently in Libya). Some of the insecurity concerns can be traced back to the colonial era, when ethnic, cultural and social differences, as well as economic viability, were not considered in the cartographic exercise of colonial powers. Colonial powers constructed economies skewed towards the extraction and exportation of raw materials, often producing small enclaves of development. In the post-colonial era, control over these sites of extraction created and fuelled conflicts. Patronage, nepotism, favouritism, and tokenism in appointments to military, political and bureaucratic

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positions exacerbated ethno-regional conflict and continues to shape political consideration in the present day Africa. During the Cold War, Africa became a battleground for East-West conflict, and the continent was flooded with arms. The end of the Cold War in the late 1980s paved the way for political change in Africa. Not only did the continent lose its strategic value to the West, as evidenced by unwillingness by some Western governments to continue supporting autocrats for ideological reasons, but also the post-Cold War ―Washington consensus‖ made democracy, good governance and economic structural adjustment measures pre-conditions for aid. Which in a large way, have contributed to the implementation of development programmes which do not prioritise the needs of the general populace but dictates of the western donors. These developments, along with increasing calls for democratization by civil society groups, led to the ―third wave‖ of democratization, and to new holistic conceptions of conflict resolution and peace building in Africa. The new thinking instead of bringing stability as envisaged it has led to exploitation and bifurcation of society, thus creating an atmosphere of insecurity which affects Africa today. 4.1 Contending Contemporary Issues of Peace and security The problem of Africa features the complex internal security environment characterised by security challenges ranging from terrorism, cross border security threats, failed states and internal conflict, self-interest- states have their own heads, armies and flags, leadership failure, one party state, personal rule, emergence of coups and counter coups, drought, corruption, mismanagement, ill-conceived policies, skills shortages, political risks, stringent regulations and bureaucratic obstacles. Externally, the key challenges are related to the consequences of global inequalities, proliferation of weapons of mass destruction, emergence of new interventionist policy doctrines, dependency relationship, and external subjugation. It has emerged that since 1963 achieving continental security has remained illusory, African continent has continued featuring chaos, coups, conflicts-intra and interstate, economic decline, political turmoil, cultural and social decadence. The status of the continent has continued featuring a ―Mixture of manmade disasters, from unscrupulous rulers to international economic policies, including American and European barriers, and unrelenting cycle of conflict‖. (Somini Sengupta, Begggar 2004: 2) The case of both natural and man made “…include historical legacies of slave trade and colonialism and the nature of post-independent African state and the nature of political contest therein or lack of such context, external intervention in the internal affairs of African countries by political powers of various denominations and vintages, external interventions driven by brute economic motives and internal destabilisation driven by motive of capturing the state and its coffers”( Ali Abdel Gadir Ali, 2000:235).

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Economically, security has been viewed as freedom from want, Africa‘s traditional importance as a new supplier of raw materials has not brought any meaningful benefits to the people of Africa. This has to do with who controls the global resources and who determine their distribution and prizing. The need to extend the benefit to the general populace has been meant with severe limitation leading to borrowing, thus, the resultant government indebtness and lack of economic growth. As Asante puts it, despite efforts to stimulate growth, supported by massive aid and technical assistance by both bilateral and multilateral agencies, to foster agricultural production and to initiate other developmental programmes to bring about more fundamental changes in the economic structure inherited at independence the continent remains the most economically, socially and culturally deprived of all the regions the world. (1987:131). Most governments in Africa now relies more on donor funds even in their national budgets. One sad reality is that the donations do not come free of charge as states are expected to behave in particular manner if they are to access funds for the future. It appears Africa in terms of division of labour remains at the lower strata as compared with the rest of the world. In the stratum Africans are merely producers and exporters of raw materials. Whether extraction of these raw materials is in the hands of the Africans or African governments is a question to ponder. However, what is clear is that western interlopers have been the major beneficiaries. According to Dani Nabudere, ‗the African peoples can be said to be the authors of African independence for this was struggled by them, yet African nationalist ideology and the African post-colonial nation states were creations of the European global imperialist project‘. (Dani Nabudere 2000:11), In essence an African today/leader of today is a breed of general masses whose grievances were combined by the ‗new African political elite which had emerged within the cultural, social and economic frame work of the colonial political economy‘, they grew with the colonial system of education or having been educated and trained in the west where, ‗the objective of access to education…was to enable the African individual to move to the level of ‗modern industrial high culture‘ from the old ‗low culture‘ of the village‘.(DaniNabudere 2000:12), Politically, lack of a sustainable democratic tradition and interference from international actors with hidden interest in African countries has hindered security. National leaders have consistently strove to protect their interest by maintaining their stay in power. This guarantees their continued access to the scarce resources. It also explains why they cannot challenge global hegemony by global powers because they need the resources to keep themselves in power and ensure their survival politically at the expense the general populace which are poor and less powerful. The western powers have realized this dilemma and are capitalizing on the situation to continually access the resources. Seeds of division have continued for African countries to unite. The West‘s relationship with Africa has to a larger extent been that of a horse and its rider. There has been a tendency by the west to treat their former African colonies as appendages of their own states. This has led

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to the asphyxiation of self-determination and independence of individual countries. In the end the decisions and policies that are made in African states, are exclusively in tandem with the interests of the capitalist centre. Socially, in Africa levels of poverty, endemic diseases and unemployment are continuing and rapidly worsening. African community at least for the majority situation has never improved. The availability and quality of social services have been greatly reduced. Cycles of non-improvement of one‘s situation have been the order of the day for the majority. With relentless continuation of social troubles communities have experienced Social squabbles often leading to ethnic, religious, regional and national hostilities. Being poverty-stricken places a nation and people on dependent relationship with the developed world. Culturally, as international NGOs parade themselves in communities with aid from the donors, names of their countries will be presented as if they are the havens for their survival, thus culturally adopting the influences of those that strive to aid them in all spheres of influence. It becomes apparent that projects that are meant to transform the communities have been left out of the equation and the talk about sustainable development a mere joke as these NGOs have devised ways of ensuring their sustainability not sustainability of the people. External manipulation and interference is at its highest level in Africa. Changing global regimes characterised by periods of the eras of slave trade, imperialism, world war, decolonization, bipolarity, global interdependence never presented Africa with any benefits rather it enabled creation and reinforcement of institutions for the continued exploitation of the continent and its people. Internationally, the consequences of global inequalities, proliferation of weapons of mass destruction and emergence of new interventionist policy doctrines have negatively affected the African continent. Current global trends in development reveal that insecurity concerns are prevalent in Africa more than any other continent. External subjugation of African states is continuing by other powerful states in the third world itself and the west and other newly emerging economies and institutions. The questions that need to be raised is ―who owns global finance?‖ ―Who conducts the global economic policy?‖ The reality is that Africa has been the victim of western interests which have continued to dominate the world to this day. Efforts have been made nationally and globally to address peace and security issues in Africa but issues of insecurity have remained. Nkrumah had tried to answer these questions before well back in 1963 but it appears the practicability of his suggestions is far divorced from the realities on the ground today. Firstly, was to have an overall economic planning on continental basis.(Nkrumah 1963:218) It has not been possible, economic policies have been more influenced by an assortment of ideologies and they do not originate in Africa, not originating from sovereign African states but from the outside world and beyond the control of African governments, International Financial Institutions, developed countries, G8 and World Trade Organisation. Various states and institutions, which suffer from

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financial constraints, have been manipulated or commanded. In essence as Baffour Ankomah(2000:13) puts it ‗ the idea of always looking to foreign partners to bail out an organisation supposed to fight for African independence is one of the contradictions that will stay with the African Union for a long time‘. And it appears China has stepped in in strengthening the AU as institutions and at most gives AU some leverage when it comes to negotiating with the West. Secondly, ‗establishment of a unified military and defence strategy‘ is one of the daunting works to be set in motion. The major impediment for this strategy can best be explained as lack of resources. First, individual African nations and the continent, as a whole, lack financial resources to embark on such a grand programme. Considering that individual countries are grappling with issues of poverty eradication, it is also very difficult to imagine how such a project can be started let alone fulfilled. Second, generally, African countries lack technological resources to fulfil the ambitious programme of a cohesive military and defence strategy. Furthermore, to an outsized extent, the military hardware, technology, information strategies originate and are controlled from the north. Therefore, such a strategy only plays into the hands of big capital and thus risks being remote controlled from the imperialist north. ‗A unified foreign policy and diplomacy‘ is pragmatically utopian as there are many hindrances to such an arrangement than there are prospects. Precepts and conditionalities imposed at independence or simply the invisible rules and regulations that are governing the periphery and the metro pole naturally stall prospects of unified foreign policy and diplomacy. At most it has been bilateral rather than multilateral. Multilateralism is inhibited by failed consensus as states purely calculate their national interest according to how they would benefit themselves. States would participate and cooperate in only those aspects they view as beneficial to them. This has been the major challenge and the western countries have taken advantage of it. What policies are emerging? It remains that, ‗all the evidence, both past and present, surely points in the other direction that the design is to maintain the historical relations of industrialized countries and Africa being the supplier of primary products‘. (Nkurumah, 1963,160). In today‘s world its no longer Europe alone, the spectrum of exploiter has enlarged- USA, Canada, Australia, New Zealand, Japan and newly emerging power houses of the East. This is done within the armpits of the much western cherished globalization. According to DaniNabudere (2000:4), ‗economic globalization that is currently being pressed into countries under the guise of adjustment and stabilization programmes has been part and parcel of a western cultural project whose roots are to be found in the attempt to universalize the Christian religion against Islam, African Religion and Asian belief systems‘.

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4.2 Addressing Contemporary Issues and the Place of China Though there has been increased interdependence of states in contemporary globalization era, China‘s approach to Africa has changed dramatically since the end of the Cold War. The past two decades has seen an unprecedented involvement of China in African affairs. The relationship between China and African international actors has grown in importance. China‘s involvement in Africa has increased in tremendous ways. This has been noticeable in almost all spheres of life i.e. political, economic, military and diplomatic. China‘s interest in Africa is motivated by her vast economic needs and the desire to influence and off set rivalry from the West. For Africa, partnership with China has proved more desirable, providing a win-win situation for both sides. China‘s involvement in Africa is not a new phenomenon as it spans from long back, principally through aiding liberation struggles and supporting governments with economic aid. With regards to the rate at which Chinese influence is spreading in Africa, one question needs to be answered. It looks like China exploits her knowledge and understanding of third world countries politicians‘ fears and concerns in global politics to advance her influence. The Chinese seem to understand that there is great anti-western feeling in most African countries and that there exists a leadership vacuum among them to lead a powerful crusade against the western influence. China, which by all standards is no longer an underdeveloped country deliberately, maintains the ‗third world‘ tag, a tag that portrays her as leader of ‗downtrodden‘ third countries. Her history as former colony of the European powers allows her to promote herself as sensitive to the dignity of Third world countries. (Drew Tompson, http://www.jamestown.org)and this has won her many friends in Africa, who feel that they share a common colonial past with her. She also was not involved in the colonisation of Africa in the 19th century, so she is not tainted with the evils of colonialism. China has moved into Africa vowing never to get mixed up in the internal politics of countries with which it deals. This will in a way affect its business as an international investor if it gets involved in notoriously corrupt countries. The overall effect would be slowed pace of dealings between China and Africa, though Wenping has argued, ―common sense about human rights and sovereignty is only one of the common values shared by China and Africa,‖ adding that, ―There is no doubt that China‘s success in Africa has partly benefited from it, and those common values have laid solid foundations for further promoting bilateral relations in future.‖( Servant, Jean-Christophe, Opicit). Even China‘s deputy foreign minister, Zhou Wenzhong, has made it explicitly clear that ―Business is business. We try to separate politics from business…. You [the West] have tried to impose a market economy and multiparty democracy on these countries which are not ready for it. We are also against embargoes, which you have tried to use against us.‖ ( www.cfr.org).

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China offers African countries diplomatic support in multilateral institutions especially the UN, where she is a member of the Security Council. All African countries that have fallen out of favour with western powers seek protection from China for example Sudan and Zimbabwe. Furthermore, China‘s professed respect of sovereignty and non-interference in internal affairs is appealing to many African leaders who view the West‘s interference as tantamount to abrogation of weak nations‘ internal affairs. China has earned significant political capital among African countries through aid and debt forgiveness. This makes her a God and saviour for the downtrodden. As China‘s power and influence grows, Beijing is becoming more willing to challenge the United States, EU nations, and others in international arenas to protect its interests in Africa. Over time, differences between China and democracies over human rights and basic political and civil rights will sharpen. For example, in September 2004, the U.N. Security Council passed Resolution 1564, which condemned the mass killing of civilians in the Darfur region, but stopped short of imposing oil sanctions if Khartoum did not act to stop the killing. China abstained from the vote and threatened to veto any further move to impose sanctions. (ibid). Again in July 2005, Britain, backed by the United States and seven other countries, led a Security Council briefing on Zimbabwe‘s slum demolition campaign in an effort to organize a formal debate in the General Assembly and possibly generate a punitive Security Council resolution. (Peter Brookes and JiHye Shin, Opicit). Because of Beijing‘s strong support for Mugabe and opposition to Security Council action, the U.N. was unable to reach a consensus on further formal discussions of the issue. (Peter Brookes and JiHye Shin, Opicit).In the 21st century alone China through its veto power has served Zimbabwe three times from adverse decisions being in the UNSC which was going to negatively affect Africa. 4.3 Whose interests are being served? For Africa, China remains an attractive strategic partner by cultivating relating relations with African nations through providing aid and technical expertise. (Drew Tompson,http://www.jamestown.org). Most countries seem to find the Chinese economic development and reform model preferable to the free market and representative government policies promoted by the USA and European Union.( Brookes and Shin, Opicit). Thus, to most African countries whose human rights record are by western standards are very questionable find the Chinese development model and aid very attractive since it comes with ‗no‘ strings attatched and with no scrutiny of their domestic policies. China‘s principal interest in the continent is access to natural resources. But it is not its only interest. China‘s economic interests are wider. China‘s trade with Africa has risen sharply, from $10 billion in 2003 to $20 billion in 2004

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and Chinese goods are flooding African markets. (Princeton Layman, Opicit). The primary focus is on textiles where the growth of Chinese exports constitutes a double whammy for Africa. Exports of Chinese textiles to Africa are undermining local African industry while the growth of Chinese exports to the United States is shutting down the promising growth of African exports in this field. (Princeton Layman, Opicit).Southern Africa provides a good example of both effects. Chinese exports of textiles to South Africa grew from 40 percent of clothing imports to 80 per cent by the end of 2004. Out of 100 T-shirts imported into South Africa, 80 are from China. (Princeton Layman, Opicit). Despite criticism that China is exploiting the African countries for their resources, African countries support China‘s activities in Africa. South Africa has defended the Chinese juggernaut in Africa, saying Beijing was opening markets and helping the world‘s poorest continent reap the benefits of its vast mineral and oil riches. The Chinese have undertaken an absolute commitment that as they expand their relations into Africa they will do everything possible to ensure that it does not reintroduce old colonial type of relation… Beijing would not just be taking raw materials from Africa without partnering with us and opening up markets for exports from Africa. If handled properly, and if we are able to keep the Chinese to the commitment that relations with us must not be one of the old colonial type, I believe this forum will open up many possibilities for South-South co-operation. (The Herald Reporter, The Herald, November 25, 2006. China and African countries have resolved to bolster joint energy and resources exploration and exploitation under the principle of reciprocity and common development, says the action plan. China will work to help African countries turn ―their advantages in energy and resources into development strengths‖ while giving high priority to environmental protection and sustainable development on the continent. (Joseph Ngwawi, The Chronicle, 25 November 2006). In a move aimed at bolstering Sino-African political ties, the Chinese are have helped with infrastructural development of the African Union. 4.4 What should be done? Unity of African countries is of particular importance. By strengthening the African Union China is creating the stepping stone and a strong well organized and strengthened voice for action. At most, the African Union and regional groups/organisations should provide the first platform in the movement towards a United States of Africa, which requires time to be consolidated, or the idea to be meaningfully supported by African leaders and peoples. As outlined in the constitutive act‘s objective (b) there is need to coordinate the promotion and defense of African common positions on issues of interest to the continent and its peoples - since such commonality of values and interest leaders and African peoples will remain divided as ever. And (i) ‗coordinate and harmonise policies between the existing and future regional economic policies‘‘ as such the regional blocs become the building blocs for future full integration of the vast continent of

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Africa. As yet, the process of forming the Union government has been top-down and not iterative. The proposals have not been debated at regional level which levels should build consensus for a bigger and united Africa. The regional leaders are the ones that should be mandated by their own people for a united Africa. The role of the African Union should not be advocating human rights, rule of law, and democracy within Africa alone but the voice must be echoed globally, be heard in multilateral institutions and should fight to transform theory into practice. The African Union should not simply duplicate long-existing institutions but must begin to interrogate and question some of the wrong images portrayed about Africa. African Union should advocate and ensure that calls for human rights, democracy, and rule of law should be grounded in the fundamentals of fairness and justice. It is from that stand point that African interest will be drawn and pave way for a union government. China can help Africa through taking the African voice particularly when it comes to the powerful organ the United Nations Security Council. Civil society must rise to defend African values rather than leaving the task to the government. Genuine funders ought to be sought and move away from the proverbial stance ‗were the piper calls the tune‘. Lessons ought to be learnt that Pan Africanism was/has to be rooted in civil society and popular movement and that ‗any strategy for Africa‘s renewal needs to be grounded not in the elites but in ordinary citizens, based on basic human needs‘.(Taylor 2003:19). The civil society has largely been dependent on funding from the Western countries and the agenda which they peddle in Africa was aimed at achievement of western interests. If China could come in and assist in strengthening the civil society with genuine interest in pursuing peace and security agenda for Africa it will go a long way in the positive direction. By involving themselves with the community, in research and developmental projects new gray areas will be dealt with. 4.5 Conclusion Achieving peace and security in Africa has remained illusory as ever. While efforts are made to ensure the achievement peace and security Africa it appears that the efforts are hampered by the emergence of new security dilemmas or renewal of the once existing challenges. The solutions call for the need to generate knowledge on the nature of the African societies themselves. Thus this challenges researchers to go deeper into understanding the African society at all levels of analysis, i.e. individual, household, community, national, regional, continental and global level. For China, therefore, at higher level, there is need to strengthen the African voice and capacity in order for African countries to handle external threats and manipulation. At the lower level efforts should be directed strengthening the state‘s capacity to exploit and utilize its resources to facilitate individual, households and community development. At most cooperation between China and Africa must be based on comprehensive research and cooperation with the outside world should be based on priorities set on the full understanding of the problem. Thus in order fast

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track issues of achieving peace and security in Africa, China has a bigger role to play in supporting efforts that strengthen whole social system that involve elimination of oppression, introduction of equitable sharing of resources, and nonviolent conflict resolution. References Abate Dejen (1996) Information for Development, Democracy and security: An Overview of the Conceptual Framework of the Problem, in Maurice Lundu (ed) The Political Economy of Information on Development, Democracy and Security in Southern Africa, Sapes Books, Harare. African Union Document (2004) Visions of the African Union and Missions of the African Union Commission, March. Ake Claude, (2000) The Feasibility of Democracy in Africa, CODESSREA, Dakar. Asante S.K.B, ―The role of the OAU in promoting Peace, Development and Regional Security in Africa‖ in E. Hansen., Peace and Development: The African Perspective., Zed Books, London. Bach Daniel C. (1999) Revisiting a Paradigm, in Bach D. C. ed. Regionalisation in Africa, James Currey, Oxford. Buzan Barry (1987) An Introduction to Strategic Studies: Military Technology and International Relations, Macmillan press, Hampshire. Barry Buzan (1998) Security: A New Framework of Analysis, Lynne Rienner, and London. Booth Ken (ed) 1998. Statecraft and Security Challenge, Cambridge University Press, Cambridge. Bowker Mike (2000) European Security, in Richard Sakwa and Anne Stevenes (ed), Contemporary Europe, Pelgrave Foundations, New York. Callaghy T.M. (1991) ― Africa and the World Economy: Caught between a rock and Hard surface‖ in John W. Harbson and Donald Rothchild (eds, Africa in World Politics, West view Press, Boulder. Dougherty, E.J and Pfaltzgraff, R.L. (1997) Contending Theories of International Relations: Comprehensive Survey., Longman, New York. Evans Graham and Geoffrey Newnham (1992) The Dictionary of World Politics: A Reference Guide to Concepts, Ideas and Institutions, Harvester Wheatsheaf, Herefordshire. Goldstein, Joshua S. (1986) International Relations,. New York: Harper Collins. Harris Geoff (2005) Achieving Security in Sub-Saharan Africa: Cost Effective Alternative to the Military, Institute of Security Studies, Pretoria. Huntington S.P (1996) The Clash of Civilisation and The Remaking of World Order, Simon and Schuster. Mandaza Ibbo (1997) Race Colour and Ethnicity in Southern Africa, Sapes Harare. Mandaza Ibbo and Arne Todtensen (1994) Southern Africa in Search of Common Future: From Conference to a Community, SADC, Gaborone.

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MandazaIbbo and DaniWadadaNabudere (2002) Pan Africanism and Integration in Africa, Sapes Books, Harare. M‘buyingaElenga (1982) Pan Africanism or Neo Colonialism: The Bankruptcy of the OAU, Zed Press. London. Meredith Martin (2005) The State of Africa-A History of Fifty Years of Independence, Simon Schuster, 2005. Nkrumah Kwame (1963) Africa must Unite, Panaf, London. Sakwa Richard and Anne Stevenes (2000) Contemporary Europe, Pelgrave Foundations, New York. ShivjiIssa G. (1989) The Concept of Human Rights in Africa, CODESRIA, London. TandonYash (1999) Globalisation and the Great lakes regional Crisis, in IbboMandaza (ed) Reflections on The Crisis in the Democratic Republic of Congo, Sapes Harare. Articles AjuluRok, The African Union: The Challenges of implementation, Issue No. 17, May 2002. Ali Abdel Gadir Ali ―The Economics of Conflicts in Africa: An Overview‖ in Journal of African Economies, Vol. 9 Number 3, October 2000, Oxford University Press, Oxford MathlosaKhabele, The role and Impact of the African Union on the Democratisation Processes, OSSREA Newsletter, Vol XXI, no. 2 (June 2003) NabudereDani W, The African Renaissance in the Age of Globalisation: New Perspective on African Unity and Integration, Annual Colloquium-2000, Sapes, September 2000. SominiSengupta, Begggar Soldier, Serf: Dire Prospects for African Youth‖ The New York Times., Sunday 26 December 2004. Taylor Ian, The African Union: The Challenge Civil Society, OSSREA Newsletter, Vol. XXI, no. 2 (June 2003) Internet sources Katema, Makonnem Creation of the OAU, www.oau-creation.con/part%20one.htm Steinberg Natalie, Background Paper on The African Union, October 24, 2001, www.wfm.org/ACTION/africanunion10001.html. The Prospects of Peace and Security in the 21st Century, www.monitor.upeace.org/innerpg.cfm?id_article=322. Rodney Walter, How Europe Underdeveloped Africa, 1973, Bogle-L‘Ouverture Publications, Dar-Es Salaam.www.marxists.org. Yamamura Takayuki, Security in International relations Theory Today. http://www.scu.edu.au/schools/gcm/ar/arp/grounded.html Ankomah, Baffour, ‗From non interference to non indifference‘ New African, March 2007,p.13.

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CHAPTER FIVE China’s Foreign Policy and Africa’s Political Economy: Interrogating Western Development Paradigm WILFRED M. TARABINAH 5.0 Introduction The decolonization experiences of Asia and Africa spanning from 1945 to 1960 coincided with the emergence of the cold war between the Soviet Union and the United States and with the birth of the United Nations. International politics during these epochs was characterized by two major opposing development paradigms and the politics of aid diplomacy. The United States used development ideologies often coached in academic literature and policies, aid packages, technical assistance and sometimes even military intervention to encourage these newly independent nations in the Third World to adopt policies that aligned with the West. On the other hand, the Soviet Union also deployed similar tactics to woo the new nations to embrace the communist bloc and to convince them that communism was inherently opposed to imperialist exploitation. In these respect, the Soviet Union had a comparative advantage over the West. Schraeder (2004, p.93) noted that: First, neither the Soviet Union nor its communist allies had ever been colonial powers in Africa. The history of the Soviet Union, at least from the vantage point of the 1950s and the 1960s, suggested that following the Soviet economic model could lead to rapid industrialization and socioeconomic development. Most important, the Soviet Union actively provided economic and military aid to liberation movements, most notably those opposed to White minority rule in Southern Africa. This latter activity in particular earned high marks among African leaders who, regardless of ideology, shared the goal of eradicating all remaining forms of colonialism and apartheid on the African continent. Even though the concept of nonalignment was often advocated as a possible third path of development, African nationalists often aligned themselves with one of the two major ideological blocs and the continent became a platform of proxy wars. The end of the cold war transformed the architecture of international relations. The first and most conspicuous, was that, the one superpower, the Soviet Union, ceased to exist, and this meant the collapse of

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the Soviet and socialist development model in 1989. Its successor state, the Russian Republic, was too preoccupied with the economic and political restructuring of its domestic system to influence the politics of the African continent. Secondly, African despotic rulers could no longer count on America or Soviet aid in return for allying themselves with one side or the other. Third, is the hegemony of western development paradigm of neoliberalism which permeated African political economy defined in terms of structural adjustment program and aid conditionalities. The effect of this new international architecture on Africa‘s geo politics is succinctly captured by Manji and Marks (2007, p. 17) that, Africans perceived that traditional relations and partnerships with the West have not helped Africa overcome the structural obstacles to eradicating poverty and reversing its economic marginalisation. Rather than develop, Africa is hemorrhaging while the rest of the world accumulates wealth at its expense through the unbalanced exploitation of its natural resources and the enforcement of a distorted international economic system. The Asian nations became a rallying point for the provision of concrete support to African nations by creating a series of mechanisms designed to deepen African – Asian solidarity and also consolidate the South – South cooperation. The 1955 Bandung Conference held in Bandung Indonesia was one of the earliest manifestations of Asian support. The common denominator of all present was a principled opposition to colonial rule, and the conference resulted in a final communique underscoring the obligation of member states to promote the independence of those countries still suffering under colonial rule (Schraeder, 2004, p. 92). China is among a number of large developing countries or new powers on the ascendance in the international system, all of which are deepening their economic relations with Africa. Kragelund, 2008 (as cited, in Dent, 2011:1) However, China is the largest and most powerful of this group, and China poses as a potential leader of the developing countries‘ quest for a new global order (i.e. a less US/Westerndominated one). China and Africa co-operation is presented as an important part of this quest. China‘s foreign policy on Africa is both an expression of traditional South–South co-operation and an emerging alternative model of development and governance to the established Northern one. China has at times positioned itself as a champion of developing country‘s interests in certain fora, or mediator between developed and developing countries, for instance in World Trade Organization (WTO) negotiations and in G20 talks on the 2008/09 global financial crisis. It has sought closer economic relationships with other developing country regions and continents such as Latin America and Central Asia, but it is with Africa – the continent that hosts more developing countries than any other – that China has fostered the closest links (Dent, 2011:1). Aning and Lecoutre (2008:47) draws attention to the ideological line between the West and China over which economic model is suitable for Africa. This bothers on

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issues of good governance and human rights that accompany the neo-liberal economic development as opposed to ―no conditionality attached to Chinese aid and non-interference in the case of development by China. It is against this background that this chapter sets out to examine China‘s foreign policy on Africa‘s political economy. Its specific objectives are to evaluate Africa‘s political economy in the context of neo liberal globalization and to contrast western development paradigm to China‘s economic model and how this impacts on Africa‘s development. 5.1 African Political Economy The end of the Cold War altered superpower and European Union (EU) involvement in Africa. However, occurrences within the global political economy have deepened African marginality within the international political economy. While it is difficult to point to a single factor, arguments have been proffered suggesting that Africa has long been a marginal continent, through the slavery and colonial periods, to the periphery of the global capitalist economy which results in ever diminishing freedom to act and space to move within the international economic environment (Wright, 1999:7). It is apparent that given this milieu, there are problems afflicting the continent and its protraction could permanently marginalized Africa from the global political economy. I point to four crucial features which characterizes contemporary African political economies. These are natural resource conflict, the crisis of economic development, dependent industrialization and political instability. 5.2 Natural Resources and Conflicts In the early post-independence period, there was considerable optimism that the resource base of Africa; particularly in minerals would provide a foundation for continental pride and status and would give individual countries the economic capability to project a strong foreign policy within the continent and overseas. Oil diplomacy in Nigeria, gold diplomacy in South Africa and diamond diplomacy in Botswana as with other parts of Africa was expected to facilitate diversification into other areas and strengthen their political economy (Wright, 1999, p. 3). Wright‘s (1999) contention that the resource base of Africa has not brought significant leverage within the global economy, partly because of deteriorating terms of trade and a failure to diversify is instructive. There is also a corpus of literature in the political economy of war thesis that suggest a strong link between natural resource and conflict in Africa. The empirical literature demonstrates that war provides an economic incentive for elites and war merchants to loot the resources of their country. It also highlights the role transnational corporation‘s play in the logic of violence and human rights in guaranteeing a steady flow of revenue stream to warring factions, thus creating interplay between greed and

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grievance (Collier and Hoeffer, 1998; Berdal and Malome, 2008; Collier, 2000; Collier and Hoeffer, 2001; Bellentine and Sherman, 2003). This also has a similar coloration with the resource curse theory. The works of Auty, (1993); Ross, (2001; 2003); Billion, (2001) and Reno, (2003) offers a robust debate on the resource – cause paradigm. This theory is anchored on the paradox of plenty versus poverty and the conflict nexus in African countries. This thesis is used in explaining why in spite of Africa‘s rich endowment it still remains poor and conflict ridden. Bayart, Ellis and Hibou, (1998); Reno, (2003); highlights the weakness, inconsistency and contradiction of the African state system which is articulated in their ―Neo-patrimonial thesis‖. The web between natural resource transnational corporations and the global arms industries provides a heuristic tool in understanding the use of armed conflict as a political and as well as an economic resource. The end of the cold war meant a recession for the global arms industries and the shadowy network tied to the arms trade. The implication meant significant loss of revenue to the home countries of arm producers which are the developed countries of Europe and America, which are also the home base of the natural resource transnational corporations. To reverse this trend, natural resource corporations engage in covert activities in fuelling conflict in their regions of operations. Nitzan and Bichler (1999) highlight a link between increase in oil wealth and a rise in arms import in Oil Producing Export Countries (OPEC) involving the U.S. as major supplier. Nzongola-Ntalaja (2003:227) demonstrates how armed conflicts in Africa provides a market for the West, as he draws a relationship between the War in the Democratic Republic of Congo (DRC) and the ―logic of plunder‖ which he described as the growing tendency for states, mafia groups, offshore banks and transnational mining companies to enrich themselves from the crises. In the case of Sierra Leone, mercenaries, private military company such as Executive Outcome (EO), air transport firms such as Ibis Air, Soruss, Sky Air and Occidental were involved in the illegal shipment of arms to the rebel forces – the Revolutionary United Front of Sierra Leone (RUF) (Musa, 1999:124). The Angolan case also showed how the activities of oil and diamond companies such as Sodian, De Beers, Chevron, Texaco, Total, FinaElf, Royal Dutch Shell, ExxonMobil, BP, Statoil, Rangers, etc.; exacerbated a civil conflict that inversely brought wealth to the transnational‘s and their home countries while bringing death and miseries to the people of Angola for over three decades (Luvhengo, 2006). Mercenaries and private military companies (PMC) are often involved in conflict ridden economies and in the exploitation of the natural resources of those countries. These organizations are closely linked with natural resource transnational‘s and often times trade services in exchange for mining concessions or oil contracts.

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Fayemi (2000:18) points out that in the case of Angola, the government awarded a US$40 million diamond concession contract to Branch Energy, an arm of Executive Order (EO) a private military company, while the Sierra Leonean government contract to Executive Order amounted to the tune of $50 million, involving both cash and mining concessions. O‘Brien (2000) noted that no fewer than 90 Private Military Companies operated in Africa‘s conflict regions, most especially in Angola and Sierra Leone which offered their services to the warring parties and to transnational corporations operating in the region. He further elucidated that these PMCs have the overt support of their country‘s government intelligent service. Similarly, oil corporations in corroboration with private security firms and the state security services create conflict in Nigeria‘s Niger Delta through their activities (Okonta and Douglas, 2001:81; Human Rights Watch, 1999:13-14). The literature thus shows a link between oil corporations, militarism and antidemocratic politics (Eaton, 1997; Dommen, 1998; Mowerry, 2002; Frey, 1997; Hunter, 2002; Kinley and Tadaki, 2004; Fowler, 1995; Shelton, 2002; Frynas, 2000; Cooper, 2002; Reno, 2000). This scholarship shows that transnational corporations promote conflict in order to sustain the global arms market. This illustrate what Nordstrom (2004) calls the ―shadows of war,‖ which describes the multi- trillion dollars financial networks which actively promotes conflicts, yet remains invisible. 5.3 Economic Development The British and European colonization of Africa effectively ensured that these newly independent states were integrated into the global capitalist economies. While, the integration of these economies into the world market is not bad in itself, what was evil is the method of integration into this global capitalist industry. As it stands, globalization has placed African countries in a permanent position of mere primary producers of raw materials for the industrialized nations. The small scale industries operating in Africa are without any form of protection and as a result they cannot survive the competition with foreign firms and are forced out of production. This done by killing infant industries such as soap, salt, leather works, pottery works and even Ajaokuta Rolling Mill in Nigeria (Lere, 2014:159). Lere (2014:159) thus, argues that African countries at the global level are recognized as playing a prominent role of dumping ground for the toxic waste that are not needed in the world. For example, the goods that are imported into African countries are different from those that are sent to European nations because the developed nations adopt protectionism in their economies. He further contends that, the ruling classes collaborate with international capital to take advantage of their positions as operators of the state to loot and plunder the state resources for private accumulation of wealth. The stupendous accumulation of wealth by the predatory operators of the state has so far been only for the sake of accumulation as the accumulated wealth is not invested within to create and add value to the economic system.

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Wright (1999:6) posits that: Within the context of immediate post-independent politics and neocolonial linkages, most states pursued broadly similar economic development strategies, normally in tune with the wishes of their Western benefactors. Attempts to promote what was defined as “modernization” were widespread, with less resistance than appeared by the 1980s. Such a foreign economic policy often dovetailed with considerations of security (military and economic) and the desire for rapid development. Wright (1999, p. 6) asserts that such strategies became increasingly questioned within Africa when they failed to produce ―development‖. He made reference to the oil crises of the 1970s which led to and were compounded by the debt crises and rescheduling of the 1980s and 1990s and the widespread implementation of structural adjustment programs (SAPs) drawn up by the International Monetary Fund (IMF) and World Bank, that shifted the emphasis of policy making outside the respective states. Adedeji (2000, as cited in Shaw, 1985:94) aptly summarizes the African contemporary political economy: [The] African economy today is the most open and the most exposed economy in the world, overly dependent on external trade and other external stimuli, foreign technology, and foreign expertise. The very strategies of development the African governments have been pursuing since independence have come from the outside, derived as they were from theories of economic development that were developed during the colonial pattern of production in Africa . . . The cumulative result is that, today, neither high rates of growth or diversification, nor an increasing measure of self-reliance and self-sustainment has been achieved in the African economy. On the question of some countries like South Africa, Brazil that have developed as a result of globalization, Lere (2014:159) argued that these African countries are not rated alongside the developed countries. South Africa still has some elements of colonialism because they attend their independence recently and the level of their development is regarded as checklist of development which form part of development and not real development. This is because it has some indicators of underdeveloped countries which includes; diseases, unemployment, poverty, illiteracy, crime rate, increase mortality rate, illiteracy etc. These African countries are not part of the G20 or part of the U.N Security Council and cannot be regarded as developed countries. The question to ask is what are some of the products that these African countries parade in the global market? 5.4 Industrialization The newly independent nations of Africa have, without exception, proclaimed their desire to industrialize in order to create increasingly productive employment opportunities and higher living standards for all their inhabitants. In other to achieve this objective, science and technology remains the indispensable tool to produce a revolution in industrial growth, which is one of the most important

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factors in creating the tremendous income gap between the developed countries of the First World and African countries. This technology gap has not narrowed significantly over the past few decades, as most African countries remain far behind the First World in most categories of technological capacity and knowledge. Wendt and Barnett (1992:102-113) highlights two systemic factors that constraints Third World countries, especially Africa in attaining industrialization; (1) the institution of sovereignty in the contemporary states system, which implies that even though the Third World achieved sovereignty, it did so on terms that institutionalized its inferiority to and dependence on the major powers. (2) The historical development of the capitalist world economy and the position of the Third World within that structure. Seidman (1977:23) also relates that: Historically, colonial development was oriented to producing the raw material exports required by the factories of Europe, and importing the manufactured goods those factories produced. Colonial government expenditures were devoted to building the infrastructure-railroads, roads, ports-required to facilitate the export of raw materials. Colonial policies discouraged local manufacturing to preserve African markets for goods produced in European factories. Most of the investable surpluses created by raw materials production in Africa were siphoned out of the country in the form of profits, interest, and dividends of the oligopolistic colonial firms that owned the mines and estates, and dominated the foreign trade. Little capital was left for investment in new industries. At the time of independence, less than 10% of the national product in the typical African country consisted of manufactured output-among the lowest level of industrialization in the world. As a result, the typical African economy remained dependent on the fluctuations of external markets for its primary product exports, its key sectors dominated by foreign firms and associated financial institutions. The remainder of the economy, outside the export sector, had become increasingly underdeveloped. Existing handicraft industries were undermined by cheap manufactured imports. In some cases they were outlawed to prevent competition with imported European goods. This demonstrates that neo liberal support of 'free market forces', fails to take into consideration the fact that centuries of colonial domination has so shaped these forces that, left to themselves, they will inevitably perpetuate further lop-sided externally-dependent industrialization in Africa. 5.5 Political Development The attainment of political independence by African countries bestows sovereignty and supposed equality with developed states of Western Europe and North America in the comity of states. Political development in this context requires these new independent nations to exercise adequate ―stateness‖, defined as demonstrated centralized control over territory and population, monopoly over the means of violence within the state‘s boundaries, and the capacity to significantly permeate the society encompassed by the state. Without the demonstration of adequate stateness, the participation of the Third World states in the international system will

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remain heavily qualified and will occur at the sufferance of the established members of the system (Ayoob, 1995:27). The state making experience has shown over the decades that regimes in Africa fail to meet the test of political legitimacy by a long measure because they preside over artificial colonial constructs that are vulnerable to internal challenges. These regimes, therefore, tend to be extremely repressive in their reactions to the first murmurings of political dissent. Moreover, since these regimes perceive themselves as besieged, they also tend to rely on kinship ties or the secret police or both to remain in the exercise of political power, thus combining the worst features of the patrimonial state and the police state (Ayoob, 1995:41). Given this trajectories, African states are thus characterized by political instabilities. Ayoob (1995:41) aptly captured the undercurrents that accounts for these instabilities as ( i.) lack of adequate time required for state building, (ii.) the near impossibility until recently of alienating juridical sovereignty once it is achieved (iii.) The accentuation of ethnic fissures in the early stages of modernization leading to frequent attempt at secession ( iv.) The demands for political participation, economic redistribution, and social justice at a very early stage in the state making process and (v.) the unrepresentative and authoritarian character of many regimes, which spawns a vicious circle of violence and counter violence as regimes are challenged, react with brutal force. 5.6 Western Development Paradigm For centuries, the Western Development Model has interpreted and shaped African realities. Following the unfulfilled delivery of global development strategies and to escape from inherited dependence and to avoid the pressures of decline, as well as to transcend predicted marginalization, African leaders momentarily overcame their ideological and political differences to agree on the creation of a continental economic community by the year 2000 (Shaw, 1985:95). The Lagos Plan of Action was adopted by the O.A.U summit held in Lagos, in 1980 as a blueprint for the economic development of Africa anchored on the concept of collective self-reliance. On the other hand, the World Bank also produced a proclaimed diagnosis and cure for Africa‘s economic condition. Unlike the economic nationalist tone of the Lagos Plan, the World Bank blamed Africa for its own plight. While, the two reports find a common agreement about the seriousness of the crisis confronting Africa - inflation, recession, debt, import dependence, infrastructural decay, etc. They basically disagree on both causes of, and remedies for, this condition. The World Bank's criticism of internal factors and its advocacy of external orientation represent the revival and revision of 'modernisation‘ (Shaw, 1985:95). In contrast, the OAU focus on external factors and the adoption of inward-oriented development. While, the route to escape for the Bank is more external exchange and international assistance articulated in inappropriate policies

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and processes that resulted in underdevelopment which requires external solution. Moreover, the Bank is concerned with individual African states and with exchange rather than production, whereas the OAU deals with the collectivity of member states and with production, not just trade. In spite of all the evidence of dramatic drops in both the terms of trade and foreign capital inflows, the Bank still offers a paternalistic explanation for Africa's negative balances of trade and growth: 'external forces were not the chief factor behind growing deficits (Shaw, 1985:96). After the so-called ‗emerging areas‘ – or the Third World – were invented they became defined as ‗underdeveloped‘ and subject to legitimized intervention by the West through a project of development. There emerged a whole industry to deal with this: agencies and aid workers, academics and experts, theories and university courses. The Third World (Africa) needed to change and become more like the West, that is, modern and developed, and in line with the theoretical development of the time in the form of ‗economic growth theory‘ and then ‗modernisation theories‘ focused on development of national economies within nation states (Sorensen, 2010:7). During this period the economic paradigms represented by the international financial institutions (the World Bank and the IMF) assumed the dominant power of definition. The notion of ‗good governance‘ emerged as the gospel, a powerful instrument that allowed development policies to be placed firmly under the ownership of the donor countries and international institutions. The World Trade Organization (WTO) emerged as the broker for regulating comprehensively the global exchange relations of goods. It also expanded and defined property rights, once again in the interest of the powerful in the industrialised states and thereby further marginalized and excluded indigenous interests in the global South (Melber, 2010: 217). These policy thrust is what is articulated as the ―Washington Consensus‖. Williamson (2004) enunciated at least three distinct meanings: 1. A list of ten specific policy reforms, which were widely agreed in Washington to be desirable in just about all the countries of Latin America, as of 1989. That is how it acquired the ―Washington‖ in the title, which was unfortunate in that it suggested (a) to the conspiratorially minded that this was a list of policies that Washington was seeking to impose on the world, and (b) to some of the reformers that Washington was seeking to take credit for the reforms that they were implementing. 2.The set of economic policies advocated for developing countries in general by official Washington, meaning the international financial institutions (the IFIs, primarily the IMF and World Bank) and the US Treasury. The original ten points were augmented with a further ten, with a heavy emphasis on institutional reforms and some recognition of the social dimension. This is also the flavor of the eligibility requirements for the Millennium Challenge Account, which is the principal attempt of the Bush administration to help low-income countries. 3. Critics‘ beliefs about the set of policies that the IFIs are seeking to impose on their clients. These vary somewhat by critic, but usually include the view that the

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IFIs are agents of ―neoliberalism‖ and therefore that they are seeking to minimize the role of the state. The mechanism for attainment of such global policy is based on internationalized conditionalities. Hall and Motte (2004:4) categorized them into five groups: (i) Project conditionality; which is the traditional form of conditionality that is used through project funding. This is illustrated in World Bank, development bank and donor projects which specify a variety of forms of privatization and private sector involvement as part of project design, or drivers for the conditions of payments of parts of loans. (ii) Trade Policies: The implementation of trade policies further encourages and sustains privatization, such as the General Agreement on Trade in Services (GATS) of the World Trade Organization (WTO). (iii) Global policy conditions: These policies revolve around the IMF and World Bank whose loans are tied to countries poverty reduction strategy programmes (PRSPs) which contain commitments to a range of policies, frequently including some form of privatization. Funding is tied to policies which completely replaces the structure of an entire sector, e.g. by the privatization of electricity systems, rather than just one specific contract, such as building a power station. (iv) Instruments designed for private sector: These comprise institutions and programmes that are designed to support only the private sector development, without the requirements of conditionalities attached to specific items of expenditure. This list includes, the International Finance Corporation (IFC) which has the mandate to invest only in private sector ventures; Multilateral Investment Guarantee Agency (MIGA) which insures only private companies; Business Partners for Development (BPD) which operates where private businesses are. (v) Reinforcement through collective donor action: This represents collective action by aid donors to move away from funding specific localized projects in a country, towards providing funding which supports a certain set of policies in recipient countries. Aid is often administered through global collectives of developed countries under the sponsorship of joint institutions such as the Organisation for Economic Cooperation and Development (OECD), the EU or the IFIs, etc. This action reinforces the power of the core policy conditions, which also implies that the PRSP becomes more central when all aid revolves around it. The Washington consensus of the 1980s was made possible in part through a lack of ideological counterweights following the ending of the cold war. Whereas the 1980s was the pinnacle of the Washington consensus, the late 1990s witnessed what Ramo (2004) refers to as the Beijing Consensus. Which tends to reflect a more co-operative stance by China viz-a-viz the developing world based on ‗peaceful coexistence‘

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5.7 China’s foreign Policy and the Beijing Consensus China‘s foreign policy in Africa is designed towards reconciling two major themes; i. Commerce and ii. Aid Diplomacy. In other to reconcile China‘s economic interest, viz-a-viz the West, Chinese government embarked on an alternative development path for Africa constructed on the logic of respect for sovereignty, zero conditionalities for loans and aid infrastructure and non-interference in national political process. 5.7.1 Chinese Commerce with Africa Industrialisation is widely seen as being central to the development challenge. From the 1950s Communist China engaged in state-dominated autarchic development, but after the demise of Chairman Mao‘s in 1976, China transited onto a path of market economy under Deng Xiaoping administration (Kornberg & Faust, 2005:67). Although, China received some high level of funding and advice from the World Bank and IMF which were important in maintaining China‘s growth rates (Kornberg & Faust, 2005, p. 228-230), it only accepted this assistance ―on terms and at conditions that served the Chinese ‗national interest‘‖ (Arrighi, 2007:355). The expansion of the Chinese economy currently accounts for 25% of all global economic growth. To feed its booming economy China needs resources – minerals, timber, foodstuffs and, above all, oil. The search for resources to fuel the country‘s phenomenal economic growth and the need to find markets for its products requires a global geopolitical strategy and the formation of new alliances. In this quest, China finds a partner in Africa. Africa needs Chinese capital and infrastructure investment, while China needs Africa‘s natural resources (Yi-Chong, 2008, p. 27). Africa is the most resource-laden continent, with every primary product required for industrial production. It accounted for more than 10m of a global 84m barrels per day (bpd) oil production in 2005. Most is light, sweet, highly profitable crude, mainly offshore, away from politics. Some 85% of the world‘s new oil reserves found in 2001-2004 were on west/central African coasts. There is strong competition to secure African oil. The US imported 60% of its 20m bpd of oil used in 2005, 16% from Africa. Sudan, the continent‘s third largest producer, exports 60% of its oil to China, fulfilling 5% of China‘s needs. Angola, the second largest producer, sends a quarter of its production to China, as does Nigeria, the largest producer. In 2005, a PRC oil firm announced it would invest US$2.3b in an oil and gas field off Nigeria. China thus embarked on vigorous ―oil diplomacy‖ in Africa (Konopo, 2005). China‘s economic engagement with Africa has thus accelerated greatly over the past decade, as bi-lateral trade increased by ten times to over $100bn annually and China became Asia‘s leading importer of African products (Broadman, 2007: 11), with oil constituting 80% of China‘s imports by value (Alden & Alves, 2009). Meanwhile, Chinese investment in Africa grew by 300 times between 1990 and

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2007 to around US$14 billion (Naidu, Corkin & Hermin, 2009:103). The majority of these Chinese FDI inflows to Africa have been concentrated in the extractive industries (Broadman, 2007:12). Carmody and Owusu (2007:506-507) identified the following emergent elements of China‘s geo-economic strategy in Africa as: (1) To ensure access to critical natural resources, particularly oil and natural gas, to maintain the country‘s economic growth, (2) To recycle its massive foreign exchange (forex) reserves into profitable investments overseas, (3) associated with both of these; to facilitate the development of Chinese multinational corporations, (4) To find markets for the products of Chinese industry, (5) To develop African agriculture to provide non-food agriculturals to supply Chinese industry and consumers, and also food products for China‘s burgeoning cities, and (6) To source knowledge workers in Africa to support Chinese economic transformation. The turn of the Millennium saw another change of pace, with the first Ministerial Conference of the Forum on China-Africa Cooperation (FOCAC) held in Beijing in October 2000 marking the beginnings of a new era of Sino-African relations. The conference emphasised common understanding on major international and political issues, as well as presenting ideas and cooperation in many areas, including the economy, trade, agriculture, and tourism. A number of important meetings have been held since, including the China-Africa Business Council meeting of 2005 and the China-Africa Business Conference held in Egypt in 2007. These meetings have been accompanied by a continued proliferation of Chinese investment in Africa, with more than 800 Chinese companies active in the continent, and 750,000 Chinese working or living there as of January 2007 (Wallis, 2008). 5.7.2 Beijing Consensus The Beijing Consensus represents a paradigm shift in Africa‘s development discourse. It is often discussed as PRC investments, aid, and trade not being conditioned by the demands made by Western states and international institutions. China‘s aid to Africa, while not disinterested, is not used as a political tool in the same way as aid from Western political actors in Africa. This approach is a longstanding policy. It has rejected outright privatization and other elements of the ‗Washington Consensus‘. Julius Nyereye, Tanzania‘s first leader, commenting on the aid for TanzaniaZambia railway built by 50,000 Chinese stated: ―The Chinese people have not asked us to become communists in order to qualify for this loan . . . they have never at any point suggested that we should change any of our policies – internal or external.‖ (Nyereye 1974). There is no evidence China conditions its aid on

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adoption of a particular political stance or alignment, except that recipients must maintain full diplomatic relations with the PRC (Mukandala, 1999:31-67).. While China‘s aid to Africa is thus not entirely untied, it is distinct from Western aid in a key way, in that it targets infrastructures. As one analyst explains: Chinese aid is often dispensed in such a way that corrupt rulers cannot somehow use it to buy Mercedes Benzes . . . [It] is often in the form of infrastructure, such as a railroad network in Nigeria or roads in Kenya and Rwanda. Or in the form of doctors and nurses to provide health care to people who otherwise would not have access . . . . In addition, China provides scholarships for African students to study in its universities and, increasingly, funds to encourage its businessmen to invest in Africa, Ching (2005, cited in Sautman, and Hairong, 2007). China does not use the language of donor and recipient. Aid is carried out within the framework of South-South cooperation, which also encompasses other types of cooperation such as commercial or semi-commercial cooperation, in contrasts with US and UK, which insist on aiding only private enterprise. It continues to support some state-run projects, both in industry and agriculture. Soderberg (2010:125-126) describes six features of Chinese aid structure which uniquely sets it apart from Western development model: One characteristic of Chinese aid is that as a general rule it is primarily bilateral. The Chinese government has demonstrated little inclination to become involved in multilateral development initiatives in line with its policy of non-intervention. Just as the Chinese government at home always wanted to be in charge of its own development policy and has never participated in round-table discussions or other meetings arranged by donors to China, in its own aid giving the government has, with few exceptions, not been interested in joining hands with groups of donors abroad. A second characteristic is a general emphasis on various projects for the promotion of trade and foreign direct investment (FDI) opportunities for China, and, as one Chinese scholar put it, aid can sometimes be a prerequisite on such occasions. In connection with this there is often strong emphasis on building economic infrastructure such as roads, railways, power plants and telecommunications. A third characteristic is that aid has been closely linked to securing access to major natural resources such as oil or precious metals. Oil in particular is of vital importance for the continuation of China‘s economic growth. Aid to Angola is a case in point. For Angola, which has now emerged as China‘s biggest supplier of oil, China announced two credit lines totalling US$4.4 billion for ‗reconstruction and national development‘. A significant portion of this is tied to the purchase of Chinese goods and service. Besides the oil industry, cooperation agreements have been signed in fields such as infrastructure, communications, agriculture, education and health care. A fourth characteristic is a high element of tied aid through the provision of commodities and services as well as technical cooperation. It is Chinese products

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that are provided and Chinese doctors and construction workers who are sent abroad. Agriculture is one area where China has long traditions, and so is capacitybuilding in the social sector, especially that related to science, health and education. A large number of African technicians are now receiving training in China. A further characteristic of Chinese aid is that it has involved a number of publicly visible features in the form of high-profile buildings such as stadiums, state houses and buildings housing parliaments. Such projects have a long tradition in Chinese support for Africa but have expanded significantly in recent years. At the FOCAC meeting in Beijing in 2006 President Hu Jintao pledged to build a conference centre for the African Union. Finally, Chinese aid is characterised by an almost complete absence of political conditionality, with the exception of support for the ‗One China‘ principal. China‘s aid policy builds on the principle of ‗noninterference in internal affairs‘. There are usually no political strings attached to Chinese aid. It is in the light of the foregoing that African countries are increasing turning to China instead of their traditional western partners after several years of exploitative relationship. African countries tend to have discovered that their development partnership with China is more concretely beneficial than their experience with Western donor countries. 5.8 Conclusion This chapter interrogates Western development model which requires African countries to implement neoliberal policies in exchange for aid packages. The African experience has shown that these policies hurt the poor and has deepened Africa‘s cleavage in the global political economy. In the strength of the South – South cooperation, China has provided an alternative development path which requires no conditionality for aid and non-interference in Africa‘s internal politics inspired from historically ideologically driven solidarity of anti-colonialism and the cold war to pragmatic market economy. Africa, on the other hand needs to develop a comprehensive long term development strategy to adequately engage China and leverage on the Chinese success that will go beyond being a mere provider of raw materials for Chinese industries. China should be willingly in the spirit of genuine true South – South cooperation to engage in technology transfer to the African continent in order for Africa to facilitate its industrialization and development. References Auty, R.M (1993) Sustaining Development in Mineral Economies: The Resource Curse Thesis, London: Routledge Ayoob, M (1995) The third World Security Predicament: State Making, Regional Conflict and the International system, Boulder: Lynne Rienner Publishers.

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Aning, K. and Lecoutre, D (2008). China‘s Venture in Africa, Africa Security Review. 17(1), pp.31-50 Alden, C. and Alves, A. C. (2009). China and African Natural Resources: The Challenges and Implications for Development and Governance, Johannesburg: South African Institute of International Affairs, Occasional Paper 41, 26 September. Arrighi, G. (2007) Adam Smith in Beijing: Lineages of Twenty First Century. London: Verso Berdal, M. and Malone, D (2000) Greed and Grievance: Economic Agendas in Civil Wars, Boulder: Lynne Rienner Bayart, J; Ellis, S and Hibou, B. (1998) the Criminalization of the State in Africa, Oxford: James Currey Billion, P (2001) ―The Political Ecology of War: Natural Resources and Armed Conflict‖, Political Geography, 20 Broadman, H G. (2007) Africa‟s Silk Road: China and India‟s New Economic Frontier, Washington D.C.: The World Bank. Carmody, P.R. and Owusu, F.Y. (2007) Competing hegemons? Chinese Versus American geopolitical strategies in Africa, Political Geography, 26(5) 504524 Collier, P (2000) ―Doing Well Out of War: An Economic Perspective‖, Berdal. M and Mahoe, D (eds) Greed and Grievance: London: Lynne Rienner Collier, P and Hoeffler, A (1998) ―On Economic Causes of War‖, Oxford Economic Papers, No.4, Vol.50, Oxford University Press: London Cooper, N. (2002) ―the business of war‖, in Ploughshares Monitor, Vol.23, No.3 Dommen, C. (1998) Claiming Environmental Rights: Some Possibilities Offered by the United Nations Human Rights Mechanisms, 11, Geo. Int‟l Environmental Law Review Dent, C.M. (2011). Africa and China: A New Kind of Development Partnership, in Dent, C.M. (eds.) China and Africa Development Relations. New York: Routledge Eaton, J. P 1997) the Nigerian Tragedy, Environmental Regulation of Transnational Corporations and Human Right to a Healthy Environment, 15, Boston University, International Law Journal Frey, B (1997) the legal and Ethical Responsibilities of Transnational Corporations in the Protection of International Human Rights, 6 Minnesota Journal of Global Trade Fayemi, J. K. (eds) Mercenaries: An African Security Dilemma, London: Pluto Press Fayemi, J.K (2000) Africa In Search of Security: Mercenaries and Conflict-An Overview, Musah and Fayemi (eds): Mercenaries: An African Security Dilemma, London: Pluto Press Frynas, J.G (2000) Oil in Nigeria: Conflict and Litigation between Oil Companies and Village Communities, New Jersey: Transaction Publishers.

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Hall, D. and Motte, R. (2004) Dogmatic development: Privatization and Conditionalities in Six Countries. UK: Business School, University of Greenwich, www.psiru.org Human Rights Watch, (1999) The Price of Oil: Corporate Responsibility and Human Rights Violations in Nigeria‟s Oil Producing Communities, USA: Human Rights Watch. Konopo, J. (2005) Chinese economy stimulates African Markets, Reporter (Botswana) in AN, 21st February Kornberg, F.J. and Faust, J.R. (2005) China in World Politics: Policies, Processes, Prospect. Boulder, Co: Lynne Rienner Kinley, D and Tadaki, J (2004) ―From Talk to Walk: The Emergence of Human Rights Responsibilities at International Law‖, 44, VA. Journal of Int‟l. Law Luvhengo, V (2006) ―Multinational Corporations and Human Rights Violations in African Conflict Zones: The Case Study of Angola, 1992- 2005‖, M.A Thesis, Department of International Relations, University of Witwatersrand: Johannesburg. Manji, F. and Mark, S. (eds.) (2007). Africa perspective on China in Africa. Oxford: Pambazuka Press Mowery, L. (2002)‖ Earth Rights, Human Rights: Can International Environmental Human Rights affect Corporate Accountability?‖ 13, Fordham Envt‟l Law Journal Melber, H. (2010). China in Africa: Any Impact on Development and Aid, in Sorensen, J.S (ed.) Rethinking international development, challenging the aid paradigm: Western currents and Asia alternatives. USA: Palgrave Macmillan Musa, A. (1999) ―Small Arms and conflict Transformation in West Africa‖, Musa and Thompson (eds.), Over A Barrel: Light Weapons and Human Rights in the Commonwealth, London: Institute of Commonwealth Studies Mukandala, R. (1999) ―From Proud Defiance to Beggary: a Recipient‘s Tale‖ in Hyden & Mukandala 1999; Phillip Liu, ―Cross-Strait Scramble for Africa: a Hidden Agenda in China-Africa Cooperation Forum,‖ Harvard Asia Quarterly, Spring 2001, www.fas.harvard.edu/~asiactr/ haq/200102/0102a 006.htm Naidu, S. Corkin, L. and Herman, H. (2009). ―China‘s (Re)-Emerging Relations with Africa: Forging a New Consensus?‖ Politikon, Vol 36, No 1, pp 87115. Nitzan, J. and Bichler, S. (1999) the Global Political Economy of Israel, London: Zeb Books Nordstrom, C. (2004) Shadows of War: Violence, Power and International Profiteering in the Twenty-first Century. Berkeley: University of California Press. Ntalaja, G (2003) the Congo: From Leopold to Kabila, London: Zeb Books Nyereye, J. (1974) Freedom and development, Oxford University press Okonta, I and Douglas, O. (2001) where Vultures Feast: 40 years of Shell in the Niger Delta. Benin: Environmental Rights Action.

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O‘Brien. K (2000) ―Private Military Companies and African Security, 1990-1998‖ in Musah and Ramo, J.C (2004) The Beijing consensus: Notes on the New Physics of Chinese power. London: The foreign policy centre Ross, M. (2003) ―Nigeria‘s Oil Sector and the Poor‖, Paper Presented to the U.K. Department for International Development, Nigeria: Drivers for Change Program. Ross, M.L (2001) Does oil Hinder Democracy, World Politics, 53 Robinson, D. (2011). The political economy of China in Africa: The Case of Mozambique, Presented at the 34th AFSAAP Conference, Flinders University Reno, W (2003) ―Political Networks in a Failing State: The Roots and Future of Violent Conflict in Sierra Leone‖, Internationale Politik and Gesellschaft, No.2 Sautman, B. and Hairong, Y. (2007). ―Friends and Interests: China's Distinctive Links with Africa‖, African Studies Review, Vol 50, No 3, pp75-114. Schraeder, P.J. (2004) African politics and society: A mosaic in transformation‘s: Wadsworth Sorensen, J.S. (2010) ‗Reinventing development for the twenty-first century‘, in Sorensen, J.S. (ed.) Rethinking International Development, Challenging the Aid Paradigm: Western Currents and Asia Alternatives. USA: Palgrave Macmillan. Soderberg, M. (2010). ‗Challenges or Complements for the West: Is there an Asian Model of Aid emerging, in Sorensen, J.S. (ed.) Rethinking international development, challenging the aid paradigm: Western currents and Asia Alternatives. USA: Palgrave Macmillan. Shaw, T. M. (1985).Towards a political economy for Africa: The Dialectics of Dependence. UK: MacMillan Press. Seidman, A. (1977). Problems of Industrialization in Africa. A Journal of Opinion, 7(4), pp.23-25 .Shelton, D. (2002) ―Protecting Human Rights in A Globalized World‖, 25, BC Int‟l & Comp. Law Rev Williamson, J. (2004) ‗The Washington consensus as policy prescription for development‘, Lecture delivered at the World Bank lectures series: Institute for International Economic Wallis, W. (2008) Drawing contours of a new world order, Financial Times, 24 January Wendt, A. and Barnett, M. (1992). The systemic sources of dependent militarization, in Job. I.B. (ed.) Insecurity dilemma: National security of Third World states. USA: Lynne Rienner Publishers Wright, S. (1999). The changing context of African foreign policies, in Wright, S. (ed.) Africa foreign policies. USA: West View Press Yi-Chong, Xu (2008) China and the United States in Africa: Coming Conflict or Commercial Co-existence? Australian Journal of International Affairs, 62(1), pp.16-37

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CHAPTER SIX Foreign Direct Investment and Sub-Saharan Africa’s Domestic Entrepreneurial Development: A Comparison between China’s Inflow and United States of America’s Inflow NKECHINYERE R. UWAJUMOGU, EBELE S. NWOKOYE

6.0 Introduction There is a wealth of theoretical literature with fewer empirical evidences on the positive roles of entrepreneurship on economic growth and poverty alleviation. Its role in stimulating economic growth portrays entrepreneurship as the bedrock of innovation as well as a platform of enthroning and entrenching competition (Carree & Thurik, 2002). It is this prime role that has led to the upsurge in the growth of small firms since 1970s; a period characterized by increased competition across the world with attendant uncertainty, instability and fragmentation of markets, and emergence of small firms which have been found to be less vulnerable than the larger ones. These small and medium scale enterprises play important roles in the economy which include being platforms for economic growth through entrepreneurial activities; avenues for innovation; they are known to spur industrial development and create new jobs. In this regard, small and medium scale enterprises control entrepreneurial activities in an economy. The links through which entrepreneurship promote growth are many and varied: it engenders growth as an avenue for innovation, change and knowledge spillover (Carree & Thurik, 2002). Theoretical literature on entrepreneurship recognizes the existence of reverse causality between economic growth and entrepreneurship: entrepreneurship is thus seen as a cause as well as a consequence of economic growth. Factors that spur entrepreneurial activities have been identified and are broadly grouped into four: individual factors; psychological factors; environmental factors and socio-cultural factors. Under the environmental factors, four sub-factors are identified: political factors; economic factors; technological factors and legal factors. Major economic

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determinants of entrepreneurship include availability of resources which include land, labour and most importantly, capital. The importance of capital to economic growth in general and entrepreneurship in particular cannot be overemphasized and is well documented. For instance, Evans & Jovanovic (1989) posited that entrepreneurship is negatively affected by wealth constraints. Paucity of capital is a feature of developing countries like Nigeria and other sub Saharan African countries such that external capital is often sought to augment the inadequate domestic capital. Access to foreign capital in form of foreign direct investment (FDI) enables countries and entrepreneurs with inadequate capital to invest in, start and sustain new enterprises. However, the impact of FDI on domestic entrepreneurship is embroiled in controversy, having both negative and positive aspects. For instance, Ayyagari & Kosová (2006) identified the entry-barrier effect and demand-creation effect of FDI on domestic entrepreneurship. In Africa, foreign firms are usually more technologically advanced than domestic firms and this deters their entry into particular industries thus creating an entry-barrier effect and by extension, crowding-out effects. Secondly, FDI inflow may generate increased demand for locally produced products, services and inputs as well as engender new business opportunities thus creating demand-creation effects (Ayyagari & Kosová, 2006). Negative effects of FDI inflow include loss of competitiveness by domestic firms, higher interest rates when foreign firms borrow from the domestic financial market, adverse spillover effects, receipt of generous incentives from government more than domestic firms, etc (De Backer & Sleuwaegen ( 2003); Acar, Eriş & Tekçe (2012)). Since the 1980s, the volume of FDI has been increasing throughout the global economy. According to data from UNCTAD, in 1980, the total global stock of FDI was US$701,160 million and by 1985 it increased to US$986,736 million. The trend in global FDI stock is shown in Figure 1.1 where there is increasing trend in global FDI, dipping in 2008 as a result of the global economic meltdown. Figure 1.1

Global FDI Stock 1980-2014

Million US$

30,000,000 20,000,000 Global FDI Stock 19802014

10,000,000 0 1980 1985 1995 2005 2008 2010 2012

Source: UNCTAD, FDI/MNE database (www.unctad.org/fdistatistics), 2016

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The inconclusive and controversial impact of FDI on growth and domestic entrepreneurial development could be linked to differences in characteristics of country of origin as well as host country. This is because country of origin affects FDI in many ways through its effects on multinational enterprises (MNEs), including: intra-company sales and trade and the size of domestic manufacturing and research and development (R&D); sector specialization, forms of ownership and ways of internationalization; capital intensity of production and technology use; human resource management practices, etc (Fortanier, 2007). Fewer studies have looked at the effect of FDI characteristics, especially the source and origin of FDI, on economic growth and most especially domestic entrepreneurial development. Thus, a pertinent question then arises: to what extent has the sub-Saharan African (SSA) countries faired in this wake of increased flow of FDI from China and the United States of America? Who is her major ally in her quest for economic growth through emancipation and development of entrepreneurial aspirations? Identifying the actual and potential economic relationship between African and each of the United States of America and China is therefore a scholarly challenge which will further boast Africa‘s drive towards attaining sustainable economic growth. To this end, this chapter is organized thus: the first part has already introduced the subject matter. This is followed by a review of some stylized facts concerning foreign direct inflow (FDI) in Sub Saharan Africa (SSA). The third section captures the literature upon which this study rests. This is followed by an examination of the relationship between domestic entrepreneurship in Africa and FDI inflows while comparing the inflows from the USA with that of China. This chapter is then concluded and policies recommended for the advancement of the African continent. 6.1 Stylized Facts: FDI in Sub Saharan Africa (SSA)

60 000.0 40 000.0 20 000.0 - 20 000.0

FDI trend in SSA 1990-2015 (US$ Million)

1990 1993 1995 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Figure 2.1:

Inflow

Outflow

Source: UNCTAD, FDI/MNE database (www.unctad.org/fdistatistics), 2016

Table 2.1: Regional FDI Inward Stock, 1990-2015 (% of World)

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Economies

1990

1993

1995

2000

2002

2003

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Developed

76.8

75.0

76.0

77.0

76.0

77.0

75.0

74.0

72.0

71.0

70.2

66.6

66.3

64.8

65.4

64.9

64.1

Developing Africa SSA Transition

23.2 12.0 61.0 0.0

25.0 11.0 61.0 0.0

24.0 11.0 63.0 0.0

22.0 9.0 70.0 1.0

23.0 10.0 68.0 1.0

21.0 11.0 70.0 2.0

23.0 11.0 70.0 2.0

23.0 10.0 66.0 3.0

24.0 10.0 65.0 4.0

26.0 10.0 59.0 3.0

26.7 11.0 64.0 3.2

29.9 10.0 66.0 3.5

30.4 10.0 66.0 3.3

31.8 9.0 67.0 3.4

31.2 9.0 66.0 3.3

32.5 9.0 67.0 2.5

33.5 9.0 67.0 2.4

Total

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

Source: ©UNCTAD, FDI/MNE database (www.unctad.org/fdistatistics), 2016

Data from UNCTAD (2016) as shown on Table 2.1 show that developed economies receive a greater percentage of the global FDI inward stock more than the developing and transition economies. The developed region received about 77% of FDI inward stock in 1990 while developing region received only 23% of the inward stock. Out of percentage received by developing region, sub Saharan Africa received only 12% of inward stock. This level of distribution did not change much for the period under review with the highest receipt of about 34% by developing countries in the year 2015. Table 2.2: FDI Stock to Africa, according to Source, 2001-2012 (US$, Millions) Source

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

USA

15574

16040

19835

20356

22756

28158

32607

36746

43924

54799

57213

61366

-

-

491

900

1595

2557

4462

7804

9332

13042

16244

21730

China

Source: Pigato & Tang (2015)

In 2001, FDI stock from USA to SSA was US$15574 million and has maintained an increasing trend since then as seen on Table 2.2. It increased by about 3% in 2002 to US$16040 million. By 2008, it was US$36746 million, an increase of about 13% from 2007 data. Between 2011 and 2012, FDI stock to SSA from USA increased by 7%. FDI stock from China to SSA also maintained increasing trend. In 2003, it was US$491 million but increased by a whopping 83% in 2004 to US$900 million. By 2008, it was US$7804 million, an increase of about 75% from 2007 figure. Between 2011 and 2012, FDI stock to SSA from China increased by about 34%. Available data shows that USA is the highest investor in Africa followed by China but the speed at which China is investing in SSA is very high and quite remarkable. Table 2.3: FDI Flows to Africa, according to Source, 2001-2012 (US$, Millions) Source USA China

2001 2436 -

2002 -578 -

2003 2697 76

2004 1612 298

2005 2564 292

2006 5157 417

2007 4490 1359

2008 3837 5416

2009 9447 1100

2010 9281 1883

2011 5127 2933

2012 3708 2158

Source: Pigato & Tang (2015)

Table 2.3 shows FDI flows to SSA from China and USA between 2001 and 2012. Unlike FDI stock to SSA, FDI inflow to SSA from USA and China did not maintain steady increasing trend. In year 2001, FDI flows from USA to SSA was US$2436 million but reduced by about 76% in 2002 to a negative sum of US$578 million. By 2008, it was US$3837 million, a decrease of about 14% from 2007 figure. Between 2011 and 2012, FDI flows to SSA from USA decreased by about 28%.

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FDI flows from China to SSA maintained increasing trend from 2003 till 2008 before it dipped in 2009 and picked up again till the end of the review period. In 2003, it was US$76 million but increased by about 292% in 2004 to US$298 million. By 2008, it was US$5416 million, an all-time high. But by 2009, it dropped by about 80%. Between 2011 and 2012, FDI flows to SSA from China dropped by about 26%. Figure 2.2: Extractive

USA FDI to SSA by Activity, 2013

Manufacturing

Finance

Wholesale Trade

Holding Companies

Others

4% 17% 3% 10%

60%

6%

Source: International Trade Administration, US Department of Commerce (2014)

When compared with the United States of America, FDI to SSA by activity, China‘s FDI to SSA is more diversified. According to data from US Department of Commerce, in 2013, 60% of FDI from USA were directed to the extractive industry. On the other hand, 37% of China FDI to SSA was directed to the extractive industry. While 6% of USA FDI was directed to the manufacturing sector, 19% of China FDI was directed to that sector. Finance attracted 6% and 24% respectively from USA and China. These are shown in Figures 2.2 and 2.3. Figure 2.3: Manufacturing

China FDI to SSA by Actvity, 2013 Finance

Extractive

20% 19% 37%

Source: Pigato & Tang (2015)

83

24%

Construction

Others

N.R. Uwajumogu & E.S. Nwokoye

Table 2.4: Value of Announced Greenfield FDI projects, by destination, 2003-2015 Region/Country

2003

2005

2006

2007

2008

2009

2010

2012

2013

2014

2015

World

719 400

632 618

817 502

804 533

1 294 322

958 130

818 974

631 003

830 771

706 049

765 729

Developed countries Developing economies Africa

215 919

224 841

309 829

295 518

408 251

321 755

289 803

238 224

263 256

232 808

261 466

443 740

354 644

464 283

442 976

788 734

586 990

482 934

355 687

534 183

447 951

468 614

53 410

61 725

72 158

55 186

140 036

84 389

70 449

47 640

68 725

89 134

71 348

Sub Saharan Africa Transition economies

39 653

31 569

25 055

26 319

87 934

45 068

52 060

32 652

57 282

62 656

49 482

59 741

53 133

43 390

66 039

97 337

49 385

46 236

37 092

33 331

25 290

35 648

Source: ©UNCTAD, FDI/MNE database (www.unctad.org/fdistatistics), 2016

FDI can be broadly divided into mergers and acquisitions (M&A) and green-fields. Inflows into these categories to SSA have been increasing as shown on Tables 2.3 and 2.4. Global green-field FDI was valued at US$719400 million in 2003. Out of this, developed countries‘ share was 30% while developing countries‘ share was 62%. Transition economies‘ share was about 8%. By 2008, green-field FDI had increased to US$1294322 million of which developed countries‘ share was about 32%. The percentage share for developing and transition countries were 61% and 7% respectively. The percentage distributions of green-field FDI in 2015 are as follows: developed economies (34%); developing economies (61%) and transition economies (5%). Sub-Saharan African economy‘s share out of Africa‘s share is as follows: 2003 (74%); 2005 (51%); 2008 (63%); 2010 (74%) and 2015 (69%). Table 2.5: Value of cross-border M&A by region/economy of purchaser, 1990-2015 World 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

98049.6 58884.9 46939.5 43495.6 93877.3 109937.6 141170.4 187306.7 349728.3 559539.3 959681.2 431756.5 243734.7 165425.4 198597.5 535035.3 619808.8 1032688.9 617648.6 287617.2 347094 553442.3 328224 262516.5 432480.2 721455.4

Developed Economies 84688.4

Developing Economies 8360.4

Africa 1296.1

Sub-Saharan Africa 1086.7

48726.1 33834.6 34385.1 80919.1 99723.4 123733.6 169359.5 327381.4 542088.5 894982.1 397539.9 211038.0 142089.1 158051.4 446360.0 499933.7 867556 479590.4 191213.5 224758.8 431898.7 183858.4 120682.7 256852.8 585859.9

4359.6 9575.9 6501.6 10143.2 5993.2 14086.4 13980.2 12464.6 11215.9 60809.6 25466.8 29261.2 16271.2 25410.9 71337.6 109154.7 136937.3 114407.8 80445.0 100377.7 101277.3 124197.7 127823.7 155978.9 119057.5

579.1 1926.5 407.5 3578.5 -2294.8 2215.1 -1970.8 1092.2 -1286 2937.9 2974.8 693.5 -443.6 -170.3 14081.7 15964.1 10439.4 8265.8 2554.4 3792.2 4392.8 628.5 3212.4 5449 3357.9

579.1 1617.1 353.5 3573.4 -2327.4 2207.6 -1970.8 1089.3 -1325.5 2939.4 2882.1 807 -452.2 -178.1 1189.9 10330.6 9038.4 3537.0 1549.9 2321.6 4376.1 543.1 2752.9 5221.2 1605.0

Source: ©UNCTAD, FDI/MNE database (www.unctad.org/fdistatistics), 2016

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Global M&A FDI was valued at US$9804.6 million in 1990. By 2000, it had grown tremendously by over 900% to US$959681.2 million. But in 2010, it fell by over 60% from its 2000 level. In 2015, it ended at US$721455 million, an increase of over 100% from its 2000 level. Out of this, developed countries‘ shares were 86%; 93%; 66% and 81% for years 1990, 2000, 2010 and 2015 respectively. Meanwhile, developing countries‘ shares were 9%; 6%; 29% and 17% for years 1990, 2000, 2010 and 2015 respectively. The proportion that went to Sub-Saharan African economies out of total Africa‘s shares were as follows: 1990 (84%); 2000 (100%); 2010 (61%); and 2015 (48%). The Global Entrepreneurial Monitor (GEM) (2015) provides information on measure and character of domestic entrepreneurship. The foremost indicator of GEM is Total-early Stage Entrepreneurial Activity (TEA) which measures the percentage of adults (16 to 64 years) who are in the process of starting a business or who just started a business. Data from only 12 countries of SSA recorded with GEM shown in Table 2.6 reveal that on the average, 5%, 24.5% and 27.2% adults (16 to 64 years) in SSA are in the process of starting a business or just started a business in 2005, 2010 and 2015 respectively. Table 2.6: Total early-stage Entrepreneurial Activity (TEA) 2005

2006

2008

2009

22.712

Angola

2010

2011

31.94

Botswana Burkina Faso Cameroon Ethiopia Ghana Malawi Namibia Nigeria Senegal South Africa Zambia SSA Average*

2012

2013

2014

2015

32.39

22.233

21.502

27.66

20.85

32.792

33.23

21.71 37.374

29.75 25.37

14.73 33.45

34.987

36.52 35.56 18.15 35.04

25.824 28.108 33.339 39.862

5.114

5.145

7.762

5.92

8.86 32.63

9.144

7.32 41.46

10.586 39.905

6.972

38.55 9.19

5.114

5.145

15.237

5.92

24.477

25.86

27.648

27.588

27.07

27.218

Source: GEM (2015) *Author‘s calculation

The GEM recognizes that several factors spur entrepreneurial activity; notable among these factors are entrepreneurship as a necessity and entrepreneurship as an opportunity. Opportunity-driven entrepreneurship arises when a person, even though may be employed, decides to engage in entrepreneurship as a result of opportunities presented by happenings in the economy. On the other hand, necessity-driven entrepreneurship is when an individual engages in entrepreneurial activity because he has no other job and needs a source of income. Hence entrepreneurship becomes just a means to keep body and soul today and not necessarily a drive to fulfill a personal/social need.

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Table 2.7: Improvement-driven Opportunity Entrepreneurial Activity: Relative Prevalence (IDE) 2005

2006

2009

2010

30.41

Angola Botswana Burkina Faso Cameroon Ethiopia Ghana Malawi Namibia Nigeria Senegal South Africa Zambia SSA Average*

2008

2011

2012

2013

2014

38.26

40.259

43.407

47.97

52.01

54.71 52.83 40.51

50.069 37.26 37.5

69.22 50.97 42.87 36.79 53.22

44.075 29.419 32.915 52.312

39.74 46.24 47.253

31.524 37.246 39.97

35.49

51.89 37.49

45.389

42.842

29.92

34.67

47.341 34.1

44.956

56.137

38.02

34.1

44.956

43.274

38.02

31.11 41.15 34.213

39.282 43.312

2015

Source: GEM (2015) *Authors‘ calculation

Table 2.7 shows entrepreneurship motivated by opportunity. Data therein shows that on the average 34.1% of adults (16 to 64 years) in SSA who are in the process of starting a business or who just started a business in 2005 were opportunitydriven. But for the same year, as shown on Table 2.8, an average of 39.5% of adults (16 to 64 years) in SSA who are in the process of starting a business or who just started a business were necessity-driven. Table 2.8: Necessity-Driven Opportunity Entrepreneurial Activity: Relative Prevalence (NDE) 2005

2006

Angola Botswana Burkina Faso Cameroon Ethiopia

2008 35.195

2009

2010 35.82

2011

2012 23.749 33.413

2013 26.124 26.267

2014 24.449 30.245 22.274 33.462

Namibia Nigeria

27.563 41.915

33.313 43.691

31.671

37.252 34.542

33.623 25.431

34.83

31.672

30.34

32.002

38.802

27.06

Senegal 39.462

29.296

20.971

32.66

35.96 35.15

Zambia SSA Average*

35.563 27.49 29.77

20.348 36.86

Ghana Malawi

South Africa

2015

39.462

29.296

28.083

32.66

35.948

33.251

31.384

32.199

28.187 27.723

32.227 30.422

Source: GEM (2015) *Authors‘ calculation

For year 2015, Table 2.7 shows that on the average 42.8% of adults (16 to 64 years) in SSA who are in the process of starting a business or who just started a business were opportunity-driven while Table 2.8 shows that on the average 30.4% of adults (16 to 64 years) who are in the process of starting a business or who just started a business in SSA were necessity-driven.

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6.2 The Literature 6.2.1 Concept of and Importance of Entrepreneurship The word entrepreneurship is rooted in a French word entreprendre which connotes knowledge, comprehension and understanding. This is why entrepreneurship is described as a process of appreciating actions concerned with recognizing and developing commercial activities while taking on the risks associated with such ventures. These activities may come in forms of introducing a new method of production, introducing a new commodity, creating a new organization, opening a new market or conquering a new source of supply. Essia (2012) described entrepreneurship as a dynamic and social process in which an individual or collaboration between individuals is aimed at recognizing possibilities and using these possibilities to translate their ideas into practicable and goaloriented actions within a social, economic or cultural context. Therefore, the typical entrepreneur always aims at determining, recognizing and then satisfying unfulfilled needs while bearing the attendant costs and benefits (Nwokoye, Onwuka, Uwajumogu & Ogbonna, 2013). Entrepreneurship is a very important stimulant to economic growth, employment and development through the many roles an entrepreneur plays. Carree & Thurik (2002) identified three such roles: innovator (Schumpeterian entrepreneur); identifier of profit opportunities (Kirznerian entrepreneur) and risk bearer (Knightian entrepreneur). The entrepreneur as an innovator changes the way things are done; bringing in newness and novelty which positively impact on economic growth, job creation and development. The reward for entrepreneurship is profit. With this motivation, the entrepreneur accepts the risk of going through uncharted courses, opening of new markets and ventures and engages in competitive activities. In the course of doing these, new products and technologies as well cost minimizing techniques are developed. In the same vein, Minniti (1999) posited that entrepreneurship spurs economic growth through the positive network linkages it creates which engenders formation of new ideas and markets. The innovative activity, according to Schumpeter, include: the introduction of an entirely new good or improved quality of an already existing good; the introduction of a new method of Production; the opening of a new market; the conquest of a new source of supply of raw materials; and finally the carrying out of the new organization of any industry. Wennekers & Thurik (1999) provided a framework on which entrepreneurial activity impacts on economic growth by identifying some intermediate variables between entrepreneurship and economic growth. In their analysis, entrepreneurship is multidimensional whose positive impact on economic growth is through some intermediate variables such as innovation and competition and depends on the fulfillment of some critical conditions that includes personal traits, cultural and institutional factors.

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6.2.2

FDI: A Determinant of Domestic Entrepreneurship

Since Schumpeter (1911)‘s study on the role of entrepreneurship in fostering real and sustainable development, the literature has been filled with far-reaching theoretical studies and fewer empirical studies, carried out in developing countries to trace the entrepreneurship-growth nexus with much emphasis paid to foreign capital inflow. These studies, having acknowledged foreign capital as a catalyst for economic growth, are partly motivated to empirically explain the quest among developing nations in continuously attracting foreign capital into their economies. This preference for foreign capital is based on the underlying assumption that foreign capital helps to augment domestic capital gap in the light of shortages in domestic entrepreneurial skills, improves productivity and enhances competition in line with the spillover hypothesis. It has been recognized in literature that entrepreneurship is synonymous with small and medium scale enterprises (SMEs) these have been recognized as the bedrock for industrial development since they offer access to numerous commodities (Nnanna, 2003; Salako, 2004). They provide a veritable means for large scale employment owing to the fact that they usually adopt labour intensive techniques of production. SMEs provide training grounds for entrepreneurs even as they generally rely more on the use of local inputs; they also provide an effective means of stimulating indigenous entrepreneurship, enhancing greater employment opportunities per unit of capital invested and aiding the growth of local technology (Sule, 1986; World Bank , 2006). Strong entrepreneurial bases are essential drivers of economic growth and prosperity in any modern economy; it empowers the populace and provides greater possibilities for the use of available local raw materials and this goes a long way in encouraging vertical and horizontal linkages (Okonkwo, 1996; Okonjo-Iweala, 2005 cited in Nwokoye, et al, 2013). This explains why governments and international agencies work towards the attainment of rapid growth and development of small and medium scale enterprises in their efforts at the realization of sustainable industrial growth and the creation of mass employment. One of the ways through which this desire has been sustained over time is the encouragement of foreign direct investment (FDI) inflow. UNCTAD (2007) defines FDI as an investment made to obtain a permanent management interest (normally 10% of voting stock) in a business enterprise operating in a country other than that of the investor‘s. Therefore, FDI refers to the activities of subsidiaries that are referred to as multinational enterprises (MNEs) and these MNEs perform different functions ranging from duplicating the activities of their parent company to producing components of the parent company‘s products to engaging in activities that are completely unrelated to that of their parent company.

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FDI is prized by less developed economies for the package of assets which the MNEs deploy to their host economies through their investments and these assets include advanced technology, improved management skills, improved channels for marketing products internationally, enhanced product design, high quality characteristics, superior brand names and so on. (Nwabude, 2014). It is a major path through which less developed economies can integrate into the global world and is often seen as the driving force behind economic convergence (Dike, 2005). FDIs are regarded as alternatives to international trade in order to penetrate markets which are protected by strong barriers (Markusen & Venables, Dike, 2005). The existences of proprietary knowledge and of some forms of market failure in protecting this knowledge abound in the literature as the main reasons why MNEs prefer FDI to exporting directly and /or licensing their technology out (Markusen, 1995; Caves, 1996 cited in Nwabude, 2014). The general literature on FDI takes it as given, these motives and in particular, the existence of some kind of firm‘s specific asset (technological advantage) which may include innovative management, organizational processes and new production methods/techniques. There are possibilities that some of these advantages can be unconsciously transferred to domestic entrepreneurs in the host economies through the MNEs with whom they operate within same industry. Since a MNE will not willingly handover its advantages, these gains received by the domestic entrepreneurs as a result of relating with MNEs who operate within their industry are referred to as spillovers. FDI through MNEs, are expected to mentor the domestic entrepreneurs to some extent (Nwokoye, at al, 2013) and this assertion is theoretically based on the spill-over hypothesis. The spillovers can come either through vertical or horizontal integration as discussed below: 1. Theories of horizontal integration: There are possibilities of some MNEs setting up shop abroad to produce a commodity whose close substitute is already being produced in its host country. Here, the domestic firms are bound to lose their market share to their foreign counterparts, This may led to a situation where the domestic entrepreneurs experience lower productivity since their fixed costs are spread over a smaller market thus introducing a competition effect. This situation is consistent with the lack of intra-industry spillovers found in current analysis. 2. Theories of vertical integration: There are possibilities of some MNEs setting up shop abroad to engage in activities which are complimentary to those of the domestic entrepreneurs. For instance, an MNE may set up shop abroad in order to physically disconnect different production stages across various countries with the objective of taking advantage of decreases in input prices. Instances include i. Situations where the unskilled phases of production are located in lower wage country while the finished goods are exported back to the home country. This is a case of forward linkage otherwise observed as a downstream linkage.

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ii. Situations where increases in MNEs activities lead to increases in the demand for production inputs produced in the host country (labour, capital goods). This is a case of backward linkage otherwise observed as an upstream linkage. In summary, economic theories identify four channels through which inflows of foreign direct investment can provide beneficial spillovers to improve the productivity of domestic entrepreneurs. These channels include: 1. Imitation. This refers to the acceptance of new methods of production and new managerial practices/ techniques. It is recognized as the classic transmission mechanism for new products/processes and imitation is commonly referred to in the literature on North-South technology as reverse engineering. Its scope depends on product/process complexity with simple manufactures and processes easier to imitate than complex ones. For instance, managerial/organizational innovation is far easier to imitate. Any advancement in domestic technology resulting from imitation is expected to boost productivity of domestic entrepreneurs. 2. Competition. In practical terms, every MNE produce in competition with the domestic entrepreneurs except in cases where such an MNE has a monopoly status. Hence the domestic entrepreneurs are likely to be put under pressure to use existing methods of production more efficiently in order to reap productivity gains. The scenario thus created leads to conscious efforts aimed at reducing X-inefficiencies and this increases the domestic entrepreneurs‘ consciousness for rapid adoption/imitation of newer technologies with a view to increasing productivity gains. 3. Human Capital Acquisition. This is considered as a most important beneficial spillover effect of MNEs to domestic entrepreneurs. It is the transfer of knowledge from the foreign to the domestic enterprises through labour mobility. When MNEs invest in training of its locally sourced labour, it is impossible to impound such labour completely especially in the absence of slavery. Hence the movement of labour from MNEs to domestic firms can create an upgrading in productivity because an MNE worker may move away and carry with them, knowledge of new production or management techniques. 4. Export Spillovers This is also considered as an additional source of productivity gains for the domestic entrepreneur. Exporting usually involves the acquisition of fixed costs in a bid to establish distribution networks, creating transport infrastructure, learning about consumers‘ tastes and preferences, regulatory frameworks, etc, in the overseas markets. Already established MNEs are armed with this information and exploit them when exporting from their host countries. Through imitation and collaboration, domestic firms can learn from the MNEs operating in their country,

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how to penetrate export markets. This will go a long way in increasing their productivity gains as existing literature propose that the productivity levels of exporting firms are higher than those of non-exporting firms as the former learn by exporting. In order words, export spillovers, through scale economies and increased exposure to international best practices and ‗frontier‘ technologies, boast productivity gains for domestic entrepreneurs. Nwokoye, et al (2013) posits that views on the influence of FDI on domestic entrepreneurship have been expressed by two major schools of thought: the dependency school and the modernization school. (a) Views from the Modernization School The modernization school of thought was developed before the 1960s and has remained widely influential to the present day. Modernization theorists posit that there is a natural order through which countries rise to higher developmental stages and recommends that developing countries should follow the footsteps of developed countries and conquer endogenous barriers to exogenously stimulated development through deregulation, liberalization, and opening up of the economy. The School views FDI as a prerequisite and channel for sustainable growth and development and maintain that for FDI to fulfill its crucial role, economies have to be free of distorting state interventions and should opened up to foreign investment and trade. This stance is reflected in the big bang theories, which postulated immediate allencompassing privatization in Eastern Europe and the structural adjustment norms which aimed at transforming economic and political structures to overcome poverty in Latin America and Africa. (b) Views from the Dependency School Between the 1960s and 1980s, the dependency school thrived and its main thesis is that economic dependence could be overcome through structural and institutional changes within the domestic economy which should aim at achieving higher equality in wealth, income, and power allocation. The School proposes that these can be achieved through self-reliance and mutual cooperation amongst developing nations in the form of regional economic integration and international commodity agreement. The dependency school's main contribution to the domestic entrepreneurship-foreign direct investment nexus is its focus on the effects of FDI on industrialization in developing economies and its pessimist scrutiny of western development paradigms that regard FDI as indisputably positive. This school asserts that developing economies are exploited either through international trade which leads to deteriorating terms of trade (an unequal exchange in Marxist terms) or through profit repatriation by the MNEs. Though dependency theorists (including Furtardo, 1964; Sukel, 1969; Santos, 1970; Emmanuel, 1972; Frank, 1976; Amin, 1976) belonged to different schools of

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thoughts, they saw the cause of underdevelopment primarily in abuse of the underdeveloped nations by the already industrialized ones. 6.3 Empirical Literature There are many empirical studies conducted to assess the impact of FDI on domestic entrepreneurship especially in developing countries. Their findings, even within a particular study, further confirm the controversy in literature on the impact of FDI on domestic entrepreneurship. While some studies found positive impact of FDI on entrepreneurship, others found negative impact. With the aim of finding the impact of FDI on entrepreneurial activities, Albulescu & Tamáşila (2014) took a panel study of 16 European countries for the period 2005-2011. Total Entrepreneurial Activity (TEA) from GEM was used to measure entrepreneurship. Further, the study made distinction between opportunity-driven entrepreneurship (ODE) and necessity-driven entrepreneurship (NDE) as well as a distinction between inward FDI and outward FDI. Three models were drawn with TEA, ODE and NDE as dependent variables in each model. Fixed effect and random effect were the methods of estimation and then Hausman test was performed to choose the best model. Their findings show that inward FDI positively but insignificantly influence TEA while outward FDI has negative effect on TEA. ODE is positively influenced by inward FDI but negatively influenced by outward FDI. For NDE, though the result lacked robustness, outward FDI has positive impact on it. Ayyagari & Kosová (2006) assessed whether the effect of FDI presence on domestic firm formation in Czech Republic (a transitional economy) produced a horizontal or vertical spillover. The study also assessed whether FDI entry spillovers vary across industries and the influence of this on the firm size and productivity. Firm-level panel data from 9979 large, medium and small scale entrepreneurs across 245 industries comprising 8384 local firms and 1395 foreign firms for 1994 to 2000 was used for the study. Regression analysis was used to estimate how FDI affect entry of new local enterprise and then an input-output table was constructed to estimate vertical and horizontal spillover effects. The study found a clear and resounding positive impact of FDI on domestic firms‘ entry rate though horizontal and vertical spillovers. The effects of these spillovers vary across industries with service industries benefiting from more spillover effects while manufacturing industries do not enjoy such benefits. The study also found that that FDI presence has strong impact on size and productivity of local firms. Results obtained by Danakol, Estrin, Reynolds & Weitzel (2013) for 70 developed and developing countries were contrary to the findings by Ayyagari & Kosová (2006), Using two variations of two-stage least square and ordinary least square regression methods of estimation, the effect of FDI inflows measured by mergers

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and acquisition (M&A) on domestic entrepreneurship was found to be negative and significant at both aggregate and disaggregate levels. Further controversial results were found in a study by Acar, Eriş & Tekçe (2012) on the effect of FDI on domestic investment in selected Middle East and North African region countries for the period 1980 to 2008. The countries were grouped into three: all the countries; oil-rich countries and oil-poor countries and dynamic panel GMM techniques was the method of estimation. For the group containing all countries, the study found that FDI inflow measured by share of inward FDI inflow in GDP had significantly negative effect on domestic investment measured by share of gross fixed capital formation in GDP but the impact on oil-poor countries was found to be positive and significant while the impact on oil-rich countries was found to be negative and significant. Thus, the study concluded that FDI crowds out domestic investment. Almost a similar conclusion was arrived at by De Backer & Sleuwaegen (2003). The study was based on 129 manufacturing industries in Belgium within 1990 and 1995. Using Tobit procedure, they found that international competition posed by FDI entrance has negative effect on domestic entrepreneurship but there was a positive long-term structural effect in the long run. Such effects include learning, demonstration, network and linkage effects are capable of reversing the crowding out effects. There is paucity of empirical literature on the impact of differences in origin of FDI on macroeconomic variables like economic growth and domestic entrepreneurial development. However, Gee & Karim (2011) is among the few studies that aimed at examining the effect of FDI inflows from countries in European Union, ASEAN, Japan, China, and the United States on growth of the manufacturing sector in Malaysia between 1991 and 2006. Using the autoregressive distributed lag (ARDL) model, the study found positive impacts of FDI inflows from China, USA, and the European Union but negative impacts of FDI inflows from Japan and ASEAN countries. A similar study was embarked on by Fortanier (2007) who examined the variations in growth of 71 countries as a result of FDI from six different countries for the period 1989 to 2002 and the findings show varying impacts of FDI from various countries on host countries. 6.4 Country of Origin and Sub-Saharan Development: USA Inflows Vs. China Inflows

African

Entrepreneurial

Theoretical and empirical literature on the effects of FDI on economic growth in general and domestic entrepreneurial development in particular have remained inconclusive as evidence of both positive and negative effects abound. It must be recognized that countries, both origin and host countries, as well as FDI are not

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homogenous. Countries differ from each other and have their unique characteristics which impacts on FDI originating from them. This, thus, gives FDI originating from any country its unique distinguishing features. Such distinguishing features include country of origin‘s institutions, laws, openness to trade, level of technology and most importantly, the aim of the investment (Fortanier, 2007). With this view, Fortanier (2007) hypothesized that the inconclusive impact of FDI on growth could be linked to differences in country of origin as well as host country differences. This is because country of origin affects FDI in many ways, including: intra-company sales and trade and the size of domestic manufacturing and research and development; sector specialization, forms of ownership and ways of internationalization; capital intensity of production and technology use, etc. The impact of FDI on growth varies by country of origin because of differences in sector specialization and organizational structure (Fortanier, 2007). Though the United States of America (USA) remained one of the greatest investor in SSA, but since the 1990s, China has steadily increased its partnership with the sub-Saharan Africa (SSA) countries in terms of trade and investment. As is seen in Figure 2.3, China‘s FDI is more diversified than that of the USA and this has some implications as can be seen from Figures 4.1 and 4.2. The correlation between the host country characteristics with country of origin characteristics will have varying effects on domestic entrepreneurial development. Therefore, it is expected that there will be differences in effect of FDI from a developed economy like USA and emerging economy like China on domestic entrepreneurial development of SSA. As posited by Chen & Ku (2000), FDI from developed economies are more of expansionary types while FDI from emerging markets are more of defensive types. Figure 4.1: USA‘s FDI inflows to SSA: Total Early-Stage Entrepreneurial Activity (TEA)

USA FDI Inflow

USA Inflow 10000 y = 7.6183x + 5469.6 R² = 0.0008

5000

USA Inflow Linear (USA Inflow)

0 0

10

20

30

TEA Source: Authors‘ Computation Using Excel

A simple correlation analysis depicted in Figure 4.1 shows a positive but insignificant impact of USA inflows on TEA owing to the very low coefficient of determination score that is almost negligible. On the other hand, China inflows‘

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impact on TEA is also positive and insignificant as seen in Figure 4.2. But this level of significance (20%) is much higher than that of US Figure 4.2: China FDI inflows and SSA Early-Stage Entrepreneurial Activity (TEA)

China FDI Inflows

China Inflows

6000 5000 4000 3000 2000 1000 0

y = 81.555x + 753.89 R² = 0.227

Y-Values Linear (Y-Values)

0

10

20

30

TEA Source: Authors‘ Computation Using Excel

There are many reasons for these diverse impacts of FDI in domestic entrepreneurship. Some of these reasons are dependent on the motive for investment in SSA. China‘s motive for investing in SSA differs from US motive. China‘s investment motives in SSA are for economic and political reasons (Renard, 2011). Firstly, as an emerging economy, China needs to diversify its supply of energy resources to support her economic development. SSA is this source with her low carbon petroleum and cheaper supply cost. Secondly, China‘s desire to get a permanent seat at the United Nations Security Council motives her to increase investment in SSA so as to garner support from countries of the region. Lastly, it makes economic sense for China to invest in Africa as the continent has lots of opportunities and potentials as well as a market for Chinese manufactured goods. On the other hand, the USA invests in SSA for economic, humanitarian and security reasons (Ingram and Rocker, 2013). Like in the case of China, the USA invests in SSA because of the mutual benefits derivable from these foreign direct investments. On the humanitarian ground, increased foreign investment in SSA is considered as an avenue for eradicating poverty. Following closely to this is the security threat posed to the USA, its partners, allies and across the globe by Africa‘s endemic poverty. FDI inflow into SSA from the USA is hoped to reduce this threat. Apart from the motive for investment, the character of the investment is another reason for the differences in impact. Foreign investments from China are made up

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of investments from both its public and private enterprises with its public enterprises in key sectors such as the extractive industry, infrastructure and telecommunication (Renard, 2011). These enterprises receive loans from stateowned banks at concessionary rates and therefore are less risk averse. For long lasting relationship and hold over SSA, the Chinese government is more committed and invests heavily in infrastructures but they have less concern for good governance, environmental and social issues. On the other hand, the foreign private investors have the upper hand in the USA‘s foreign direct investment inflow to Africa. They do not enjoy as much concessionary loans as their Chinese counterpart. Therefore, they are more risk averse. Good governance, environmental issues and social issues form the crux of her considerations while investing in the African continent (Ingram and Rocker, 2013). 6.5 Conclusion and Policy Recommendations The sub-Saharan African region is one of the fastest growing regions of the world but is also a region beguiled by poverty. In its quest to ameliorate the numerous developmental challenges facing it, the region has over the years formulated and implemented on several programmes and engaged in strategic partnerships. One persistent problem that undermines the success of these programmes and partnerships is the paucity of funds and capital. In other to overcome this problem, the countries in this region, collectively and individually, seek for foreign capital. Foreign direct investment from the world to the region has been growing. Global FDI stock to SSA increased by 25% between 2009 and 2012. Within the same period US FDI stock inflow to SSA increased by 40% while China‘s FDI stock inflow grew by133%. In 2009, United Kingdom, France, United States of America, South Africa and Malaysia were the first five largest foreign investors in Africa, while China and Germany were the seventh largest investors (UNCTAD, 2016, World Investment Report 2016). By 2014, China became the fourth largest foreign investor after United Kingdom, the USA and France. Several reasons have been advanced for the USA‘s foreign investment in Africa. Notable among them is Africa‘s economic growth and its large natural resource endowment (ITA, 2014) and this explains why resource-rich countries like Nigeria and Kenya have large FDI inflows. Another factor that attracts USA FDI to Africa is political stability enjoyed by many of its countries like Ghana, Angola, Nigeria, Uganda and Tanzania (ITA, 2014). The activities to which the USA‘s FDI inflows are directed at and the aim of investment support the view that the USA embarks on expansionary foreign investments. For instance, greater share of its FDI inflows were directed at high technology and capital-intensive industries like the extractive industries. Therefore, the host countries benefit from technological and knowledge spillovers. On the other hand, China‘s FDI inflows are more diversified. Though, a large percentage

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goes to the extractive industry, a greater chunk go to the manufacturing sector. This is more of a defensive type of investment focusing on low technology-driven industries, export markets and industries that exploit labour-intensive technique of production. This could be a plausible reason for the higher significance level of the impact of FDI on the total early-stage entrepreneurial activities (TEA) indicator provided by the Global Entrepreneurial Monitor (2015) for the sub-Saharan African Region. 6.6 Policy Implications Despite the numerous challenges facing the region, sub-Saharan Africa has enormous opportunities and potentials capable of propelling the region towards the path of sustainable development, industrialization and self-sufficiency. In this regard, the region is capable of negotiating FDI inflows in terms and conditions that will be more beneficial rather than exploitative. There is the need to foster more regional integration in the many fragmented states of Africa. This will help widen the market size as well as fully exploit the region‘s comparative advantage in agriculture. More potential abound for the region as about 60% of the world‘s uncultivated land is in the region. Opportunities also flourish in the information and communication technology sector as well as in the new discoveries of off-shore gases, in addition to a burgeoning middle class. This region is also blessed with low-cost labour and its nearness to European markets is an advantage that can be exploited in its interaction with Asian countries. This shows that sub-Saharan Africa should not be an underling in its relationship with the rest of the world; the world needs Africa. To maximize these potentials, the sub-Saharan African region must invest in critical infrastructures that ease the cost of starting and operating business. Properly functioning institutional arrangements and markets as well as stable political systems are also important for harnessing these opportunities. References Acar, S., Eriş, B. & Tekçe, M. (2012). The Effect of Foreign Direct Investment on Domestic Investment: Evidence from MENA countries. 14th Annual European Trade Study Group Conference Paper 143. Acs, Z. J. (1992), Small business economics: A global perspective. Challenge 35, November/ December, 38-44. Adelaja, M A (2005). Enhancing the Microfinance Sector for Sustainable Development in Nigeria. A Seminar Paper presented at the Central Bank of Nigeria launching of Microfinance Policy, Regulatory and Supervisory Framework for Nigeria, December. Aitken, B. J. & Harrison, A.E. (1999). Do Domestic Firms benefit from Direct Foreign Investment? Evidence from Venezuela, American Economic Review 89(3), 605–618.

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Albulescu, C. T. & Tamáşila, M. (2014). The Impact of FDI on Entrepreneurship in the European Countries. Procedia - Social and Behavioral Sciences, 124, 219 – 228. Ayyagari, M & Kosová, R. (2006). Does FDI facilitate Domestic Entrepreneurship? Evidence from the Czech Republic. CERGE-ei.cz Papers 061211. Carree, M. A. & Thurik, A.R. (2002). The Impact of Entrepreneurship on Economic growth. In: Z. Acs & D. Audretsch (Eds). Handbook of Entrepreneurship Research 1, pp 437 - 471. Link.springer.com>chapter Chen, T. J. & Ku, Y. H. (2000). The effect of Foreign Direct Investment on firm Growth: The case of Taiwan‘s Manufacturers. Japan and the World Economy, 12, 153-172. Chibundu, E (2006, September 29). How Nigerian SMEs can grow the economy. Vanguard Newspaper, p.46. Danakol, S. H., Estrin, S., Reynolds, P. & Weitzel, U. (2013). Foreign Direct Investment and Domestic Entrepreneurship: Blessing or curse? IZA Discussion Paper No. 7796. De Backer, K. & Sleuwaegen, L. (2003). Does Foreign Direct Investment crowd out Domestic Entrepreneurship? Review of Industrial Organization, 22(1), 67-81. Dike, M. E. (2005). Sub-Saharan Africa, Multinational Enterprises and Foreign Direct Investment in the Context of Globalization. Journal of Economic Studies 5(1): 94-117. Essia, U. E. (2012). Entrepreneurial Culturing of Formal Education Programmes in Nigeria. Journal of Sustainable Society, 1(2), 52-62. Evans, D. S. & Jovanovic, B. (1989). An Estimated Model of Entrepreneurial Choice under Liquidity Constraints. Journal of Political Economy 97, 808827. Ewurum, U. J. & Ekpunobi, G. N. (2008). Problems and Prospects of Small and Medium Scale Enterprises. Nigeria Journal of Economic Studies, 7(1), 32-40. Fortanier, F. (2007). Foreign Direct Investment and Host Country Economic Growth: Does the investor‘s country of origin play a role? Transnational Corporation. 16(2), 41 – 76. Fosfuri, A., Motta, M. & Rønde, T. (2001). Foreign Direct Investment and Spillovers through Workers' Mobility. Journal of International Economics, 53, 205-222. Gee, C. S & Karim, M. Z. A. (2011). FDI‘s Country of Origin and Output Growth: The Case of Malaysia‘s Manufacturing Sector, 1991-2006. Applied Econometrics and International Development 11(1), 161-176. Global Entrepreneurial Monitor (2015). 2015 Global Report. www.gemconsortium.org>report Görg, H. & Greenaway, D. (2004). Much ado about nothing? Do domestic firms really benefit from foreign direct investment? World Bank Economic Observer, 19 (2), 171- 197.

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Ingram, G. & Rocker, S. (2013) U.S. Development Assistance and Sub-Saharan Africa: Opportunities for engagement. In J. P. Banks, G. Ingram, M. Kimenyi, S. Rocker, W. Schneidman, Y. Sun & L. A. Warner (Eds), Top five reasons why Africa should be a priority for United States. pp14- 19 Brookings Institute. International Trade Administration (ITA) (2014). US – Sub-Saharan Africa Trade and Investment. An Economic Report by the International Trade Administration, US Department of Commerce, August. Jhingan, M. L. (2003). The economics of development and planning (36th revised ed).New Delhi: Vrinda Publications (P) Ltd. Madariaga, N. & Poncet, S. (2007). FDI in Chinese Cities: Spillovers and Impact on growth. The World Economy, 837-862. Manufacturers Association of Nigeria (2000). Manufactures‘ Association of Nigeria (2000). Half yearly economic review July – December 1999, Lagos, Nigeria. Markusen, J. R. & Venables, A. J. (1999). Foreign Direct Investment as a Catalyst for Industrial Development. European Economic Review, 43, 335338. Minniti, M. (1999). Entrepreneurial Activity and Economic Growth. Global Business and Economics Review, 1(1), 31-42. Nnanna, O. J. (2003). The role of Central Bank of Nigeria in Enterprise Financing. Central Bank of Nigeria Bullion, 27(1), 19-28. Nwabude, E. S. (2014). Impact of Foreign Direct Investment on Domestic Investment in Nigeria. A Ph.D. dissertation submitted to the Department of Economics, Nnamdi Azikiwe University Awka Nigeria. Nwokoye, E. S., Onwuka, K., Uwajumogu, N. R. & Ogbonna, I. C. (2013). Business Mentoring and Domestic Entrepreneurship in Nigeria‘s Manufacturing Sub-Sector: The Place of Foreign Direct Investment inflows. Journal of Developing Country Studies 3 (8), 8 – 18. http://www.iiste.org/journals/index.php/DCS/article/view/7057 Pigato, M & Tang, W. (2015). China and Africa: Expanding Economic Ties in an Evolving Global Context. Investing in Africa Forum. www.worldbank.org>africa>2015 Renard, M. R. (2011). China‟s trade and FDI in Africa. African Development Bank Group Working Paper No. 126. Salako, M. O. (2004). Financing micro, small and medium scale enterprises in Nigeria: The Small and Medium Industries Equity Investment Scheme (SMIEIS) experience, Union. Digest, 8 (1), 66 - 81. Schumpeter, J. A. (1911). The Theory of Economic Development. Translated by Redvers Opic. Cambridge MA: Harvard University Press. Sule, E. I. K. (1986). Small Scale Industries in Nigeria: Concepts Appraisal of Government Policies and Suggested Solutions to Identified Problems. CBN Economic and Financial Review 24(4).

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UNCTAD (2007) United Nations Conference on Trade and Development (2007). World investment Report: Transnational corporations, extractive industries and development. New York and Geneva: United Nations. UNCTAD (2016). World Investment Report: Annex Tables. Accessed from www.unctad.org/fdistatistics on 31st July, 2016. Wang, J. Y. & Blomström, M. (1992). Foreign Investment and Technology Transfer: A simple model. European Economic Review, 36, 137-155. World Bank (2006). World Bank (2006). World Business Environment Survey. Retrieved from http://www.worldbank.org/busensurvey/article.289 Uwajumogu, N. R., Nwokoye, E. S., Anochiwa, L. & Ojike, O. R. (2015). German Mittlestand: Any Lesson for Development and Sustainability of Small and Medium Scale Enterprises in Nigeria? Business, Management and Economics Research, 1(6), 73-78. http://arpgweb.com/?ic=journal&journal=8&info=aims Wennekers, S & Thurik, R (1999). Linking Entrepreneurship with Economic Growth. Small Business Economics 13, 27-55.

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CHAPTER SEVEN The Eastern Industrial Zone in Ethiopia: Catalyst for Development?

PHILIP GIANNECCHINI, IAN TAYLOR

7.0 Introduction In 2000, at the Forum on China-Africa Cooperation (FOCAC) meeting in Beijing, the Programme for China-Africa Cooperation in Economic and Social Development was launched, in which China agreed to share with African countries its experience in the field of investment promotion relating to the establishment and management of special economic zones (SEZs). Since then, two competitive tenders have led to proposals for the development of seven SEZs in six African countries being approved by the Chinese Ministry of Commerce (MOFCOM), including one in Ethiopia: the Eastern Industrial Zone, located in Oromia region around Dukem, a small town some 35 km south-east of Addis Ababa. Of the seven proposed zones, Ethiopia‘s represents one of the biggest challenges to both the Chinese developers and the host government alike. Due to its geographical location and the absence of any serious SEZ experience in Ethiopia, the zone‘s ability to contribute to Ethiopia‘s economic development remains unclear. Both the Chinese and Ethiopian sides however appear very keen for the zone to work: in May 2014, Chinese Premier Li Keqiang visited the Zone, accompanied by the Prime Minister of Ethiopia, Hailemariam Desalegn. Ethiopia, in fact, is emerging as a veritable hive of economic zones and industrial parks. In 2014, the Ethiopian Industrial Parks Development Corporation (IPDC) was established. Currently, in Ethiopia there are four industrial zones (three of which are foreign-owned): the Eastern Industrial Zone; the Lebu Industrial Zone, owned by Huajian Group; Modjo Industrial Zone owned by George Shoe and the Bole Lemi Industrial Zone, owned by the Ethiopian state. In 2015, construction

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began on a $246 million park dubbed Hawassa Industrial Park after the signing of an agreement between Addis and China Civil Engineering Corporation (CCECC). Hawassa Industrial Park, when finished, is planned to include 35 factory sheds and 19 buildings. The first phase will cover 100 hectares, while the remaining phase will add 200 hectares. Starting from 2016, IPDC will develop additional parks in Mekelle, Dire Dawa, Kombolcha, and probably also Adama. At the same time, feasibility studies will be conducted for Bahir Dar in the north-west and Jimma in the west. With a final size ranging from 500 to 2000 hectares, each park will be developed in phases of 75–200 hectares. Unlike the EIZ, these parks are targeted and coherent vis-à-vis industrial focus: Site

Delimited land (ha) 8.7

Phase I

Completion period of Phase I 2012

Status

8.7

Eligible industries Apparel

Addis Ababa Addis Ababa Addis Ababa

156

156

Apparel

2014

Operational

186

186

2017

337

337

Detail design phase Detail design phase

South

300

100

Dire Dawa

East

1500

150

Kombolcha

Northeast

700

50

Mekelle

North

1000

50

Adama

Southeast

2000

100

Bahir Dar

Northwest

1000

50

Jimma

Southwest

500

50

Textiles and apparel Food processing, pharmaceuticals, furniture, household appliances, electronic and electrical Textiles and apparel Textiles and apparel, vehicles assembly, food processing Textiles and apparel, food processing Textiles and apparel, food processing Textiles and apparel, vehicles assembly, food processing Textiles and apparel, food processing Textiles and apparel, food processing

Hawassa

Addis Industry Village Bole Lemi I Bole Lemi II Kilinto

Addis Ababa

2017

2016 2016

Operational

Under construction Under construction

2016

Open for bids

2016

Open for bids

2016

Feasibility study phase

2016/2017

Feasibility study phase

2016/2017

Feasibility study phase

Industrial parks operated or owned by IPDC (Industrial Parks Development Corporation, 2015)

Constructed at the interface between the top-down and the bottom-up, industrial parks and SEZs have very real implications for people living in or near the spaces

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where they are constructed. Concrete studies of the SEZs in action are the most fruitful avenue in lifting the veil of obscurity over much of what is really occurring ―on the ground‖ vis-à-vis these projects. This is not least because both Beijing and the various host African governments have marketed the ―SEZ model‖ as the basis for future deepened collaboration between China and the continent. Indicative of this commitment was a major conference held in Beijing in December 2015 entitled ―Industrial Parks and Globalization: Experience Sharing between China and Africa‖, which sought to discuss best practices and past experiences. The success or otherwise of existing Chinese SEZs in Africa, and the processes engendered by the various projects are thus of crucial importance for discussions around African development and the role that China may or may not play. This chapter is based on primary research involving interviews with investors, zone developers and operators, regulatory authorities, government officials, and other key stakeholders which were conducted in both Beijing and Ethiopia. The study integrates investigations into the agenda-setting behaviours of both Ethiopian and Chinese actors involved in the Eastern Industrial Zone initiatives, identifying who decides what and with what means, and for whom, for what purpose and with what consequences. Analysis of the zones‘ potential to have an effect on development in Ethiopia, the current obstacles faced and the potential benefits for all the relevant stakeholders are outlined. The chapter takes as its starting point previous accounts of the Eastern Industrial Zone, as well as a recent study of Ethiopia‘s industrial policy, which utilises the theories associated with the economist, Albert O. Hirschman. Fundamentally, this chapter seeks to analyse the progress thus far in the Ethiopian SEZ, to identify the strengths and weaknesses of the project and to determine what impact, if any, the development of this zone will have on Ethiopia‘s structural transformation. This last point is important given that the SEZ scheme is a central component of FOCAC and is heralded as a concrete way in which Beijing is exporting its ―model‖ of development to Africa for economic change. More concretely, the Ethiopian government has decided that the Eastern Industrial Zone (EIZ) is an integral part of its Sustainable Development and Poverty Reduction Program (SDPRP) and the key element in its industrial development ambitions. As the article will detail, the zone‘s contribution to structural transformation of the Ethiopian economy is vital if the zone is to have a catalytic effect on sustainable development in Ethiopia. Structural change is here taken as an increase in the share of industry or services in the economy, or as the broadening and sophistication of exports or as the move of workers from low labour productivity sectors to those with high labour productivity. 7.1 Special Economic Zones Special Economic Zones can be understood as a blanket term used to describe a variety of economic initiatives including, but not limited to, Free Trade Zones

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(FTZs), Export Processing Zones (EPZs), Industrial Zones and Free Ports. SEZs are best understood as spatially defined geographic areas designed to attract foreign investment by providing economic and commercial policies that are more liberal than in the rest of the country, along with infrastructure investment designed to facilitate streamlined operations and lower transaction costs for investors. In China‘s case, ―bringing in‖ (yin jinlai) foreign direct investment, technology and skills was central to the SEZ methodology as practiced post-Mao. As a rule, SEZs are long-term orientated, usually taking over a decade to mature, and are evolutionary and flexible by nature: as an SEZ develops, its objectives and priorities invariably change. A usual evolution is characterised by a shift in focus from attracting foreign direct investment (FDI) to technology-upgrading, with a strong focus on encouraging domestic private investment. The methods employed to achieve these objectives—including incentives and policies—are adjusted where and when necessary to meet the changing needs of investors, the host government, and the wider context of the global economic environment. Utilised effectively, successes are popularized and up-scaled whilst failures are discarded and lessons are learned. In short, as an ideal type, SEZs represent a kind of testing ground, an incubator of ideas and policies designed and implemented to take advantage of comparative advantages in host economies. However, it is not uncommon for SEZs to fail to reach maturity or to have the desired catalytic impacts that the SEZ prospectuses promise. Studying concrete examples of actual SEZs is thus vital if their actual, rather than claimed, efficacy is to be evaluated competently. In Africa, the first official export processing zones (EPZs) were established in Mauritius in 1971. Today, over twenty African countries have played host to various industrial clusters, be they EPZs, SEZs, FTZs or spatial industrial parks. Problematically—and for reasons that echo much of the situation in the Ethiopian SEZ example (see below)—the broad results of SEZs in Africa have been uninspiring. Incompletion of the projects, partial functioning and, in some cases, termination of the project itself, has been the history of SEZs across the continent. It is for these reasons that a preliminary study and assessment of the Ethiopian SEZ is pertinent. 7.2 The Eastern Industrial Zone – Overview and Objectives The Eastern Industrial Zone in Ethiopia was initially planned in 2007 and launched in 2009 by the Ethiopian minister of trade and industry and the Chinese ambassador to Ethiopia. Located in Dukem, Oromia state, around 30 kilometres south-east of the capital, Addis Ababa, the original plan was to establish a 5km² zone operated by the Yonggang Group and the Qiyuan Group, which in five years would entice eighty separate investment projects, creating 20,000 jobs. However, the Yonggang Group soon abandoned the project and the zone currently consists of an area of 2km², a downsizing of over 50%. Like most other Chinese SEZs in Africa, the

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Ethiopian zone is 100% Chinese-owned, developed and operated by the aforementioned Qiyuan Group, a China-based privately owned steel manufacturer. In addition to the provision of land at an extremely favourable rate—one Ethiopian birr (around $0.05) per square meter/per year for 99 years—the Ethiopian government has also agreed to provide all the necessary infrastructure outside the zone and to cover the cost of 30% of the internal infrastructure. This is a remarkable commitment from Addis Ababa and hints at the focus within Ethiopia to promote industrialisation. The previous Prime Minister, Meles Zenawi, was a strong proponent of industrialisation and looked to the Asian late developers for inspiration. It was under him that the details of the EIZ were agreed upon and, starting under Meles‘ leadership, Ethiopia embarked upon a remarkable capital spending programme on large investments (around 15 per cent of GDP) in infrastructure projects. Railways, roads and dam projects have all been part of this endeavour, as has the industrial parks. This huge public investment is credited with driving economic growth above 10 percent. However, the state has borne the brunt of raising financing, whilst at the same time requiring that banks invest the equivalent of 27 percent of the loan portfolio in low-yield state development bonds. Whilst this has been an integral part of the country‘s development strategy, the World Bank has criticised Addis for reducing the ability of private businesses to borrow. Returning to the EIZ, the focus of the Eastern Zone is difficult to ascertain and contrasts with the projects being advanced by the IPDC. The EIZ started out focusing on the production of construction materials as well as light industries, including the production of pharmaceuticals, electronics, chemicals and leather. However, this has now widely diversified. An indicative list of companies with a physical location in the zone is below: Name of Company

Date Entered Zone 2006

Investment

Physical Presence

Industry

$60 million

N/A

Cement production

2008 2008

$500,000 $5 million

3600m² hotel Large storage/parking area

Zhongshun Cement Manufacturing Chang Cheng Packaging L & J Engineering

2008

$11 million

30,750m2 plant

Hotel Construction equipment rental services Cement production

2010

$510,000

5000m² factory

2010

$126,000

2000 m² factory

LQY Pipe Manufacturing Yulong Technology Building Materials Changfa Agricultural Equipment Huajian Group

2010

$9 million

5000 m² factory

Packaging materials Construction cement products Steel pipes

2010

$420,000

10,000m² factory

Gypsum products

2011

Unknown

Unknown

2011

‗Several millions‘

Huajian International Shoe City

Agricultural machinery Shoe manufacturing

East Cement Share Company Eastern Hotel East Cement Leasing Company

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Unilever Plc Eastern Steel Yangfan Motors Plc

2011 2013 2013

Unknown $54 million $2.8 million

5,000 m² workshop 100,000m² factory 33,000 m² factory 10,780 m²

Consumer goods Steel bars and wire Motor vehicles

Ethiopia Great Wall Packing Be Connected Industries

2014

$4.5 million (2014) $2.42 million

8,000 m² factory

Packaging

2015

$2.5 million

7,000 m² factory

Garment printing

This rather eclectic array of investors is problematic, as will be discussed below. Of the companies currently setting up operations in the zone, almost all are Chinese, with the exceptions of Unilever and Be Connected, who are renting facilities (in 2014 Unilever announced it was going to start construction of a new factory). According to the zone operators and also officials at the Chinese embassy in Ethiopia, until Be Connected made their commitment, only one non-Chinese company (from India) had ever expressed any interest in physical investment in the zone. Ethiopian officials involved in the regulation of the zone claim that numerous companies, all Chinese, have signed letters of intent to invest, but how many will actually follow through on this commitment remains unclear. The key motive for Chinese investment in the zone is labour exploitation, relatively cheap land and input materials. Against the background of increasing labour costs in China and over-supply in the domestic manufacturing sector, some Chinese producers find Ethiopia attractive. For example, footwear manufacturer Huajian Group, uses the zone to make shoes for the American and European markets: For Huajian, the major attraction of Ethiopia is its cheap workforce. The average monthly payroll for a worker in Ethiopia is about 300 yuan ($50), compared with 3,000 yuan at its headquarters in Dongguan, Guangdong province. In addition, because animal husbandry output accounts for 20 percent of Ethiopia's gross domestic product, Huajian is using 30 percent of the local leather yield every year, which saves 30 percent in the cost of raw materials…."In general, we can save 18 percent to 28 percent in costs in Ethiopia compared with China" [the general manager at Huajian International Shoe City] said. An official at the Ethiopian Ministry of Industry openly remarked that: ‗According to our evaluation, the Chinese choose Ethiopia because of the stable political situation and the land is almost free…Labour is very cheap here too. With 20 birr you can have one day labourer, with 2000-3000 you can have a professional for a month‘. Incentives to invest in the zone are no different from those offered to any foreign company looking to invest in Ethiopia, including tax holidays and waivers on import tariffs for raw materials. This includes seven years of income tax holiday for Qiyuan, seven years income tax holiday for enterprises in the zone who produce products mainly for the export market and four years income tax holiday for enterprises that produce for the local market.

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The Qiyuan Group has pressed the Ethiopian government to try and arrive at further incentives and concessions. Indeed, one of the authors was at the Ethiopian embassy in Beijing whilst a delegation from Qiyuan was meeting with the ambassador to discuss issues and to ‗exchange information‘ relating to zone policies and the current incentives on offer. According to the Qiyuan management in Dukem and officials at the Ethiopian Ministry of Trade, a key issue is the ten year 30% value-added tax (VAT) which Qiyuan is obliged to pay. The Ethiopian government‘s position is that a decrease does not comply with the principles of competiveness. Qiyuan have also proposed better incentives and preferential policies to compensate for having to build all the infrastructure inside the zone themselves and point to the past situation in Chinese SEZs where, Qiyuan claim, the Chinese government and provincial authorities took care of such infrastructure development. However, structural weaknesses in Ethiopia‘s infrastructure (now being addressed by the state‘s huge investments) limit the value of such largesse. Electricity and water shortages are endemic to Ethiopia. This has at times impeded the smooth development of the zone and has even led to a wholesale cessation of construction efforts. Moreover, misunderstandings exist over whether the pledged 30% from Addis to support the cost of internal infrastructure being built will actually be paid. According to reports, officials in Addis agreed to pay when zone construction is complete. However, some members of the management at the Qiyuan Group expressed concern that this would not be honoured and wanted the costs recovered sooner. In response, one official at the Ministry of Industry asserted that delivery of the 30% is guaranteed and that the Chinese developers should not worry, but instead focus on finishing the construction of the zone and begin operations. In an interview with Wu Shuaiju of the management of the zone, problems were enunciated. Wu complained that investors cannot obtain title deeds issued by the Government and thus think that their property rights are unprotected. This issue about land title deeds has had a knock-on effect on investment license applications, duty-free applications, construction permit applications and capital loan applications. Qiyuan currently charges enterprises 1.00 ETB (5 cents) per m², the same that Qiyuan paid to Oromia State. Additionally, a one-off land development fee is charged at about 135 ETB ($6.7) per m². The main bone of contention for Qiyuan was that its investment on the zone was considerable and that the current estimate is that it will take more than twenty one years to get the investment returned. With an initial development cost of $180 million and an income budget of $7.5 million, it appears that only after twenty four years will Qiyuan start making money on the project. Similarly, in an interview with Yin Tianjun, director of Lifan's car assembly factory in the zone, Yin complained of high import tariffs, consumption taxes and expensive transportation costs. Although labour is much cheaper than in Ethiopia, Yin claimed that this was offset by high duties, meaning that the price of a Lifan car is almost triple the price found in China.

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Yet a recent report by World Bank highlighted the fact that financial incentives are not in fact correlated with SEZ success. Rather, a strong host business and investment climate is decisive. In other words, what is ―special‖ about SEZs is not so much the financial incentives offered to investors, but rather the business environment which SEZs provide. Incentives are but just one aspect. The resolve of the relevant Ethiopian bodies regarding the incentives issue, therefore, should be viewed in a positive light, evidence that the Ethiopian government is less concerned with minor issues and perhaps instead focussed on the factors correlated with zone success. In contrast, the Chinese side seem fixated on what incentives they can prise out of Addis. The Ethiopian government is publicly committed to maintaining macroeconomic stability and developing an improved financial sector. Regulations have been simplified, customs times reduced, and business licenses are substantially cheaper and easier to obtain than before. Moreover, adhering to the belief that a strong private sector is vital for Ethiopia‘s development, reforms have been initiated designed to encourage the development of a stronger and more competitive private sector. The investment code has been amended several times as a means to satisfy the ostensible demands of both domestic and foreign investors. The government of Ethiopia is not being passive and letting foreign investors do what they want or get what they want and is proactively defending perceived Ethiopian interests. As one officer at the Ministry of Industry tasked with overseeing zone operations explained: ‗We will not budge on the VAT tax we are offering the Chinese developer. They (the Qiyuan Group) want us to reduce it, but if they think we will do so, they are mistaken‘. This is perhaps evidence of the Ethiopian government exercising its regulatory role and, equally, playing a role as a partner, not a bystander, although it should be noted that many African governments are reluctant to concede on VAT. The planning, resolution and execution of the zone initiatives groups together a number of agents and stakeholders, such as central governments in Ethiopia and China, local governments in Ethiopia, national investment promotion agencies, private businesses, interest groups and local communities. Unlike in China, where government agencies generally took the lead in formulating and implementing SEZ projects, in Ethiopia, as in the some other MOFCOM-approved African zones, private enterprises were at the helm. It was only with the formation of the IPDC that we can say that Addis began taking charge. The Chinese government (mainly through the embassy in Addis) provide guidance and support, but they do not get involved in the business side of the project—this is left to the investor. The Qiyuan Group‘s relationship to the Chinese embassy in Addis mainly consists of the latter helping establish and co-ordinate relations with Chinese companies and parties interested in investing in Ethiopia. But beyond this, the involvement of the embassy is minimal. This fits with previous studies which have found that:

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[T]he Chinese government has taken a „hands off‟ attitude towards African policies on these zones. We could find no evidence or even rumours of conditionalities or quid-pro-quos imposed on host governments by the Chinese government in return for the development of the zones. While the Chinese government played a role at the diplomatic level and in visits by Chinese leaders to some (but not all) of the countries hosting zones, our interviews make it clear that Chinese companies, with the support of their local embassy, took the lead in negotiations with host governments over particular incentives and responsibilities, particularly for infrastructure construction. Within Ethiopia, consensus on the EIZ initiative was slow to arrive, particularly the merits or otherwise of allowing a private corporation to drive the process. Initially it seemed that the Ethiopian government believed that having a private enterprise in charge of the planning, implementation and operation of the zone had advantages that state-led initiatives are unable to realise. According to one senior official at the Ethio-Chinese Bilateral Commission in Addis Ababa, ‗the [Ethiopian] government hopes that the zone developers will be less vulnerable than our companies, and that they will be in a better position to access global markets and capital. They will also have the know-how which we simply don‘t have‘. Capitalizing on the strengths of private enterprises and their experience and knowledge of the global markets alongside their operating procedures was one way that the Ethiopian government believes Ethiopian actors involved in the zone may benefit and develop. However, the formation of the IPDC in 2014 signalled a step up in direction. The IPDC is fully mandated to develop industrial parks in Ethiopia. As a public enterprise, owned and supervised by the government, infrastructure connecting industrial parks with Ethiopia‘s core infrastructure is also part of the IPDC mandate. This joined-up strategy is indeed noteworthy. The IPDC aims to provide a one-stop-shop service for those investing in designated industrial parks in collaboration with the Ethiopian Investment Commission (EIC), the Ethiopian Revenues and Customs Authority (ERCA) and others. The Ethiopian government‘s strategy still acknowledges the role of the private sector as an engine in the industrialization process. Within this framework, effort to enhance responsible capitalism is central. By this, the government makes a clear distinction between ―rent-seeking‖ and ―developmental‖ capitalists, with the latter obviously being favoured. Yet Addis also maintains that the state must play a strong role in development, ‗not merely as a facilitator but also as a leader (i.e., providing direct support, co-ordinating and guiding the private sector). Inspired by the East Asian experience the government has recently introduced the language of ―developmental state‖ as its policy principle regarding the state-business relationship‘. 7.3 Catalytic potential? A key component of the SEZ paradigm is to move away from the protected and isolated import-substitution approach of the past towards one ostensibly guided by

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international competitiveness, regional co-operation and a more diversified, privatedriven ownership pattern. In this sense, the SEZs purport to be targeted attempts to stimulate economic growth by creating globally competitive spatial entities through new investments, infrastructural development and jobs creation. Through these initiatives, the host state seeks to ―crowd in‖ private investment in order to unlock inherent economic potential in a specific spatial location with unrealised economic potential. The basic task is to use existing frameworks and/or construct new ones as a means to formulate a certain geographic space by which the existing economies can be developed and diversified. In the study of SEZs this has been termed the ‗catalytic effect‘ where there is potential for SEZs to engender dynamism in the economy beyond the spatial restrictions of the zone and stimulate development. Cheesman defines the catalytic effect as ‗interaction with the domestic economy: specifically they deal with industrial spill-overs and the establishment of zonedomestic linkages‘. For Ethiopian proponents of the zone, the aim is clear: to support sustainable industrial development, whilst the Chinese equally claim that ‗the purpose of our Eastern Industrial Zone is to make contributions to the economic development of Ethiopia‘. Of course, Chinese enterprises hope to gain competitive advantages in their trading networks (access to new markets and areas of unique competitive advantage). According to Tadesse Haile, the Ethiopian Minister of Industry, over the next ten to fifteen years Ethiopia aspires to evolve from an economy based on agriculture (currently accounting for over 40% of national GDP and 85% of national employment) to an industrialised middle-income economy. Policy makers in Addis believe that improved living standards, reduction in poverty, and greater agency in global affairs will only be achieved once Ethiopia has industrialised. As the Ethiopian Minister of Industry Minister has asserted, ‗industrialisation is the benchmark for transforming an economy‘ helping to foster investment and innovation. With a low investment capital base in Ethiopia, and a weak local bourgeoisie (which is critiqued by the Ethiopian government as being parasitic and dependent on the state bureaucracy), Addis is looking to foreign investors to act as a vehicle to help speed up the process of industrialisation. As one official at the Ethio-Chinese Bilateral Commission explained: [f]oreign investment is critical to Ethiopia‟s development and we must do what we can to maximize it to keep our economy on a path of growth. We need to modernise and reach international standards. Linking with countries like China who have

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better experience and resources in this regard is vital to Ethiopia‟s modernisation efforts. The EIZ is held to be capable of acting as a catalyst for innovation and development and inspiring the Ethiopian government to plan six new industrial zones around Addis based on the model. 7.4 Untargeted development? The EIZ is, at present, noticeable for its rather scattergun approach with regard to the types of industries located in the zone. The diversity of industries is problematic given that influential development theory argues that a more directed and steered industrial policy is needed in late developers, even if this is at the expense of a broad-based strategy. This critique of the EIZ, based on the work of Alexander Gershenkron and Albert Hirschman, raises important questions about the efficacy of the EIZ as it is currently developing. Indeed, synchronic solutions to the problem of industrialization, which the EIZ assumes, is less likely to be effective than sequential solutions. Alexander Gerschenkron initially applied the concept of ―substitute factors‖ to the study of so-called ―latecomer‖ economies. Rejecting the idea of a one-size-fits-all model of industrialisation, Gershenkron recognised the partiality and specificities of development. Albert Hirschman‘s conceptualisation of sequencing followed this line of thought. This was a rejection of the dominant idea that required ―balanced growth‖, whereby the industrial sector is seen as an inseparable and amalgamated enterprise, ‗like one huge firm or trust‘. Instead, Hirschman argued that development policies should foster a distortion in profits and investments in accordance with a predesigned industrial strategy, as it is these imbalances that facilitate economic growth. The targeting of sectoral development, rather than attempting a broad-based approach was, according to Hirschman, particularly important in resource-poor economies (such as Ethiopia). For example, an investment project aimed at an output industry, which at first has to import its equipment and inputs, may be planned so that it promotes the production of this machinery and inputs domestically, by other companies. This then may help stimulate domestic capital formation and backward linkage through the inputs. At the same time, it is also imaginable to set up investment projects so that developments in the focussed input industries promote extant output industries, or even lead to the materialisation of new output industries i.e. forward linkages. The targeted sectors then, ideally, develop into the primary sectors of the economy. Development follows as growth in the key sectors spreads to others. Hirschman also postulated two separate processes of stimulating an unbalanced growth strategy: investments in basic services that support primary, secondary and tertiary production sectors (Social Overhead Capital or SOC) and Directly Productive Activities (DPA). Significant investment in SOC will animate investment in DPA by delivering cheap inputs to agriculture and industry. For example, low-cost electricity and an efficient

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power supply network may support the development of industries as well as stimulating movement in other sectors. As Hirschman notes, ‗Investment in SOC is advocated not because of its direct effect on final output, but because it permits and in fact invites DPA to come in some SOC investment as a prerequisite of DPA investment‘. Imbalances in the economy may also be fashioned by investment in DPA such as investment in manufacturing industries and construction. Growth in investment in DPA without a matching increase in SOC will likely lead to a rise in production costs due to insufficient overhead facilities. If this happens, stresses are likely to develop and the state could intervene and embark on investment in SOC to generate the needed infrastructure so as to stimulate development of the economy. The progression of development from SOC to DPA is referred to as development via excess capacity. The second sequence i.e. from DPA to SOC is termed development via shortages. Development through an excess of capacity of SOC is less problematic than development via deficiencies of SOC: ‗development via shortages is an instance of disorderly compulsive sequence while that with excess SOC capacity is essentially permissive‘. The concept of unbalanced growth has re-emerged in developmental economics, albeit not always overtly. Recent literature ranges from a U-shaped pattern of sectoral diversification during the development process to broader industrial policy discussions. Indeed, industrial policy is now very much back on the agenda of African development. In an important study, Cohen differentiates vertical (sectorspecific) and horizontal (framework) industrial policies and it is quite clear that Hirschman‘s unbalanced growth postulation matches the vertical industrial policy classification. There have also been attempts to make a distinction between industrial policy ―in the small‖ (introducing mechanisms to recognise and eliminate ―roadblocks‖ hindering existing economic undertakings) and industrial policies ―in the large‖ (essentially strategic prioritisation on favoured industries; the linkage aspect of the unbalanced growth premise offers a standard for making policy decisions in this regard. At first glance, the SEZ model appears to follow the logic outlined by Gershenkron and Hirschman, given that a spatially concentrated location of economic activity is prioritised (acting as substitute factors) over other parts of the economy (unbalanced growth). This has been the case with other SEZs. Indeed, the EIZ may be seen as nominally functioning as SOC. Yet the EIZ‘s stated raison d‘etre is its embeddedness in Ethiopia‘s economy and it is not supposed to be simply some enclave assembling products for the external market. Far from it, the EIZ claims to act as a catalyst for Ethiopia‘s wider industrialisation, which necessitates a strong connection between the economy of the EIZ and the local economy. SOC investment in a spatially constrained area with minimal backward and forward linkages will not lead to DPA outside of the zone. Fundamental to this is that growth needs to be transmitted from one sector to another, with robust backward and forward linkages across sectors. Hirschman stressed that backward linkages were of greater importance, as sectors with solid backward linkages instinctively generate input requirements. However, when one considers the enterprises currently active in the EIZ, the broader developmental

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possibilities appear minimal. Very few have even reasonably durable backward linkages, with most being operations with low levels of employment opportunities. It is not good enough to argue that the EIZ offers up the possibilities of technology transfers, as the literature observes that capacity for transfer spillovers is most pronounced where the differences between incoming investment and the local economy is least and that such transfers ‗should be for appropriate sectors and at appropriate levels‘. A recent study on the effect of Chinese inward FDI into Ethiopia confirms that the investment only has a positive spillover effects for Ethiopian industry when the technology gap between the Chinese and domestic firms is small, and that domestic firms with lower absorptive capacity suffer negative spillover effects from the FDI flows. Hi-tech investment in an economy like Ethiopia‘s is least likely to have beneficial results, particularly when the backward linkages are minimal. The catalytic effect potential of the EIZ is then probably insignificant A problem that is now only be addressed lies in the fact that until recently (2014) the government in Addis Ababa took a rather hands-off approach to the EIZ idea. What SOC that was occurring was to the benefit of the Chinese investors, rather than the wider economy. In China, the SEZ model was implemented within a very specific political and economic context, where the state was generally able to capably ―direct‖ development through SOC and DPA. This was absent in Ethiopia until the IPDC formation, which of course is a positive development. This is particularly so given that a study by the World Bank noted that, ‗[c]ountry context is likely to be critical in the outcomes of any SEZ program, so it may be implementation rather than policy and design that is the most critical factor in determining the success of an SEZ program‘. Understood in this way, it seems that for a SEZ to develop successfully it is a case of not what, but how. As the Bank‘s report makes clear, this requires the right framework, taking into consideration the host country (its comparative market advantage and political economy, including political will) and utilising the know-how and experience of the investors and developers. It seems that Addis realised this fairly early on in the EIZ experiment as further industrial parks were envisioned. Thus a special research unit from the Ministry of Industry in Ethiopia was created and tasked with travelling to and investigating different SEZs around the world, identifying what was and what was not appropriate to the Ethiopian situation. As the then head of the unit explained to one of the authors: The problem that I see on our side is that we are not ready to support and guide the investors so there could be some hindrances when they start investing. Now the government is paying attention and we are starting to study the legal framework on how to supervise or how to support based on international practice. But we are conscious not to make the mistake that other developing countries have made in thinking that we can just copy the exact SEZ model of other countries. The IPDC‟s role in such a milieu is likely to be vital. At a conference held in Ethiopia in 2011 focusing on creating the ―right‖ enabling environment for enterprise development, a recurring theme was apparent: China‘s

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development model was right for China and whilst certain lessons can be taken from China‘s development experience, its policies and framework should not be simply replicated in developing countries, but rather serve as a point of reference. This included China‘s success with SEZs. Experimental in nature, SEZ strategies were said to actively absorb foreign ideas, but adapt them appropriately to the local environment. The concrete results of such thinking was the formation of the IPDC, a state institution explicitly mandated to offer up a coordinating service for investors considering investing in the designated industrial parks (which includes EIZ). Ethiopia has also drafted a new Special Economic Zones law ‗based on international best practices‘ to guide the governance, development and operation of SEZs in the country. Yet despite these potentially positive moves, as well as designing and implementing SEZ programmes appropriate to the host country‘s economic (and political) context, SEZs must be part of a broader and more dynamic national economic development strategy that links SOC with DPA. But this needs strategizing. Simply crowding in diverse investors from China into a concentrated geographic space, with no control over the types and levels of technologies that the investors bring or the depth of linkages that can be developed to the local economy, is unlikely to be optimal. The news in October 2015 that a delegation of ten major Chinese pharmaceutical and medical supplies companies had visited the EIZ with a view to investing is indicative of this unfocused approach. Whilst the visitors claimed to be interested in partnering with local companies to manufacture drugs, the initiative is yet another diversification of industries being collated at the EIZ and again undermines its potential as a catalyst for development through a targeted strategy of uneven growth. Whilst all potential projects are said to be in the form of joint ventures with Ethiopian companies, tying in with the demands of the government‘s Growth and Transformation Plan (GTP II), the ability to structurally transform Ethiopia‘s economy remains to be seen. What is interesting in this regard is that the planned industrial parks operated or owned by the state (under the rubric of the IPDC) are far more concentrated and targeted. Further research on these zones (most of which are only in the planning or design phase) will clarify whether or not Hirschman‘s theory of targeting sectoral development, rather than endeavouring a broad-based method (as exemplified in the EIZ) is applicable to Ethiopia. 7.5 What Chance of Success? The potential of the Chinese EIZ to have any meaningful effect on development in Ethiopia is uncertain. Firstly, the zone itself has been considerably downsized from the originally planned area of eight square kilometres to a mere two square kilometres. Though this was due to the developers‘ financial problems and the inability to muster enough investors, the fact that the central government in Beijing, which has marketed SEZs in Africa as a flagship projects symbolising Chinese commitment to ―win-win‖ outcomes and ―mutual benefit‖ did not step in and offer assistance is perhaps a sign of its ambivalence towards the initiative beyond the rhetoric. Here it should be pointed out that the China-Africa Development Fund

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(CADF) (China‘s prime investment vehicle in Africa) is not involved. The CADF is involved in three of the seven African zones (Lekki in Nigeria, Suez in Egypt, and Mauritius) and has considerable expertise, thus its decision not to invest in the Ethiopian zone suggests at the very least that the Fund holds some degree of scepticism towards its potential. Interestingly, in contrast to the Ethiopian case, in the Lekki Free Trade Zone (LFTZ) in Nigeria, at the request of the government of the host Lagos State, Beijing did intervene to restructure the consortium of Chinese companies involved in the operation of the zone and increased the China Civil Engineering Construction Corporation‘s (CCECC) stake from 25% to 75%. This can be seen as evidence of the political and commercial importance that the Chinese government attaches to the successful development of the LFTZ in Nigeria, and the potential it sees in the zone. Also of note, in Nigeria Beijing sent a delegation from MOFCOM to audit the accounts of the Lekki Free Trade Zone Company, the 40% Nigerian/60% Chinese joint venture created to operate the zone. Beijing has also stepped in to solve problems in the Chinese SEZs in Mauritius and in Zambia, and former President Hu Jintao attended the opening ceremony of the Zambia-China Economic and Trade Cooperation Zone. In contrast, there has been no intervention by the Chinese government in Ethiopia, even after the Qiyuan Group, with no previous experience in developing a SEZ, continued to develop the zone after initial partners pulled out. Currently, policymakers and government officials alike seem to regard the SEZ as little more than a fancy industrial zone, created to facilitate foreign (i.e. Chinese) investments focused on light industries. As Arkebe Oqubay, a senior adviser to Ethiopia's prime minister, recently noted, too many SEZs in Africa are underwritten by outsiders and are ‗a kind of fad that is seen as a solution for everything‘ despite the fcat that it is obvious that such industrial parks cannot be ‗a replacement for the basics‘. What is remarkable about this situation is that it once again replicates the weaknesses that characterised previous attempts in Africa to set up industry clusters: poor infrastructure, fragile ties to sources of innovation and technology, and a broad absence of state support. Inappropriate technology levels and the absence of beneficial linkages to the domestic economy might also be added to this set of problems. Whilst Addis Ababa talks loudly about industrialisation and developing Ethiopia, it is in fact the Chinese investors that have put up the bulk of the capital and shouldering the majority of the risks involved. Time will tell whether the IPDC‘s industrial parks will be qualitatively better. However, at least it may answer some of Eshetu Chole‘s warnings: [W]here industrialisation has been successfully implemented, it was under the leadership of an indigenous capitalist class or a strong state. In the absence of such a class in the Third World, ownership and leadership of industry has fallen in the hands of foreign entrepreneurs or those of the state, or some combination of these. Where foreign enterprise has the upper hand, whatever industrialisation takes place is likely to be dependent, that is, without any organic domestic base, foreign investments are fragile.

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7.6 Conclusion The most important implication of this study is that policymakers must understand and engage with the interaction among and between industrial structures, linkage potentials, and the political economy of a given situation. Host governments where SEZs have been successful have taken advantage of the dynamic potential of the zones as an instrument of sustainable structural economic transformation. This currently does not yet exist in Ethiopia. Indeed: Weak information flows, risk aversion, and a poor environment for investment protection and contract enforcement in Ethiopia combine to foster entrepreneurial conservatism. The result is personalised business relations, exceptionally low productivity, and the pursuit of opportunistic rents in often dysfunctional markets. These factors have allowed efficient and inefficient businesses to continue to coexist, leaving domestic business vulnerable to international competition as sectors are opened. The fact that the Eastern Zone is operated by a wholly owned Chinese venture and that no Ethiopian businesses are investing in the zone means instead that significant levels of technology and knowledge transfer are highly unlikely to take place. Nor are backward linkages, as Hirschman identifies so clearly, likely to be of any significance. While the EIZ developers claim that they are very willing to work with local companies in Ethiopia and that they actively encourage Ethiopians to invest in the zone, in practical terms, capital investment required to obtain a stake in the zone prevents this from happening. This then has led some Ethiopians to believe that rather than being an initiative aimed at assisting Ethiopia‘s industrialisation, the Eastern Industrial Zone is in fact designed to facilitate the expansion and penetration of Chinese private enterprises into Africa, and that the former (industrialisation) may be just an incidental offshoot of the latter, at best. Such an analysis would confirm Andrew Shrank‘s general prognosis on such economic zones. Yet the decision announced by Addis that it was going to invest $1.3 billion for industrial parks, with $700-750 million coming from sovereign bonds issued by the state reflects an expression of faith in the workability of these spatially concentrated industrial nodes. Whilst the IPDC has (understandably for political reasons) sought to spread the geographic range of these planned parks a problem immediately arises: all previous experiences of economic zones demonstrates the need to prioritise development based on site selection criteria so as to make sure that the different zones do not end up competing with each other. That there is sufficient demand to fill all proposed sites is another basic principle and it is unclear where the Ethiopian government believes it is going to get the necessary investors for their expansive programme given Ethiopia‘s infant private sector, underdeveloped transport facilities and unpredictable infrastructure and utilities. If the hope is that foreign investors will fill the gap, the question of dependent development comes to the fore. This is something that the state in Ethiopia will have to carefully manage.

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Remaining with the EIZ, if local companies cannot afford to invest in the zone, and it is not financially feasible for the bigger companies to shift operations from their current location into the zone (which in itself is somewhat geographically remote), then the Eastern Zone will be of possible limited benefit to Ethiopia. Technology and knowledge transfer or spill-over, a fundamental aspect of any claimed SEZ model, will not occur if Ethiopians are unable to access the opportunities in the zone. Evidence suggests that, at best, Ethiopian involvement in the zone will be limited to providing cheap labour and the supply of some basic low-grade input materials (primarily in the shoe factory). Thus the assertion that Ethiopia ‗could become the China of Africa‘ in terms of industrialisation is unlikely. What is more likely is that the ‗China of Africa‘ element will consist of very low wage levels, enabling profit maximisation for the investors. The EIZ then will not perform its task as a substitute factor in spurring development or stimulating significant DPA. This contradicts previous studies such as by Brautigam and Tang, but is in line with the conclusions drawn by studies of Ethiopia‘s industrial policies by Ethiopian academics and others. For instance, the World Bank‘s latest report on the state of Ethiopia‘s economy is less bullish about the industrial zones (IPs) performance in the country: The inexistence of IP-related policies and management experience led to multiple challenges in planning and implementing of the EIZ and Bole Lemi 1 industrial parks. A range of issues have held back the performance of the program, including…lack of an effective and functioning policy, regulatory and institutional framework; weak strategic planning and demand-driven approach; poor on-and-off site infrastructure planning; lack of specific on-and-off-site costing, performance agreements, and economic and financial analysis; absence of institutional capacity to oversee IP development; inefficient procedures and controls, including customs administration; lack of systematic investment promotion to attract committed anchor investors; and deficiencies in designing and implementing a linkages program, a communications and outreach strategy, and establishing and tracking performance indicators. These factors, combined with a poor business environment and weak eco-system related to skills and technology, have not led to the envisaged outcomes. From interviews with people living around the zone in Dukem and in Addis Ababa, concerns were common around the questions of how the EIZ would translate into employment opportunities and how might this then facilitate a better quality of life. At the moment, employment generation is the main (if not sole) benefit of the Eastern Zone for the local population. This will likely stay the same for years to come as the zone develops and matures from the preliminary developmental stage and early operational stages. Officials in Addis hope that when experience levels in Ethiopia increase, particularly in the management and understanding of the zone operations, then the more dynamic benefits for Ethiopians will accrue as they begin to take charge of the management of zone operations and become responsible for its continued growth and development. But this ambition remains vague and in any case is unlikely to generate substantial employment opportunities with a high skills

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transfer content. The bulk of the workforce in the EIZ will remain low-skilled, lowpaid. The government in Addis Ababa is strongly focussed on attracting FDI. Such policies are, in the absence of lucrative and easily exploitable resources, reliant on an investment climate where investors feel secure. Given that infrastructure (or lack thereof) is one of Ethiopia‘s main barriers to attracting significant foreign investment, the SEZ may provide one way to address this issue, albeit necessarily confined to a small locale. However—and this goes to the heart of the viability of the SEZ in Ethiopia—even having world-class infrastructure (SOC) within the gates of a SEZ loses any advantages if the infrastructure outside the zone is poor (as it generally is in Ethiopia) and linkages to the local economy are minimal. This is why the government‘s huge investment in Ethiopia‘s infrastructure is so important. Currently the Eastern Industrial Zone is in the early stages of development and it could be argued that evaluations such as ours are premature. On the positive side, it could be suggested that for the Ethiopian government a number of short term objectives have already been achieved, most notably attracting foreign (even if mainly only Chinese) investment and the institutional development of an improved investment climate. The establishment of the IPDC, which has clearly been influenced by the Chinese SEZ experience as well as ambitions to construct a developmental state in Ethiopia can also be seen to be positive. It was certainly a coup on the part of Ethiopia to be chosen by Beijing to host one of the Chinese SEZs in Africa. As the zone develops analysts will need to study to what extent does this zone in Ethiopia act as a substitute factor for DPA and development and how deep are its linkages to the Ethiopian economy, as well as to what extent does the zone provide easily accessible opportunities for the domestic business community and the local population? This will likely be the focus of future research on the Chinese SEZs in Africa, allowing the identification of whether or not the SEZ framework is appropriate and effective in the African context, and whether or not host countries are best utilising the dynamic catalytic potential of SEZs to generate long-term sustainable development. The ability of the state-owned industrial parks will be similarly evaluated. Future analyses will necessarily take place within the context whereby the new SEZs and industrial parks will ‗face the challenge that many similar attempts to construct special zones in African countries have failed‘. As an integral aspect of China‘s formal Africa policies, the SEZs will be central to any evaluation of the claimed ―win-win‖ relationship that is so prominent in official Chinese discourse vis-à-vis its ties with the continent. Equally, they will be no doubt useful indicators of Ethiopia‘s developmental progress

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References Ian Taylor (2011) The Forum on China-Africa Cooperation (FOCAC) London: Routledge. Deborah Brautigam and Tang Xiayang (2011) ‗African Shenzhen: China‘s Special Economic Zones in Africa‘, Journal of Modern African Studies, 49, 1, pp. 27–54. Deborah Brautigam and Xiaoyang Tang (2011) ‗China‘s Investment in Africa‘s Special Economic Zones‘ in Thomas Farole and Gokhan Akinci (eds.) Special Economic Zones: Progress, Emerging Challenges, and Future Directions Washington, DC: World Bank. Deborah Brautigam and Xiaoyang Tang (2014) ‗Going Global in Groups: Structural Transformation and China‘s Special Economic Zones Overseas‘, World Development, Vol. 63, pp. 78-91. Arkebe Oqubay (2015) Made in Africa: Industrial Policy in Ethiopia Oxford: Oxford University Press. Sustainable Development and Poverty Reduction Program Addis Ababa: Federal Democratic Republic of Ethiopia, 2002. Growth and Transformation Plan, 2010/11-2014/15 Addis Ababa: Ministry of Finance and Economic Development, 2010. Alice Sindzingre (2013) ‗The Ambivalent Impact of Commodities: Structural Change or Status Quo in Sub-Saharan Africa?‘ South African Journal of International Affairs, Vol. 20, No. 1, 2013, p. 26. Susan Tiefenbrun (2012) Tax Free Trade Zones of the World and in the United States Cheltenham: Edward Elgar, 2012. Zhihua Zheng (2010) Building Engines for Growth and Competitiveness in China: Experience with Special Economic Zones and Industrial Clusters Washington DC: World Bank Publications. Connie Carter and Andrew Harding (eds.) Special Economic Zones in Asian Market Economies London: Routledge, 2010. Amitendu Palit and Subhomoy Bhattacharjee (2008) Special Economic Zones in India: Myths and Realities New Delhi: Anthem Press. Interview with Ministry of Industry official, Addis Ababa, January 2011. Interview with Hagos Sequar, Project Promotion Department Manager of the Eastern Industrial Zone, Addis Ababa, January 2011. Interview with Dessalegn Rahmato, Researcher and Private Consultant, Addis Ababa, September 3, 2013. „Low Ethiopian Labour Cost Attracts Chinese Investors‘, China Daily, December 31, 2013. Interview with Hagos Sequar, Project Promotion Department Manager of the Eastern Industrial Zone, Addis Ababa, January 2011. Bulti Terfessa (2010) ‗Ethiopia‘s Trade and Investment Policy‘ in Taye Assefa (ed.) Digest of Ethiopia‟s National Policies, Strategies and Programs Addis Ababa: Forum for Social Studies.

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Interview with Assefa Alemu, Minister Counsellor at the Ethiopian Embassy, Beijing, April 2011. Interview with Hagos Sequar, Project Promotion Department Manager of the Eastern Industrial Zone, Addis Ababa, January 2011. Interview with Wu Shuaiju, Eastern Industrial Zone, cited in Ethiopia Herald, January 14, 2015. Dan Ciuriak and Claudius Preville ‗Ethiopia‘s Trade and Investment: Policy Priorities for the New Government‘, unpublished paper, September 2010. Asayehgn Desta (2014) Ethiopia: From Economic Dependency and Stagnation to Democratic Developmental State Trenton, NJ: Red Sea Press. Admit Zerihun (2008) ‗Industrialisation Policy and Industrial Development Strategy of Ethiopia‘ in Taye Asefa (ed.) Digest of Ethiopia‟s National Policies, Strategies and Programs Addis Ababa: Forum for Social Studies, p. 10. Solomon Mamo Woldemeskel (2008) Determinants of Foreign Direct Investment in Ethiopia, Master‘s thesis submitted to Maastricht School of Governance, Maastricht University. Interview with Hagos Sequar, Project Promotion Department Manager of the Eastern Industrial Zone, Addis Ababa, January 2011. Interview with Yang Xuhong, Economic and Commercial Counsellor‘s Office of the Chinese Embassy, Addis Ababa, January 2011. Mulu Gebreeyesus (2014) Industrial Policy and Development in Ethiopia: Evolution and Present Experimentation Africa Growth Initiative at Brookings, Working Paper No. 6, p. 22 Yue-man Yeung, Joanna Lee, and Gordon Kee (2009) ‗China's Special Economic Zones at 30‘, Eurasian Geography and Economics, Vol. 50, No. 2, pp. 222–240. Alexius Pereira (2003) State Collaboration and Development Strategies in China London: Routledge. Thomas Farole and Gokhan Akinci (2011) Special Economic Zones: Emerging Challenges and Future Directions Washington DC: World Bank. Ligang Song and Ross Garnaut (2007) China: Linking Markets for Growth Canberra: Asia Pacific Press. Andrew Cheesman (2012) Special Economic Zones & Development: Geography and Linkages in the Indian EOU Scheme London: Development Planning Unit Working Paper No.145, p8 Interview with Wu Shuaiju, Eastern Industrial Zone, cited in Ethiopia Herald, January 14, 2015. Tadesse Haile, Ethiopian Minister of Industry, Fourth China-Development Assistance Committee (DAC) Study Group conference, Addis Ababa, February 2011. Amanuel Mekonnen Workneh (2014) ‗Factors Affecting FDI Flow in Ethiopia: An Empirical Investigation‘, European Journal of Business and Management, Vol.6, No.31.

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Melakou Tegegn (2013) State and Civil Society: Ethiopia‟s Development Challenges Los Angeles: Tsehai Publishers. Seifudein Adem (2012) ‗China in Ethiopia: Diplomacy and Economics of SinoOptimism‘, African Studies Review Vol. 55, No. 1.

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CHAPTER EIGHT Impact Assessment of the China-Zimbabwe Infrastructure Development from 1980 to 2016

Cooperation

on

CLAYTON HAZVINEI VHUMBUNU 8.0 Introduction The relationship between China and Zimbabwe spans several centuries when ancient kingdoms in Zimbabwe made contacts with the Chinese dynasties (see Blaha, 2004; Adekunle, 2010; Davison and Clark, 196). However, modern forms of cooperation between the two countries started in the late 1970s when the Chinese extended support to the liberation struggle against Rhodesian colonial establishment, and later transformed after the establishment of formal diplomatic contacts after independence. These areas of cooperation have ranged from trade, investment, politics, diplomacy, security, cultural and people-to-people exchanges, among others. Whilst trade and investment have been the main activities characterizing the China-Zimbabwe relations, with total trade and investments between the two countries totaling US$1,308 billion and US$787 million respectively in 2015; infrastructure development cooperation has also been one of the most visible areas that the China-Zimbabwe partnership has been engaged. This has encompassed both hard and soft infrastructure projects across various sectors of transport (all modes, that is, road, railway and air), energy, water supplies, and telecommunications as well as other social services infrastructure undertakings. Whilst most of the infrastructure projects have been executed through preferential loan agreements, some of the projects are donated as ‗friendship‘ projects. This article seeks to assess the impact of infrastructure projects constructed under the China-Zimbabwe cooperation framework. The focus period will be from 1980 when Zimbabwe attained its political independence up to 2016. The impact assessment will consider key development issues, particularly the extent to which the infrastructure projects facilitate, contribute and/or influence socio-economic development, revenue generation, job creation, local participation and procurement, technology transfer, environmental management and protection, whilst also

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considering the impact of the infrastructure projects on China-Zimbabwe diplomatic and political relations. Challenges and complexities experienced in the China-Zimbabwe cooperation on infrastructure development during the period under review will also be explored. The article will then suggest recommendations on how China and Zimbabwe may enhance and broaden the impact of infrastructure development projects implemented under the China-Zimbabwe cooperation framework. Infrastructure has been a priority in defining and directing the development path of Zimbabwe since independence in 1980. The Government of Zimbabwe has always acknowledged, in its budget and policy statements, that infrastructure is a key determinant and facilitator of economic growth, poverty alleviation and sustainable development. Whilst the Government inherited infrastructure established during the colonial era, the post-1980 period saw massive rehabilitation and expansion of road, rail, air, water, energy, telecommunications and social infrastructure across the country with an effort made to address the colonial inequalities in terms of infrastructure geographical distribution which favored white communities at the expense of rural areas and/or black African communities (Zhou et al, 2016; African Development Group, 2011; Mazingi and Kamidza, 2011). The trends and patterns of infrastructure development in Zimbabwe, just like in any other country, has reflected the national economic growth trajectory. Using the World Bank (2016) statistics on Zimbabwe‘s economic prospects, one can categorize the post-independence economic trajectory into the following phases: 1980-1997 (period of relative growth), 1998-2008 (period of sharp economic instability and decline characterised by negative economic growth rates), 20092013 (period of economic resuscitation and sharp economic growth) and 2014-2016 (period of stagnation and gradual economic decline). Thus, the country invested most in road and networks or highways linking mostly industrial areas, cities and areas of economic activities, countrywide energy generation and distribution infrastructure, water management and supply facilities, schools, hospitals, and telecommunication lines during the period of relative growth. This was mainly in the form of government grants, Public Private Partnerships (PPPs), infrastructure bonds, donor funds and grants from international partners. In the post 1998 era, most Western investors, and even prospective investors from the Western countries were largely disinterested in investing in Zimbabwe due to political differences and disagreements over the government‘s domestic policies. This prompted the Government of Zimbabwe to ―look east‖ as an alternative strategic counter-policy initiative especially after the year 2003. Whilst the Look East Policy intensified relations and cooperation between China and Zimbabwe, China had already been involved in Zimbabwe‘s infrastructure development sector since 1980. As at 2015, China had provided US$1,5 billion in ―preferential, concessional and commercial loans‖ for infrastructure construction together with over US$100 million worth of grants (Government of the People‘s Republic of China, 2015).

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A number of possible factors have motivated China‘s investment in Zimbabwe‘s infrastructure. First by the conviction of the Zimbabwean government that infrastructure is an economic growth enabler. Second, it may be part of China‘s ‗Going Out Policy‘ which has seen many of their State Owned Enterprises (SOEs) securing tenders to undertake projects that are implemented through these concessional and preferential loans or grants. Third, China is a growing power, and the global investment market entry modes entails setting a footprint and locking in, thereby expanding markets. Zimbabwe is one of the markets in Africa that China would be interested to gain a foothold in. Fourth, China‘s growing appetite for natural resources as raw materials for its booming industry may have facilitated this, especially the ‗resources-for-infrastructure‘ arrangement that is now popularly referred to as the ‗Angola Mode‘. Lastly, some infrastructure projects were implemented out of friendship, which in the end obviously have win-win political and diplomatic outcomes. In short, the infrastructure projects open economic opportunities for rewarding investments in Zimbabwe, strengthens mutual relations between the two countries, and boost China‘s diplomatic and political influence in Africa and in terms of global standing. 8.1 Literature Review There has been a lot of interest from several scholars in establishing the role of infrastructure development on socio-economic development. The majority of empirical studies have for long been confirming the fact that infrastructure development indeed has a significant impact on the economic and social development of states (see for instance Banister and Berechman, 2000; Batuo, 2015; Shenggen and Zhang, 2004; Sahoo and Dash, 2012; Feltenstein and Ha, 1995; Lall, 1999; Halstead and Deller, 1997; Sahoo and Dash, 2009; Looney and Winterford, 1992; Calderón and Servén, 2010). The above studies concur that investing in both economic and social infrastructure result in the stimulation of production capacities, reduction of costs of doing business, alleviation of poverty, creation of employment, improvement of competitiveness of economies, creation opportunities for the sustenance of other economic activities as well as elimination of barriers to trade (see also African Development Group, 2011: 107-112; Baporikar, 2016). A study by Batuo (2015) on the role that is played by the development of telecommunications infrastructure in the growth of regional economies revealed demonstrated and confirmed that investments in telecommunications infrastructure, which results in higher tele-density, has positive returns on economic growth. The study focused on 44 African countries, including Zimbabwe, using the dynamic panel data approach model. As the author suggests, African governments should encourage ―more resources should be allocated to rural areas in order to ensure that telecommunications infrastructure reaches a vast majority of the population‖ and

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that ―effective competition‖ should be created to ultimately reduce user fees by consumers (Batuo, 2015:327). Drawing on findings from a study on investments in the Brazilian infrastructure sector, Garcia-Escribano et al (2015) concurred with Batuo (2015), arguing that infrastructure play a domestic integration role between regions from a trade perspective and improve productive efficiency. However, the author hinted that the government should intervene not only to improve infrastructure investment efficiency but also to court the private sector for joint implementation of infrastructure projects through concessions in order to close the infrastructure gap across all sector (Garcia-Escribano et al, 2015). The government‘s role in Public Private Partnerships (PPPs) has been identified in various studies as critical in influencing the quality of delivered infrastructure and broadening the impact of infrastructure on the society. Trebilcock and Rosenstock (2015) studied the merits and demerits of PPPs in developing countries with a specific focus on Latin America. The authors‘ argue that governments need to capacitate PPP implementing units, pass progressive PPP laws, engage in Bilateral Investment Treaties (BITs) to ensure certainty and smooth implementation infrastructure projects in cases were governments are partnering foreign investors as well as subsidize infrastructure user fees with a view to expand access (Trebilcock and Rosenstock, 2015). This, according to the authors, will enhance the welfare impact of PPP projects, negotiation of better PPP deals and ensure success of PPP projects. In a study more specific to Zimbabwe, Nhema and Nkomo (2015) explore the challenges and prospects of implementing PPPs within the transport infrastructure sector in Zimbabwe. The authors‘ findings were that there was limited commitment to collaborate with government in PPPs, incapacity of the local financial markets to fund PPP projects, ―extant legislative frameworks‖ governing PPPs, and absence of an institutional framework that plays an oversight role and superintends over the procurement process to ensure transparency and PPP projects‘ effectiveness (Nhema and Nkomo (2015). As alluded to by Trebilcock and Rosenstock (2015), it was suggested by Nhema and Nkomo (2015:67) that a central PPP unit be established preferably within the Treasury, PPP laws be enacted, and personnel should be capacitated through ―holding short training courses and seminars on PPPs and PPP-related issues‖. Granted, Zimbabwe does not have a specific law on PPPs unlike the over 23 countries in Africa that have enacted PPPs-specific laws (World Bank, 2016). Zimbabwe, however, has a Joint Ventures Act (Chapter 22:22) which governs the negotiation and implementation of PPPs established through different categories, such as build, operate and transfer (BOT); build, own, operate and transfer (BOOT); build and transfer (BT), build, lease and transfer (BLT), build, transfer and operate (BTO), contract, add and operate (CAO), and develop, operate and transfer (DOT) (see Joint Venture Act of Zimbabwe, 2016). The Act also

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establishes a Joint Venture Unit (JVU), which may respond to Nhema and Nkomo (2015)‘s request for a PPP Unit. It should be noted that the existence of PPP Units, JVU Units or specialized institutions to administer government partnerships is a necessary but not sufficient condition to ensure that national partnership projects impact on societies and on national development. Complementary measures and policies relating to procurement, labour, and local empowerment matter. In line with Nhema and Nkomo (2015)‘s findings that very few private sector players are now willing to collaborate with government in PPPs, and that the local financial have limited capacity to partner government in PPP projects; most African governments are now resorting to PPPs with international investors. In this regard, China has been one of the leaning financiers of infrastructure in Africa. From 2010 to 2012 alone, China constructed 86 economic infrastructure projects in Africa, as well as 150 primary and secondary schools, 14 agricultural technology demonstration centers, 30 hospitals, and 30 malaria centers (see China‘s Second White Paper on Foreign Aid, 2014). During the same period, it was reported that China ―approved concessional loans worth a total of US$11.3 billion for 92 African projects‖ (China‘s White Paper on Economic and Trade Cooperation, 2013:10). The Mail and Guardian (19 September 2015) also stated that there were over 3 030 Chinese-funded infrastructure projects that were underway in Africa then. In the same year, The New China (14 June 2015) reported: “China has long been helping Africa with infrastructure development and has completed 1,046 projects, including railways with a total length of 2,233 km and highways with a total length of 3,530 km in Africa, making a significant impact on Africa's economic development and tangible contributions to improve living and working conditions”. China, in its White Paper on Economic and Trade Cooperation, (2013:9), acknowledges that ―infrastructure construction is a significant part of Africa's further economic and social development‖ and hence have always taken measures to ensure that their projects empower locals in different ways such as employment creation, local procurement, among others. The China‘s White Paper on Economic and Trade Cooperation, (2013:10) points out: “While undertaking infrastructure projects in Africa, Chinese enterprises have paid attention to localized operation and management styles, and taken an active part in programs benefiting local people. For example, large Chinese communication companies in Africa have raised their localization rate to above 65%. They have also cooperated with 1,200 local subcontractors, indirectly providing more than 10,000 job opportunities”. Although the Chinese government has always insisted that their projects are designed and implemented in such a way that benefits the local people, there are critics to some of their approaches to business. Whilst some of the criticism is based on empirical studies, a considerable number of these are based on media speculations and hasty generalizations of reported malpractices. The challenge with

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some authors maybe on how to measure the impact of the partnership or infrastructure investments. For instance, in their assessment of the China-Angola relations, Campos and Vines (2008) rhetorically asked whether China and Angola‟s Special Relationship was a Perfect Marriage? The authors admitted that Chinese investments‘ contribution to poverty reduction is ―not easily measured‖ (Campos and Vines, 2008:12). However, the authors concluded: ―Chinese investment has contributed to poverty reduction in Angola. The construction and rehabilitation of electrical and hydro-electrical infrastructure by the Chinese has expanded electricity access to over 60,000 new clients in Luanda. The rehabilitation of water supply systems across the country has granted thousands of people access to clean water. The rehabilitation of roads, bridges, and rail networks provides access to parts of the country that had been disconnected by the war and facilitates commercial activities. The rehabilitation of the rail system across the country will benefit people commuting into towns and the transport of goods across the whole southern African region […] Lastly, the rehabilitation of hospitals, health centers, schools, and polytechnic institutes will provide access to education and health to many communities that had for years had been deprived of it‖ (Campos and Vines, 2008:19-20). Notwithstanding the benefits of Chinese infrastructure investments in Angola stated by Campos and Vines (2008), the same authors argued that the downside of the project partnership was that the Chinese were bringing low-skilled labour such that by the year 2007, over 22 000 Chinese were living in Angola. Other authors disagree. For instance, Corkin and Burke (2006:2) insist that Chinese enterprises in Africa ―usually employ large numbers of local labour‖ although the Chinese companies ―have shown only limited interest in collaborative ventures with local construction companies due to their low levels of human capital, technological proficiency and problems with the financial and management‖. There have also been claims that Chinese infrastructure projects are unaudited and are not accompanied by oversight to avoid corruption (Power, 2012). Similarly, Chen (2009), in a study on the role of China in the development of infrastructure in Botswana, found out that Chinese enterprises involved in infrastructure development faced a number of challenges. These include public concern with regard to the quality of infrastructure with some expressing reservations on the quality of the infrastructure delivered by the Chinese whilst the government departments were largely satisfied, shortage of skilled local labour, lack of market risk assessment before project commencement, concerns over lack of fulfilment of corporate social responsibilities, and language and cultural barriers which often leads to labour relations tensions (Chen, 2009). Infrastructure projects are usually sensitive to environmental management. Chinese projects have been criticized for damaging the environment and not paying attention to environment impact assessments outcomes (see for instance Bosshard, 2008; Mathuthu, 2013). However, there are guidelines for social and environmental

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impact assessments that were issued in 2007 by the China Exim Bank, which is one of the largest source of concessional and preferential loans to African infrastructure projects (Cisse et al, 2014). Further, the Chinese Ministry of Commerce and Ministry of Environmental Protection also issued guidelines on environmental risk and impact assessment for overseas Chinese companies (Shinn, 2015). Despite the fact that these regulations remain voluntary and companies can choose to neglect without any punitive measures instituted, there has been reported compliance progress. Shinn (2015:31) notes: “There is growing evidence that China is now encouraging its companies to follow better environmental practices as they invest in Africa and other countries. Chinese companies are increasingly using environmental impact assessments, and sometimes even drawing on the expertise of Western companies that specialize in these studies. This development is not surprising in light of the growing concern about environmental problems in China and a deeper understanding by the government that it is not in China‟s interest to export its bad practices overseas.” Perhaps, one may need to understand that even the countries hosting infrastructure investment projects also have their own environmental management regimes. The essence is to ensure compliance enforcement. Whilst it is the responsibility of both the investor and those receiving investments, it is incumbent upon host countries to enforce their domestic laws with effectiveness. Having reviewed the relevant literature above, the section below will be dedicated to identifying the infrastructure projects that were implemented under the ChinaZimbabwe partnership from 1980 up to 2016. 8.2 Impact and Implications of China-Zimbabwe Cooperation on Major Infrastructure Projects Given the cross sector nature of the infrastructure development projects that have been implemented through the China-Zimbabwe infrastructure development cooperation, this sector will adopt a sector-by-sector approach. For the purposes of organization, the projects have been classified into six different sectoral categories, that is; Sports and Recreation, Health and Education, Energy, Transport, Water Management and Supply, and Telecommunications. 8.2.1 Sports and Recreation Infrastructure Zimbabwe was a beneficiary of a grant for the construction of a national stadium just after independence. The National Sports Stadium, which is situated in Harare, was officially opened in the year 1987 is regarded by Madzivanzira (2016) as ―the best sports facility in the country‖ with a carrying capacity of 60 000 spectators. Dube (2015) points out that the stadium ―has changed the landscape of local football‖ given its massive holding capacity. It was China‘s gift of the 1980s to Zimbabwe, and African countries such as the Democratic Republic of Congo

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(DRC), Djibouti, Kenya, Mauritania, Mauritius, Niger, Rwanda and Senegal were all beneficiaries. Will (2012) calls it the ―stadium diplomacy‖ which has been ―evolving since it [China] began giving aid to African countries in 1956‖. Zimbabwe‘s National Sports Stadium covers an area of 17 hectares and consist of two football pitches, floodlights, accreditation hall, electronic scoreboard, public address system, changing rooms, public address system, technical equipment rooms, and television and broadcasting rooms as well as facilities for several sporting disciplines such as athletics, high and long jump, triple jump, and javelin. Ever since it was handed to the Government in 1987, the stadium has hosted several national, regional, continental and international sporting events especially football matches, social gatherings, religious extravaganzas, political rallies, musical concerts, school and corporate functions, among other activities. It has generated lot of income for government, especially at the background of government‘s selfadmission that sports facilities are very expensive to hire (Newsday, 19 January 2015). The stadium obviously had, and still has, a positive bearing on China-Zimbabwe relations. It can be regarded as part of China‘s cultural diplomacy and has therefore managed to build and solidify relations between the two countries upto now. In any infrastructure cooperation projects discussions, there are references that are made to it as a friendship project and it still remains monumental in that respect. China was reported to have extended US$0,07 million for the refurbishment of the National Sports Stadium in 1999 (Edinger and Burke, 2008). Later, the Chinese were also involved in the National Sports Stadium Refurbishment and Rennovation Project for the period between 2006 and 2010. This involved refurbishment civil works, electronic equipment installation, replacement of ablution facilities and resurfacing of the tarmac and football pitches (China Daily, 11 April 2010). The project was undertaken by Jiangsu International Economic and Technical Cooperation Construction Group Corporation, a Chinese State Owned Enterprise, at a cost of US$10 million (China Daily, 11 April 2010). The fact that the stadium was having cracks when refurbishment interventions were made may have raised public concern over the quality of the stadium. However, one may also need to understand the importance of effective maintenance and repair of infrastructure that may have been lacking since the establishment of the stadium. Perhaps, that is why China later had to dispatch six Chinese experts to give expertise and guidance on how to maintain and manage the stadium (Herald, 10 September 2012). 8.2.2 Health Infrastructure The China-Zimbabwe infrastructure development cooperation has also been recorded in the health sector. This has also been the case with a number of African countries. Volodzko (2016) terms it ―medical diplomacy‖ or ―health care diplomacy‘, and according to the author, China has been engaging in this since

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around 1963. In Zimbabwe, China has been involved in the construction of Chinhoyi General Hospital and Mahusekwa Hospital in Mashonaland West and East Provinces respectively. Chinhoyi hospital was completed in 1996 whilst Mahusekwa Hospital, often referred to as China-Zimbabwe Friendship Hospital, was commissioned in 2013. The Mahusekwa China-Zimbabwe Friendship Hospital was constructed by Nantong Construction Group Company Limited of China at a cost of US$10 million (Government of the People‘s Republic of China, 2010). It has been credited for transforming the health service delivery in the Mashonaland East Province, with its modernized equipment and quality health services such as ―x-ray, ultrasound scan, dental services, CT scan, endoscopy and specialized orthopedic services‖ (Machingura and Lingui, 2015). Mashonaland East encompasses Marondera, Uzumba-Maramba Pfungwe, Mudzi, Wedza, Mutoko, Murehwa, Goromonzi, Seke and Chikomba, which all, according to the ZimStats (2012), had a provincial population of 1 344 955 in 2012. Most of the population is rural-based, thus health access issues were a challenge. Assessing the impact of Mahusekwa Hospital, Machingura and Lingui (2015) state: “With a staff complement of 175 including three medical doctors, the Mahusekwa hospital is supposed to serve only Marondera district, but due to the extensive and specialist health care it offers, the hospital attracted people from as far as 200 km away. Some even came from national capital Harare”. The authors added that Mahusekwa offers free treatment to those citizens who cannot afford to pay which has vastly reduced maternal mortality in the district from 946 per ever 100 000 live births before the opening of the hospital to 703 per 100 000 live births after the establishment of the hospital (Machingura and Lingui, 2015). On the other hand, the 420-bed Chinhoyi General Hospital was constructed by the China Overseas Engineering Group Company Limited through a contract value of US$57 million. The hospital has been contributing significantly to health service delivery in Mashonaland West Province. For instance, out of the seven provincial hospitals in Zimbabwe, Chinhoyi Provincial Hospital recorded the third highest number of major and minor operations in the year 2012. According to the Zimbabwe National Health Profile (2012), Chinhoyi Hospital recorded a total of 1, 505 major and minor operations, ranking the hospital third after Mutare Provincial Hospital (2, 944) and Gweru Provincial Hospital (1 912). During the same year, the hospital recorded 3 830 live births and 6, 852 child care attendances, which were both the highest when compared to the other provincial hospitals in the country (ZimStats, 2012). The hospital continues to be among the most impactful provincial hospitals in Zimbabwe. Statistics from the Zimbabwe National Health Profile of 2014 reveals that in terms of outpatient departments (OPD) and preventive care services,

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Chinhoyi Provincial Hospital recorded the second highest outpatient attendances of 108, 519 people out of the seven provincial hospitals, coming second to Masvingo Provincial Hospital which attended to 120, 022. The hospital also recorded the second highest antenatal care clinic visits of 8 006 in the year 2014, with Masvingo Provincial Hospital recording the highest number of antenatal care clinic visits of 8, 258 (ZimStats, 2014:147). In the same year, Chinhoyi Provincial Hospital carried out a total of 1, 780 major and minor operations, ranking the hospital as the second highest amongst all the seven provincial hospitals after Mutare Provincial Hospital recording the highest number of major and minor operations totalling 2, 818 (ZimStats, 2014:148). There are wider impacts of Mahusekwa Hospital and Chinhoyi Provincial Hospital. For instance, Chinhoyi Hospital has a school of nursing, which is instrumental in the training and supply of medical staff throughout the country. In the year 2012, it was reported that the hospital is in the process of putting in place the systems needed to satisfy the regulatory requirements required for the setting up a school of midwives (see Newsday, 9 March 2012). The hospital‘s envisaged midwiferytraining programmes will undoubtedly contribute to the reduction of infant mortality rates. Notwithstanding the hospitals‘ impact on improving the quality, affordability and access of health service delivery services to the people within their respective catchment areas, the operations of the hospitals has been affected the maintenance challenges, budgetary constraints and unreliable and inadequate supply of drugs as has been the case with all public health facilities especially since the year 2000. For instance, it was reported that by 2009, the x-ray processors at Chinhoyi Hospital were malfunctioning with no funds available for repair whilst shortages of drugs, health equipment and staff was also reported (The Zimbabwean, 7 October 2009). 8.2.3 Education Infrastructure The China-Zimbabwe cooperation on infrastructure development has been influential in the education sector. The involvement in this sector has mainly been through grants for the construction of what are termed ‗Friendship Schools‘. Since independence in 1980, China has assisted with grants to construct primary schools, secondary schools, colleges, and also partnered with tertiary institutions to implement projects on housing, water supply, among others. In 2011, China completed the Warren Park China-Zimbabwe Friendly Primary School in Harare and Chiwaridzo Primary School in Bindura, Mashonaland Central Province. The two schools were constructed by Chinese state-owned firms Gansu Hualong Group and China Jiangsu Nantong Construction Group Company Limited at a cost of US$1,5 million (Herald, 29 September 2011; Government of the People‘s Republic of China, 2010).

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In addition, the Lupane China-Africa Friendship Primary School, in Matabeleland North, was completed in February 2016. It was constructed by a Chinese firm, the Anhui Foreign Economic Construction Group Company Limited (AFECC), through a US$1,5 million grant from the Chinese government (Xinhua, 29 May 2016). The Friendship school has ―ten classrooms, one computer lab and staff offices, […]300-metre perimeter athletic track, a football pitch, and a basketball court‖ (Xinhua, 29 May 2016). These friendship primary schools definitely reduced government financial expenditure and reduced pressure on the existing primary schools in Harare, Bindura and Lupane. By virtue of being located in the rural area, the Lupane China-Africa Friendship Primary School will continue to assist in reducing the walking distance to school as it serves the nearby communities. Granted, the contribution of these schools to the total national enrolment figures is very insignificant when one considers that the total number of students enrolled in primary and secondary schools in Zimbabwe as at 2014, according to the World Bank (2014), was in excess of 3 million. However, there is need to consider the impact of the schools in terms of micro-level community impact, as well as the broader impact on China-Africa relations. The Chinese were also involved in the construction of the Zimbabwe National Defence College (NDC) and the Grace Mugabe Foundation Junior School both in Mazowe District. The two have had a lot of controversies, perhaps due to the usually controversies that attract project undertakings that involve political leadership. The Amai Grace Mugabe Junior School, which has an adjacent Grace Mugabe Children‘s Home to cater for the orphans and vulnerable children (OVCs), was constructed by AFECC with Chinese assistance (Xinhua, 29 May 2016). With an enrollment capacity of 900 students, it is reported that the school has ―27 classrooms, a library, an art room, computer room, and auxiliary equipment rooms‖ (Herald, 3 November 2011). It was reported that the school now has a Confucius Department that offers Chinese language lessons to students (Sunday Mail, 18 December 2016). On the other hand, the NDC was officially opened in September 2012 with its role stated as that of training members of military forces and civilians on national security strategy and defense (Herald, 15 September 2012). It has lecture rooms, seminar rooms, halls, staff accommodation apartments, gymnasium, sports fields, and other supporting facilities. The college hosts degree programmes with its affiliation to the University of Zimbabwe, and also conducts exchange programmes, training courses, seminars, workshops and capacity building programmes. It will eventually be transformed into a university (Herald, 15 September 2012). The college was constructed through a US$98 million concessional loan from China with an interest rate of 2 percent per annum accompanied by a 7 year grace period during which only interest is paid thereafter the loan will be repaid ―in 26 twiceyearly installments over the next 13 years‖ (The Zimbabwean, 7 June 2011). According to The Zimbabwean (7 June 2011), part of the loan agreement was that

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government‘s income from Anjin Investments Private Limited (a China-Zimbabwe diamond mine joint venture in Chiadzwa) be dedicated to pay back the loan. During the construction phase, there was massive procurement of building materials from local suppliers and substantial machinery was also imported from China (Read, 2014). This may have benefited Zimbabwe in that regard. However, the loan was huge at US$98 million and this would mean that the country shall be debt-burdened for over two decades of repayment. Without full knowledge of the finer details of the revenue-sharing matrix within the now defunct Anjin Investments, it may be very difficult to weigh the overall costs of the project against its benefits of the NDC projects to Zimbabwe. Further, one may also need to understand whether the NDC will be generating its own revenue from programmes that it will be offering to the civilians and military personnel so as to reduce continued reliance on government budgetary support or grants. In other areas, Chinese contractors have also been engaged in infrastructure development in higher and tertiary education sub-sector, such as water projects and student accommodation construction at the University of Zimbabwe and Midlands State University (MSU) respectively. The China-Aid Agricultural Technology Demonstration Center (CATDC) was completed by the MAE Northern Company Limited (MAEN) of China in 2012, via a US$6,75 million China grant aid at Gwebi College of Agriculture which is situated 27 km out of Harare (China Aid Data, 2016). The CATDC engages in agricultural production and training on a 109hectare land and employ 70 people (Chifamba, 2016). In his assessment of the Gwebi CATDC, Chifamba (2016) notes: “The center carries out research and studies on maize, wheat, potatoes, soybeans, vegetables and other crops and seeks to attract Chinese agricultural enterprises to invest in Zimbabwe. Since 2011, more than 10 experts on agricultural machinery, farming, horticulture and agricultural economy have cooperated with local agriculture extension services and Gwebi College to improve production. About 450 students have been trained at the center so far, with more than 4,000 local and foreign visitors also benefiting […] the center [is] producing more than 10 tonnes of maize, 30 tonnes of potatoes and between seven and 10 tonnes of wheat per hectare […]”. Thus the project contributes to national socio-economic development through enhancing food security, technology transfer, employment creation, and capacity building of the local farming communities. 8.2.4 Energy Sector In the energy sector, the China-Zimbabwe infrastructure development cooperation projects have been in hydropower generation and thermal power expansion projects. China‘s Sino Hydro Corporation Company Limited has been working on both Kariba South Expansion (7 & 8) and Hwange Thermal Power Station (7 & 8).

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Kariba South Expansion entails the expansion works at Kariba Hydro Power Station generating units in order to increase its generation capacity by 300 megawatts from the current generating capacity of 750 megawatts by March 2018 (Herald, 3 October 2016). The project costs US$533 million and will be financed through joint venture financing with the China Export Import Bank providing US$320 million whilst the Zimbabwe Power Company provides US$213 million (Herald, 3 October 2016). By October 2016, it was reported that the project was 57 percent complete (Herald, 3 October 2016). With regard to the Hwange Thermal Power Station project, Sino Hydro Corporation Company Limited was awarded the engineering, procurement and construction (EPC) contract to install two additional power-generating units to increase the generating capacity with 600 megawatts from the current installed capacity of 920 megawatts (Herald, 4 October 2016). The total project cost is US$1,5 billion and 80 percent of this will be funded through a Preferential Buyer Credit Loan from China Export Import Bank once the governments of China and Zimbabwe agree on modalities to settle an outstanding loan indebted to China (Herald, 4 October 2016). Erratic electricity supply has been affecting smooth industrial operations and also resulting in companies using expensive alternative sources of power which increases the cost of doing business. In any case, Zimbabwe 300 megawatts of electricity every month from South Africa‘s Eskom at a monthly cost US$6,5 million and the country also imports an additional 40 megawatts of electricity from Mozambique‘s Electricidad de Mocambique (EDM) every month (Newsday, 22 February 2016). This is given the fact that Zimbabwe generates 1 300 megawatts against a power demand of 2 200 megawatts (Newsday, 22 February 2016). The projects will definitely boost local electricity production upon full completion. Of course, the debt implication of the projects cannot be ignored. At US$1,5 billion, the Hwange project is very colossal, whose debt burden on ZPC in particular, and government as the guarantor, may require a an effective debt repayment plan designed in such a way that electricity users are not ultimately over-charged. Chinese companies were awarded EPC contracts by ZPC to install establish 300 megawatts solar power plants in October 2015 and the projects will commence in 2017. According to ESI Africa (2015), ZTE was awarded a $197 million project in Insukamini (Matabeleland North Province) and CHINT Electrics Company Limited partnered with Intratek (a Zimbabwean company) in a US$202 million solar power plant project tender for Gwanda (Matabeleland South Province). On the other hand, China MCC17 Group was awarded US$179 million tender in Munyati (Midlands Province), with China JA Solar Holdings Company Limited being the supplier of PV solar modules (ESI Africa, 2015). All these projects will contribute to energy self-sufficiency as envisaged in the Zimbabwe National Energy Policy. 8.2.5 Transport and Telecommunications Sectors The China-Zimbabwe cooperation on infrastructure within the transport and telecommunications sector comprises airport expansion projects, road projects and mobile telecommunication network upgrading projects.

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China‘s Jiangsu International Economic and Technical Cooperation Construction Group Corporation worked on the Victoria Falls International Airport Upgrading Project which started in 2013 and was commissioned in November 2016. This was managed through a US$150 million loan from the China Export Import Bank concessional loan. Upon completion, the airport‘s annual passenger handling capacity has increased from 500 000 to 1,5 million (Chronicle, 14 November 2016). The scope of work included constructing a new terminal building, new control tower, extending the runway, extending the parking area for aircrafts, new fire station, new access roads, refurbishing the domestic terminal, modernizing the passenger facilities, baggage handling system, flight information display and passenger processing systems (Chronicle, 14 November 2016). Over and above the employment of locals from the Victoria Falls community, the refurbishment project at Victoria Falls International Airport will smoothen tourism facilitation, and enhance safety and security at the port. Detailing the benefits of the Victoria Falls International Airport Upgrading Project, the Herald (16 May 2016) reported: “[…] the expansion of the airport brought jobs, honed skills of Zimbabwean technicians, taught “big-time” Chinese construction techniques and management to the locals and helped to promote the construction industry in the country […] [However] the country needed to address the slow procedure in approval of designing and construction drawings, shortage of local supply of major construction materials, frequent power and water failure and lack of qualified personnel” China‘s Jiangsu International Economic and Technical Cooperation Construction Group Corporation also undertook the construction of the Joshua Mqabuko Nkomo International Airport in Bulawayo (Herald, 16 May 2016). The same company is also reported to be concluding feasibility studies for the expansion of the Harare International Airport (Herald, 16 May 2016). In another project, the China Habour Engineering Company Limited (CHEC) was contracted, together with Geiger Private Limited (an Austrian firm), to work on the 897km Beitbridge-Harare-Chirundu Highway Dualization Project which is set to start in 2017. CHEC will construct the Harare-Chirundu segment, including the Harare Ring Road, through a loan financing arrangement that will be negotiated with Chinese funders in early 2017 (Financial Gazette, 1 December 2016). The project is a vital for trade facilitation as the form part of an essential component of the North South Corridor (NSC), a regional road network that runs through and connect the Eastern and Southern African countries from the Port of Dar es Salaam in Tanzania to the South African port of Durban. This will also benefit Zimbabwe through increased transport and logistics business, supporting retail and hotel industry as well as spatial development initiatives along the busy highway. In the telecommunications sector, Chinese companies have been active in several telecommunications infrastructure expansion and upgrading projects, notably

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Zhongxing Telecommunication Equipment (ZTE) Corporation and Huawei Technologies Company Limited. In January 2015, NetOne - which is wholly-owned by government - received US$65 million from the China Export Import Bank for Huawei Technologies Company Limited to undertake NetOne‘s network expansion project. In total, NetOne agreed on a concessional loan of US$218,9 million under Phase 2 (20142016) of the NetOne‘s network expansion project (Herald, 19 January 2015). In the Phase 1 (2010-2013), NetOne had received US$45 million in concessional loan from the same bank for the NetOne National Mobile Broadband (NMBB) project and the work was also carried out by Huawei (Herald, 19 January 2015). In both phases, the project involved the construction of 2G, 3G and 4G base stations countrywide and replacing ageing equipment such as generators, base band processing units, base station controllers, among others (Herald, 19 January 2015). Previously, NetOne had received $53 million grant from China in 2009 for network expansion projects. Under Phase 3 (2017-2020) of the project, NetOne has secured a two percent interest rate concessional loan of US$485 million from the China Export Import Bank (Daily News, 24 August 2016). NetOne is the second the largest subscribed network among the three mobile network providers in Zimbabwe with 4,360,298 total active subscribers, according to the First Quarter Report of the Postal and Telecommunications Regulatory Authority of Zimbabwe (see POTRAZ, 2016:6). Econet leads with 6,714,939 total active subscribers whilst Telecel has the least active subscribers at 1,824,936 (see POTRAZ, 2016:6). Largely as a result of its network expansion projects, NetOne now has 30,7% market dominance and was reported in July 2016 as ―the only network with increasing subscribers and revenue‖ (Chronicle, 5 July 2016). NetOne active subscribers increased by 5,5 percent between 2015 and 2016, whereas Econet and Telecel recorded 0,2 percent and -5,0 percent during the same period (see POTRAZ, 2016:7). The company now generates total revenue of US$400 000 per day, with gross revenue for May 2016 increasing to US$34 million from US$29 million registered in May 2015 (Daily News, 24 August 2016). NetOne is now reported to have the ―widest fourth generation (4G) technology Long Term Evolution (LTE)‖ in Zimbabwe (Daily News, 24 August 2016). Thus the partnership with China in expanding its infrastructure is catalysing its service quality enhancement, improved coverage and calling connection, speedy and quality internet connection, technological innovation, tariff reduction, and widening its subscriber base. On the other hand, TelOne, a fixed telephone service provider, has worked with Chinese firms and secured funding to implement its projects. For instance, TelOne received US$98,6 million loan from the China Exim Bank to undertake a telecommunications upgrading and broadband project. TelOne is also currently undertaking its Fiber to the Home (FTTH) project with China‘s Wuhan Fibre Home

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Technologies (Daily News, 10 October 2016). All these have managed to strengthen TelOne‘s competitiveness on the market. 8.2.6 Water Management and Supply Infrastructure In the Water Management and Supply infrastructure sector, the Chinese have been involved in dam construction and urban water supply management projects. Water projects include the drilling of boreholes in rural areas since the 1990s. It was reported that China drilled 36 boreholes in Matabeleland Province in 1996 and 22 boreholes in the same province in 1999 at a cost of US$0,42 million (Edinger and Burke, 2008). Matabeleland Province, just like Masvingo, is famous for receiving very low and unreliable rainfall. CJCIETC, with Chinese funding, was contracted to drill boreholes in Zimbabwe‘s dry and remote rural areas through a five-year cooperation agreement between the two countries that spans from 2012 to 2017 (Xinhua, 8 November 2016). The contract, which comprises three phases, targets 500 boreholes by 2017. In the first phase (2012-2013), CJCIETC drilled 64 boreholes Matabeleland Province, and in the second phase (2014-2015) the company drilled 136 boreholes in the provinces of Mashonaland Central, Mashonaland East and Manicaland, whilst the third phase (2016-2017) targets 300 boreholes (Xinhua, 8 November 2016). The boreholes projects will definitely benefit on targeted communities through provision of safe and clean drinking water, reduction of water-borne ailments and related health complication, and also overcome prior challenges in water access for livestock especially in the face of persistent droughts. This should be read against the background that in Zimbabwean rural areas, according to African Development Group (2011:140), ―wells and boreholes accounted for two-thirds of the sources of water used in the 1980S, but this dependence increased steadily to more than 80 percent by 2008‖. Thus, boreholes have become a vital source of clean water in the country‘s rural areas. In the dam construction and irrigation sector, China was contracted to build the Valley Dam and Irrigation Scheme in Kezi District, Matabeleland South Province, in 1996 (Edinger and Burke, 2008; People‘s Daily, 2005). This, according to Edinger and Burke (2008), costed US$0,42 million. Similar irrigation projects were also completed by the Chinese in Runde and Mawere rural areas in Masvingo Province (People‘s Daily, 2005). These have been boosting agricultural production and at one time the Valley Dam Irrigation scheme was regarded as ―the best irrigation in Matabeleland South‖ (Sunday News, 31 January 2016). The Sunday News (31 January 2016: n.p) reported: “Since its inception in 1997 the irrigation scheme managed to provide some relief to more than 400 plot-holders and provided some hope of food security to the villagers and a greenbelt in the area which is a low rainfall area in the agronatural region five. […] The communities around, apart from having a food secure life, were even selling the surplus to send children to school. [A]t its peak the

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scheme which was the pride of Kezi was churning out over 1 200 tons of maize each season as well as various other crops.” However, whilst the project had vast potential to transform the host communities, some of them have not managed to realize their full potential. For instance, in May 2015, farmers relying on the Valley Dam reported that the irrigation pipes at the dam ―are constantly bursting, resulting in [farmers] stopping production‖ (Zbc News, 27 May 2015). Although the 400 farmers utilizing the 200-hectare Valley Dam irrigation scheme had been managing to produce harvests in the drought prone province, they are now faced with other challenges such as erratic electricity supply, dilapidated sprinklers and water pipes, malfunctioning water pumps, as well as lack of agricultural machinery to boost production (Zbc News, 27 May 2015). Describing the current status quo at Valley Dam irrigation scheme, the Sunday News (31 January 2016) stated: “[The] Valley Irrigation Scheme […] is now a pale shadow of itself sparking serious food shortages in the arid area and eroding the economic lives of villagers […] due to a combination of various economic and natural factors militating against the irrigation scheme, it has not been functional for a good number of years now. The death of the irrigation scheme has added to the catalogue of problems that the communities deal with […] the irrigation scheme, which used to be the only reliable source of livelihood in the arid area with good soils and a poor rainfall pattern was now a shadow of its former self. The area that used to be a greenbelt is now punctuated by brown and empty fields.” Some dam projects were discontinued before completion due to funding constraints. For instance, China Jiangxi Corporation for International Economic and Technical Cooperation (CJCIETC), was awarded a tender to construct Murovanyati Dam in Buhera District, Manicaland Province. The project which started in 2003 and was expected to be completed by 2009, was stopped after the company reportedly ―ran out of funds‖ (The Standard, 30 September 2012). Detailing the potential losses to be incurred due to the non-completion of the project, The Standard (30 September 2012) stated: “The dam was supposed to provide domestic and industrial water to people at Murambinda growth point and surrounding areas. The project was also earmarked to irrigate 3 650 hectares of land. The failure to complete the dam has resulted in about 1 000 people losing their jobs while 10 families were relocated to facilitate the construction of the water reservoir […] There is continuous hunger in Buhera and the provision of water would have helped people to embark on irrigation projects […]”. The same has been the case with the Gwayi-Shangani Dam Project in Matebeleland North Province. The project, which had been awarded to China International Water and Electric (CWE) Corporation through a State Procurement Board tender, started in 2012 and was scheduled for completion in 2016. The Gwayi-Shangani Dam Project was later suspended due to funds shortage, is now ―on hold‖ as it requires

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around US$90 million to complete which the government cannot afford for now (Chronicle, 3 June 2016: n.p). The project is yet to resume despite its strategic status as part of the National Matebeleland Zambezi Water Project (NMZWP). However, the China-Zimbabwe cooperation continues in dam construction. For instance, in November 2016, Sino-Hydro entered into an agreement to fund and construct the Kunzvi Dam at a cost of US$400 million through BOT arrangement (Xinhua, 04 November 2016). The dam, which is located 67 km out of Harare in Goromonzi District, had been approved by government in 1996 but could not commence due to funding constraints. Upon completion, it is expected to carry 158,4 million cubic meters of water and supply Harare with 250 000 cubic meters of water per day, at a time when the over 2,5 million Harare residents (including those in the satellite towns of Chitungwiza, Epworth, Norton and Ruwa) require 800 megalitres per day against the city‘s daily pumping capacity of 450 megalitres (Xinhua, 04 November 2016). This will reduce water shortages. The dam will add to Zimbabwe‘s existing stock of 10 000 small, medium and large dams, and other than water supply, it will generate electricity and provide water for irrigation (Herald, 28 January 2016). However, it may be difficult to establish how the BOT arrangement will impact on the cost of water rates during the period under which Sino-Hydro will be in charge of dam operations pending transfer to government and/or the Zimbabwe National Water Supply Authority (ZINWA). Suffice to say that loan repayment arrangements may, if not strategically structured, inflate user fees in a bid to recoup costs within unreasonably shorter periods. Within the same urban water management and supply projects, China Machinery Engineering Corporation (CMEC) is currently involved in the Harare City Council Water and Sewage System Rehabilitation Project which started in April 2013 and was scheduled to complete in March 2016. The project is being funded by a US$144,4 million concessional loan from the China Export Import Bank. In terms of scope, the project encompasses refurbishment, rehabilitation, replacement of old plant and installation and commissioning of new equipment at Morton Jeffrey Water Treatment Plant, Crowborough and Firle Sewerage Water Treatment, Alex Park Pump Station, Letombo and Warren Control Booster Pump Station and Borrowdale Brooke Pump Station as well as establishing a computerized system – the Programme Logic Control (PLC) System (Herald, 19 November 2015). Although the project was reported on the 31st of December 2016 as ―almost complete‖ (Herald, 31 December 2016), it is behind the initial schedule of March 2016. The project has also been surrounded with controversies regarding procurement, engagement of local engineers, delayed payment of funding tranches, abuse of project funds on part of the Harare City Council, among others (see for instance Herald, 9 March 2016; Newsday, 16 July 2015) 8.3 Discussion of Findings Form the assessment above, it was found out that the China-Zimbabwe partnership in cross-sector infrastructure development has been intensifying since the

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attainment of independence. The overall impression is that the projects reviewed have been making noticeable impact in the targeted communities, although when viewed from a national perspective some of the projects may appear to be insignificant. Thus, in terms of scale, scope and magnitude, the finding of this study was that economic infrastructure projects have greater and wider impact than other projects in the social services sector. Thus, projects in the energy sector, telecommunications sector and water management and supply have relatively huge benefits. For example, projects in the energy sector (Kariba South Extension Project and Hwange Thermal Power Station Expansion Project) have more benefits and contribution towards industrial performance, socio-economic development and budgetary implications. The same applies to the Harare City Council Water Project as well as the solar installation projects in Matebeleland North, Matebeleland South and Midlands provinces. An analysis of the China-Zimbabwe infrastructure cooperation relations will also reveal that a number of projects had very plausible project intentions and targets before they were undertaken. Upon completion, for several reasons, some projects have failed to sustain their potential realization momentum. For instance, the Valley Dam projects discussed above. In most cases, the government has not managed to make the necessary interventions to provide the necessary support needed to sustain such projects. Borehole projects would need routine maintenance and repair whilst irrigation projects require the same. Another finding was that some projects have been strategically structured to ensure improved returns on investment and improved revenue generation. For instance, the NetOne network upgrading and expansion projects with Chinese firms have assisted the mobile network provider to vastly improve its revenue generation capacity, and is now leading within the telecommunication sector in as far as subscriber base expansion and profitability is concerned. When it comes to job creation, it has been revealed from the assessment that whilst the projects are generating employment for the local people, there is still a phenomenon whereby the Chinese companies bring their own labour to carry out non-specialized work routines. However, local procurement in most cases has been notable as discussed in the NDC Project and Victoria Falls International Airport Upgrading Project. This concurs with Corkin and Burke (2006) as discussed in the literature review. In terms of environmental management and protection, there were no reported environmental mismanagement in the execution of the projects. Unlike in other sectors such as mining in Zimbabwe were there have been reports linking Chinese firms to environmentally unfriendly approaches in undertaking their project activities, the infrastructure projects assessed had no reported controversies in the literature utilized in the study. With respect to corporate practice, a few partnership projects between China and Zimbabwe assessed above have been affected negatively by allegations of tender or

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procurement fraud (for instance see Financial Gazette, 9 October 2014; Newsday, 20 July 2013; The Independent, 26 August 2016). Such controversies provoke a negative sentiment, damaging stereotypes and prejudices towards Chinese projects. In terms of efficiency in project execution in the projects assessed, it has been noted that Chinese funding arrangements appear to be relatively quicker. Memorandums of Understanding (MoUs) are often signed between project implementing institutions after political and technical engagements. The Government of Zimbabwe makes a request for a grant or loan to China, either through a travel to China, or when a Chinese delegation visits the country. When the Chinese government screens the proposal, a technical team from China visits to undertake a feasibility assessment in order to consider its viability. When approved, institutions sign a loan agreement. Tender processes are commenced and contracts are awarded more often than not, to Chinese companies, after which project finance tranches are released. It has however been noted that at times project implementation processes have been delayed by situations whereby the Government of Zimbabwe has an overdue debt owed to China. For instance, delayed tranche payments for the Harare City Council Water and Sewage System Rehabilitation Project discussed above has ultimately delayed the timely completion of the project which was scheduled to be finished by March 2016. Most of the infrastructure development projects undertaken have been through Chinese grants, interest free loans and concessional loans. These grants have been mostly on social infrastructure, specifically within the health and education sectors, in what can be termed as ‗friendship‘ projects assessed above. On the other hand, interest free loans and concessional loans have been secured for infrastructure implemented through parastatals and local government such as dams (with ZINWA), telecommunications infrastructure (with NetOne and TelOne), energy projects (with ZESA), water management (with Harare City Council), among others. What may need to be considered is the ultimate impact of all these projects on the national debt stock of the country. There may be need to move towards PPPs or Joint Ventures as suggested by Nhema and Nkomo (2015) in the literature reviewed above. This will reduce the costs incurred by government whilst ensuring long lasting capacity development and technology transfer. Lastly, what should not be ignored is how China-Zimbabwe cooperation on infrastructure development has impacted on the diplomatic and political relations of China and Zimbabwe. It is very clear that the infrastructure projects, especially the ‗friendly schools‘ and the ‗friendly hospitals‘ have stood as symbols of solid relations and close partnership. In most of the speeches by the delegations from either Zimbabwe or China, mention of the projects is always made. Of course this has a diplomatic merit to both the giver and the receiver as discussed above. This does not, however, connote that the China-Zimbabwe relations are based purely on

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friendship and ‗brotherhood‘ basis. The relations have a commercial dimension, as evidenced by the delays in the disbursement of the Harare City Council Water and Sewage System Rehabilitation Project as discussed above, on the basis that the Zimbabwean government had an overdue debt. Nevertheless, the fact remains that in China, Zimbabwe has a partner that can be able to bankroll infrastructure projects at a time when the other Western sources of finance were not forthcoming since the turn of the millennium. And China has also managed to take advantage of a leveraged bargaining power in negotiating these infrastructure deals. 8.4 Conclusion and Recommendations The chapter has managed to assess the impact of infrastructure projects constructed under the China-Zimbabwe cooperation framework for the period 1980 to 2016. The impact assessment has considered key development issues, particularly the extent to which the infrastructure projects have facilitated socio-economic development, revenue generation, job creation, local participation and procurement, technology transfer, and environmental management and protection. It has been found that most of the projects have wide-ranging impacts on host communities‘ socio-economic development, and contribute to national growth. The infrastructure projects have been found to be creating jobs, although there are still cases where Chinese companies bring their own non-specialized labour. Technology is being transferred, despite the speculations around cases of over-invoicing and price transfer. It has been found that some projects tendered to Chinese have been discontinued due to funding challenges whilst others have delayed completion. It is recommended that the Government of Zimbabwe effectively supervise its projects and enforce the Joint Venture Act and procurement laws to prevent some of the challenges faced in the execution of the projects. Government should come up with an integrated infrastructure repair and maintenance schedule for all the infrastructure developed supervised by the responsible Ministry and implemented by the line institutions so as to avoid cases of malfunctioning infrastructure which can be retrogressive. It is further recommended that the China-Zimbabwe cooperation projects shift more into industrial infrastructure development and productive infrastructure development so as to secure more economic benefits for the society from the China and Zimbabwe partnership.

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Cissé, D., Grimm, S. and Nölke, A., (2014). State-Directed Multi-National Enterprises and Transnational Governance: Chinese Investments, Corporate Responsibility and Sustainability Norms. Centre for Chinese Studies Discussion Paper, 1, January 2014. Corkin, L. and Burke, C., (2006). China‘s Interest and Activity in Africa‘s Construction and Infrastructure Sectors. Report Prepared for DFID China. Stellenbosch, South Africa: Centre for Chinese Studies. Daily News (2016). NetOne secures $485m. Daily News, 24 August 2016. Available at: https://www.dailynews.co.zw/articles/2016/08/24/netonesecures-485m [Accessed on 19 December 2016]. Daily News (2016). TelOne urges firm to protect the environment. Daily News, 10 October 2016. Available at: https://www.dailynews.co.zw/articles/2016/10/10/telone-urges-firms-toprotect-the-environment [Accessed on 15 November 2016]. Davison, C.C. and Clark, J.D., 1976. Transvaal Heirloom Beads and Rhodesian Archaeological Sites. African Studies, 35(2), pp.123-138. Dube, N. (2015). Of Uhuru, Sporting Facilities. The Sunday News, 26 April 2015. Available at: http://www.sundaynews.co.zw/of-uhuru-sporting-facilities/ [29 September 2016]. Edinger, H. and Christopher Burke (2008). AERC Scoping Studies on China-Africa Relations: A Research Report on Zimbabwe. Centre for Chinese Studies, University of Stellenbosch, March 2008. Available at: http://dspace.africaportal.org/jspui/bitstream/123456789/32047/1/Zimbabw e-China.pdf?1 [Accessed on 6 September 2016]. ESI Africa (2015). Zimbabwe: JA Solar Holdings wins 100MW solar PV contract. ESI Africa, 10 December 2015. Available at:https://www.esiafrica.com/news/zimbabwe-ja-solar-holdings-wins-100mw-solar-pv contract/ [Accessed 11 November 2016]. Feltenstein, A. and Ha, J., (1995). The role of infrastructure in Mexican Economic Reform. The World Bank Economic Review, 9(2), pp.287-304. Financial Gazette (2014). State Procurement Board in tender furore. Financial Gazette, 9 October 2014. Available at: http://www.financialgazette.co.zw/state-procurement-board-in-tenderfurore/ [Accessed on 30 December 2016]. Financial Gazette (2016). Work on US$984 million Beitbridge-Chirundu-Harare dualisation to commence next year. Financial Gazette, 1 December 2016. Available at: http://www.financialgazette.co.zw/work-on-us984-millionbeitbridge-chirundu-harare-dualisation-to-commence-next-year/ [Accessed on 16 December 2016]. Garcia-Escribano, M., Goes, C. and Karpowicz, I., (2015). Filling the Gap: Infrastructure Investment in Brazil. IMF Working Paper No. 15/180. Available at: https://www.imf.org/external/pubs/ft/wp/2015/wp15180.pdf [Accessed on 19 September 2016]. Government of the People‘s Republic of China, (2010). Briefing by H.E. Xin Shunkang at the Launch of the 30th Anniversary Celebrations of

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Establishment of China-Zimbabwe Diplomatic Relations, Harare. Embassy of the People‟s Republic of China, 21 January 2010. Available at: http://zw.china-embassy.org/eng/xwdt/t653147.htm [Accessed on 19 July 2016]. Government of the People‘s Republic of China, (2015). China and Zimbabwe celebrate 35th anniversary of establishment of diplomatic ties. Embassy of the People‘s Republic of China in the Republic of Zimbabwe. 11 May 2015. Available at: http://www.chinaembassy.org.zw/eng/xwdt/t1262770.htm [Accessed on 20 September 2016]. Halstead, J.M. and Deller, S.C., (1997). Public Infrastructure in Economic Development and Growth: Evidence from Rural Manufacturers. Community Development, 28(2), pp.149-169. Herald (2011). China envoy hands over 2 schools. Herald, 29 September 2011. Available at:http://www.herald.co.zw/chinese-envoy-hands-over-2schools/ [Accessed on 22 July 2016]. Herald (2011). Work at Amai Mugabe Orphanage School begins. Herald, 3 November 2011. Available at: http://www.herald.co.zw/work-at-amaimugabe-orphanage-school-begins/ [Accessed on 11 December 2016]. Herald (2012). President officially opens National Defence College. Herald, 15 September 2012. Available at: http://www.herald.co.zw/presidentofficially-opens-national-defence-college/ [Accessed on 22 December 2016]. Herald (2015). NetOne gets $65m for network expansion. Herald, 19 January 2015. Available at:http://www.herald.co.zw/netone-gets-65m-for-networkexpansion/ [Accessed on 1 December 2016]. Herald (2015). We‘ll finish the job on time: Chinese Engineers. Herald, 19 November 2015. Available at: http://www.herald.co.zw/well-finish-the-job-ontime-chinese-engineers/ [Accessed on 6 August 2016]. Herald (2016). 60 million lifeline for Kariba South. Herald, 3 October 2016. Available at: http://www.herald.co.zw/60m-lifeline-for-kariba-south/ [Accessed on 10 November 2016]. Herald (2016). Controversy dogs city‘s $144 million waterworks deal. Herald, 9 March 2016. Available at: http://www.herald.co.zw/controversy-dogscitys-144m-waterworks-deal/ [22 December 2016]. Herald (2016). Debt Stalls Hwange Expansion Project. Herald, 4 October 2016. Available at: http://www.herald.co.zw/debt-stalls-hwange-expansionproject/ [Accessed on 10 November 2016]. Herald (2016). Harare International Airport set for major expansion. Herald, 16 May 2016. Available at: http://www.herald.co.zw/hre-international-airportset-for-major-expansion/ [Accessed on 19 December 2016]. Herald, (2012). China working towards a better Zimbabwe. Herald, 10 September 2012. Available at: http://www.herald.co.zw/china-working-towards-abetter-zimbabwe/ [Accessed on 22 July 2016].

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Herald, (2016). ZINWA, Chinese firm in Kunzvi Dam talks. Herald, 28 January 2016. Available at: http://www.herald.co.zw/zinwa-chinese-firm-in-kunzvidam-talks/ [23 December 2016]. Joint Ventures Act [Chapter 22:22]. Available at: http://www.zimlii.org/zw/legislation/numact/2016/6/2015/Joint%20Ventur es%20Act%20%5BChapter%2022-22%5D.pdf [Accessed on 13 December 2016]. Lall, S.V., (1999). The Role of Public Infrastructure Investments in Regional Development: Experience of Indian States. Economic and Political Weekly, pp.717-725. Looney, R.E. and Winterford, D., (1992). The Role of Infrastructure in Pakistan's Economic Development, 1972-1991. Pakistan Economic and Social Review, 30(1), pp.69-94. Machingura, G. and Xu Lingui (2015). In rural Zimbabwe, Chinese-Built Hospital brings relief to the poor. Xinhua, 27 November 2015. Available at: http://news.xinhuanet.com/english/2015-11/27/c_134859202.htm [Accessed on 5 December 2016]. Madzivanzira, A. (2016). Stadiums call for attention. The Patriot, 18 March 2016. Available at: http://www.thepatriot.co.zw/old_posts/stadiums-call-forattention/ [Accessed on 22 December 2016]. Mathuthu, M. (2013). Zimbabwe: Chinese Companies Destroy Environment in Mat South. AllAfrica, 17 December 2013. Available at: http://allafrica.com/stories/201312181098.html [Accessed on 22 November 2016]. Mazingi, L. and Richard Kamidza (2011). Inequality in Zimbabwe, in Tearing Us Apart: Inequalities in Southern Africa (Jauch, H. and Muchena, D, Eds.), Johannesburg: Open Society for Southern Arica, pp.322-383. New China (2015). China's role in developing Africa's infrastructure commendable. New China, 14 June 2015. Available at: http://news.xinhuanet.com/english/2015-06/14/c_134325506.htm [Accessed on 19 December 2016]. Newsday (2012). Chinhoyi hospital to open midwifery school. Newsday, 9 March 2012. Available at: https://www.newsday.co.zw/2012/03/09/2012-03-09chinhoyi-hospital-to-open-midwifery-school/ [Accessed on 14 November 2016]. Newsday (2013). Storm over $200m NetOne deal. Newsday, 20 July 2013. Available at: https://www.newsday.co.zw/2013/07/20/storm-over-200mnetone-deal/ [Accessed on 30 December 2016]. Newsday (2015). China Exim Bank loan for Harare water infrastructure abused. Newsday, 6 July 2015. Available at: https://www.newsday.co.zw/2015/07/16/china-exim-bank-loan-for-hararewater-infrastructure-abused/ [22 December 2016]. Newsday (2015). Stadium rentals too high: Langa. Newsday, 19 January 2015. Available at: https://www.newsday.co.zw/2015/01/19/stadium-rentalshigh-langa/ [Accessed on 19 November 2016].

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The Zimbabwean (2011). Bill Watch 22/2011 of 6th June [Recalled Parliament approves Chinese loan agreement]. Media Institute of Southern Africa, 7 June 2011. Available at: http://thezimbabwean.co/2011/06/bill-watch222011-of-6th-june-recalled-parliament-approves-chinese-loan-agreement/ [Accessed on 17 December 2016]. Trebilcock, M. and Rosenstock, M., 2015. Infrastructure Public–Private Partnerships in the Developing World: Lessons from Recent Experience. The Journal of Development Studies, 51(4), pp.335-354. Volodzko, D. (2016). China's Medical Diplomacy. The Diplomat, 12 April 2016. Available at: http://thediplomat.com/2016/04/chinas-medical-diplomacy/ [Accessed on 10 November 2016]. White Paper on China's Foreign Aid (2014). People‘s Republic of China. State Council, 10 July 2014. Available at: http://english.gov.cn/archive/white_paper/2014/08/23/content_2814749829 86592.htm [Accessed 13 October 2016]. White Paper on Economic and Trade Cooperation (2013). People‘s Republic of China. State Council, August 2013. Available at: http://english.gov.cn/archive/white_paper/2014/08/23/content_2814749829 86536.htm [Accessed 12 September 2016]. Will, R. (2012). China‘s stadium diplomacy. World Policy Journal 29 (2), pp.3643. World Bank (2014). Zimbabwe National Education Profile. Education Policy Data Centre, World Bank 2014 Update. Available at: http://www.epdc.org/sites/default/files/documents/EPDC%20NEP_Zimbab we.pdf [Accessed on 11 September 2016]. World Bank (2016). Public-Private Partnership Laws/Concession Laws. 24 October 2016. Available at: https://ppp.worldbank.org/public-privatepartnership/legislation-regulation/laws/ppp-and-concession-laws [Accessed on 11 November 2016]. Xinhua (2016). China hands over another rural primary school to Zimbabwe. 29 May 2016. Xinhua, 29 May 2016. Available at: http://english.gov.cn/news/international_exchanges/2016/05/29/content_28 1475359966328.htm [Accessed on 15 September 2016]. Xinhua (2016). Chinese firm signs agreement to construct long-awaited dam for Harare. 04 November 2016. Available at: http://europe.chinadaily.com.cn/business/201611/04/content_27273291.ht m [Accessed on 2 December 2016]. Xinhua, (2016). Feature: Chinese borehole project brings relief to drought-weary Zimbabweans. Xinhua, 8 November 2016. Available at: http://www.fmprc.gov.cn/zflt/eng/zfgx/jmhz/t1413723.htm [Accessed on 13 December 2016]. Zbc News (2015). Irrigation in Kezi appeals for assistance. Zbc News, 27 May 2015. Available at: http://www.zbc.co.zw/newscategories/agriculture/56729-irrigation-in-kezi-appeals-for-assistance [Accessed on 11 September 2016].

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CHAPTER NINE China’s Transport Infrastructure Support in Eastern Africa: Security Implications for the Indian Ocean Rim JOSEPH ONJALA 9.0 Introduction Transport infrastructure plays a fundamental role in enabling a better mobility for people and goods as well as a better connection between regions. Infrastructure that is sufficient and works properly is crucial for Africa‘s economic integration. Prior to the September 2005 UN Millennium plus 5 Summit and the report of the Commission for Africa, transport infrastructure was low priority on the international development agenda. The new infrastructure program formed between NEPAD and the African Union Commission hopes to have a fully integrated infrastructure for the whole of Africa by 2030. Every country and every region currently has its own master plan and transport priorities. The above efforts notwithstanding, transport infrastructure including shipping, ports, roads and railway lines have been dangerously neglected while lack of transport infrastructure impeded economic integration and poverty reduction in much of Africa. Consequently, Africa has the most number of land locked countries in the world. Besides infrastructure development, the challenges experienced in creating a viable transport network that not only connects Africa with the world, but also with within the continent itself are still many. Any crisis that closes an important transport infrastructure such as shipping lines, ports or hub of trade affects the entire regions. Incidents like the 2007 Kenyan election protests affected the output of Mombasa, and more recently the Transnet strike in South Africa closed Durban port for several days, so goods were not reaching the several inland countries they would normally serve. Such interests underline security implications for the Indian Ocean Rim. African economies will begin the process of deep integration and economic stability not only when their infrastructure networks are designed in such a way as to link production centers and distribution hubs across the continent, as the networks of developed economies, but also when the major regional security threats are addressed.

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In this chapter, we examine how transport infrastructure developments are unfolding and the role that infrastructure could play in the integration of Eastern Africa economies. No doubt, the developments are occurring at time of mineral resources discoveries while the Eastern Africa countries are enjoying closer ties with the East (including China and India). Secondly, we examine how the anticipated gains from the roads, railway and ports development is likely to be spur unprecedented economic activities within the Indian Ocean Rim (IOR). The IOR, especially the Horn of Africa is known for the frequency of regional insecurity likely to heighten risks of international trading. The scenario calls for anticipatory measures to deal with the security threats likely to hamper the gains of rapid development in the region. The chapter is organized as follows: in the second part of the paper, we introduce the east African integration and the role infrastructure in the integration process. Section three examines infrastructure in the EA region – current state, planned investments, the role of china in the infrastructure developments. The fourth section looks at the mineral resources discoveries and the likely trading patterns between EA in the IOR. Finally, the IOR security threats for the EA region are analyzed. 9.1 East African Integration 9.1.1 The east African Community The East African Community (EAC) was established in July 2000 when the founding treaty, ratified in November 1999 by Kenya, Uganda and Tanzania, entered into force. Rwanda and Burundi joined the organisation in July 2007. The EAC‘s headquarters are located in Arusha, Tanzania. The main purpose of establishing the EAC was to strengthen regional cooperation, infrastructure and development via full political, economic and cultural integration of the member states. With the consolidation of the Customs Union and establishment of the Common Market, which was launched in July 2011, EAC has been greatly energized and indeed the regional programme has reached its threshold. Most of the region‘s development Master Plans, which had lingered for a long time in the planning and studies phases, are being taken to the implementation stages. These include projects areas of Infrastructure, roads, railways, inland waterways, ports and harbours which have been prioritized under the 4th EAC Development Strategy (2011-2016). Currently, the EAC envisions a modernized and vastly revamped railways system and roads network, efficient communications and reliable power supply. 9.1.2 The Role of Infrastructure in the Integration There is a close relationship between regional integration, economic growth, and infrastructure. Many development issues can be best tackled through a regional integration approach (Ndulu B. et al.). Nevertheless, infrastructure development has

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increasingly been recognized as a key ingredient to catalyze the process of regional integration. Limão and Venables (2001) provide empirical evidence that infrastructure has a large impact on trade costs and consequently on trade volumes. They find that the median landlocked country has only 30 percent of the trade volume of the median coastal economy. Improving the standard of infrastructure from that of the bottom quarter of countries to that of the median country would increase trade by 50 percent. So improving infrastructure in sub-Saharan Africa is especially important for increasing African development. Consequently, infrastructure is one of the key areas of collective regional interest that the New Partnerships for African Development (NEPAD) and a number of sub-regional integration initiatives have recently raised. The regional objectives are partly to foster integration of African markets through improved connectivity and partly to facilitate cross-country investment within Africa. The high proportion of landlocked countries necessitates cross-border trade facilitation and coordination in trans-boundary infrastructure investment (Ndulu B. et al, 2008). Africa has numerous schemes of economic integration, with practically all the African countries belonging to more than one scheme. A unique characteristic of economic integration in Africa is the multiplicity and overlapping of its schemes (El-Agraa Ali M, 2004). 9.2 Infrastructure Developments in the Region 9.2.1 The Current State of Infrastructure The lack of modern infrastructure is a major challenge not just in the Eastern Africa but across Africa where it is the main constraint to economic development and constitutes a major impediment to the achievement of the Millennium Development Goals (MDGs). Table 1 provides summary of infrastructure indicators in Africa. Table 1: Indicators of infrastructure development for Kenya and other Sub-Saharan African Countries Indicator Transport • Paved road density •Mobile teledensity •Internet density •Electricity access (%) Water and Sanitation •Improved water (%) •Improved sanitation

SubSaharan Africa 49 101 3 18 60 35

Kenya

South Africa

14.3

Uganda

Nigeria

Tanzania

Botswana

6.7

62

65 28 16.1 59

127 20.9 75

56 12.1 13.9

48 13 9

59 28.4 50.6

143 7.0 45.4

91

54

67

58

95

32

73

10

34

31

62

Source: Compiled from World Bank, World Development Indicators, 2012. Ndulu B., et al (2008)

Africa suffers from a pronounced infrastructure deficit. Inadequate infrastructure has been estimated to shave off at least 2 percent of Africa‘s annual growth. Infrastructure that is sufficient and works properly is crucial for Africa‘s economic integration. African economies can begin the process of deep integration if their

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infrastructure networks are designed in such a way as to link production centers and distribution hubs across the continent, as the networks of developed economies do (Ondiege P., et al 2013). Modern infrastructure has been identified as one of the main ingredient required in order to attain sustainable economic development in Africa. Outdated infrastructure and limited maintenance continue to undermine the effectiveness of railways across Africa as the limited railways infrastructure has collapsed due to lack of management. For many years, the regional railway infrastructures have remained in a state of disrepair. The Kenya-Uganda Railway; The Tanzam Railway was termed the third largest foreign aid project ever undertaken-after the Aswan Dam and the Upper Volta Project - the Tanzam link is the largest aid project ever financed by a single nation representing a huge investment by the People's Republic of China (Rettman J. R., 1973). 9.2.2 Planned Infrastructure Developments Currently, both COMESA and EAC have agreed to jointly work together on infrastructure development with a strong focus on corridor development as insufficient infrastructure is also a problem in East Africa. There is also strong programming to develop One Stop Border Posts (OSBPs) to make cross border transport more efficient and seamless. The following infrastructure development projects are in the pipeline: -

-

-

-

-

-

Zambia‘s focus is to improve the operational efficiency of the Zambia Railways and the TAZARA Railway (which connects Dar es Salaam in Tanzania with Kapiri Mposhi in Zambia), and promote new railway developments using the PPP framework. Zambia also intends to extend the Zambia Railways network to the Botswana Railways network via the planned Kazungula Bridge, which will facilitate the flow of goods and labor (Ondiege P., et al 2013). A high capacity Standard Gauge Railway line from Lamu to Lokichogio for onward connection to Juba; A high capacity Standard Gauge Railway line from Nairobi to Moyale for onward connection to Addis Ababa; A high capacity Standard Gauge Railway line between Mombasa and Malaba with a Branch Line to Kisumu for onward connection to Kampala and Great Lakes Region; EAC Railways Master Plan complemented by national plans; plans on a new railway line linking the port of Dar es Salaam to Burundi and Rwanda; and the initiation of studies to modernize the existing railway network (East African Community, 2011). There is a project to build a port in Lamu in order to create a new economic development pole in the underdeveloped region of northwestern Kenya. A second transport corridor is considered to connect South Sudan, Ethiopia, and later on Somalia, to this region with also transport links to Nairobi.

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-

In the much longer term, the transport corridor would provide a vital link as a trans-African land bridge or transport corridor, running from the eastern coast of Africa to the Atlantic Ocean through a route connecting Lamu to Juba, Bangui, Yaoundé and Douala.

Construction of Lamu port would serving a large hinterland and provide infrastructure for the following: South Sudan (oil exports, offering an alternative to Port Sudan; Ethiopia, offering an alternative to Djibouti; Somalia, ultimately (agricultural potential of the river regions of Shebelle and Juba), offering an alternative to Mogadishu; Uganda (crude oil and construction of a refinery and other oil industry activities) offering an alternative to Mombasa; The port of Lamu could potentially provide competitive advantages for international trade for a number of countries. In the long term, this would have the impact of reducing maritime transport costs. For all of this to materialize, large-scale construction of infrastructures will be needed, and peace must come in a lasting way to the region. For some of the east coast ports, the major regional hubs are already being developed in the Middle East (Djibouti, Djibouti; Jebel Ali, United Arab Emirates; Jeddah, Saudi Arabia; and Salalah, Oman). For southern Africa, the government of South Africa has decided to develop a sizable hub port in Richards Bay, which will likely capture a significant portion of the seaborne trade between Asia and subequatorial Africa (Anonymous, Chapter 6). For southern Africa, the government of South Africa has decided to develop a sizable hub port in Richards Bay, which will likely capture a significant portion of the seaborne trade between Asia and subequatorial Africa (Anonymous, Chapter 6). Oil experts are increasingly speculating that Africa‘s eastern coast could represent one of the few remaining major petroleum frontier regions in the world (Michael D. and R. Sticklor, 2012). 9.3 The Role of China in Infrastructure for EA Integration In the FOCAC 2009 platform, China made commitments for prioritizing infrastructure for posterity in Africa. The renewed China-Africa engagement has revitalized inter-regional connectivities through Airlines (some financed or constructed by China) in Africa. These changes have particularly impacted on Kenya favorably. The Kenya Airways has experienced increased growth and emerged as a dominant player in the airlines linking West, Central, East Africa and China. The surge in activities emanates from African businessmen seeking trade and investment opportunities with China (Katumanga 2010). According to Martyn D. (2010): ―A significant development in Africa over the past decade has been the trend of Chinese construction firms building infrastructure on the continent. The market entries of large Chinese state-owned or state aligned construction enterprises have

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largely been underwritten by the Chinese Government through financing provided by the China Export-Import Bank, the de facto project finance arm of China Inc. in Africa. Although relatively few in number relative to its overall project funding on the continent, the Bank‘s new commodities-for-infrastructure financing model is rapidly gaining in appeal to cash strapped African Governments that are willing to part exchange commodity resources for the building of infrastructure.‖ In the rail sector, Chinese financing commitments in Africa are reportedly standing at no less than US$ 4 billion for rehabilitation of both old lines that were mostly damaged through conflict as well as new line construction (Davies M., 2010). For the construction of roads, it is estimated that project finance for road rehabilitation and building stands at approx. $550 million, but with many more projects in the planning stages. Deserving particular mention once again is the DRC case where it is reported that over 7000km of road rehabilitation and construction is to be carried out by Chinese contactor companies (Davies M., 2010). The 5th Ministerial Conference on China-Africa Cooperation came to a successful conclusion on 20th July 2012, with the adoption of the Beijing Action Plan 20132015. During the meeting, China agreed to partner with African countries in promoting inter-regional trade and transnational and trans-regional infrastructural development. Consequently, Beijing has targeted most East African countries -including Djibouti, Ethiopia, Kenya, Tanzania and Uganda -- for investment in key infrastructure projects to support those countries' economic development. The signing of these agreements also highlights the integration of East Africa with the rest of the Indian and Pacific ocean basin economy, thereby augmenting the economic potential of these emerging countries. 9.4

Mineral Resources Discoveries and the Likely Trading Patterns between EA Economies in the IOR

9.4.1 Resources Discoveries It is probably no coincidence that Beijing's rising interest in Africa comes at a time when sizeable new discoveries of oil have been made on the continent. In the last few years, the Eastern Africa region covering Kenya, Uganda, Tanzania and Southern Sudan, have experienced large discoveries of natural resources (mainly oil and gas), creating potential for rapid socio-economic transformation in the region. It is anticipated that exploitation and trading in these resources is likely to spur trade flows and transform the value of the Indian Ocean Rim. The exploitation of the natural resources is likely to impact on the regional economies in several ways. Rapid growth in both exports and imports are expected since increased incomes from the energy resources export is likely to lead to growth and improved incomes.

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-

-

-

-

Kenya: Oil in Kenya‟s Anza Basin; Turkana Basin. China National Offshore Oil Corporation, which has exploration rights to blocks 9 and 10A within the Anza Basin Lake Turkana (Kenya) announced in March 2010, that high concentrations of gas have been found; Kwale mineral sands (Tiomin); Rare Earth / Niobium Project on the Kenyan coast near the Tanzanian border (Mirima Hill); Coal in Kitui's Mui Basin. Tanzania: High-impact gas discovery offshore Tanzania. Uganda: The Albert Basin has been the area of most interest, oil discoveries have been confirmed and production will soon follow; There are still a few blocks open toward the southern end of the basin.; Uganda‟s Ministry of Energy estimates there are reserves totaling the equivalent to 2 billion-6 billion barrels of oil. Production could hit 350,000 bpd by 2015 within Uganda; Copper – cobalt deposits & stockpiles in Uganda (Kilembe); Vast iron-ore resources in north-eastern DRC (Mont Kodo) and Uganda (Kabale / Muko); phosphate in Tororo; The Uganda crude oil is ―waxy‖, which means it solidifies below a temperature of 40°C; A heated pipeline would be required to export it, but it is very costly to operate and therefore unlikely to be economical for such volumes. Burundi: Nickel deposits - Musongati & Muremera; Nickel & titanium targeted at exports for alloy. Rwanda: Methane gas in Lake Kivu. S.Sudan: South Sudan‟s reserves are largely held in the Mug and Melut basins. In 2007, South Sudan had an estimated 19 Mt (approximately 139 million barrels) of crude oil production. Ethiopia: Ethiopia‟s Ogaden Basin.

In early 2010, Texas-based Anadarko Petroleum Corp. announced the confirmation of a giant gas play off the Mozambique coast in the Rovuma Basin. There is also confidence of significant potential for oil deposits off the Somali coast, with some analysts speculating there may be reserves of up to 10-billion barrels in the northern sector of the basin. 9.4.2 The likely Trading Patterns with Infrastructure, Integration and Mineral Discoveries The essential benefit of regional infrastructure is to make possible the formation of large, competitive markets in place of the present collection of small, isolated, and inefficient ones. Regional infrastructure does this by slashing transport costs (in particular to and from hinterlands and landlocked countries); establishing connectivity so that goods can reach markets and people can exchange information and reach jobs (Nepad, African Union, and AfDB, 2013). Shared regional infrastructure is the only solution to problems of small scale and adverse location. An important but underappreciated benefit of regional infrastructure is its effect on trade within Africa. As regional integration improves the competitiveness of African producers and brings millions more consumers within their reach, Africa

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will see a swelling of intra- and inter-regional trade as a share of all trade. Regional infrastructure also exploits and advances synergies among sectors (Nepad, African Union, and AfDB, 2013). Trade forecasts for different regions in Africa suggest that infrastructure development is likely to spur volume of trade by about 5.8%. As shown in Table 2, the east African region is likely to experience the largest growth at about 7% to the year 2040. Table 2: Trade Forecasts in Africa by Region (millions of metric tons) Region

2009

2020 Volume

North Africa West Africa Central Africa East Africa Southern Africa Total Africa Base With Suppressed Demand With new Minerals

20 7 21 45 240 523 513

235 176 43 96 408 958 1,056

Avg. growth (%) 6.3 6.7 6.8 7.1 4.9 5.8 6.3

513

1,175

7.8

2030 Volume 410 300 77 181 617 1,585 1,822

Avg. growth (%) 6.3 6.0 6.4 7.1 4.7 5.7 6.1

1,998

5.5

2040 Volume 760 666 145 360 1,001 2,823 3,397

Avg. growth (%) 6.4 6.3 6.5 7.1 5.0 5.9 6.4

3,630

6.2

Source: Africa Transport Outlook 2040, Annex 3.2, excluding crude oil. Nepad, African Union, and AfDB (2013).

Traditionally, the EAC-China relationship has been more trade-related. Since the year 2006, there has been a dramatic change in the way China trades with the EAC countries. From 2007–2011, the annual growth in export value to EAC has been phenomenal for Burundi and Tanzania, averaging 35 percent and 26 percent respectively. For Uganda and Rwanda, the annual growth rates for imports from China have been 13 percent and 12 percent respectively. For Kenya, growth in exports to the EAC has been modest, except for Burundi at 17 percent. Kenya‘s exports to Tanzania, Rwanda and Uganda have grown at 7 percent, 13 percent, and 13 percent annually over the same period. Overall, the annual rates of China‘s export growth to the EAC have surpassed that of Kenya. In view of the recent mineral resource discoveries, the level of trade between the EAC and China is likely to rise phenomenally. 9.5 IOR Security Threats for the EA Regions The Indian Ocean Rim serves the five Northern Corridor member countries: Kenya, Uganda, Rwanda, Burundi, as well as the whole of Ethiopia, Somaliland, Tanzania and the states which make the Southern region of Sudan. The RIM represents an increasingly significant avenue for global trade and arena for global security. Rising prosperity in Asia, growing dependence on natural resource flows linking producers and consumers across the Middle East, East Africa, and Asia, and globalized supply chains and distribution networks are knitting the region ever more closely together by sea. In the foreseeable future, the IOR is set to rise to the forefront of world geopolitics. At the same time, emerging problems ranging from

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piracy and territorial disputes in the regional seas to global environmental pressures on coastal and marine resources pose significant governance challenges for the Indian Ocean region (IOR). To date, even an international naval presence combining the resources of the European Union, NATO, and the US Navy has had great difficulty in securing such a wide swath of ocean. The variety of sources of insecurity that afflict the region include (Michael D. and R. Sticklor, 2012): - Insurgent conflict, - Terrorism, - Political instability - Illicit trafficking and - Piracy. These security threats taken together, the myriad security threats facing the region may exceed the international and regional community‘s capacity to effectively manage such challenges. The EAC, which has made tremendous strides in regional integration, is surrounded by other countries – Somalia, Sudan, Southern Sudan, Eritrea – in East Africa that have not done so well in managing conflict. Somaliabased Al-Shabaab remains a potential threat to foreign interests and personnel in Kenya (and to a lesser extent, in Tanzania) (Michael D. and R. Sticklor, 2012). Co-operation among the EAC Defence Forces is currently engaged in the issues of insecurity posed by the situation of Somalia. Nevertheless, piracy in the Indian Ocean waters off the East African coast; and proliferation of small arms and light weapons is still filtering from the states of insecurity in the countries surrounding the EAC region. In the case of Kenya and Ethiopia, both countries are involved with a newly planned development corridor called the Lamu Port – South Sudan – Ethiopia (LAPSSET) transport and economic development corridor. Some areas through which this corridor will pass have recently seen more evidence of AlShabaab crossing over the border, including the kidnapping of Western tourists. 9.6 Conclusion The Horn of Africa is known for the frequency of regional conflicts, including territorial disputes within the Sudan, between Ethiopia and Somalia, between Eritrea and Ethiopia, and many others. As the 5th Ministerial Conference on ChinaAfrica Cooperation came to a successful conclusion on 20th July 2012, with the adoption of the Beijing Action Plan 2013-2015, the two sides also agreed to increase their exchanges and cooperation in operationalizing Africa‘s Peace and Security architecture. Kenya has since called for a deepened programme of cooperation with the Chinese Government in the resolution of conflict and financing of post-conflict reconstruction programmes recommended by IGAD and the ICGLR. This includes security support to protect fishing and commercial vessels plying the eastern coast of the Indian Ocean. It also includes the fight against piracy on the east African Coast and the Gulf of Aden.

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The realization of a large regional economic bloc comprising Kenya, Uganda, Tanzania, Rwanda and Burundi bears great strategic and geopolitical significance, imposing on the EAC Partner States enormous responsibility for regional defence and security. A protocol governing co-operation in defence and security matters is at advanced stage of consideration, setting the stage for deepening and widening co-operation in regional peace and security. EAC has in the past successfully pursued strategic mission to establish wider areas of peace and security beyond the confines of its borders. Despite the efforts of a multinational coalition to patrol the waters off east Africa, the area impacted by Somali piracy remains enormous at approximately (Michael D. and R. Sticklor, 2012). While piracy has earned the greatest share of headlines in terms of security threats in the Indian Ocean, other security issues abound. Trafficking of illicit narcotics, weapons, and people within and via the Indian Ocean will likely continue in the medium- to long term because there are numerous sources of high-volume supply for all three commodities, a sufficiently large number of points of export that suffer from chronic insecurity, and a wide array of sea transportation available to service all the necessary sites of demand and consumption ((Michael D. and R. Sticklor, 2012). There are several reasons for taking stronger offensive moves to avoid conflict spillovers, the key driver being economic development. References African Development Bank. 2010. African Development Fund. Eastern Africa Regional Integration Strategy Paper 2011–2015. (Revised Draft for Regional Team Meeting) Regional Departments—East (Orea/Oreb). Anonymous, Deepening Regional Integration. In Africa‘s Infrastructure: A Time for Transformation. Chapter 6. Australian National Centre for Ocean Resources and Security (ANCORS), University of Wollongong (2009). Proceedings from The Indian Ocean Maritime Security Symposium 15-17 April 2009. Bougheas, S., Demetriades, P.O., Morgenroth, E.L.W. (1999) Infrastructure, Transport Costs and Trade, Journal of International Economics, 47(1), 169-189. Corkin Lucy, Christopher Burke and Martyn Davis (2008). China‘s Role in the Development of Africa‘s Infrastructure. SAIS Working Papers in African Studies. 04-08. Davies Martyn (2010). How China is Influencing Africa‘s Development. Background Paper for the Perspectives on Global Development 2010 shifting Wealth. OECD Development Centre DFID (2006) Infrastructure and Pro Poor. Pro poor Growth Briefing No.4. A DFID Practice Paper, April 2006. Djankov, S., Freund, C., Pham, C.S. (2006) Trading on Time, Working Paper 3909, World Bank, Washington, D.C.

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East African Community (2011). East African Community Development Strategy 2011/12-2015/16. Deepening and Accelerating Integration. East African Community. El-Agraa Ali M (2004). The Enigma of African Economic Integration. Journal of Economic Integration, Vol. 19, No. 1 (March 2004), pp. 19-45. FOCAC. 2009. Declaration of Sharm El Sheikh of the forum on China-Africa Cooperation. [Online: Forum on China-Africa Cooperation, November 12] Available at: www.focac.org/eng/zxxx/t626388.htm. Forum for China Africa Cooperation (FOCAC) Action Plan 2010 – 2012, also known as Sharm el Sheikh Action plan. Francois, J., Manchin, M. (2006) Institutional Quality, Infrastructure and the Propensity to Export, Working Paper, World Bank, Washington, D.C. Hull R.W. 1972.China in Africa. Issue: A Journal of Opinion, 2(3), 49–50. Infrastructure Consortium for Africa. 2007. ICA Annual Report 2006, Infrastructure Consortium for Africa Secretariat, Tunis. Jerome Afeikhena and Ademola Ariyo (2004). Infrastructure Reform and Poverty Reduction in Africa. Forum Paper 2004. Development Policy Unit, Cornell University. Katumanga, M. 2007. China Footprints in Africa. Draft Research Report, mimeo, Nairobi. Kenya, Republic of (2010). Kenya Vision 2030. A Globally Competitive and Prosperous Kenya. Ministry of Planning and Vision 2030. Government Printers. Kenya, Republic of (2011a). Economic Survey 2011. Kenya National Bureau of Statistics. Government Printers. Pp253. Kenya, Republic of (2011b). Project Briefs. Office of the Prime Minister. Office of the Prime Minister. Ministry of Planning and Vision 2030. Kenya, Republic of (2013). Brief on Kenya – China Relations. Limão, Nuno and Anthony J. Venables (2001), ―Infrastructure, Geographical Disadvantage, Transport Costs and Trade‖, In: World Bank Economic Review, Vol. 15, No. 3, pp. 451-479. McIntyre, M.A. 2005. Trade Integration in the East African Community: An Assessment for Kenya International Monetary Fund (Working Paper WP/05/143). Michael David and Russell Sticklor (eds) 2012. Indian Ocean Rising: Maritime Security and Policy Challenges. STIMSON. July 2012. Ndulu Benno, Lolette Kritzinger-van Niekerk and Ritva Reinikka ().Infrastructure, Regional Integration and Growth in Sub-Saharan Africa. Olu Ajakaiye, Francis M. Mwega, Felix F. N‘zue (2009) Seizing Opportunities And Coping With Challenges of China – Africa Aid Relations: Insights From AERC Scoping Studies. Policy Issues Paper No. 1. African Economic Research Consortium (AERC). Ondiege P., J.Moyo, and A. Verdier-Clouchne (2013). Developing Africa‘s Infrastructure for Competitiveness. The African Competitiveness Report 2013. African Development Bank.

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Onjala Joseph (2008). A Scoping Study on China-Africa Economic Relations: The Case of Kenya. Revised Final Report submitted to AERC, March 2008. Onjala, J. 2010. The Impact of China-Africa Trade Relations: The Case of Kenya (Working PaperNo. CPB_05), African Economic Research Consortium (AERC). Onjala, J. and Tuju, M. 2012. A Comparative Analysis of China and India Trade with Kenya: An Evaluation of the Implementation of FOCAC Plan of Action 2009. Final Report submitted to Fahamu. Onjala, Joseph (2013) a chapter contribution on ―Merchandize Trading between Kenya and China: Implications for East African Community (EAC)‖ to a book on ―China‘s Diplomacy in East and Central Africa‖. Ashgate Publishing Ltd. England. Forthcoming 2013. Rettman J. Rosalyn (1973). The Tanzam Rail Link: China‘s ―Loss-Leader‖ in Africa. World Affairs, Vol. 136, No.3 (Winter 1973-1974), pp.232-258. Taylor Ian (1998). China‘s Foreign Policy Towards Africa in the 1990s. The Journal of Modern African Studies, 36(3) (Sep. 1998), pp.443–460. United Nations Conference on Trade and Development (UNCTAD), 2009.Economic Development in Africa Report 2009. Strengthening Regional Economic Integration for Africa Development. United Nations. Wilson, J.S., Mann, C.L., Otsuki, T. (2005) Assessing the Benefits of Trade Facilitation: A Global Perspective, The World Economy, 28(6), 841-871. World Bank, World Development Indicators, 2012.

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