African Review of Economics and Finance - latest Issue
Volume 8, Issue 1, 2016
Source: African Review of Economics and Finance 8, pp 3 –11 (2016)More Less
Much has been made of China's economic ascendency in Africa, most notably its overtaking of the US in 2009 to become the continent's largest trading partner. Beyond trade, the broader contours of Chinese loans, export credits, investment, and aid have changed Africa's economic landscape since 2000 when the first Forum on China-Africa Cooperation (FOCAC) meetings were held. In the extensive discussions - in government meetings, the media, public fora, and academic settings - that have ensued, China has been portrayed in distinctly contrasting terms; on the one hand, as a responsible partner of the global south, creating new markets for African products and supplying affordable goods to African consumers, while on the other as a rapacious superpower plundering the continent's resources and flooding its markets with cheap manufactures that further undermine local production. Consequently, the impacts of China on African economies and Africa's development have become one of the most controversial topics in the wider and rapidly expanding field of Sino-African relations.
Fostering structural change? China's divergence and convergence with Africa's other trade and investment partnersAuthor Alice Nicole SindzingreSource: African Review of Economics and Finance 8, pp 12 –44 (2016)More Less
The paper analyses the divergence and convergence of the characteristics of China's economic relationships with Africa - trade, investment and aid - with Africa's 'traditional' partners, i.e. Western industrialised countries. It argues that these relationships may foster structural transformation of African economies. The latter have indeed exhibited spectacular growth rates since the early-2000s, which have partly been driven by China, via China's demand for goods produced in sub-Saharan Africa and its contribution to high commodity prices. In addition, China's relationships with sub-Saharan Africa are driven by investment,not only in African countries' infrastructure, but also in industrial sectors, both being key determinants of structural transformation. The paper reveals the convergence of the trade relationships between China and sub-Saharan Africa with those of industrialised countries and sub-Saharan Africa, in particular similar ambivalent effects (the detrimental effects of commodity-based trade patterns and the positive effects of investment). However, in addition to differences regarding conditional aid, China's specific modalities regarding trade and investment may make an original contribution to sub-Saharan Africa's structural transformation.
China and latecomer-industrialisation processes in Sub-Saharan Africa : situating the role of (industrial) policyAuthor Christina WolfSource: African Review of Economics and Finance 8, pp 45 –77 (2016)More Less
This paper examines how China's systemic impact on the world economy and growing presence in Sub-Sahara Africa (SSA) affects processes of structural change in SSA countries. It is argued that these effects depend both on their size and composition which varies across different SSA countries, as well as their mediation through domestic policy. This paper explores potential China-related effects on industrialisation processes in SSA as well as the role of (industrial) policy in mediating these effects. In particular, it is argued that capitalising on the full potential of domestic markets by strengthening intersectoral and final consumer demand becomes increasingly important in light of the more limited scope for export-led manufacturing sector growth stemming from China's systemic impact on the world economy. The paper further proposes a framework to separate empirically the differences in manufacturing sector growth that can be explained by differences in the size and composition of various China-related effects from those resulting from differences in country-specific factors.
Source: African Review of Economics and Finance 8, pp 78 –105 (2016)More Less
This article challenges the widely-held view that the competition for markets and influence between China and the West in sub-Saharan Africa is a zero-sum game, with few incentives or opportunities to collaborate. The study examines the history and operative framework of the China Development Bank (CDB) and the International Finance Corporation (IFC) and presents two case studies- CDB's loans to Huawei for telecommunications expansion in the region and IFC's Africa Micro, Small and Medium Enterprise (AMSME) Program - that exemplify each institution's approach to sub-Saharan Africa's development challenges. These cases, the study finds, reveal a complementary, rather than conflictive, dynamic between CDB and IFC's interests and activities in the context of the region's infrastructure and private sector development. The paper argues that these complementarities are too often overlooked, and highlights the potential for further cooperation, proposing a mechanism through which local governments, global financial institutions, and extra-regional players can coordinate efforts to maximize the developmental impact of investment-led projects.
Environmental and social risks of Chinese official development finance in Africa : the case of the Lamu Port project, KenyaAuthor Dong LeSource: African Review of Economics and Finance 8, pp 106 –109 (2016)More Less
Unlike traditional donor countries, China has not established compulsory environmental and social risk (ESR) mitigation mechanisms for its Official Development Finance (ODF) projects. This article seeks to examine the various stakeholders' relations concerning the ESR induced by Chinese ODF-funded projects with a case study in Kenya. Much of the current research has not analyzed stakeholders of Chinese ODF-funded projects in Africa, especially the local communities. This paper looks at the Lamu Port project, a major infrastructure project in Kenya, to understand the perceptions of various stakeholders - the Chinese government, the Kenyan government, Chinese companies, media, NGOs, researchers, and most importantly the local communities - on the ESR of this particular Chinese ODF-funded project, and examines their relations so as to explore whether there is consensus on who should mitigate the ESR. Understanding these factors is critical for taking action to mitigate ESR resulting from the growing number of Chinese ODF-funded projects.
Source: African Review of Economics and Finance 8, pp 130 –155 (2016)More Less
In the context of rapid increases in Sino-African trade over the last fifteen years, this article examines the consequences of the proliferation of Chinese goods in the daily life of African societies and the rise of mass consumption on the continent. The impact of Chinese goods is frequently analyzed solely through the lens of their cheap prices, yet these products need to be further understood as contributing to the emergence of a new material culture. In this article, we focus on African consumers of "made in China", as well as the key category of actors actively creating this new material culture - African traders themselves. Through an analysis of these traders of Chinese products, this article argues that their activities partially reconfigure local power relations surrounding access to extraversion - or 'relations with the exterior on which those who dominate the society base their power' (Bayart, 2000).
China's Second Continent. How a million migrants are building a new empire in Africa, Howard W. French. Alfred A. Knopf (Eds.) : book reviewAuthor Derek SheridanSource: African Review of Economics and Finance 8, pp 156 –159 (2016)More Less
The provocative title and thesis of Howard French's book is ample evidence of the allure geopolitical narratives have in simplifying what would otherwise be a complex portrait of African-Chinese relations. Despite the title and his own attempt to live up to the title, French has actually written a rich and nuanced book. His long term experience in both China and around the African continent makes him among the better qualified of non-African journalists to cover the topic. His strongest contributions are the portraits he provides of the individual Chinese entrepreneurs whose experiences and relationships, as he argues in the introduction, have been neglected in discussions about Sino-African relationships. Thestories he collects from his year-long whirlwind tour of Africa portray hyper-entrepreneurs, some lacking prior international experience, and some knowing no language other than Chinese. Through a combination of what French identifies to be some parts skill and some parts luck, many (but not all) have managed to set themselves up in a range of industries from timber exploitation to manufacturing. These rags-to-riches stories are set within an atmosphere of "eating bitterness," wherein Chinese migrants strive by working in environments that many (but not all) expressly do not like, and do business with people towards whom they frequently express negative sentiments. French considers many of them to be China's "lost generation," those whose opportunities for education were disrupted by the Cultural Revolution, and who were unable to compete successfully in the post-reform economy. As French points out, "huge numbers of Chinese had not boarded the up escalator, or at least they did not feel they had," (240) and Africa presents itself as a second chance, a place of supposedly limitless opportunity. The pursuit of these opportunities is fragmented, rather than organized, and we find different Chinese actors working at cross-purposes.
The Looting Machine : Warlords, Oligarchs, Corporations, Smugglers, and the Theft of Africa's Wealth, Tom Burgis (Ed.) : book reviewAuthor Nkemjika E. KaluSource: African Review of Economics and Finance 8, pp 160 –163 (2016)More Less
In the Looting Machine, Financial Times reporter Tom Burgis attempts to trace the transactions, linkages and individuals that have played a significant role in the persistent and chronic underdevelopment of African states. The author aims at defining, naming, and shaming the beast called corruption as it marauds through Africa leaving in its wake thousands of corpses and malnourished innocents. In many ways the book reads like a modern day thriller with accounts of espionage, corporate maneuverings, wiretaps, assassinations, and hypocrisy, made all the more repugnant because these are true accounts backed by eyewitness statements, and copious other evidence.
China's Superbank : Debt, Oil and Influence -How China Development Bank is Rewriting the Rules of Finance, Henry Sanderson and Michael Forsythe (Eds.) : book reviewAuthor Winslow RobertsonSource: African Review of Economics and Finance 8, pp 164 –167 (2016)More Less
As China has increased its aid, trade, investments, market share, and influence in the countries of Africa, there has been scant attention paid to the role of Chinese financial institutions. When a major China-Africa deal is announced, in which a generalized "China" has an agreement with an African country for a stupendous amount of money, the particulars of that deal are seldom revealed. For example, when the Financial Times reports on April 28, 2015 that "China rail group signs $5.5bn in Africa deals", it is only in the sixth paragraph that the reader learns that "[China Railway Construction Corp] said financing for its rail project had not been finalised." China is not making these deals but rather Chinese companies and individuals are; they are able to do so because of Chinese financing and Chinese policy banks. However, there is not as much literature specifically on these policy banks and how they relate to Africa-China relations. Thankfully, veteran reporters Henry Sanderson and Michael Forsythe have given readers an incredible resource in China's Superbank: Debt, Oil and Influence - How China Development Bank is Rewriting the Rules of Finance, which offers a detailed and insightful look at one of the most powerful financial institutions in the world: the Chinese Development Bank (CDB).