Infrastructure development within the context of Africa’s cooperation with new and emerging development partners
The turn of the Millennium has marked important developments for Africa. Three stand out in significance. First the “African lion” is becoming an important growth pole in the world economy. Continent-wide growth rates in the first decade of the century were more than double those of the 1990s, and have been more than fifty percent higher than global growth rates. Second, many African economies are resource rich and have benefitted greatly from the post 2002 commodities price boom. And, third, the centre of gravity of global growth is moving from the high income economies of the north to rapidly growing and often very large middle and low income economies of the south.
In an earlier OSAA Report entitled Africa’s Cooperation with New and Emerging Development Partners: Options for Africa’s Development published in 2009, the rapid entry into Africa of seven New and Emerging Partners (NEPs) was assessed, chronicling the rapid growth in their trade, aid and investment relations with Africa. China stood out in from the pack, but each of the remaining six emerging economies – Brazil, India, Korea, Malaysia, Russia and Turkey – have also been rapidly deepening their presence in the continent.
This new OSAA Report sharpens the focus of enquiry into the activities of these seven NEPs in Africa by examining their participation in Africa’s economic and social the infrastructural sectors. Weak and deficient infrastructure is widely acknowledged to be one of the binding constraints on the rate and sustainability of Africa’s growth and development. Amongst other objectives, the Report seeks to asses the extent to which this growing presence is driven by the desire of these seven NEPs to gain access to Africa’s abundant natural resources. It also seeks to assess whether this involvement has a character which is distinct from the involvement of Africa’s traditional partners in its infrastructural development.
Not much is known about the participation of the NEPs in Africa’s growth in general, and their infrastructure sectors in particular. The World Bank has constructed a database on the involvement of China in Africa’s infrastructure sectors, but it does not explicitly address their links with the resource sector. This Report seeks to augment this World Bank database by including a wider sample of infrastructure projects, from a greater number of countries. Through a careful search of published materials, consultation with key informants and a thorough review of material available on the web, a total of 239 infrastructure projects involving the seven NEPs was identified. In addition an analysis was conducted of Africa’s imports of capital equipment used in the infrastructure sectors. This is of course only a partial sample of the involvement of these NEPs in African infrastructure and the Report is frank in acknowledging that it is unsure how representative this sample may be. On the other hand, aside form the World Bank’s smaller database on Chinese projects in Africa, there is no other such source of material and at the very least, this Report provides a starting point for more systematic enquiry and raises a number of issues of policy relevance.
In addition to identifying the rapidly growing role of these seven NEPs – and particularly China – in Africa’s infrastructure sectors, two important conclusions emerge from the detailed analysis of this database. First, few of the activities of the NEP economies in Africa’s infrastructural sectors were, as is widely believed to be the case, focused directly on the extraction and export of commodities. This does not mean that they did not have the longer term and indirect objective of developing mutual relations in order to gain access to Africa’s raw materials in the future. Second, a distinctive feature of China’s involvement in Africa, increasingly being replicated by other NEPs, is its bundled character. Participation in large infrastructure projects involves a complex combination of aid, commercial finance, foreign investment and use of many inputs from China, frequently repaid through the receipts of commodity exports. This is known as “the Angola Mode”, following its early application in China’s support for Angola’s infrastructural development. This strategic “bundling’ is distinctive from the participation of Africa’s traditional northern partners.
But at the moment the rewards of bundling are largely reaped by the NEP economies who use it to gain business for their infrastructure firms, to foster their supplier industries and to gain access to Africa’s abundant resources. The key policy challenge facing Africa, consequently is to proactively develop its own “bundling strategy”. Since raw materials are increasingly scarce and costly, Africa is in a position to leverage access to these natural resources in return for a range of developmental assistance packages. The Sicomines venture in the DRC involves significant synergies between economic infrastructure, social infrastructure and training in return for access to mineral deposits which will be used to repay China’s investments. This may be a template which other Africa economies – and perhaps even groups of Africa economies – may use to persuade the NEPs and other partners involved in the commodities sector to devote more resources to the development of economic and social infrastructure on the Continent.
Much remains to be done in the development of infrastructure in Africa, in the contribution which the NEPs can play in the development of this infrastructure, and the lessons which can be learned by Africa to promote deeper and more beneficial involvement of other partners in its infrastructural development.
For too long African policy development has occurred in a knowledge vacuum. The key challenge is to develop evidenced-based policies to promote growth and development. However imperfect the database contained in this Report may be, it provides some level of evidence which can be used to promote more effective policies and to stimulate the development of larger and more reliable data to support the design and implementation of policies appropriate for the development not just of the continent’s infrastructure sectors, but of all sectors of economic and social activity
The report was prepared by the Office of the Special Adviser on Africa (OSAA) under the guidance and direction of David Mehdi Hamam, Director