Chinese bring gifts … and risks

BAMAKO – A few years ago most motorbikes buzzing round Mali’s dusty capital Bamako were locally assembled and a bargain at 1,5 million CFA francs (about N$21 750).

Now the same basic model, imported from China, sells for a fifth of that price and has become as ubiquitous as the battered green minivans that serve as the city’s public transport and the assembly plant has shut. “It’s not the same quality.But in Mali people always prefer what is cheaper, even if they have to replace it several times a year and even if it is less comfortable, less reliable,” said Finance Minister Abou-Bakar Traore.”China has understood that.”It is not just the man on the African street that Beijing is trying to woo, undercutting rivals on price and – critics say – on quality.President Hu Jintao offered US$5 billion (about N$37 billion) in loans and credits and a doubling of aid at a China-Africa summit in Beijing a week ago to boost access to Africa’s oil and mineral wealth.Trade officials say Chinese lending to Africa helps fill a financing gap left by the West.But they also voice concern that such money comes with few strings attached, undermining the efforts of other lenders to root out corruption by attaching conditions to their loans.”We’re very happy that China intends to commit new resources to the region.It seems to us that more resources can be used effectively and efficiently and it is very welcome,” the International Monetary Fund’s first deputy managing director, John Lipsky, told Reuters in an interview here.But he said he hoped Chinese authorities would be “collaborative and co-operative” with other countries providing debt relief and funding to Africa.”We look forward to China’s co-operation in making sure that their aid efforts in the region are as productive as possible and consistent with the efforts of many other IMF member partners,” Lipsky said.OLD CHUMS Not all economists are confident that such co-operation will be forthcoming or that Chinese investment will benefit Africa.”In terms of the co-ordination of aid we just don’t know what volume of financing is coming from China.Sometimes the states themselves don’t know how much they have to spend,” said one senior French development economist specialising in West Africa, one of the world’s poorest regions.”It creates huge difficulties putting in place development strategies,” he said, asking not to be named.Finance Minister Traore acknowledged Mali’s relationship with China was very different to that enjoyed with other foreign lenders, but pointed out it was an old friendship.The former French colony broke with Paris at independence in 1960, building links instead with the Soviet Union and China, which had supported uprisings against colonial rule in Africa.”We owe billions to China which it never asks for.In the Malian mind, Chinese loans are considered to be gifts because we’re never asked to pay them back,” Traore said.But the funding is only one side of Beijing’s hard-nosed strategy in Africa.It also brings cheap Chinese labour to its building sites and cheap imports like Bamako’s motorbikes, hurting local economies precisely where they should be generating jobs – in the private sector.”Small businesses in Africa are in ever greater competition with Chinese companies, which have lower labour costs and import materials that are subsidised by the Chinese government,” the French economist said.”It’s not dramatic yet but in the next few years if nothing is done it will get much worse.It will force Africa to remain like a patient on a drip, reliant on aid,” he said.Nampa-Reuters”It’s not the same quality.But in Mali people always prefer what is cheaper, even if they have to replace it several times a year and even if it is less comfortable, less reliable,” said Finance Minister Abou-Bakar Traore.”China has understood that.”It is not just the man on the African street that Beijing is trying to woo, undercutting rivals on price and – critics say – on quality.President Hu Jintao offered US$5 billion (about N$37 billion) in loans and credits and a doubling of aid at a China-Africa summit in Beijing a week ago to boost access to Africa’s oil and mineral wealth.Trade officials say Chinese lending to Africa helps fill a financing gap left by the West.But they also voice concern that such money comes with few strings attached, undermining the efforts of other lenders to root out corruption by attaching conditions to their loans.”We’re very happy that China intends to commit new resources to the region.It seems to us that more resources can be used effectively and efficiently and it is very welcome,” the International Monetary Fund’s first deputy managing director, John Lipsky, told Reuters in an interview here.But he said he hoped Chinese authorities would be “collaborative and co-operative” with other countries providing debt relief and funding to Africa.”We look forward to China’s co-operation in making sure that their aid efforts in the region are as productive as possible and consistent with the efforts of many other IMF member partners,” Lipsky said.OLD CHUMS Not all economists are confident that such co-operation will be forthcoming or that Chinese investment will benefit Africa.”In terms of the co-ordination of aid we just don’t know what volume of financing is coming from China.Sometimes the states themselves don’t know how much they have to spend,” said one senior French development economist specialising in West Africa, one of the world’s poorest regions.”It creates huge difficulties putting in place development strategies,” he said, asking not to be named.Finance Minister Traore acknowledged Mali’s relationship with China was very different to that enjoyed with other foreign lenders, but pointed out it was an old friendship.The former French colony broke with Paris at independence in 1960, building links instead with the Soviet Union and China, which had supported uprisings against colonial rule in Africa.”We owe billions to China which it never asks for.In the Malian mind, Chinese loans are considered to be gifts because we’re never asked to pay them back,” Traore said.But the funding is only one side of Beijing’s hard-nosed strategy in Africa.It also brings cheap Chinese labour to its building sites and cheap imports like Bamako’s motorbikes, hurting local economies precisely where they should be generating jobs – in the private sector.”Small businesses in Africa are in ever greater competition with Chinese companies, which have lower labour costs and import materials that are subsidised by the Chinese government,” the French economist said.”It’s not dramatic yet but in the next few years if nothing is done it will get much worse.It will force Africa to remain like a patient on a drip, reliant on aid,” he said.Nampa-Reuters