Real help means open markets for Africa’s exports

This week, three African countries played host to two of Asia’s most powerful leaders – President Xi Jinping of China and Prime Minister Narendra Modi of India.

As they travelled for the BRICS summit in South Africa, both managed to squeeze a couple of African countries into their itinerary with Xi making a stop in Senegal, Rwanda and Mauritius while Modi did the same in Uganda and Rwanda.

The two Asian giants have a unique relationship with Africa in the sense that neither of them has a colonial legacy on the continent and both have managed to break free of the centripetal forces of underdevelopment.

When they engage with Africa therefore, their forays are seen through the prisms of both hope and trepidation.

They bring hope because it is expected that their experience and good fortune will rub off on an Africa that appears to be permanently trapped in underdevelopment.

Their overtures are, however, taken with a pinch of caution because it is suspected in some quarters that they could simply be making up for lost time with an eye on the continent’s vast natural resources.

Whatever the case, Xi and Modi came bearing gifts for their hosts. In Rwanda and Senegal, the Chinese leader signed off several deals, promising investment in manufacturing, while the Indian leader committed a total of $405 million in credit to Rwanda and Uganda.

Much as this money can help to meet real needs in the recipient countries, the offers also emphasise the lopsided nature of the relationship between benefactor and recipient.

In Uganda, for example, the $205 million line of credit will go towards the energy, agricultural and infrastructure sectors. At the last count, Indian exports to Uganda were inching towards $700 million annually while corresponding trade flows to India were worth a paltry $40 million a year.

In Rwanda, President Xi signed agreements to support road construction and renovate hospitals as well as the greenfield Bugesera Airport development.

Mauritius perhaps offers the most successful outcome of Chinese engagement with Africa, with the former’s enterprise having helped the island nation develop a diversified export-oriented economy.

More recently, China has made a big push in Ethiopia, supporting both infrastructure development and the core of a manufacturing sector through establishments in several special economic zones. These moves are partly driven by internal changes in China that are driving up the cost of manufacturing.

Yet the relocation of Chinese or Indian manufacturing to Africa, despite its contribution to job creation, is unlikely to shake off the suspicion that it is self-serving, unless it can deliver the fundamental impact of turning the continent into a net exporter.

This can be achieved by shifting focus from mere import-substitution to manufacturing those goods that can find a market back home in China or India.

That would have the immediate effect of bringing about a more balanced bilateral trade between the host countries and the benefactors.

Original Post by The East African

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