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(MONITOR - UGANDA) Why Africa must make China a priority development partner

Why Africa must make China a priority development partner
By JULIUS BOSIRE (email the author)
Posted Monday, December 6 2010 at 00:00

Don’t lynch China; there are good things it is bringing to Africa’s extractive industry,” argues Muthuli Ncube, vice President of the African Development Bank.

Addressing a group of journalists attending a workshop in Tunis recently, Prof Ncube said that whereas Africa mostly looked to development partners from America and Europe, China was worth considering because it was biased towards improving infrastructure in the countries it is doing business in.

“China is using a different model – trading off its extraction with infrastructure,” said Prof Ncube. “Even after the contracts expire, the states are assured of improved infrastructure in roads and the telecommunication sector.”

He said that since infrastructure development was a direct investment China was making in Africa, the country should be ranked among priority development partners.

Prof Ncube criticised aid given to African states with conditions, likening it to insurance (aid-insurance) that demands specific conditions be met before it is delivered.

“The good news is that Africa may not need aid in the next 40 to 50 years,” he said.

He urged African media to focus on macro economic management of their economies, explaining that whereas the continent may not have economically benefited from the Structural Adjustment Programmes of the late 1980s and early 1990s, personnel trained to handle the process have become the best managers who are leading growing companies on the continent.

“The quality of managers who emerged due to SAPs are now displaying their skills in growing economies,” he said.

Prof Ncube praised Kenya’s mobile telephone money transfer system, which “had not been seen anywhere else in the world.”

Media should focus on intra-Africa trade, which he said was the pillar of economic development and yet it went under reported.

The 20 journalists were picked from around the continent to attend the one-week training whose theme was strengthening media coverage of economic and development issues in Africa. The workshop was sponsored by the AfDB and Reuters Foundation.

Godfrey Mwindaare the chief investment officer in charge of the Private Sector Department of AfDB said the coming of China, Brazil and India into Africa has enhanced competition in the mining industry, which has long been dominated by the West.

“This will promote efficiency in the extractive industry, leading to a competitive environment for business,” said Mr Mwindaare. “China is bringing improved infrastructure to Africa, a more permanent development as they extract resources.”

He however, cautioned African countries against exporting raw materials to the homes of their development partners.

“Africa cannot extract and export raw materials. There is a need to add value. Since most countries with resources have no infrastructure, it is all the more reason that we should welcome China, which has shown the way of concurrent development.”

Patrick Smith, editor Africa Confidential, cautioned African countries against entering loose agreements with “development partners,” which caused them to lose millions of dollars in the process of extracting their resources.

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Since 2008, Africa has lost $854 billion through deliberate mispricing and illicit financial flows, Mr Smith told the workshop.

Mr Smith estimated that of the total loss to Africa, about 70 per cent was through deliberate mispricing, 20 per cent through criminality, drug trafficking, taking resources out in terms of substance while 10 per cent is lost through facilitation fees, which was usually split between government officials and contractors.

He said the reason countries could not trace the money lost through such arrangements was because pre-bargain deals are always very difficult to investigate and prove in a court of law.

“African states need to be extra-cautious in investigating companies before signing deals with them,” said Mr Smith.

Some companies that have wrecked prospects of African countries’ development are extremely well connected in the West, Mr Smith explained.

A case in point is Ghana’s oil exploratory plans that have not taken off to drilling oil because of what the government feels was a bad deal entered into by the former regime with Kosmos, an exploration company from Texas.

He said all contracts with companies investing in Africa must be scrutinised to ensure they benefit both parties.

“Extractive industries must be monitored and their profiles investigated. Their accounts must be investigated and their tax payment followed keenly,” said Mr Smith.

Bad deals have been witnessed in Uganda oil, Nigeria and Ghana where the three states have lost massive resources in terms of tax and pre-negotiated agreements.

Vinay Sharma, the head of Integrity and Anti-Corruption Department at AfDB, argued that 25 per cent of African states’ GDP was lost through corrupt activities.

The latest Transparency International report ranked 30 African states among the 47 most corrupt countries in the world.

Labels: CHINESE, MUTHULI NCUBA

posted by MrK @ 5:50 PM