The Great Scramble for African Bounties

March 1-15, 2019

The recent edition of  The Economist carried a fairly comprehensive write – up on Africa, its progress and excruciatingly slow strides the sleeping giant is making towards progress. Some of the circumspect observations in the article were amplified by us from time to time. There are positive takeaways the continent can boast of including the of late spurt in the number  of foreign missions , primarily to scout for the business opportunities. And yet, the pecking order of investors in the country is c.hanging, perhaps with the exception of China, which had made deep foothold in the continent some years back and now catapulted itself  as the frontline investor. While the US was relegated to the third position as the investor, European countries are visibly eclipsed in the new architecture. In its place, India perched up its ranking from nowhere to the second position buffeted by China at the top and the US at the third position.

Pattern of investments also had undergone the change so also the trading, though vestiges of old order still persist in some countries. While mining and raw material imports continue though at a relatively lower pitch, countries like China and India -China particularly – focuses on infrastructure, power, ports, housing and the list is expanding. India is mostly in telecom, IT, healthcare, education etc.  But its presence in the resurgent Africa is sadly behind China, which is also an arm supplier especially to Sub-Saharan countries. Of late, the US and Russia are trying to muscle their way into defence, aerospace and aviation.

The flip side of the development process, as has been pointed out by us several times and substantiated by The Economist is that China’s or for that matter US’s engagement with Africa is mostly one-sided. They dictate and the host (African) countries follow. Is it the time to mend the ways? Admittedly there is incongruity in profiles. China has a population exceeding the count of all 54 African  countries put together. The US’s GDP at over $ 21 trillion is light years ahead of the entire Africa. Obviously, bargaining power gets skewed. Also, poorest of the poor countries in Africa like Somalia, Djibouti or Republic of Congo is struggling to provide basic amenities to their citizens. Even the better off countries in the region like South Africa, Nigeria and Ethiopia pale into insignificance in the comparative development matrix of the developed or  emerging economies.
   
What is the way out? Obviously there is no magic wand. It is for the African Union to act as an interlocutor to protect the weak and leave the playground wide open for the fairly mature economies like South Africa, Nigeria and Ethiopia. There should be set of rules framed for the host countries to follow while negotiating business or financial deals from outside.  Let them not get arm twisted in their urge to get resources through hook or crook. Also, it is imperative to have a mapping of strength and weaknesses of each country, their competitive edge, resource base etc.  to show case to the world so that each country can pick and choose from a bouquet of investors and countries and not adhering to the dictum “winner takes all”.