A new scramble for Africa?

These days there is quite a bit of reporting and commentary referring to “The new scramble for Africa” a loaded phrase if ever there was one. It invokes that appalling era when more than a few nations of Europe pushed into Africa, divvying up its territories and resources as they went. Foreign powers had everything to gain, then, and Africa had everything to lose.

Quite a while later, after that era had waned, there came a second defining wave – the cold war period – when East and West were at each other’s throats, and vied for the allegiance of those who subscribed to their competing ideologies, again at an enormous human and economic cost.

For the last few years, a third surge has become apparent. USA, China, Russia, several European countries, and less obvious nations like Japan, India, and others, are making inroads into Africa. There is also an increasing military presence, with bases established by several foreign countries on African soil. This time, they say, it is not about exploitation, but about strengthening trade, diplomacy, and strategic ties. Sounds fairly benign.

Why the interest? There is several good reasons; not least, that Africa’s share of the world’s population is growing rapidly. In fact, several projections suggest that its population will be greater than China’s in the not too distant future. It is also the fastest urbanizing region of the world. The opportunities therefore seem obvious.

With a nod to The Economist, here are a few relevant points:

  • From 2010 to 2016 more than 320 embassies were opened in Africa, probably the biggest embassy-building boom anywhere, ever.
  • Militarily, America and France are growing their presence, and that includes feet on the ground.
  • China is now the biggest arms seller to sub-Saharan Africa and has defense-technology ties with at least 45 countries.
  • Russia is signing military deals, while oil-rich Arab states are building bases on the Horn of Africa and hiring African mercenaries.

The profile of commerce and trade relationships is also changing. Consider that in 2006 Africa’s three biggest trading partners were America, China and France, in that order. By 2018 it was China first, India second and America third. Over the same period, Africa’s trade has more than trebled with Turkey and Indonesia, and more than quadrupled with Russia. Trade with the European Union has grown by a more modest 41%. The biggest sources of foreign direct investment are still firms from America, Britain and France, but Chinese ones, including state-backed outfits, are catching up, and investors from India and Singapore are eager to join the fray. [The Economist, “The New Scramble for Africa”, 2019]

Yes, we can express disquiet about foreign exploitation, corrupt governments, and massive but shady deals that do little to benefit the local people. We can bemoan incoming investors who care little for transparency and the obligations of good governance. Rightly so. However, we can also consider the potential good it is doing for Africa. New ports, access to technology, factories employing locals, easier access to travel, better distribution, are just some of the benefits I can think of. As a possible result, Africa’s growth has stabilized at 3.4%, and is expected to be touching 4% by 2021. There is also a small but steady shift from consumption in the main, towards more manufacturing, investment and exports. Compare that to an expected 2.1% growth for USA. Or 1.4% for Europe. [China, though, is chugging along quite nicely at around 6%, trade wars and deadly viruses notwithstanding]

I refer again to the Economist’s article [See refs], which suggests several ideas as to what Africans themselves need to consider in order to have a chance at securing the benefits they deserve.

To begin with, Good Governance, which must surely include taking real action against corruption.  Transparency in terms of the deals being made is going to be critical, too, especially if the ordinary citizen is to benefit.

Second, Africa’s leaders need to think more strategically. The issue is that Africa is not one cohesive country, like China, or USA. It is 54 Countries, and has no unifying structure. African governments could strike better deals if they showed more unity. The AU could provide the integration needed, especially if the Free Trade concept takes off.

Third, African leaders no longer have to choose sides, as they did during the cold war. They can do business with anyone they want to. That should mean that they can push for better deals.

Fourth, Africans should use democratic institutions to encourage leaders to do what is right or all. As education improves, and urbanization grows, this could evolve naturally.

There are other themes to ponder, but I think the point to be made is that Africa needs to take a proactive approach in order to benefit.

From a business perspective, consider this:

  • The population is growing, and urbanizing, quickly.
  • Africa is arguably experiencing a very rapid industrialization
  • Infrastructure is improving [Chinese initiatives are a well discussed driver]
  • Foreign investment is helping to unlock agriculture, and mineral resources including oil and gas
  • Digital platforms and mobile technology is growing rapidly.

Businesses, which have strategies in place, or are in the process of planning their entry strategies, are going to be at a distinct advantage.

And if Africa handles the new scramble wisely, the main winners will be Africans themselves.

Acknowledgement: Forbes:  What is China really up to in Africa?  / J. Gramlich, Fact Tank, Pew Research / Brookings: Africa’s untapped potential / ADBG: African Economic outlook 2020 / Economist: The New Scramble for Africa / Al Jazeera: Are we witnessing a ‘new scramble for Africa’?]

Article by Kevin Abraham