Namibia has announced it will ban foreign investment in medium-sized public transport business and hair beauty salons. Citing growing Chinese involvement in the businesses, Namibia's Trade and Industry minister, Hage Geingob, last week announced that the government would enforce legislation and make foreign investors obtain permits to invest in any form of retailing in a bid to protect local jobs and the country's economic well-being. "Much of this concern has been sparked by activities of Chinese business persons," the minister was quoted by Bloomberg as having said.Helping fellow developing countries or the yellow man's burden? The debate continues, and I myself am not quite decided.
Analysts say the dilemma facing the southern Africa nation is likely to be replicated in other African nations including Kenya, thanks to the latest wave of forays into the continent by fast rising economic powerhouses such as China. "It is going to be a contentious issue going forward especially when the foreign investors begin moving into areas way beyond the comfort zones of locals. For instance here in Kenya we are already seeing disenchantment among road and construction contractors who claim they have been locked out by the Chinese," an analyst, Mr Robert Shaw told Business Daily.
The Sino-Africa trade and investment pacts have grown significantly over the last 10 years driven by a quest by China to find resources to support its vibrant economic and industrial growth and market for its manufactured products. Africa has become a perfect match for the Asian economic tiger because consumers in poor countries on the continent prefer the more affordable goods and equipment from the Asian nation. Statistics showed that in 2008, total trade between the two blocs was valued at $106.8 billion.
According to Prime Minister Wen Jiabao, China invested $875 million in Africa in the first nine months of 2009, marking a 77.5 per cent year- on-year growth. China also pledged $10 billion in November 2009 in fresh low-cost loans to Africa over the next three years. The data further showed that while trade volumes inevitably suffered in the first half of 2009, Chinese enterprises signed $22.45 billion of new labour service contracts in Africa, up 25 per cent and completed $11.53 billion of business volume, representing a 61.1 per cent year- on- year growth.
In Kenya alone, the economic connections with China have grown by leaps and bounds with the Economic Survey 2009 saying that Kenya exported goods worth Sh2 billion to mainland China in 2008 compared with imports worth Sh63 billion. Projections released in December by the Chinese ambassador, Deng Hongbo, further said that between January and October 2009, the value of bilateral trade between his country and Kenya stood at $1.02 million compared to $1.2 million realised over 2008. The performance in 2008 marks a 30.4 per cent leap over the previous year, indicating a firm run in the value of bilateral trade between the two countries. Chinese enterprises have also shown interest in key sectors of the Kenyan economy including energy and roads construction where some of them are already operating.
The firms are also showing interest in smaller sectors such as apparels trade. Barely a fortnight ago, some local contractors protested against alleged domination of the construction sector by Chinese firms. "Though the concerns raised by the Kenyan contractors may be contested on the basis that their Chinese counterparts offered better services, it provides an indication of the locals coming to feel that the foreigners are pinching beyond comfort levels," Mr Shaw said. He further said: "The Chinese here in Kenya may not get to low economic sectors such as those contested by Namibia but caution must be taken for the sake of any eventualities..."
We've already had a long series of posts looking at the thorny question of China's involvement in Africa from several angles [1, 2, 3, 4, 5, 6, 7]. What we have here is yet another sceptical take on what the Chinese are doing in Africa. While it is well-known that Chinese construction crews building infrastructure projects there do not typically hire locals and thereby provide employment--see my previous feature on China's stadium-building diplomacy in Africa--it appears that matters are further-reaching than previously thought. As Chinese entrepreneurs move their way down to smaller scale businesses in the region, many African countries are beginning to set limits of this budding friendship. That is, small- and medium-scale businesses may increasingly be off limits even to Africa's newest, bestest friends: