04 May, 2011

An African looking at Africa and China

Sergio Abranches

Manuel is an investment banker from Mozambique. He runs an investment and private equity company with stakes in pratically all sectors of almost all African countries. He moved from Mozambique to Namibia, where he lives. So far all his company’s investment were financed with its own capital. No leveraging. He is in a strategic position that gives him a broader and yet deep view of what is going on in Africa. We’ve met recently at an event on global sustainable logistics and had a long conversation about China’s involvement in the region. He asked me to have our talk off the records, for understandable reasons, that’s why I don’t write his full name. Our chat was in Portuguese our common language.

“Africa is being dominated by China”, he told me. “It is a voracious and predatory investor.” China is primarily interested in mineral resources of all sorts, and this is shortening the view of governments and reducing the prospects for a true development of Africa. Governments like investments in mining very much. They yield high tax and royalties revenues, without any cost or collateral. The companies even build the necessary infrastructure for mineral logistics. It is also a type of activity that induces a lot of corruption. They are “infertile investments” they don’t generate progress. They have no inducement effect, they don’t promote new investment downstream, they are not interested in the diversification of economic activity. After the ore is gone, they leave the holes behind and go after other sources. The power elite is satisfied with its pockets full of money. “No benefits for the people.” Governments are replacing development plans with a policy of mineral licensing.

Another area of strong Chinese interest is timber, says Manuel. Deforestation with Chinese money is rampant. “But, alas, China is an irresistible power in Africa, we need to learn how to deal with China,” he adds. To understand the Chinese, and be able to anticipate its moves, and learn how to deal with it, his group opened offices in Beijing and Shanghai. They’re even investing in China. At the same time they are looking for cooperation with Brazilian and South African corporations. He thinks that development in Africa will have to turn these three powers into positive forces for the region’s progress: China, Brazil and South Africa.

He came to this traditional global event in Brazil to look for scientific expertise in two areas his group is investing heavily in Africa: logistics and energy. He is very interested in wind and PV (photovoltaic) solar power. I can’t understand why Brazil has not become a major player in wind and solar research and development. We are very interested. Africa, like Brazil has a great potential in these two sources of renewable energy. China is becoming a major player. “With the huge potential for wind and solar power generation in Brazil it is a pity, and a great waste of opportunity not to investment to assume a leading role in this market.” I couldn’t agree more.

Manuel is the face of the new Africa trying to emerge from the wreackage of civil wars, bad, tyrannical and corrupt governance that led to an awful degree of social degradation. There are many like him, he tells me. “We are all striving to change Africa and going through hard times still dealing with very corrupt regimes.”

It is clear that to prosper in Africa to have good relations with local governments is a necessary condition. Good relations in many countries still depend on bribe. “Corruption is everywhere. It is a shame, but there is no place in Africa free of corruption.”

Would he not speak portuguese, be called Manuel and be a black man, he could be taken for any contemporary young investment banker from Wall Street or the City, running the world in search of the best profit opportunities. But Manuel is not a regular investment banker, he is different, not only because of his language, his name and the color of his skin. He does run the world, but looking for knowledge, expertise, and technology, and not only for his company. He has an African dream. He wants Africa as a whole to prosper with the assets he brings home. He is always interested and concerned about Africa. Another distinctive trait that differentiates him even from other Africans: he looks at Africa as a whole, beyond borders, and beyond tribal divisions, just Africa.

Perhaps this is the appropriate 21st century view for his land. An integrated and unified Africa, that takes its diversity into account, and knows that no part will be fully developed if the whole is not equally developed. That there will be no durable and fair progress while corruption and violence dominates Africa. He is not looking for Africa as a single nation, but he dreams of a true African Union.

Tags: Africa, African Union, , , , , , minerals, mining, ,