Big Business and

Economic Development
Conglomerates and economic groups
in developing countries and transition
economies under globalisation
Edited by
Alex E. Ferniindez Jilberto
and Barbara Hogenboom
Routledge
Tayl ~r hFrancis Gmup
LONDON AND NEW YORK
13 African regional
groupings and emerging
Chinese conglomerates
Kwame Nimako
China's economic growth in the past two decades is in sharp contrast to
the economic decline and political implosion in much of Africa in the 1980s
and 1990s. On the one hand, not only has China's econon~ic growth been
reinforced by foreign direct investment (FDI) and accumulation of foreign
exchange but also it has transformed some Chinese state corporations
into emerging conglomerates on the international scene. In turn, China's
economic growth has given rise to a greater demand for natural resources.
On the other hand, Africa's economic decline and political implosion has
I
led to the desiLgnation of inany African countries as heavily indebted poor
countries (HIPC), which in turn has placed most of them on a 'HIPC diet'
by international financial institutions (IFIs) and 'Western' donors. However
the availability of natural resources in Africa implies that some African coun-
tries fare well, positioned to form effective partnerships with Chinese
conglomerates for infrastructure development in Africa and to export natural
resources from Africa to China.
This chapter will examine a Chinese international investment conglom-
erate in relation to the Chinese construction/engineering sector and the
prospects of their positi~e impact on Africa's economy and politics. It \\ill
he argued that world econon~ic forces in the twenty-first century are shifting
in favour of China. On the positive side, if properly managed by African
governments, the emergence of China as a major economic force and emer-
gence of its conglomerates could relieve Africa fi-on1 its debt burden and
dependence on IFIs and EU and US donors. On the negativeside, if poorly
managed hy African governments, China's demand for natural resources
could make Africa a battle ground reminiscent of the 'scramble for Africa'
in the late nineteenth ce11tury.l
The global context
The ascendancy of China as a major player in the world economy consti-
tutes a crack in the international political economy. Specifically, in the short
run, the rise of China and the subsequent fissure in the international polit-
ical economy challenges the dominance of the G3, namely, the United States,
298 hir'crttl~ . Gttlciko
Gerinany and Japan, of the \vorld economy. According to Hilllooprn and
van hlarrruijk, China's ,TOSS domestic product (GDP) moved from fifth place
in the \vorld ranking of 1980 (behind the United States, the Soviet Union,
Japan and Grrmany) to second place (Ixhind the United States) in 2001. It
is also \vorth noting that relative to the GDP of the United States, Chinese
GDP rosr fronl about 25 per cent in 1980 to ahout 62 per cent in 2004.
'I'his yo-o\vth \vent hand in hand with cxternal trade; China's exports and
iinpnr~sincrcased fi-om ahout 2 per cent of GI)P in the 1970s to about 21
prr crnt in 2001 (Hinloopen antl \.an Marre\cijk 2001). In a separate account,
1x1~ in alfirmatioll of thr. above trend, Robert J. Samuelsou, citing the study
of Xntly Si c, noted that in the past 25 years. China's economy has expandrd
by a factor of almost 9> but exports have grown 45 times (San~uelson 2001).
The ascendancy of China as an important player in the \vorld econolny
is a consequence of coilsistent economic growth in China during thr past
two decades. .According to Hinloopen and van hlarrewijk (2004) the Chinese
economic growth (after correcting for international price differences) \vas
about 7.25 per cent per year in real terms in the period 1980-2001, i~nplyillg
a doubling or output every ten years. There are even those who think OR-
cia1 China conceals part of its economic data. James Kynge, for instance,
claims that .although officially its gross domestic product grew by 9.1 per
cent in 2003, iildepelldent econon~ists suggest that the real figure was nearer
11 or 12 per cent' (Financial Thw 21 March 2004). Not only does the repo-
sitioning of China imply that various countries and regions have to reposition
themselves in the world economy, but also it can be advantageous or disad-
vantageous to Africa as a rcgion in the world economy depending on the
responses of diKerent ;\frican states and their regional ~roupings.
By all accounts and olxervations China's economic growth in the past two
decades is in sharp contrast to the economic decline and political implosion
in much of Africa during the same period. According to African Development
Bank (ADB) sources, l~etween 196 1 and 1997, the median real GDP growth
rate of 35 African countries was 3.7 per cent. But this was better than the
gro\vth rates between 1980 and 2000. Of the 49 African countries surveyed
by the t\DB for thc period between 1980 and 1990, only 6 countries
(Eots\vana, Cape Verdc, Congo, Egypt, Swaziland and Zimbabwe) recorded
GDP gro\vth rates of more than 5 per cent; 15 countries experienced GDP
gro1vtl1 rates of 3 to 5 per cent; 27 countries less than 3 per cent, whereas
onc (C6tr d'lvoire) slipprd into negative g r o ~ t h . ~
It is important to note that of the countries that recorded GDP growth
rates above 5 per cent between 1980 antl 1990, only Botswana continues
to report GI)P g~owt h rates al)o\pe 5 per cent in the 1990s. Not only is
t\Sric.a's cconomic decline in contrast to economic growth in China but also
i t is in contrast to Africa's owl1 recent history. For instance, between 1960
anti 1980 almost all African countries experienced some form of economic
grcnvth. Of the 35 African countries from which data is available, between
1960 and 1970, 12 countries recorded GDP growth rates of more than
5 per cent; 12 countries experienced GDP growth rates of between 3 to .',
per cent, and l l countries less than 3 per cent (ADB 2000).
Recent data on .\frica suggest that compared with the previous drcade,
the year 2003 saw a record rise of the number of high growth countrirs. Of
the 53 African countries surveyed by the ADB (2001), 18 recorded GDP
growth rates of more than 5 per cent (including the oil producing countries:
Algeria, Chad, Equatorial Guinea, Lil~ya antl Nigeria); I6 countries experi-
enced GDP growth rates of between 3 to 5 per cent and I I countries less
than 3 per cent; however G countries slipped illto negative gro\vth, ~lamely,
Central African Republic, Burundi, Cbte d'lvoire, Ethiopia, Seychelles and
Zimbabwe. However, during the past four decades, only three African coun-
tries have recorded GDP g~owt h rates of more than 5 per cent for t\vo
tlecatles or more without leading to transformations comparable to that of
China or the Asian Tigers. These three countries are Botswana ( 1 960-2000),
Egypt (1960-90) and C6te d'Ivoire (1960-80). This of course raises the ques-
tion as to how African states ~lnderstood, interpreted and explained [heir
economic fortune. We shall return to this later in the chapter.
Regarding the underpinning of China's economic growth, Hinloopen and
van Marrewijk (2004) identify two moments of st ruct ~~ral change. The first
was 1980, when China started to open up to international trade flows. The
second was 1985, when the start of FDIs initiated the rise in technolo:,)-
intensive exports. 1)uring this period the composition of Chinrse exports
changed structurally towards more unskilled labour-intensive and tcch-
nology-intensive exports, while there was a tlrastic decline in the export of
primary products. Of course these structural changes in China in the 1980s
did not take place in isolation. They formed part of cl~anges in the inter-
national political economy in response to the 1979-82 world economic
recession, which formed part of the worldwide reaction to inflation and crisis
in the world economy in the 1970s. In turn these developments manifested
then~selves in several fornls in diKerent countries in the 1980s and 1990s,
ranging from French President Mitterand's U-turn in 198 1 through
Thatcherisin, Reaganomics and neoliberalism to ~or bach&' s economic pere-
~tro~ka aild political gla~no~t and the subsequent collapse of the Soviet U~~i o n .
Clearly a crisis is a decisive turning point, which is filled with danger and
anxiety and r eq~~i r es adaptation, and on this score China adapted brtter
than se\,eral African countries and the Soviet Union. As will be argued here,
one of the keys to this adaptation was thr role of state-owned enterpriscs
(SOEs). For the moment it suffices to say that by the end of the twentieth
century, 70 per cent of the FDI in the world outside the United States, the
Eur o~r a n Union and Japan was going to China whereas only 2 prr cent
\vrnt to Africa. Of this FDI in Africa: 80 per cent went to four countries:
Egypt, Morocco, Nigeria (in the oil sector) and South Africa.
These economic diKerences between Africa and China evidently cause
social differences too. The structural changes and econon~ic growth in China
were accompanied by social gains:
[ q r o m 1978 to 2002, the average annual per person income rose from
$190 to $960. Life expectancy increased from G 1.7 years in 1970 to
71 in 2002; adult illiteracy fell from 37 per cent in 1978 to less than
17 per ccnt in 1999; infant mortality dropped from 11per 1,000 live
birlhs in 1978 to 30 in 1999.
(Samuclson 2001: 17)
In contrast, many African countries could not reco\'er from the 1975)-82
~vorl d economic recession. 'I'lie resulting foreign exchange sliortagcs, aggra-
vated by drought, made it impossible for many African governments to
import sufficient food to bolster the resulting shortages. This oldiged several
AfYican govcrnnicnts to scck f or e i p aid to case the food crisis and forcign
lo;tns to revi\rc their economies.
Not only did the crisis in r\frica lead to the accun~ulation of foreign debt
in much of Africa 11ut also hitherto African state elites and the IFIs, such as
tlic. \Vorld Bank and the Inter~iational Llonetary Fund (Ih' IQ, used different
units of ;tnalysis to explain the region's economic performance. This in turn
gave rise to tliffcrcnt perspecti\res on Africa's economic decline. At the
broader level, African states attributed the crisis that preceded Africa's
economic decline to the 'oil crisis' antl unfa\.ourable terms of international
trade for primary commodities, and instability of the international com-
modity markets. Apparently African states \vere accuston~ed to comn~odi t y
price fluctuations on the \vorld market. Kot only was it assumed by African
state elites that the world market is controlled by the so-called Western world
but also it was assumed that con~modi t y prices would bounce back, perhaps
within three years, which in turn would lcad to economic recovery. The per-
spectives of African states found their expression in the numerous five-year
development plans of the United Nations Econon~i c Commission for Africa
(UNECA), such as the Lagos Plan of .Man for the Econonlic Developnzenl of AJica
1980-2000 ( 1 98 1 ) and the .+ican dler-rzali~~e fian~ework lo Struclut'al d(~u~lrnetLt
PI-ogrannne.rfor Socio-economic Recocey and Tramjimnation, tlriFSAP (1989). The
IFIs, hou.ever, attributed the samc crisis to economic misman;lgement antl
assumed h e y could fix the economies of these 'people without history' witllin
one ycar based on IhIF Inonetar). policy. The perspectives of the I121s were
rxpressecl in the Berg Report (1981), also known at the World Bank (15)UE))
as .-lccelemted Ueceloptnent in Sub-Sahura,~ .@(I: An ilgeda fur- Action antl Sub-
.Yclharcm ,4fiica: fiorn C,'r-isis to Sustai~~aDIL' Growll~.
1,ike China, African elites considrretl the state as tlie prime agent of
change and development whereas the IFIs viewed tlie magic of the market
;IS the agent of the same. It was against this backdrop that se\ wal African
states resorted to tlie sale of SOEs for public finance. However, whereas
African elites considered privatisation as de-industrialisation and loss of
so\rereignty, the IFIs viebved this as part of globalisation. Ne\wtheless African
states and IFIs agreed that borrowing from these institutions, as an instrument
African re,oional groupings Ond emerging Cl~inese conglovterales 30 1
of public finance, was necessary. By the mid- 1 990s, not only had African
states accumulated Soreign debt but also one of the ways for the leadership
of an African country to, demonstrate that it was not corrupt was to subject
itself to the status of HIPC, which in turn has placed most of them on
an 'HII'C diet' by the IFIs and '\Vestern' donors. In plain language, the
HII'C diet implies that African economics ha\,e to be n~onitoretl antl
controlled 11y IFIs through conditionality in exchange Ibr less stringent dcbt
collection, considered as de\ dopmcnt aid by their creditors, also referred
to as 'tlonors'.
By the end of the t\ventieth century ACican states had accepted the IFIs'
version of the interpretation and explanation of Africa's economic decline,
namely, had governance and economic mismanagement. This is clearly
cxpressetl in thc publication of tlie document hi.w Parlnersh$ for i?r;ica's
Deuelopnenl, or hEPiiD (UNECA 2001). Not only does r'YEPiiD servr as an
un~hrel l a for the five sub-regional cgoupings in Africa, but also it was designed
ostensibly to rebuild Africa through the consolidation of democracy and
sound economic management (UKECA 200 I: nr. 204). Regionalism became
one the main pillars for Africa's economic recovery.
According to hrEPiiD, the ADB 'must play a leading role in financing
regional studies, programmes and projects' (UNECX 200 1 : nr. 96). NEPAD's
ratlollale for sub-regional and regional approaches to development is as
follows:
Most African countries are small, both in terms of population and per
capita incomes. As a consequence of limited markets, they do not offer
attractive returns to potential investors. while progress in diversifying
production and exports 1s retarded. This limits investment in essential
infrastructure that depends on econon~i es of scale h r viability. . . . These
economic conditions point to the need for African countries to pool
their resources and enhance regional development and economic inte-
gration on the continent, in order to improve international competitive-
ness. The five sub-regional economic groupings of the continent must,
therefore, be strengthened.
(UNECX 200 1: nr. 93, 91)
Intleed most African countrirs arc small in terms of population, I,ut evi-
tlcncc available from the ADB does not support part of the rationale of
.NEPiiD for regionalism because Mrican countric-s with small populations tend
to have per capita income above African average. In Lct , a study by thr
ADB (2000) demonstrates that of the 53 AGican countries, six (Cape Vcrdr,
Equatorial Guinea, Seychelles, Djibouti, Comoros and Sao Tome and
Principe) had populations of less than one million, and two of these (Comoros
and Sao Tome and Principe) had GDP per capita below Xfrican average.
In other words 50 per cent of the smallest Mrican countries had more than
average income per capita. Of the seven African countries with populations
of het uwn one and two million (Botswana, Gabon, Gambia, Guinea Bissau,
hl;iuritius, Namibia antl S\\xziland). only two (Gambia and Guinea Bissau)
had CLIP pr1- c.apita I~el o\ \ Africa's average. This means that 70 prr c-ent of
the \,cry small i\fi-ican countries 11a\.e income per capita abovc .MI-ica's
a\.cr;igc.
'I'llis is ill contrast to the countries with large populations. 01' the n i ~ w
:\liica~l countries ~vi t h popul;~tions of more than 30 million ( LC. ncarly 40
~ x r cul t of :\tikan pop~~l at i on), six had GDP per capita brlow i\lkican
;l\.cl-age (Dvmocratic. Repul)lic o S Congo, Ethiopia, Kenya, Nigeria, Sut1;ul
and l' anza~li;li, wliich means that nrarly 70 prr cent of Africa11 countric's
with large populations ha\.e income per capita below Africa's aprr; l gc. ' r he
implications arc tllat positive economic de\ dopn~ent in these six comt ri cs
\\dl have a \.er!. p o s i t i ~ ~ imlxict on Ahica. Not onl>. do the three other
countries, Soiitli Africa, li31~t and illgeria, ha\.e illcome prr cap it;^ above
Afiican average, but ;dso eacli has GDI' per capita above that of China.
Besides, Egypt and South Xfric;~ lla\.r t hr scientific antl technological inli-a-
structure to achir\.c. economic- growth a r ~d ~~c i o e c o n o n ~i c transforniation.
The po\ wt y in South Afric;~, E p p t and Algeria thus has more to do with
historical injustices and current race, ethnic. political and social relations
rather than with ;I lack of foreign iin,estment, inadequate infrastructure and
lack of economies of scale. The question is whether the quest for regional
groupings and economies of scale constitutes a quest for conglomerates in
Africa.
SOEs and privatisation in Africa and China
As noted above. as in Chi na it Lvas taken for granted within African states
that the state shoultl be the agcnt of change and development. As a result
many SOEs \\.ere called into l ~ei ng. However the IFIs considered the magic
of the market as t hr agcnt of change and development. It was against this
1)ackground that structural adjustment programmes (SAPS) became ;I ma-jor
theme of public policy in the 1980s. It was also against this backdrop that
at t11r height of thc SAPS in the 1980s Andre Gunder Frank notrtl that t hr
t11t.11 I ~ i \ . ; ~ t i s a t i o ~ ~ craze \v;~s just as economically irratio~lal and politically
ideological as the carlier nat i onal i s; ~t i o~~ craze. ?'his is all t hr more so since
in and to tlir market
i t ~na kr s ~ ~ r y little tlilrcrcnce ~vhct her an enter1)risr is owned privately
or lx~blicly; for the!. all havc to compete with each other c q~~a l l y in tllc
samv world market. The only rxcrptions are pul~lic ent erpri m t l l ~ t are
su1)sitlisccl by thc state budget ant1 privatr rnterprisc.~ that ;irt. also sul~si-
clized from state b~ltlget and/ or othcrw.isr 11ailc.d out in the pul)lic
interest. . . . hIorco\ n-, public ant1 pri\,atr e~lterprises can ~nnke equally
good or bad i n\ wt ment and other management decisions i l l the ~narket .
. . . I n the 1!)70s, (p~lblic) Britisll Steel overin\,ested Ixtdly, and (private)
US Steel underinvested badly. In the 1980s, both closed steel mills o\.cr
the pul)lic objections of labor. So did si~nultaneously tlir private steel
industry in Germany under a Christian Democratic go\.el-nment and
the public st ed industry in France untler a socialist go\ wnment ,
(Frank I W O : lo-- I I )
I t was not only the ideology of privatisation that w x cluc>tio~lrcl I ~ut ;~lso
the praxis of 1"-ivatisation. Frank thus argi1c.s
that privatizing puidic enterprises now at bargai n-l ~aseme~l t -sl ~i ~rc pricrs
that doubled next week on the national stock escl ~ange is just a h frautl-
de nt a practicc as nationalizing loss-making enterprises and ~ a y i ~ l g for
tlirm above market value, or nationalizing profitable enterprises u.ith
little or no indemnification. This ' now you see i t , nou. you clon't' p m c
is all the more egregious for enterprises in the E ~ h t and the So11tl1 tliat
are now privatized and bought up ~vi t h de\~alued donleatic currency
purchased (or s~vapped for debt) by foreign companies or~j oi nt ventures
with foreign exchange h o ~ n ahroxi . In sum, the privatization debate is
a sham; it is far less about productive efficiency than about distributive
(in)justice.
(Frank 1990: 1 1 )
Back in 1991 as an extension of Frank's obsenations, I argued with refix-
ence to the privatisation drive in Ghana that one of the main problems
with most of the SOEs (in Ghana) was that they \\.ere established as import
substitution industries. and continued to be viewed as such. As a result of
this SOEs 1m.e become forei,gn exchange consumers, rather than foreign
exchange earners. If a turn-around was required, it was not through a
transfer of o\vnersliip from public to pri\.ate, but should rather have been
through ;I t ur ~~- ; ~r ound fiom satiaf).ing only local consumers or import substi-
tution, to exports and foreign exchange earnings. The succcss of such a
turn-around would require an effective international ~narket i ng stratesy ancl
the re-organisation of the country's AIinistries 6f Trade and Foreign .Whirs
(Nimako 199 1 : 2 12). Rccent political and econonlic clevelopnlents in Chi na
and Ali-ica have confirmed Frank's thesis and my o1)servations on G11;lria.
Like China, most African countries had SC)Es before the nrolilwral onslaught
in thc 1980s, \vhich found its expression in the i mpl rn~cnt at i o~i of SAI's.
Unlike Cllina, lio\ve\.rr, r\liicall countl-irs Ila\.r not I xr n able to transfornl
their SOEs into conglon~eratrs. 'This is p r t l y 1,rc;iusr Cl ~i na' s SOEs were
granted more autononiy to operate cfi.ctivc4~. and ellicirntly.
/\ casv in point is the (;hina Intcrnation;~l Trust ancl In\.rstmcwt Corpora-
tion (CITIC). .+\ state-o\\.netl corporation c~stahlislied in 1979 to servr as
window on China' s opening to the outside \vorltl. CITIC: has ,grown into ;I
large translational cong1ome1-ate with 44 sui~sidiaries in and outsiclc Chi na
including Hong Kong, the U~l i t ed States, Canatla. ;\ustralia and New
Zealand. One sucli subsidiary is CITIC Intcrnational Contracting Inc.
(CICI),,jointly establishetl 11y CITIC and the hlinistry of Railway. According
to its 1998 annual report, CICI 'is guided 11). the kIinistry of Foreign Tradr
ancl Economic Cooperation. It's a large-scale state-owned combinrd cnter-
lxise with the principles of autonomous business operation, sole respo~isibility
for its profits or losses, self-restraint antl self-devclopmc~it.' Besides, CICI
'has a qualification certificate of Class A ratified by the klinistry of
Construction. for general contracting of construction \vorks':' 'I'liis company
lias l~ecomr 'a big complrx uith its multi-fi~nction in the field of scientific
rcscarcli, sur\.cy and ticsign, construction, inan~~facturr and procrssing in
onr rntity'. It has tlr\.clopcd a
trcl~nical force of morr than 30,000 senior antl regular engineers and
technicians for design, scientific research, and manufac-
turing as \\.ell as a large well-traiilrd, multitradc work force with 300,000
workers engaged in construction and installation. . . . Over the past 10
years, thr ineinI>cr units of CICI lia\.e built over 5,000 km railroad
mainlines? 1,000 kin high\vay, ' LOO Ixidgcs, 500 million cubic metrrs of
earth and stone, 5,000 kin electric railway, and have constructed many
fi\.e-star hotels, civil and industrial buildings, channels, tunnels, clams
and airports in and outside China.
Besides its core business, 'the labor service business of the company has
been progressivel)~ expanded since its set-LIP'. CICI has sent a large number
of workers and technical peoplc to many countries and areas such as the
liepublic of Korea, Japan, Singapore, Malaysia, Indonesia, Thailand, Sri
Lanka, Iraq, Georgia, Kazakhstan, LIexico and Hong Kong (CICI 1998).
Unlike China, ho\ce\w, in inucl~ of Africa, due to foreign exchangc short-
ages, on the conditions of the IhIF and the itTorld Bank most African
governments resorted to pri\.atisation as one of the means of earning lbreign
exchange and, flowing from this, attracting FDI, resolving debt crisis and
stimulating economic g~on.tI1. Bliintla d al. lia\.e noted that
xiv vat is at ion revenue as a source of FDI to sulj-Saharan Africa (SSA)
is important rc1atii.r to other tlc\.elol~ing areas. It coml~risrd 20% of
total FDI in 1988-95. This indicates high depentlence on privatisation
as a sourre of FDI: onr third of Tanzanian and Ugandan rccorded FDI
since 1992-93 has come from l~ri\misations (though tliis is well al ~ovr
tlir SSA avcrngc). it'orlti Bank data show that FDI was 42% of total
gross privatisation r r \ r c n~~c for SSA in 1988-95, with the bulk going to
Ghana, Nigeria and %i i nba l ~\ \ ~. For our project countries rxcept South
ilfrica tliis is even higher. The), state that privatisation programmes
have often been an entry point for FDI to a country or sector, and arc
pcrcci\wi by investors to have llad positi\,t. effects in Tanzania, Upnda ,
Zaml~ia, Zimbabwe and Soutli Africa.
In sub-Saharan Africa (i.e. excluding North Africa)
sales of state oyi ed enterprises (SOEs) werc below the tlevrloping ivorld
average until 1995, with some notable rxceptioix such as Ghana's
Aslianti Goldfields (1994), \chic11 1)rought large net inflows of forei<gn
exchange. Ho\ve\.er: 1995 saw a broadelling of the countries in which
sales iserr occurring, antl 1996 a dramatic increase in gross privatisa-
tion revenue (though most of this reflected three large scale sales in
Ghana, Kenya and South Africa).
(Bhinda el al. 1999: 57)"
It is important to reitrrate that \clirrras some African governments have
vicwrd pri\~atisation as a means of saving and/or raising foreign exchange,
the IFIs view i t as one of the prime ol>jrcti\.es of their intervention. In IF1
circles privatisation is an end in itself because 'private enterprise is consid-
ered to be better able to respond to the stick ancl carrot of competition,
which is seen as a criterion of improved efficient).'. In Ghana, in the history
of economic programming icith regard to the private sector and the public
sector, 'pragmatism rather than ideolon underpinned the rebalancing
process' (Akuoko-Frimpong quoted in Niinako 199 1 : 33).
Privatisation in Africa did not give rise to .lSrican conglon~erates. Some
SOEs were left to rot or liquidated, inucll of the investment in SOEs was
wasted, and the few that were privatised fell into foreign hands. According
to Bhinda et al. (1999: 57), most privatisation programmes have begun with
large utilities (telecoms, water, electricity, transport), or small guaranteed
profit-makers such as cigarettes (Tanzania selling to RJ Reynolds (US)),
breweries (Tanzania to Soutli Africa Breiceries) or cement (Zambia's sale
to Cliilanga). They also note that Tanzania and Zambia 'have liquidated
or sold for virtually nothing a large number of companies, particularly manu-
facturing and agriculture'. In Zanil~ia,
privatisation lias been delayed by the aBsence of functioning stock
markrts, political opposition to f or r i p purchasers, technical issues of
valuing assets, antl complex bidding ~~rocedures (which potential foreign
investors nevertheless see as non-trails~~areilt). After clelay has degraclt.cl
their assets and forcecl them to be revalued downwards, mail): companies
find k w intrrcsted buyers, and in final negotiations governments have
to take over large amounts of debt, often turning the privatisation into
a net foreign exchange loss! Even Zambia Consolidated Copper h,Iines
risks rariiiiig less than 30% of its original valuation. While a few prime
con~panies remain to be sold in each country, it is vital to capitalise on
these sales with strong positive publicity about wider policies, to mobilise
FDI additional to l~rivatisation.
(Bhinda et al. 1999: 59)
111 Ghana, llo\ve\rer, pri\.atisation began with the profit-making sec-
turs. Initially, out oS al ~out 235 public enterprises in the c o~~nt r y, 37 \verr
consitlrred marketal~le and \vcre ear~nz~rked Tor privatisation by May 1989.
. rhe govcrnnlcnt did not intend to pri\.atise 21 core SOLS (inclucli~lg pul ~l i c
utilities) by \virtue 01' thrir strategic importance to the econonly. In brtwren
t hr t\\w categorirs (corc~~~n~ai ~ket aI)l e) ~ver c about I 77 SOEs tlxit rc~~n;rinctl
u~idccidrtl ~ i p n by thc government 1)). the end oS 1989. By 1990 only thc
C:ontinrntal Hotcl (Accra), thc most profit-making hotel anlong the SOEs,
had l ) c ~ - ~ i privatiscd mt l p~~r c l ~: ~s e t l 11). a I,ib).;~n company Tor $3.6 miilion;
six ut hrr SOEs had lwcn lic~uitlatrtl. 'I'hc sale of- thc most ~ x ~ h t - ~ mk i n g
11otc.l cuntratlicted the go\.crn~nent' s claim that 'considering that (pul)lic
rntcrprisesj wnt i nue to constitute ;I tlr;~in on national hudgct, it slloultl 1 1 ~
pn~dcnt Sor thrii- o\vncrship to ch; ~ngr f'ro~n public to private, \rhcrc the
pri\.atc sector c;ln bring a turn-;~rountl in these rntrrprisc.sl (Nimako 199 1).
Thus, unlike Xfrica \vhrre mass pri\.atisation 1)ecame the order oS the
1980s antl the I!)!)Os. Chi na rlccirled to impro\.e the management oS their
SOEs rather than sell them. Besides, not only has China' s economic growth
Ixen reinSorced by FDI and accumulation of forrig11 cxchange reserves, but
also i t has transSorn~rc1 some Chinese state corporations into emerging
conglomerates on the international scene. As mentioned above, in and to
the markct it m; ~kes \.el-\. little difyerence \vhrther an enterprise is owned
privately or publicly; they all have to compete with each ot hrr equally in
the same \vorld markrt. \\'hereas the structural changes in China gave rise
to FDI, st ruct n~al changes led to debt accun~ulation in ASrica. The end
result is that Mi-ican states nrither have n vibrant private sector nor a strong
state. It is against this backdrop that African states \vant to strengthen their
regional gr o~~pi ngs.
African regional groupings: from Rome to Abuja
;\li-ica's regional groupings currrntly find their expression in the ASrica Union
(ALi) and the ..\EPP-ID programme. As noted above, the JVER~D, uhi ch serves
as 2111 uinbrclla Tor the f\.c sul)-rrgional gr o~~pi ngs in Akica, was puhlishrd
in October 2001 in X b ~ ~ ~ j a (Nigeria) by ASrican Heads oS Stilt? ostcnsil~ly to
rcd)uiltl Xfi-ic;~ through the consolid;~tion of democrat), ; ~ n d sound cconomic
m;tnagcnlc1lt, antl to renegotiate relations ~vi t h devrloprtl countries through
' dc\~clolxnent aid'. r\pparently the Sormer (i.e. democrat), m~t l sountl eco-
~i omi c n ~ a n ; ~ g c n ~ c ~ ~ t , also rcSerred to as good go\.ern;~nc,cj is suppose-tl
to scr\?e as precondition to the latter (i.e. aid or drvrlop~nc:nt ;~ssistancr).
Thc ; ~ut hors oS.,\EI<-lD hoped that the launching of'tlle progr;Imlne \\~oultl
' mark the 1)eginning oS a nc\\. pll;~sc in t hr l ~art nrrshi p anti co-operation
bet\vren ~\ ki c a and the tlc\.rlopetl \ \ odd' (UNECA 2001: nr. 206); this in
turn \vould enablr ;\TI-ica to catch up or bridge the de\,elopment gap between
Akica and the tlrveloped co~~nt r i es. also rrferred to i l l ollicial jargon as
'donors'.
7l zp ~laiious par!nershi/~s belrceen @i ca and 1 1 ~ ~ i n ~ i u s t ~ ~ i a l ~ , ~ ~ d C O U ~ / I . ~ ~ J J 011 /hi' 011~
hand, and n~ul ~~l at eral institutions on t h ~ other, will be n1ain1atnctl. The part-
nerships in question include, among others: the United Nations Nr\v
Agenda for the Dc \ ~l o ~) mr n t of I\G-ica in the 1990s; the .-\Srica-l~~~ropr
S~ummit's Cairo Plan of Action; the \\'orld Bank-led I'ovrrty Reduction
Strategy II-'apers; the Japan-led 'I'okyo Agenda Ibr .-lction; t hr r\l*ir;r
Growth and Opportunity ; k t of the United States; ;rnd the I k o ~ ~ o ~ n i c
Commission on ASric;~-lrd Glohal Compact \\.it11 Afric;~. 'L'l~c nl?j(.cti\fc.
will be to r d o n a l i g ~ l l z m palb~rr.~l~z).s ; ~n d to c11s111.e that rr.;~l I)ellc.fits to
:\liica flow from them.
(USLC.4 200 1 : nr. 187, r ~npl r a~i s ;~tldctl)
The ' devrlopment' journey to Abuja startcd in Rome over SOLIS tlccatlr~s
ago. Articles 13 1-6 of the Eurol ~ean Economic Co~nrnunit). IEEC;) Treat y
of 1957, also relerred to as the Treaty of Romr , l)ro\4derl for assoczat~on of
non-European countries and territories \\.it11 \vhich EEC member statcs had
special relations [i.e. colonies). .4ccording to the Treat y of Rome, the purpose
oSsuc11 an as.socia/ion \vas to ' promote the economic and social devclopment
of the countries and territories and to esta1)lish close economic relations
between and the Conmiunity as a whole' (Article 13 1). Furthermore, the
Treaty stated that the 'association shall s e n e primarily to further the inter-
ests and prosperity of the inhabitants of these countries and territories (i.e.
coloniesj in order to lead them to the economic, social and cultural devel-
opment to which they aspire'. In other \vords, formally, the a.rsoc~a/ion was
designed for the good of the colonies.
However, decolonisation challenged thesc EEC arrangen~ent s and called
Sor a neu. relationship. On this score, at the broader level of generalisation,
Africa's international political and economic relations, antl Ibr that matter,
the foreign policy oS ASrican countries, h a w been shaped by two historical
Sorces; colonialism/neo-colonialism, and sel S-t l et ermi nat i oi ~/ ~an-Afri ci ~i ~i s~~~.
The fbrmer called for a closer ;~ssociation ant l ~asymmet ry relations \\.it11
or vertical integration towards - Europe and fountl its expressio~l in the
Treat y of Rome. The latter called for g r a t e r autonomy I1-om I<uropr and
closer cooperation among ASrican countrirs - or horizontal integration.
(:harlcs De Gaullc of' France rcprcsrntrcl \wtic.;~l integration \vhrre;rh
I<wamr Nkr~i mah of Ghana rcpresentcti horizontal integration. :is c.strn-
sion oS the 'I'reaty of' Rome, I)c Gaullr's 1)rantl 01' Africa's li)rriyn policy
was instit~~tionalisc.tl t h r o ~~g h the Yaounrli. I C o n \ ~ t i o n i l WY), Jr;rou~rtli.
I1 (1!)69), Lome 1 (1!)75), Lomi. I1 (1!)80), 1,orni. 111(I!)85), Lon16 IV [l!I90-5),
Cotonou (2000) and rrlated regional arrangements such as the \\:eht African
Economic antl hIonetary Union (UI.;,\IO.A). Nkrumah' s 11r;untl of XSrica's
Soreign policy \vas institution;~lised througll the Orqanisatio~r Sor XSric:m
Unity (OAU l9G3), the .AU, and relatrtl regional integration arrangements
308 Kharne ~\imako
such as the Economic Communi t y of West African States (ECOWAS) and
Southern African Development Con~muni t y (SADC).
J\~EP,~D is designed to na ~i ga t e bet\veen the vertical and horizontal inte-
gmtion, but it has its doses of illusions, especially its clesired 7 per cent
econon~i c growth - to be determined by domestic policy or mobilisation of
local resources - and the $61 billion in~vestment - to be determined by
f or e i p policy or clevrlopment assist;mcr. In plain language, JYEPALI envis-
aged to keep what they ha\re, namely 'tlcvelopment aid' , and add new things
to it. namely 'tlevelopment aid'. The origins of .AfEPP4D and the idea to
renegotiate rclations bet\vecn African and developed countries go further as
NEPIIL) is not the first new partnership with the developed countries. 111
fact, already the Lon16 I Convention signed on 28 February 1975 in Lorn6
(Togo) between 16 Africa, Caribbean and Pacific (ACP) countries (37 African,
six Caribbean and three Pacific) and nine EEC member states, 'resolved to
establish a new model for relations betwern de\relopcd and developing States,
compatible \vith tlie aspirations of tlie international cornnlunity towards a
more just and balanced economic order' (emphasis added).
In turn the Lome I Convention Lvas preceded by Yaounde Convention,
\vhich \\.as again preceded by the Treat y of Rome. With regard to the
Treat y of Rome, not only \\.ere the associated states to define and deter-
mine their aspirations, but Section 1 of Article 132 is also explicit on the
issue of equality among the EEC member states." Apart from Somalia, all
the associated countries were former colonies of France and Belgium.
Yaounde I was follo\ved by the Yaoundk I1 Convention, signed between
the 18 Associated African States and Madagascar (AASR/I) member states
and the G EEC member states on 29Jul y 1969 to reaffirm and renew their
association on the basis of the objecti\m enshrined in Yaounde I. Mean-
while a new fomm of relationship and agreement had been reached between
the EEC and the three member states that formed the East African
Communi t y (EAC 1968), Kenya, Tanzani a and Uganda. Although the ol ~j ec-
tives of this agreement Lvere the same as those governing the EEC-AASM
relationship, tlie EAC states became known as jarlnel- slales, rather than
arsocia~ed .rlalc.c.
Yaounde 11 was replaced by tlie Lorn6 I Convention, representing a trans-
formation, extension and expns i on of the provisions of YaoundP 11. Not only
was it established on the I~asis of jur~ner.r/~~) instead of associalion, but also it
'rcsolvetl to establish a new nzodel for relations between developed and clevel-
oping States, compatible with the aspirations of tlie international community
towards a morc just and balanced economic order' . M'hile Yaounde I was
formally intended to respond to the aspirations of the Associated States, the
Lome I Con~~c nt i on was designed to respond to the aspirations of the 'intcr-
national community' . Lomk I extended the provisions of Yaounde I1 in that
the parlners were ' anxious to establish, on the basis of complete ecl ~~al l y
between partners, close and continuing co-operation, in a spirit of inter-
national solidarity'. The Lome I Convention had the following ob,jectives:
Ajican regional groupings and emerging Chinese conglomerales 309
T o establish, on the basis of complete equality between partners, close
and continuing cooperation, in a spirit of international solidarity . . . for
the economic development and social progress of ACP States; to
promote, having regard to their respective levels of develolment, trade
and cooperation between the ACP States and the Community and to
provide a sound basis therefore in conformity with their international
obligation; to promote tlie industrial development of the ACI' States hy
wider cooperation between these States and the hl embr r States of t hr
[European] Conimunity.
By the end of 1995, the ACI' states numbered 70 and thc EU states 15,
making t hr Lome I V Convention the largest development partnership in
the world outside tlie United Nations. Against this backdrop JVEPAD \v;ls
launched, with objectives similar to Lome but \vithin a different world polit-
ical context. Whereas the I.ome I Convention was constructed against thc
backdrop of the Cold \Vat-, v'\EPiV) is constructed to reflect what is now
known as globalisation. Besides, whereas the Treat y of Rome, Yaounde and
Lorn6 Conventions were proposed by the European countries, J\~EPAD was
proposed by tlie AU. According to the initiators of J\EPLW,
[i]n proposing the partnership, Africa recognizes that it holds the key
to its own development. \Ve affirm that the NEPAD offers an historic
opportunity for the developed countries of the world to enter into a
genuine partnership \\it11 Africa, based on mutual interest, shared
colnmitments and binding agreements.
(UNECA 200 1 : nr. 205)
On this score, J\ ~ERD is built on moral persuasion rather than economic
arguments. First, .ArEPAD assumes that tlie developed world - or the imag-
ined international community - has a responsibility for Africa's development.
The second problem is how to enforce an agreement between Africa and
its 'tlevelopment partners'; even if the developed countries agree to assist
Africa, they are not obliged to do so under I&; they may not know how
to assist Aliica; and they may also not have the capacity. ways and means to
assist Africa.
JVEPIW is thus designed to navigate between vertical and horizontal inte-
gration. However, vi e~vrd in the context of Africa's relation to thc EU,
what JYEPilD did ( ne~v) was to ask the United States, Canada andJ apan to
I~el mve like the EU, thereby expressing the need to ralionalise //zese parlner-
sluj~s. On the one hand the need to rationalise these partnerships is a reflection
of depc~i dency (' a critical dimension of Aliicans taking responsibility for the
continent's destiny is the need to negotiate a new relationship with thcir
development partners'). On the ot her hand the need to rationalise these
partnerships made 'development aid' or assistance, the agency of Africa's
development:
;IS \ \ , r \ \ . i l l scc, tlic prol ~l em of niaintaining the \.arious 11;1rtnt~rsIiil1s
Ix.c\\.c.cn . \ l i i c; ~ iultl the inclustrialised countries and multilater;~l institutions
is t l i ; ~ t tlie old lxlrtncrships may ser\.c as an obst;~cle to fosteri~ig ue\v part-
ncl.4iips to cope \\,it11 thc cracks in the new international political economy.
NEPAD and emerging Chinese conglomerates
Thc .\YiP.-ID idea of ' r eb~ddi ng a continent' is based on economic decline
in the 1980s and political implosion in the 19!)0s, \vhile recognising that
Xliica expericnccd eco~l omi c gro~vt h before. However, from the point of
vic\v of \vorlcl s!.stem analysis, international political economy, and public
fin;uncc, the economic anal) sis underpinning the .\EPALl document was (and
is) \veak at best and disappointing at \\.orst. First, its \veakness is the not
explicitly stated assumption that the \\.orld market is controlled by the devel-
oped col~ntries. 111 rcality. the \ ~o r l d market is beyond the control of every
collntl-y. The last scntence of the .\EP.-ID clocument says that '[iln fulfilling
its promise, this agenda mllst gi1.c hope to the emaciated African child that
tlir L'lst century is indeed ;\li-icn's century' (l!NEC:.-\ 200 t : nr. 207). From
;L \vcdtl systcln perspecti\~r, i t is ;In i l l l ~si o~~: at the time of the dlafiing and
1;~uncIning of .\'EI'AL). there ivas rver). indication that this century \vas
I~rcomi ng an i\sian ccntur).. ;\ recent . \ i ~rc~rr~ck (2004) report indicates tliat
of tlir \\orlcl's 62.5 trillion lilrcign r escnw, Ibur :\si;~n cou~~t r i cs, nanirl).,
( ~l i i ~i : ~, ~ J ; I ~ ; I I ~ . S o ~ ~ t l i Korea and Tai\vmi. ~ \ \ I I S I .3 t1-iIlio11 or 60 per cc11t.
11' l h(, 11i11t.tc.cntI1 ccntuly \\.as 13ritain's cc-ntuly, and the twentieth century
\ \ ; I > / \ ~i i ( i c a ' > c c ~ i t y . , tlnc t\vrnty-lirst ce~i t ur!~ \ \ , i l l I I V Cl i i ~~a' s c c ~ i t ~ ~ r y .
:\ wc.ontl \ \ d m. s s of .\EP:lL), liom a n i ~~t cr ~l at i onal politicnl econoriiy
1x)int 01' \.ic.u. is t hr economic : ~~i ; ~l >, si s untlcrpinni~lg the programmr ~ L S
111c.r~ is 110 c.co11nc-ction I,(-t\\-ccn rconomic t l c\ &pme~~t on the one Ii:~nd,
ant1 i nh; ~at ruct urr clr\~rloprnrnt con tlie othcr. Xot only do the aut l ~ors assume
t1i;lt ' thc i nr c~. ~~at i oual coni n~mi t y' Iins responsibility to\v;xis Africa's
tw)nomic dc\.clopnent, 11ut also they assume tliat i nf~-ast r~~ct ure develop-
mc-nt Inas to takr place I,eSore ecoiiomic gro\ \ dl can take ofT(A la Rosto\v?)."
l ' l i i s tlisconncction I~ct \ \ ert i i nf r as t r ~~ct ~~~- c- cle\.elopment and economic
g o wt h is contrasting with indications tliat economies gro\\. faster \\,lien infra-
structure and other economic acti\.ities are gro\ \ i i g si n~ul t aneousl ~~. .-\t 1c;ut
in Chi na, economic g ~ o \ \ d ~ in the past t \ \ o decades went hand in 1i;untl with
i~iliastructure devel opnent . On this score tlie role of (:1iina1s conglnmer;~tcs
s l i o~~l d not be overlooked as the aho\.e CICI ci ~sc \ \ i t 1 1 its mmy in\vstmrnts
in infrastructure slio\ved.'
:\ third weakncss of .\rEPP~Ul, li-om the point of \,ic\\. of 11nl)lic- li~i;uicv, is
t l ~at i t heavily tlepe~ids on pri\~ate foreign tin:~ncr and 1;lc.k~ ;I 1'l;ui 11. ' 1 I l l '
inSrnstructu~-e is to impro\.c in :\Sricn, pri \ xt r Ibrrign linance is c.ssc.nti;d to
complrment the two major S~~ndi ri g nirthods, tiamely. credit m r l i d '
(LJNIX. 4 2001: nr. 103). This of course I-aisrs thc question \\.liicli pri\.atc
capital will tlevelop r\l*ica's infrastruc~ture? Thc assumption that forc,ign \\.ill.
foreign credit antl forrig11 capital ;ire i nst r~~mcnt al in i nl i . ; ~st ruct ~~re tlr\~el-
op111ent ma); explain \ \ hy t l ~e \\'cht .-\Gica Gas l'ipeli~ie, \\.liicl~ ECO\.\'AS
agreed to I~uild in 1975, is > t i l l on tlie draui ng I~oard: hhic;un regional
gr o~~pi ngs expect too muell fi-om t l ~ei r ' de\.elopnie~it partners' with rrspect
to infrastructure development. This i h contrary to the tle\.elopment of the
infrastructure in China. \\%en liegotiations bet\\.een Petrochina, a statc-
owned behemoth and oversras pasricipants (Royal lhtc11 Shell, Exxonhlobil
and Russia's Gazpr o~n) broke down regarding a S 18 billion \vest to east gas
pipeline, the Chinese government decided to go ahead and build it anyway.
Peter Flowerday of Gas Strategies: a consulting firm, said it \vas not surprising
that negotiations broke down. 'It is a bad sign for international coii~panies
\vanting to invest in China; this appears to be part of a wa\.e of Chi na
investing for itself, he said. 'I don' t understand \\.hy the \vest-cast pipeline
needed foreign investment as the Chinese ha\pe already gone ahead and
I~ui l t i t \\.ithout foreign help' (Fmancial T h r s d h u g ~ ~ s t 200-1).
From the point of view of public finance, multilateral institutions' l i ~~i t l i ng
for inli-i~structure development is a dead-end for tn.0 reasons. First, di t krent
African countries have reached different levels of r-conomic ant1 political
dr \ dopment . Political instability in one country can cause a rirl;~y i l l a
regional project and thus rccluires a Plan R to take pc l i factors into account.
Second, developed countries compete among tliemsel\w within m~~ltilater;d
agencies for contracts. This implies that drveloped countries tend to ' s; ho-
tagc' cach other in the process of coml)ctition, we n if they gi\re xi appe;u-mcr
of unity.
However, from tlie p o i ~ ~ t of \,ic\\. of i ~~t ernat i onal politics and intc.rnxtion;d
relations, .WEPAD is a uscli~l tool hecaust, it can be ~ ~ s e d as ;ui instrument
of interliatio~ial tliplomacy at aet,zral Ir\~els. Indeed earlier initiati\ces liom
tlie EU constructed in the context of tlic Treat y of Rome, sucli as Yaountli
and Lomi., led to nothing; earlier initiatitw li-om AG-ica such as tlic I,agos
Plan of Action also led to nothing, and so the circle is complete. .jVEPP-11)
could be used to challenge tlie de\,rlopetl countries' treatment of Africa as
three entities, namely North Ahica. Sub-Saharan .+\fi.ica and South Alricx.
Thi s in turn can e~i hance Africa's negotiation capacity \vithin multi1ater;d
agencies even though ;uny concession by the developed countries may stem
horn \vorld economic forces rather than from agreements that cannot be
enforced or from moral persuasion. On this score, the economic growth of
Chi na ancl Inclia, antl China' s integration into the Mrorld Trade Organization
(\lTI' O) h n t ~ transformccl the old Th i r d World' politics of resistance into
t ~ o ~ i o ~ n i c s of resistance. In April 1953, the politics of resistance found an
earl). cspression in tlic Uanclung Conference (Indonesia), and in the early
tunity-first century, led 1)y Brazil, India and South Africa, the econonlics
of resistance gathered momrnt um at the \Vorld Traclc Sumniit in Doha
(Qz~tar) in November 2001, c-ulminating in the collapse of tlie WT O
Conference in Cancun (hIexico) in Septernl)cr 2003.
China' s economic expansion has given rise to a mqjor demand for natural
resources: China' s steel production capacity has eclilxetl those of the United
States and Japan combined, and i t is expanding feverishly. In 2003, Chi na
consumed 40 per cent of the worlcl's cement; its demand for metal ores antl
grain have turned it into a price-setter in international commodity markets;
in 2004 Chi na surpassed Japan as the world's sccond largest importer of
oil, after the United States; and C:hin;~ is expected to soon overtake Japan
to become the world's second biggest a~~t omobi l e market (Financial Tinles 24
hIarch 2004, 2 June 2004). \Vliile China' s increasing demand for natural
resources could be bad for ' mot l ~er earth' , to Xfrica it could be advanta-
geous in the short and medium terms since the comparative and competitive
advantage of Africa is natural resources. Thi s is not because Africa is more
endowed with natural resources than other continents, but because in Africa
i t \vould be comparat i vel ~~ easy to negotiate and cheaper to exploit.
Still, the comparative and competitive disadvantage of Aki ra is infrastruc-
ture. There is thus a mismatch between natural resources and infrastructure
cle\~elopment, \\,hich in turn has gi\.en rise to a disconnection between infrn-
structure development and economic growth in the economic analysis uncler-
pinning of tlie .\EPAD p r o p mme . This is not surprising because in the past
l ~at ural rrsourccs, as an instrument of international trade for Africa, were jjus-
tiliably) also vi e\ \ rd in tlie context of exploitation, neocolonialism and under-
clcvelol)ment, ant1 in ordcr to o\.ercome these, the anti-neocolonialis~n school
of' tliought proposecl regional integration and diversification (Iioclnry 1972).
In recent years the issue has I ~een discussed in the context of the 'resource
curse' (Ross 1999) and 'encla\re production' (Leonard and Strauss 2003).
h'lany con\.entional and civil wars have been fought and continue to be fought
over natural resources, ant1 natural resources and conflict in Ati-ica Iia\.e
become inseparable, Also tlie scraml ~l e for Xfrica and for that matter the mak-
ing of modern African nation-states through European-led colonialisln was
part of the natural resources conflict (Nimako and CVillemscn 2004)."
Despite its \\'eaknesses hEP,-lD could still be used as instrument to nego-
tiate a natural resource-based international trade regime in exchange for
infrastructure development. .As China's ,gro\vth has given way to a large
&icon regional grou/)ings and nnuging Chinese conglomerates 3 1 3
demand for natural resources, for Africa the advantages of trading natural
resources for infrastructure with Chi na are twofold: the availability of foreign
exchange in China, and the transitional nature of China' s conglolnerates.
There is t hi ~s an' opportunity to deal with Chi na in the context of Soutli-
South cooperation. As time goes on, Chinese conglomerates will develop
inter-locking shares with global capital and finance, which will col~solicl;~tc
China' s conglomerates on the global capital market and raise the entry cost,
eventually ldocking Africa from entry and deepening its marginalisation. In
2004, ovrr 170 Chinese (mainland) companies operated in Britain against
barely 50 in 2001 (Financial Znzes 25 August 2004). Th e tral~sitional naturc
of China' s rise means that it is still open to negotiations. Contrary to clealing
with Europe, the United States and IFIS: African governments do not need
to renegotiate a 'new partnership' with Chi na; African goverlime~its call
therefore choose to engage \\.it11 Chi na bilaterally or collectively. However,
to engage Chi na in the contest of regionalism, .fVEPrlD will need to reassess
its economic analysis underpinning its programmes on natural resources,
infrastructure, and capacity building.
Concluding remarks: beyond NEPAD
Clearly, China' s economic growth in the past tu.0 decades is in sharp contrast
to the economic decline and political inlplosion in much of Africa in the
1980s and 1990s. Th e ascendancy of Chi na as a major player in the world
economy constitutes a crack in the international political economy. Not only
does this imply that various countries and regions have to reposition them-
selves in the world econom!,, but also the repositioning of Chi na can be
advantageous or disad\,antageeous to Africa, depending on the responses of
diKerent African states and their regional groupings.
Like Cliina, most African countries had SOEs before the neoliberal
onslaught in the 1980s, but unlike Chi na, African countries have not been
aide to transform their SOEs into conglomerates. Thi s is partly becausc
China' s SOEs \\.ere granted more autonom). to operate eKectively and elii-
ciently whareas African states resorted to privatiktion. \lrhereas the structural
changes in Chi na gave rise to FDI, in Africa they led to clebt accumula-
tion. Th e end result is that African states ha\.e neither a \.ibrnnt pri\.atc
sector nor a strong state.
In response African states havc attempted to intensify regonal intrgration
t h r o ~ ~ g h the launching of :WPAD. Thi s pro, gamme raisrs the question as to
whether 'you can manage big things if you can't manage small things'; that
is, if African elites ha\re failccl to manage small national economies, how can
they manage large regional entities? Not only clid Africa's 'clevelopment
journey' to Abi j a (i.e. ./YER4D) start in Rome (i.c. the Treat y of Rome) over
four decades ago, but also when \.icwecl in the context of world system
analysis, international political economy, and p ~ h l i c finance, the economic
analysis underpinning the ;+PALl document is weak and disappointing,
partly I >r cat ~sc .,\EE'AD \\.as h i l t on moral persuasion r at her t han economi c
n ~ p mc i i t s , T' hr implications are tllat t hrough JVEPALI Africa is increasingly
tying itsrlf to t he traditional tlominant economi c forces in the world (the
United Statcs, the EU and<J apan) . at ;I time \ \ hen these traditional clomin-
; ~11t r conomi c powe n a r r Il eromi ng lrss domi nant due to t he rise of Chi na.
Nr \ wt hel ess, vi r \ \ , t d in thc r ont r xt of international politics a nd i nt r r -
nation;ll rclations. .,\W!.IL) is ;i t ~ s e f d tool I ~ecausr i t can t)e used l or
intcrn;ltional di pl omacy at sr\.cral lc~vrls. In particular, .VEPP-iD coul d be
t w( 1 ;IS ;111 i nst rumrnt t o licgotiatr a nat ural rrsoul-re-t~asccl international
t radc r r gi mc in r xcl i angt ~ for i nfrast rl ~ct ure dwel opl nr nt . For Africa, t he
; d \ x n t ; ~ ~ v s of t radi ng tiatur;ll resources for infrastructure with Chi na a r c
t\voSold. 'The first is t hat Chi na no\\. controls a large s har r of world foreign
r xchangr rt . scr\ ~-s. 7' he second is t hr transitional nat ur e of Chi na' s conglom-
rrat es. In stlm, t he w is still a n opport uni t y for Africa t o deal with Chi na
in t hr cont rxt of Sout h S o u t h cooperat i on. If properly managed by African
governmrnt s, t he emer gence of Chi na as a maj or economi c force a nd t he
rise of its congl omerat rs coul d re1io.c Africa from its debt bur den a nd depen-
dencr on IFIs a nd EU a nd US donors. If poorly managed by African
govr r nmr nt s, ho\ ve\ w, Chi na' s demand for nat ural resources could make
Africa a battle gr ound reminiscent of the ' scrarnblr for Africa' in t he late
~i i net eent h century.
Notes
1 This article is dedicated to Andre Gunder Frank (19'29-2005). my teacher,
colle;lgur ar~t l kientl.
2 Of t l ~e 53 .ifric;~rl cour~tries sui ~eyet l [or 1990 and 1997, six (Bot swa~~a.
E(luatorial ( ; i ~ i ~ ~ e a . L.e$otlw, .klauritius. Sudan and Ugar~tla) recorded GDP
gro~vth rntr? of more tl~ari 5 per cent; 19 experienced qrowth rates of I)rtwrer~
3 to .i per cmt : ;lnd 23 less t l ~an 3 per cent, tvhereas fiGe (Burundi, Camrroon,
r)enrocratir lirpul>lic or (:ongo, r),jil)outi a i ~ d Sierra Leone) slipped into rleg;t-
tivr yro\\ 111 I:\DI< 2000).
3 The cow I,uri~irsi of C1C:l i \ tlie
1 It \11,11dtl I I C mcntionc.tl that in the case of C;h,tun, ctate owl~ersl~ip was untler-
~i i i ~~c t l ;I tlrcatle I~eforc :\slianti C;oltlficltls \\.a sold. 0 1 1 8 ,2.1ay, 1985, t l ~c
I~rtcrl~;~tionaI I:i~i;il~ce (:orporatio~i 1lI:C) ;innouncctl that i t \vas providing loans
of $55 millioi~ to .Asl~;u~ri Goltlficltls (;oq~oratior~ (Ghana) 1,td (AGC:), a joir~t
vcnture I, et \ \ rr~i Gl n~l n htate ar~tl tlie British firm I,or~hro. The loar~ formed
])art of a prciect to C O - ~ ~ I I ~ I I C C :I S158 million, five-ar~tl-a-lialf-year rehabilita-
tion progran~me of t l ~ r qold i nd~~st ry. This has I ~e e ~i the sirigle biggest in\.rstrnrnt
aritl pri\.atisatio~~ plmject.
5 The article notes that '[IJor i ~ ~ \ r s t ~ n r r ~ t s financed by the [European Econumic]
Comnlunity, participatiun ill trlitler and supplies shall I x open on equal trrni\
to all natural and legal person \vho ;n.r n;~tionals or a h<Iernl)er State or of onr
of the countries. arid territorie?' ('Treaty of Komc. Article 132). It \v;ls ;~gainrt
this I)acktlrop tint tlie ~.nou11tl6 I C:orivcntion \v;~s signed (two moritlis ;iftrr t l i ~
Organisation of .African U~iity tvas Iaunclictl) o ~ i 2OJuly 1963 I~'t\verr~ 18 r\li.ican
states ( US h I ) arid six EEC r nr ml ~r r states antl Ovrrsr; ~, r)rpnrt~~lcrlts a~i t l
Trrritorirs (ODTs). 11amc4y thr I ht c h X11tillt.s i u~d S u r i ~ ~ a ~ ~ l r . ; I I I ~ I ~ C Fw11cl1
ovrrseas tr~-rito~-ic.$ a11t1 departmr~its.
G 0 1 1 this issue .!EP.lD mrnt i ori t\vo i n ~ p o ~ . t a ~ ~ t tl~inqs.
Thr \-ic\v of t l ~ r initiating h. rsi dr~i t s is that. u~~l r s s tllc i\iur of ~ I I ( ~ . ; I I I ~ I I ( . -
tul-r tlc\~clopmrnt is adtlrcssctl on a ~~l ; ~nr i ct l basis - tIt:~t is, I i ~ i ! c ( l to rrgio11;d
i n t e ~ r ; ~ t i o ~ ~ tlevclopmri~t - tlic rclir\val pr ocr s of t l ~ r c o ~ ~ t i ~ ~ c ~ t t \<ill ~i ot
take OK. Thrrrfc~re. the i ~i t ern; ~t i o~i ; ~I coninlur~ity is u r ~ c d to support :\li.ica
ill ;~ccclerating t l ~ r t l e\ ~l opmr nt of inli.ast~.uc-ture. [. . . ] If !\kic;i liatl tlw
same iiifrastructurr ns de\.eloped countries. i t \\,odd I)r ill ;i more fiwurald,,
positio~i to rocus on pr oduct i o~~ and ir11111.oving pmtlucti\.ity for ir~tern;itio~~;il
competitiori. The stritrturill qap in i ~~Snst ruct urr constitutrs ;i t r r y srriou.\
handicap to econo~iiic gro\\tll ar d po\.erty retluction. Inq)rovr(l iriSr.r-
structure, inclutliiig the cust and rrli;~l)ility of services, tvoultl I)eneft I~ot h
Akica and the international community, \vl~icli woultl he able to o l m i ~ ~
Akican goods anti sei ~i ces more rlie;iply.
(UNECA '2001: nr. 197. 101)
7 According to its annual report, CICI Iia cnntracted numerous irifrastructu~~e
development projects, \vhich olniously play an important role in stiniulatirig ;ind
Pacilitating economic gro\vth (e.g. major milroads aritl railway statior~a. Ilritlges
over the Yangtse Kiver antl the Yello\v Ri\,er, cross-sea bridgcs, tunnels, sul)\vays,
expressways, city roads, fi\.e-star hotels, ai q~or t trrminal I~uiltli~lgs, super-hig11
buildings, embassies. darns! stadiums aritl electrical and macliinrr)- installations).
8 This is partly because the need to secure natural resourcrs 1c.g. thr nectl to
protect oil firltls and maritime trade routes) is at times achir\.rrl through ~nili-
tary force, but these historical facts do not explniii tvhy arid ho\\ w ~ n r countrirs
and regions ha\,? more ~nilitary capability to sul~jugatr othrr regions or countrie\.
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