The United States (U.S.) President Barack Obama recently finished his week-long visit to Africa in Tanzania, after first visiting Senegal and South Africa. During the trip, Obama announced a new model of engagement between the U.S. and Africa, based less on aid and more on trade and partnership, with his country helping Africa “build Africa, for Africans.” Through several new U.S.-Africa economic initiatives launched during his visit, especially regarding trade and energy, Obama is striving to catch up with China, which has created strong partnerships on the African continent. Obama arrived three months after Xi Jinping visited Tanzania on his first foreign trip as Chinese president in March 2013.
During his African trip, including in his speeches in Tanzania, the U.S. president indirectly juxtaposed the U.S. and Chinese trade and investment proposals, by suggesting that U.S. investors would support local economic capacity, not simply consume its raw materials, which China amply strives for, given its ever-growing industrial capacity. While he is implying that African countries will have to choose between two different trade models, is he right?
Most likely not. The U.S. and China are both interested in ensuring employment for their countries’ citizens, gaining access to valuable resources, and securing new stable trade partners. Nevertheless, China will likely win the battle over Africa, due to its policies of non-interference in internal affairs, especially regarding human rights and democracy, which many African countries are lagging in.
Tanzania was a logical choice among Obama’s destinations, given that the U.S. and the African country have had long-standing economic relations. According to Obama, Tanzania has continuously been one of the U.S. best partners in Africa. The U.S. has provided aid in order to promote transparency, address health and education issues and target development indicators to sustain progress. In turn, Tanzania exports to the U.S. agricultural commodities, minerals, and textiles, while importing wheat, chemicals, and machinery.
One of the key initiatives revealed by the U.S. President during his brief stay in Tanzania was Power Africa, a $7-billion program combining public and private funds and loan guarantees, aimed at ensuring cleaner, more efficient electricity generation capacity. This new program will build on “Africa’s enormous power potential, including new discoveries of vast reserves of oil and gas, and the potential to develop clean geothermal, hydro, wind and solar energy.” This indirectly implies that the U.S. is keen on discovering new resource reserves in Africa and possibly make us of them for both Power Africa and its own national interests. Obama visited the Ubungo power plant, run by U.S.-based Symbion.
Another key U.S. project on Obama’s agenda was launching Trade Africa, a new partnership between the U.S. and sub-Saharan Africa “that seeks to increase internal and regional trade within Africa, and expand trade and economic ties between Africa, the United States, and other global markets.” The new partnership will be initially implemented in the members of the East African Community (EAC): Burundi, Kenya, Rwanda, Tanzania and Uganda. Among its original goals, Trade Africa intends to “double intra-regional trade in the EAC, increase EAC exports to the United States by 40%, reduce by 15% the average time needed to import or export a container from the ports of Mombasa or Dar es Salaam to land-locked Burundi and Rwanda in the EAC’s interior, and decrease by 30% the average time a truck takes to transit selected borders.” This suggests that the U.S. is not exclusively interested in benefitting itself from EAC exports, but that it also wants to assist these countries to improve their regional trade capacity.
Even though throughout his trip Obama indirectly tried to highlight that the U.S. will be a better economic partner that China for Africa because of its interest in support local economies, not just benefitting from them, there are clear similarities in the two global players’ goals and approaches. Ironically, China has already massively supported the local African economies, by building much needed infrastructure, consisting of roads, ports, and bridges in multiple African countries.
Chinese companies, either building infrastructure or involved in other businesses, have also provided important job opportunities to many African countries’ populations. While it is true that China brings most of national white collar workers to develop the infrastructure projects, while the majority of their blue collar workers are Africans. For instance, during the construction of Chinese-funded Imboulou Hydroelectric Dam in the Democratic Republic of the Congo in 2010, more than 2,000 locals and 400 Chinese construction workers were employed. Similarly, at the China-Benin Textile Company, there are 5 Chinese employees and 1,100 local staff members.
This is partly because in many of the African countries, especially those afflicted by prolonged periods of war, there is an acute penury of highly-skilled workers. Given this context, the U.S. would most likely have to bring its own white collar workers to develop its energy projects, which will also secure much needed employment opportunities. Therefore, almost inevitably, the two countries would end up applying a similar employment model: while the highly skilled laborers will be their own countries’ nationals, the lower labor will comprise African locals.
Moreover, both the U.S. and China want to benefit from Africa’s abundant natural resources. As an indication of this interest, two of the countries that the Trade Africa initiative will be implemented in have extremely valuable resources. Tanzania possesses significant quantities of gold, diamond, iron, uranium, and natural gas, while Burundi has nickel, uranium, kaolin, and gold. China has made significant investments in Sudan and South Sudan, well-known for their oil resources, and in Angola, which has some of the most important reserves of oil, gas, and diamonds on the African continent. Moreover, at this moment, oil already represents 66 percent of China’s exports from Africa, while minerals and metals 30 percent. The US imports from Africa consist of 89 percent oil. For the U.S., this focus on obtaining natural resources will be further facilitated by the launch of the energy partnership.
Finally, the African continent is an increasingly ripe market, as it currently has six of the world’s fastest growing economies and is projected to grow by 5 percent in 2013. China surpassed the U.S. as Africa’s largest trading partner in 2009. In 2012, China invested more than $40 billion in African countries and promised $20 billion in aid during the upcoming three years. In 2012, the total trade between China and Africa was $128 billion, while Africa’s trade with the U.S. was only $100 billion. The more African countries’ economies grow, the more profitable trade relations will become and the more interest bigger exporters, such as the U.S. and China have in establishing strong relations with them.
Apart from their similar interests in African countries, there is a key difference that sets China and the U.S. apart and might determine who wins over Africa: their approach to countries’ respect for human rights and good governance. China has a policy of non-interference in internal affairs with its partners, whereas the U.S. advocates for democracy and human rights and often conditions aid receipt on efforts to achieve certain standards. In fact, on his recent trip, Obama encouraged African countries to strengthen good governance and hold human rights abusers accountable. Many of the African countries are far from the standards that the U.S. calls for, some due to on-going conflict, like the Democratic Republic of the Congo, others due to political disinterest in reform, like in Uganda. Therefore, these countries, hungry for economic partners, might be more inclined to work with China, which is almost strictly interested in economic pursuits, rather than the U.S., which wants to also have a social and political involvement in internal affairs and will scrutinize their every move. At the same time, people in other African countries, like South Africa, are disillusioned with the U.S. and are criticizing the U.S. double standards. During his visit in South Africa, people protested against Obama for the use of drones in the Middle East and failure to close Guantanamo Bay. As a result, the U.S. might lose to China the battle that it recently launched. Regardless of who wins the great power battle over Africa, the people of the African countries will most likely be the main victims, seeing as their resources will be sucked up with few considerable improvements in their lives.