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Tuesday, 12 August 2014 17:04

U.S-Africa Summit - How East Africa Will Benefit

By Kenneth Agutamba

KIGALI, Rwanda, August 12, 2014 (The New Times) -- Figuratively put, Africa is enjoying a stable relationship with China when the USA, a returning ex-boyfriend, with renewed interest, shows up promising paradise.

Choices have to be made but who should Africa trust between China and USA? Is USA a new admirer or a returning ex-boyfriend with renewed interest who now wants his partner back?

Commentators noted with interest President Obama's veiled quips at China alluding that the USA will be a better partner for Africa that strengthens a school of thought that America's new engagement with Africa is not voluntary, but rather forced by China's deepening influence on the continent.

Chinese keenly followed the meeting in Washington well knowing that someone is plotting for their cake in Africa. Africa is clearly on a double date with the world's two largest economies, but who should be trusted?

Benjamin Gasamagera is not only Rwanda Private Sector Federation's (PSF) Chairman but also an investor, proprietor of the Safari Centre; he has previous experience in both worlds, in Europe and China, he says "Africa should trust no one."

"These two know what they want from us, we should know what we want from them and how to get it," Gasamagera said.

But in Washington, Obama made a case for America explaining to his guests why his country should be trusted when he argued that, "we don't look to Africa simply for its natural resources. We recognise Africa for its greatest resource which is its people and its talents and its potential."

In Beijing, the counter argument was given in an opinion article by Mark Kapchanga published by the Beijing based Global Times newspaper noting that 'China gives what Africa wants, trade and respect.'

Washington accuses the over 800 Chinese firms operating in Africa of refusing to employ local skills choosing to fly in Chinese nationals to do jobs that would otherwise be done by Africans. During the summit, Obama promised African leaders that, "we want to build partnerships that create jobs and opportunity for all our peoples that unleash the next era of African growth."

A few months before the Washington summit, the Chinese Premier was in Africa where he reiterated his country's commitment to Africa announcing several deals worth billions of dollars, including a railway line in East Africa.

The resolutions of the Washington summit as issued in a statement by the office of Obama's press secretary have been seen as a counter menu for that of the Chinese. But what's juicy on the American menu?

One of the juicy outcomes is President Obama's pledge of $300 million in assistance per year to expand the reach of Power Africa in pursuit of a new, aggregate goal of 30,000 MW which has, reportedly, already mobilised more than $26 billion.

Given Africa's energy inadequacies, Obama's Power Africa should excite most African countries including Rwanda that are working uphill to produce enough energy-whose shortage is a major hindrance to investment.

Under the initiative, American investors will be looking for deals in energy development and Rwanda for instance has a number of them.

Another element that excited leaders was the announcement of new investment commitments to the New Alliance for Food Security and Nutrition which has already reportedly mobilised more than $10 billion.

During the US-Africa business forum, new private sector deals worth over $14 billion were announced, a development that could signal for a new Sino-US scramble for the African market. It will be interesting to see how American firms in Africa treat Africans given that the Chinese firms have been accused of poor working conditions.

"It's clear there will be competition and competition is good, in this case, it will benefit Africans," notes Caleb Turinde a trans-border trader based in Kampala.

Over the next two years, there will be excitement on the market as President Obama's $7 billion meant for financing the Doing Business in Africa Campaign gets spent to support USA trade with and investment in Africa.

While leaders agreed to develop a substantive Common African Position and a long-term vision dubbed "Agenda 2063: The Africa We Want," the continent has over 50 countries and there's no guarantee that everyone will get an equal share of the American cake.

Therefore, African leaders returning to their respective countries are expected scramble for these American opportunities and the question now would be how are East African leaders planning to get their share?

Part of the answer to the question was given by Richard Sezibera, the Secretary General of the East African Community (EAC).

While speaking as a panelist on Voice of America's Straight Talk Africa programme, Sezibera revealed that the region will propose an EAC-US trade treaty that would focus on three main pillars including trade facilitation, bilateral investment promotion and capacity building.

"We believe East Africa has great potential that would be interesting to US investors, but we also want a situation where we negotiate for smooth bilateral trade between the region and USA and that calls for the removal of barriers that currently impede trade," observed Sezibera.

It's good to know that East Africa knows what it wants from America but remains to be seen whether it can get everything. Negotiations with the EU over a comprehensive trade agreement have been problematic with accusations of arm-twisting by Europe in a bid to limit who East Africa trades with.

Gasamagera says the US must face reality, that it can only play 'catch up' to China's advanced trade relationship with Africa and the figures support his view.

Tracking this relationship to about three decades ago when China was little known on the global business scene, Sino-African trade volumes stood at just $1billion rising to $6.5 billion in 1999 and $55 billion in 2006.

By 2009, China had surpassed the US to become Africa's biggest trading partner and since then the gap has only grown surpassing $210 billion in 2013 compared to USA's $85 billion in bilateral trade with Africa.

The good thing is, Gasamagera notes, both countries present Africa with unique opportunities and that leaders must exploit them to their benefit.

"The Chinese are more flexible in their dealings and their technology is closer to Africa given its affordability but on the other hand, USA also provides a unique opportunity especially from a cultural perspective, the language, English connects us more compared to Chinese and these are factors that will shape the nature of relationship that our countries have with either USA or China."

Recognizing the importance of language in further deepening its cordial relationship with Africa, China has recently intensified its investment in spreading the Confucius Institute around the continent, including Rwanda, that has a centre at the University of Rwanda College of Education.

The purpose of the Confucius Institute is to teach Chinese language and Culture to Africans an effort that has been backed by thousands of scholarships to African students to go and study in Chinese Universities.

For now Africa is the attractive princess with the attention of two rich princes, China and USA, and both will be competing to be the more attractive a development that would increase the benefits for Africans.

Those benefits have already started. Early this week, Li Juguang the project deputy manager for the Mombasa-Nairobi Standard Gauge Railway (SGR) said the contracting company, China Road and Bridge Corporation (CRBC) will attach great importance to staff localisation dismissing allegations that jobs will be taken on by Chinese nationals.

Some 572 Chinese managerial personnel and engineers have already arrived in Kenya according to the official out of 2,500 Chinese personnel expected to work on the project. Meanwhile, 2,162 local employees have been recruited out of the 30,000 local personnel expected to work on the construction of the 445km long rail.

With the Chinese working on railways and the Americans investing in energy, Africa clearly doesn't have to choose between the two but rather do business with both to address the continent's infrastructural bottlenecks to spur growth and development.

For decades, the west has wasted time dishing out aid and playing savior to African problems of disease and poverty. The US has been preoccupied with toppling bad governments and imposing democracies where it deems fit, meanwhile, China was operating quietly, scooping large infrastructural deals while extending string-free aid, credit lines and increasing trade ties with the continent.

"It has now dawned on them that Africa doesn't need aid but trade, now they want to do what they should have done decades ago, be partners not patrons of Africa, they are welcome," concludes PSF Chairman Benjamin Gasamagera. (This story was originally published by The New Times)

 

 
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