Is Africa being short-changed?

Is Africa’s desperation for infrastructure development making it vulnerable to bullying by global investors who use that desperation to ensure a skewed trade agreement in favour of the investment country? This was the hotly debated issue during a roundtable session at the Africa Rail 2015 conference and exhibition held in Johannesburg last week, with industry representatives all agreeing that this was certainly the case with China. “The Chinese arrive in a country, invest in an expensive infrastructure project, bring their own countrymen to work on the project or manufacture equipment and depart again, leaving a big white elephant that no-one local can operate – as the manuals are often in Chinese,” said Hlayisani Matelakenga, manager of rail and industrial at global manufacturing and engineering company DCD. He commented that the Chinese investors were generally not committed to a real partnership with the countries in which they invested as there were no localisation agreements in place – and nor was there any skills or knowledge transfer. Matelakenga added that as a local manufacturer of railway parts, DCD’s prices were often significantly undercut by Chinese exports of the same product. “They bring in their product at a cheaper price than it costs us to manufacture it,” he said. “It’s no small coincidence that the investment in infrastructure projects is often in countries that have an abundance of the raw commodities China needs to manufacture its own beneficiated products, which it sells to the same country it has invested in,” added a participant who wished to remain anonymous. Pete Giorgianni, transportation and telecommunications officer at the United States embassy in South Africa, said that his country “embraced” Chinese investment in Africa as the continent needed the developments to facilitate global trade. He pointed to the arrangement that US company General Electric (GE) had with Transnet Engineering to manufacture locomotives. “The agreement includes a certain percentage of local manufacturing, employing locals and transferring skills.”