Victor Kgomoeswana has one request for African leaders: embrace the support from China, because we need all the investment we can get.
Out of the flurry of announcements before and during the China-Africa Summit, I shall focus on the R12-billion motor manufacturing plant to be built by the Industrial Development Corporation (IDC).
I love any story about manufacturing in Africa because that is what the continent needs to claim its rightful place at centre stage in global economics. A deal, however small – and this is not small – that would add to the continent’s manufacturing capacity must be applauded.
The proviso, though, is that we should do it with open minds and eyes. If we do not cover our bases, our grandchildren will pay the price – just as we are paying the price for the decisions or impositions from our colonial past.
In our radio chat, the chief executive officer of the IDC – Geoffrey Qhena – assured me the plant would be built with due regard to the interests of South Africa. I had asked him particularly about the terms and conditions of this agreement because I could not help wondering where the catch was.
During the summit, AU Commission chairwoman Dr Nkosazana Dlamini Zuma tweeted its theme, “China-Africa Progressing Together: Win-Win Co-operation for Common Dev’t” – which is appropriate for the type of co-operation.
This was a day after President Jacob Zuma and President Xi Jinping of China had clinched R94bn in trade and investment deals, including the IDC’s car plant scoop with Beijing Auto Works.
Qhena explained the significance of this plant. Beijing Auto Works exports to the rest of Africa.
Locating the manufacturing plant in South Africa will not only add to the output of multinational giants such as BMW, Nissan, VW, Toyota and Mercedes-Benz, but promote trade within Africa. Sadly, their intellectual property and the more expensive inputs remain in the hands of non-South Africans.
It was not surprising to witness the intense interaction on social media about the Chinese-South African agreements. On the one side there were those who asked what the catch was, or what the Chinese wanted in return for their R94bn investment. They almost sounded like they saw in China a colonial force hell-bent on exploiting Africa’s infrastructure backlog to get at its natural resources.
They were pitted against those who felt South Africans were asking these questions only because China – not the US or Europe – was involved. Those in favour of Chinese investment believed that the deal had to be embraced because it would create much-needed jobs and bolster our faltering economy. The answer lies in a balance between these two extremes.
China is getting a lot in return for whatever it is investing here. As things stand, our resources are exported raw, and we import finished goods from China.
The trade volume between the two countries has overshot the $200bn mark – and is hugely in favour of China. The deal includes a $2.5bn funding guarantee between Transnet and the China Export Credit Insurance Corporation (Sinosure).
This means part of the R94bn is guarantees, not hard cash.
What will Transnet use the guarantee for? Reportedly, to procure mechanical, electrical products and equipment from, you guessed right, Chinese suppliers!
Does that sound like a fair deal? Is it possible that the IDC R12bn motor manufacturing plant will siphon even more money into Chinese companies? No, says Qhena. This is different – because the manufacturing capacity will remain in South Africa and ramp up trade between South Africa and other African countries.
The US Agency for International Development and the UK’s Department for International Development do the same in funding development in Africa. The consultants are mainly highly paid natives of the US and UK. This is development aid, routed back to the source in the name of developing Africa.
My request to the leaders of Africa is simple: embrace the support from China, because we need all the investment we can get. However, ensure it is on a win-win ticket, as Dlamini Zuma said. It is unrealistic to expect China not to protect its interests in structuring any trade deal, including everything agreed on at Focac 2015.
Let China act in the interests of the Chinese – and Africa in the interests of Africans.
*Victor Kgomoeswana is author of Africa is Open for Business and anchor of Power Hour, which is broadcast on Monday to Thursday on Power FM. He writes weekly columns for The Sunday Independent and African Independent.
Twitter Handle: @VictorAfrica
** The views expressed here are not necessarily those of Independent Media.
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