It’s high time for African Countries to guard against adverse terms and conditions of Chinese assisted projects. There is no doubt that with growing Chinese FDI in African countries, the latter were prompted to enhance partnership with the former for a win-win benefit to both the sides. In spite of the fact that China’s investment in Africa significantly promotes the host country’s economic growth and development, it inevitably destroys the local environment to different degrees depending on the quality of political, legal and administrative set-ups in the recipient countries … writes Dr Sakariya Kareem
Notwithstanding Chinese investment in Africa sparking economic growth and some positive social outcomes across the continent, a 2021 research paper from the United Nations University revealed that regions hosting Chinese projects are more likely to experience protest. China’s financial involvement in the continent has grown dramatically since the launch of the Forum on China-Africa Cooperation (FOCAC) in 2000 and the China-Africa Development Fund in 2006. Today, China is Africa’s largest trading partner and it has spent an estimated USD 350 billion on development programmes in the continent between 2000 and 2014.
African countries are resource-rich but capital deficient. They seek Chinese investment for exploiting their natural resources and developing their railroad networks to connect various ports and cities for trade and commerce.
But given their weak institutional framework and corruption of self-seeking and vulnerable politicians, Chinese investment often ends up in the hands of a select few among the ruling elites while people do not benefit as much.
Such anomalies often propel people into protest. There are various instances of protests in the past against Chinese-assisted projects in Africa and some of them have been cancelled due to protracted controversies. Recently, Tanzania cancelled its deal with China for the construction of the Bagamoyo Port project on the pretext of skewed Chinese terms and conditions and irreconcilable differences after nine years of negotiation. The agreement had been signed in 2013.
Another such episode of skewed Chinese terms and conditions came to light in Kenya in 2022 with regard to China assisted 473 km Standard Gauge Railway (SGR) project connecting the port city of Mombasa with Nairobi. The project agreed by the previous government is now being put to scrutiny for highly skewed terms and conditions in favour of China including giving priority to China in related purchases, giving mandatory favourable customs clearing facility to China and provision for creating a Railway Development Fund for repayment of Chinese loans by dedicating 42.06% of SGR proceeds.
In the case of Tanzania’s Bagamoyo port project, the skewed Chinese terms and conditions included taking over the port on a 99-year lease with complete monopoly on construction and operation and exclusive rights for transportation of copper from Zambia, by TAZARA to Bagamoyo port for further transportation to China. The terms also included complete control over the logistic facility.
In fact, this is not a new phenomenon. The Chinese investment in many other African countries also came under scanner in the past for being opaque and skewed besides being exploitative of indigenous workers and causing social and environmental dislocations. People’s protest in such cases is frequent.
In the Kenyan archipelago of Lamu, for instance, residents and local businesses recently managed to block a proposed Chinese coal power plant on the pretext that the project might affect the local tourist industry. People in Gambia have protested against Chinese fish factories, which have drained waste into nearby wildlife reserves, hurting the local fish industry and the environment. In 2012, Zambian workers protested against low pay and hazardous working conditions in Chinese-run mines and even killed a Chinese manager.
All this happens because of opaque and skewed terms and conditions giving Chinese investors more control on the implementation and operation of the projects and lack of accountability due to corruption, poor governance and weak institutions which China influences through underhand deals. Another research from the UN University has concluded that compared to World Bank aid, Chinese finance is prone to be used by local elites to pursue their own interests and obtain many of the benefits mainly because of a lack of transparency in loan conditions and China’s indifference in the domestic affairs of the host countries. The projects are allocated to Chinese investors often without proper impact assessments. The local people also do not have confidence in their governments and institutions suspecting involvement in corruption and underhand deals, so they resort to protest to safeguard their labour and human rights demanding accountability from their respective governments.
There is no doubt that with growing Chinese FDI in African countries, the latter was prompted to enhance its partnership with the former for a win-win benefit to both sides. In spite of the fact that China’s investment in Africa significantly promotes the host country’s economic growth and development, it inevitably destroys the local environment to different degrees depending on the quality of political, legal and administrative set-ups in the recipient countries. It is now well-documented how China’s significant investment in Africa’s mining industry accelerates the rapid consumption of non-renewable resources eventually causing a series of environmental problems.
Some large hydropower projects funded by China rarely consider the negative impact on the local environment and society. Instead of improving the local power supply, they do significant damage to the local agricultural production environment. All these side-effects of the Chinese FDI adversely affect the livelihood and habitats of African people.
In 2013, more than 1 million cubic meters of timber from Mozambique were brought into China through illegal channels and this continued later on a larger scale from other countries. Fishing in West African waters has also been affected by overfishing by Chinese companies. In the case of Sudan, the construction of the Malloway dam has led to clashes between local governments and residents. The majority of Chinese enterprises ignore international environmental and social standards while constructing roads, bridges, railways and dams and this is why they have led to environmental destruction, air and water pollution and extinction of rare species.
All the failings on the side of Chinese investors do not mean that African countries should close their doors to them, but they need to avert becoming victims of the skewed terms and conditions of the Chinese companies. The governments of these countries need to be cautious about the overexploitation of their natural and human resources by Chinese companies which at best brings asymmetric benefits and leads to the violation of the rights of the local people.