In less than a decade, Chinese investment in African mines has increased over 25-fold, quickly gaining significant control of the industry. And there are no signs of this push ending anytime soon.
With over $500 billion in outward FDI of which more than $20 billion is allocated to the extraction of natural resources, infrastructure, textiles, and power generation in Africa, it is clear that China’s ties to Africa are getting increasingly stronger. Although these sums may seem modest in terms of global finances, the economic impact on the region is tremendous, particularly in Sub-Saharan Africa with the most substantial investments made in Nigeria, South Africa, Angola, and Sudan. And besides considerable investments made, China has also become Africa’s most noteworthy trading partner with a trade volume of close to $200 billion, which is estimated to reach as much as $1.7 trillion over the next decade.
While foreign investment is something that most countries actively seek out, China’s deep interest in Africa is being considered as detrimental to the continent in many ways. Projects are dependent on deals made at high political levels, and bidding processes tend to lack transparency and competitiveness. This results in most of the workforce employed being Chinese nationals and not Africans. In South Africa, around 75,000 local jobs in the mining sector were potentially lost over a period of one year due to the ferrying in of Chinese workers. And, even when African workers are hired, poor safety practices often follow. For example, at mines in Zambia’s copper belt that are run by the Chinese, there is poor underground ventilation, potentially fatal accidents occur on a daily basis, and workers have to complete two years of service before being given safety helmets.
Another point of contention is whether the trade agreements between China and Africa are one-sided. While China mainly buys natural resources like metals and minerals from Africa, African countries mainly import finished goods like electrical goods, machinery, and plastics. This is often seen as China exploiting Africa’s natural resources while exporting cheap, often poorly manufactured goods to African countries, which not only creates dependence on China but also undercuts local manufacturers. In Nigeria, an influx of cut-priced textile products from China has resulted in around 80% of the local companies in the industry closing their doors.
In Ghana, there are regulations against foreigners mining on plots smaller than 25 acres in size, but despite this, Chinese continue to work with desperate local landowners flouting the rules. In early 2019, there was a crackdown on illegal mining operations in the country, and several Chinese nationals were detained. China’s Ministry of Foreign Affairs warned that they will not be protected by their home country or by Ghanaian laws. Even though Ghana and China have a strong relationship, there is a massive problem with Chinese involvement in illegal mining activities. There are similar issues in the Democratic Republic of Congo where, in July this year, soldiers were deployed to remove tens of thousands of illegal informal miners from a copper and cobalt mine owned by the Chinese.
According to a report compiled by the German Institute of Global and Area Studies (GIGA), there are both positives and negatives to Chinese mining operations in Africa. While China has poured money into Africa with over $60 billion allocated to African projects between 2015 and 2018 as well as a further $100 million pledged in military aid to the African Union, China is clearly supportive of African growth and defence. According to the report, Chinese banks, the government, and contractors loaned over $86 billion to Africa. But despite the numbers, these investments do not provide on-the-ground benefits for Africans. Chinese companies employ less local labour and have become known for disregarding local laws. This has resulted in the increasing stake in Africa and its resource sector being widely debated. Some are even claiming that it is more like colonisation than investment.
While the report’s conclusion is ambivalent, it was stated that steps should be taken to ensure a mutually beneficial relationship going forward.
While the China-Africa connection is positive or negative for Africans currently, China is firmly entrenched in the African mining sector, and the best way forward is to find mutual ground in which both countries may benefit over the long term. Some ways in which this can be achieved are mixed ownership, improved communication, and a review of local policies for exploration and production.
Based on research, it was found that international companies that work alongside locals promote linkages to other economic sectors. When refining local policies, the focus should be placed on hiring local workers and companies. Through open and continuous communication between communities and companies, risks can be reduced, and future operations can be improved to be more in line with both international standards and community demands. Only mutually beneficial agreements will ultimately stand that test of time and result in a prosperous, fair, and stable alliance between the two countries.