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Economy

Boost From BRICS: 'Emerging' Trading Partners Are Fair Deal For Impoverished Africa

Opinion: More and more, poor African countries are throwing their lot in with emerging economic powers like China, India and Brazil. In many cases, these new trade relationships are less one-sided than observers might expect.

A Chinese convoy in Mbarara, Uganda (stttijn)
A Chinese convoy in Mbarara, Uganda (stttijn)
Helmut Reisen

China, Brazil and India have become major trading partners for poor African countries. The emerging economic powers of Asia and Latin America are not, however, the only ones to benefit from these partnerships. Historically dependent Africa is profiting as well from these new relationships, which have more to do with efficiency than "charity."

Today, the term "rogue aid" is by no means the right way to describe the business partnerships between poor African countries and their new trading partners, especially China. This concept, which was first used in early 2007 by the prestigious American magazine Foreign Policy, conveys several clichés about the impact of this new kind of aid: deteriorating governance norms in Africa, mounting debt, de-industrialization and the piling up of non-advanced manufactured goods.

The concept is in fact inappropriate in several ways. For starters, these new trading partners do not really offer "aid." Nor do they act like "crooks." The African countries themselves certainly don't view their new trading partners that way.

It is no longer necessary to state the importance of emerging countries for Africa. Using the most recent data about the African continent, the 2011 edition of the African Economic Outlook shows how in the space of a decade these countries went from marginal associates to Africa's top trading partners. According to the website, at the start of the millennium these new partners weren't members of the Western donors club, also known as the OECD's (Organization for Economic Cooperation and Development) Development Center.

Africa's top trading partners are China, India, Brazil, South Korea and Turkey, not only in terms of bilateral trade volume, but also because of the diversity of countries and sectors these emerging countries work with.

Which trading partners are most efficient in helping African countries reach their development goals? When it comes to infrastructure, water, transport, energy and innovation, Africa sees emerging countries as more efficient partners than the traditional donors and multilateral institutions. These results are even more striking when you think about the efforts made by traditional donors in these fields.

The economic cooperation between Africa and its emerging partners goes beyond China-Africa bilateral trade. It also goes beyond commercial exchanges, and increasingly beyond raw material extraction. The emerging partners offer more flexible financing, more appropriate expertise, technology and training, more affordable and promptly delivered infrastructure, generic drugs, machines and consumer goods adapted to Africa.

More importantly, African governments have a wider range of policy options, which means they have increased their ability to make the necessary decisions to pursue their own development goals, rather than those of their donors. This has put an end to decades of a near unilateral dependence on Western sponsors. And since Africa is a shock-prone continent, it seems wiser to depend on a larger number of trading partners and customers.

The power of choice

The China-Africa partnership isn't unique. Trade between African countries and their emerging partners has grown at dizzying speed over the past decade. Today, Africa's trade with emerging countries has doubled, reaching 40% of its total trade volume. Ten years ago, they represented only half of the trade between Africa and the European Union. Now they are on par. In 2009, China overtook the United States as Africa's top trading partner.

So is Africa moving away from a post-colonial dependence towards a Chinese one? The current trends seem much more promising: Africa can now choose its trading partners. China has not replaced the West as Africa's exclusive partner. In fact, putting the West aside, Africa's trade with all its other emerging partners represents almost twice its trade with China.

But the partnerships don't stop at trade. These new partners offer new financing mechanisms. China, India and Brazil in particular offer alternative methods of development funding. These new economic players have blurred the traditional dividing lines between investment and public development aid, between trade and aid, between the public and private sector. In terms of economic cooperation, aid is only one tool among many.

This shows a significant difference between the cooperation strategy of traditional sponsors and that of new partners. Western style "charity" emphasizes aid to reduce poverty. The "Asian" model emphasizes the partner's potential and tries to develop mutual benefits. In fact, this approach is similar to Japan's former cooperation strategy with China.

Emerging countries aren't only looking for Africa's raw materials. Many would be surprised to learn that the growth of African trade isn't solely based on its natural resources. Manufactured goods represent a growing portion of the products emerging countries import from Africa, while they are a shrinking share of Africa's trade with Western partners. Moreover, the flow of foreign direct investment is more concentrated in OECD member countries than in oil-exporting African countries.

We cannot expect a small African country to lead negotiations with major emerging countries by itself, and be treated as an equal. But today, thanks to cross-border improvements in infrastructure, African countries are benefiting from better regional cooperation and economic integration. Greater transparency from Africa's emerging partners could help dispel the remaining myths that some Africans, and too many Europeans, still too often take as truth.

Read the original article in French.

Photo - stttijn

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