African countries need to be more strategic in response to the
growth dynamic unleashed by Brazil, Russia, India and China
(Brics) or risk getting left behind, according to investment
Deborah Bräutigam, a professor at American
Universitys International Development Programme and
author of The Dragons Gift: the real story of China in
Africa, suggests some countries can move into the global
economy on Chinas coat-tails in much the same way
China initially rose on the coat-tails of Japan, Korea and
Despite the might of China and India, she says there is
still opportunity for other developing nations: I
remember when Taiwan, Korea, Singapore and Hong Kong were the
only countries people were talking about in Asia the new
NICs [Newly Industrialized Countries] and made the
argument there was just no more space available for other
countries because these were just dominating the exports. And
then China suddenly rose up.
The NICs climbed the value chain themselves and now China is
doing the same, upgrading its manufacturing. She adds:
Its not a static thing; its dynamic. So
countries that realize this can start positioning themselves
just like China and Vietnam and Bangladesh positioned
themselves to benefit from places like Korea and Taiwan moving
up the value chain... If you get on that wagon train, you can
Bräutigam cites Mauritius as having clear strategic
relations with China, and South Africa, Ethiopia and Rwanda as
getting more strategic. These are all governments in
which there are aspects of being developmental. But across the
rest of the continent, there arent many other
There is an opportunity, though, for governments who want to
move up the value chain because China is very interested in
projecting relationships of mutual benefit, says
Bräutigam. She cites a recent Zambian copper export
project where the Chinese have set up factories to process the
metal in an African-initiated beneficiation move.
But Bräutigam says one cannot expect Africa as a whole to
have a Sino-African strategy. You could only do something
like that if you have a central government of Africa. The AU
[African Union] is not presumed to speak for Africa. So you can
only talk about individual countries. And do they have
strategy? That varies quite a bit. She adds that it is
not very useful to conceive of Africa as a whole: I get
very fed up hearing about China and Africa like we are talking
about two countries.
Stephen Gelb, executive director of the Edge Institute, an
economic policy centre in South Africa, also reflects that view
and says it is difficult to envisage a single African response
to Bric because Africa is not a single entity. Each
country has different interests of course some of those
interests are common. But its not like there is one...
national or continental interest. Its hard to think about
an African response or initiative: its not like the EU
where there is a continental vote.
Furthermore, Gelb dismisses the Bric bloc as an artificial
notion. He says bilateral relationships are much more important
than the trilateral or quadrilateral, because the basis
of relationship between countries has to be their trade,
investments and other direct economic interactions.
He adds: Lets build economic ties between India
and South Africa and South Africa and Brazil, and then we can
talk about some sort of trilateral grouping. The same is true
in relation to the Bric.
But growing internal demand from China and India on the back
of a burgeoning middle class is set to inject fresh impetus
into consumer spending, according to Standard Bank research.
Its April economic report on Bric and Africa says that how
African nations respond to Chinas internal dynamic could
define their economic trajectories. African countries and
companies must seize the initiative to gain a stronger foothold
in the Chinese domestic market, it states. Goldman Sachs
reiterates this view in its May monthly Brics report.
Jeremy Stevens, an economist at Standard Bank South Africa,
says the Brics share a strong interest in building cooperation
among emerging markets to rebalance the global scales. He says
rapid growth, modernization and urbanization in China and India
will continue to cause an ever-accelerating convergence of
their interests with Africas.
Africa offers strategic opportunities to, and
potential nourishment for, Russias globally-minded energy
and metal producers, Brazils soft commodity power
players, Chinese manufacturers trying to build global brands
and, of course, Indias ICT, pharmaceutical and other
avenues of entrepreneurial spirit, he says.
The Brics view Africa as a continent with boundless
potential rather than being a developmental burden.
That said, Africa needs to take ownership of the Bric-Africa
partnership. The convergence of interests means the Brics
need Africa as much as Africa needs the Brics, he
China unsurprisingly dominates Bric-Africa trade flows: over
the past 15 years, China-Africa trade has doubled every three
years to surpass $100 billion in 2008, and it now buys
one-tenth of all Africas exports 60% from
oil-flush states. But Stevens says Africa exports more than
just oil, or metals: other notable exports include textile
fibres from Benin and Burkina Faso, apparel and clothing from
Tunisia and Morocco, tobacco from Malawi, Zambia and Zimbabwe,
and coffee and tea from Ethiopia, Kenya and Uganda. The
first time I drank Ugandan tea was in China, he says.
This trade is accelerating: for instance, Mauritania
exported just $100 million of ore to China in 2007; one year
later, that amount had increased six times. More and
more, Africas markets are mattering too because, unlike
in more mature economies, Africa offers a market to
Chinese-owned brands, says Stevens. Yes, it is true
that Africa exports mostly resources to Bric nations. But
thats the same for Africas trade relations with
advanced economies too. That dynamic is described by
Bräutigam as more about the conditions of Africa and
its lack of development and transformation of the economy in
general than about China itself.
More important, says Stevens, is that Africa must capture
its elevated position: What matters is how Africa manages
the revenues it earns from resources to broaden its industrial
capacity, diversify production and develop its social and
economic infrastructure to raise living standards.
Martyn Davies, chief executive of Frontier Advisory, agrees
the emerging middle class in China and India is the new driving
dynamic. If youre BAT [British American Tobacco] or
a luxury goods company selling top-end brands to emerging
consumers in India or China, you are effectively set for the
next century, he says. That is the story driving
growth. We need to get out of our fishbowl.
But he holds a contrarious view about the importance and
ability of African countries moving up the value chain to take
advantage of it. Davies says: We are naive to think we
can compete with the Asian manufacturing machine. Its not
going to happen. And can we compete in terms of the region with
Indian services? No... We need to accept we are a lesser value
chain producer, and we need to do that better... Its not
a dirty word not to be able to beneficiate. Its often
South Africa needs to take some rapid and hard decisions
about how to retain competitiveness. And for economies to the
north Mozambique, Zimbabwe, Zambia, the Democratic
Republic of Congo, Kenya and Tanzania he says:
Its not about doing the sexy thing and
moving into value-added activity; its about getting by
and survivalist economics.
Davies thinks free trade agreements are more political
rhetoric than commercial substance largely because
they have a difficult balance to strike, considering partners
are often also competitors. He suggests African countries
acknowledge the world is becoming more fragmented, and winning
economies need to retain relevance for global capital, with
factors like economies of scale, integration of markets and
stock exchanges, immigration, and free flow of services and
people becoming more important.
NO AUTOMATIC ANSWER
Matthew McDonald, a research analyst at the Centre for Chinese
Studies at Stellenbosch University in South Africa,
acknowledges the challenge is not just an economic question but
also a growing social experiment. That is something
individual governments have to try and sell to their various
populations, so there is no automatic economic answer. But I
think there is potential. There are methods to reinforce and
avenues to explore with regards targeting particular sectors
the Chinese and the Indians cant necessarily capitalize
on effectively. The other is pooling our resources and using
our available region and regional structure and architecture to
make that effective.
McDonald says one difficulty with regards to a unified
African response is different levels of development and hence
differing needs and abilities to maintain and sustain any free
trade agreements. The other, as illustrated through Focac
[Forum on China-Africa Cooperation], is misdirection of
resources and inability of African countries to capitalize on
opportunities. There have often been too many agendas
contesting each other. There is an issue with regards
identifying and singularly pursuing African
McDonald also warns about complacency in the face of
changing middle-class dynamics in Asia: It is becoming
important for Africa to speed up and take advantage of
opportunities to move up the value chain because Africa is not
the only region major manufacturers like Asia are looking to.
As China changes into a spending economy, Africa faces the
potential to be left behind. It needs to make itself as
preferable and valuable a source [as possible] of these kinds
of products and resource materials.
In the final analysis, Bric nations are altering the points
of departure in economic debate, forcefully arguing for a
wider arc of representation in global economic and political
affairs, according to Standard Bank. And the continent
has the opportunity to help define the next chapter.
Stevens at Standard Bank is optimistic: The potential
for cooperation is boundless. The story of the Brics and Africa
has only just begun.