Tuesday 27 September 2011

The new scramble for Africa

The prospects for growth in Africa are promising.  Mozambique has grown 8% in the last decade; Africa grew by 4.7% in 2010; and the World Bank has increased its growth forecast for sub-Saharan Africa to 5.3%.

The Chinese are capitalising on these economic opportunities.  China is now South Africa's largest trading partner.  It has invested heavily across Africa: from deals to import coal from Mozambique and oil from Nigeria to building roads and railways in Lesotho.

Not only will these investments boost the natural resource industries but it will have large spin-off effects.  The infrastructure the Chinese are building will facilitate economic growth in all industries.  The Chinese may look to manufacture goods in Africa as Chinese labour costs begin to rise.

However, China must realise that their role is not limited to making sound business decisions.  They should not be propping up rogue regimes like Zimbabwe by doing business with them.  China need to recognise its international duty to promote good government - their investment in vicious regimes should be conditioned on improvements in government conduct.


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