Seeing Green in Africa

As leaders of wealthy countries pat themselves on the back for debt relief and development assistance to Africa, China and India are doing their part to help develop Africas economies. The two Asian giants are pouring funds into the continent to find energy for their superheated economies and markets for their products.

Chinese companies are snapping up African oil and gas fields, investing in telecom companies, and funding programs to boost farm output. The value of Chinas trade with Africa has jumped from $10 billion in 2000 to nearly $30 billion in 2004. India arrived late but is starting to see gains as well. It is a driving force behind the new African Institutes for Science and Technology, which aim to replicate Indias technology-led economic growth. In 2004, India extended $500 million in credit to eight West African countries to promote the purchase of Indian information technology. Indias state-owned oil firm has invested heavily in Sudan and is exploring options in West Africa. China is making greater inroads, says Peter Draper of the South African Institute of International Affairs, but with its historical connections, India will catch up.

Why all the interest in the forgotten continent? A goodie bag of exploitable markets and exploitable resources. China has flooded Africa with cheap textiles, rice, and electronics. India has cornered the market in generic pharmaceuticals used to treat HIV and offers the hardware and software needed to get Africa on the information superhighway. Africa, in turn, is feeding the insatiable Asian thirst for energy: Both India and China have negotiated oil, gas, timber, and coal contracts worth billions of dollars.

The burgeoning business offers African leaders an inside look at Chinas and Indias enviable development models, which over the last decade have produced annual gross domestic product (GDP) growth of more than 9 percent and nearly 7 percent, respectively. China offers a manufacturing model built around cheap goods for export that many African countries are eager to emulate. India brings other assets to the table. India has shown that poverty can be reduced through the knowledge industry, says Manu Chandaria, Kenya-based chairman of the Comcraft Group, a steel, aluminum, and computer software conglomerate run by Chandarias Indian family in more than 40 countries.

In contrast to Western countries, neither India nor China pesters African governments about good governance or human rights. After Chinese President Hu Jintao visited Gabon last year, Gabonese President Omar Bongo remarked that, It seems to me that the aid provided by certain countries is tied aid, [but] cooperation with China comes without conditions, with mutual respect. This mutual respect often means looking the other way when it comes to repression and official graft. China has successfully diluted U.N. Security Council condemnations of Sudan, where it has significant investments in oil exploration and extraction. China and India like to say that they are looking out for the interests of other developing countries, but many think thats just gloss. There is an element of South-South solidarity at the political level, says Draper, but these relations are driven more by interests than fuzzy politics.

Foreign investment without strings of lectures is enticing, but it has drawbacks. Most African governments are eager to do business with the developing worlds superstars, but their interests do not always align with those in India and China. The rich-country investment dollars that go to Beijing or New Delhi dont go to Africa. And if foreign products continue to flood African markets, local industries will suffer. China often provides its own workers for development projects, which means fewer jobs for struggling local economies. Both countries are known for poor labor standards and weak environmental protections, which can translate into exploitation when combined with weak or unscrupulous African governments.

Still, African leaders realize that the rise of China and India is changing the rules of the game. By 2020, Chinas oil consumption will overtake the United States, and by 2025 India will be importing 85 percent of its energy. So Africans roll out the red carpets when Indian and Chinese politicians come looking for resources, checkbooks in hand.

According to the International Monetary Fund, five of the worlds 10 fastest growing economies are in Africa. The results arent isolated either. In 2005, 26 African countriesincluding many with expanding ties to the Asian giantswill likely exceed 5 percent GDP growth. Chinese and Indian investment, it turns out, may be as important to solving African poverty as Western charity.