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Africa must not be fooled by China's carrots

By unknown | Jun 23, 2008 | COMMENTS [ 0 ]

Africa's economic outlook is not as rosy as recent reports would have us believe.

Africa's economic outlook is not as rosy as recent reports would have us believe.

Africa continues to attract the wrong foreign investment. Its leaders are too easily tempted by China's carrots of infrastructural development and soft loans in return for oil concessions and mineral rights. These deals give China tremendous leverage because they only represent a tiny fraction of the value of the reserves exploited. China wears the attire of socialism, but could be viewed as a neocolonial power.

It follows the imperialist paradigm: raw materials sourced from Africa, processed in Chinese factories, and sold back to Africa at a profit.

In South Africa, lopsided trade with China left a R32billion deficit last year and a weakened currency. Clearly, this begs for re-evaluation. Offers of overseas investment should be critically evaluated.

For example, foreign investment in long-established local companies, such as ICBC's investment in Standard Bank, are not ideal because dividends remitted abroad don't flow back here.

To create jobs for its jobless masses, Africa is in desperate need of new greenfields projects in manufacturing. China went to school on Taiwan's economic miracle and successfully emulated the island's economic policies and institutions.

If South Africa is serious about developing its manufacturing base to create jobs it should, like China, learn from Taiwan.

G Lishman, Johannesburg


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