Chinese investment in Africa is ‘not the new colonialism’

2017-09-15 14:52

Investment by Chinese firms on the continent is not as exploitative as it is made out to be, and South Africa is protected from possible exploitation as it has strong policies in place.

This is according to Carlos Oya, an economist with the department of development studies at the University of London. He has done research across the continent, including in Mozambique, Angola and Ethiopia.

He said the perception that China, through various investment deals, was recolonising the continent was unfair.

“I think it’s an unbelievably biased picture,” he told City Press shortly after speaking at a seminar at the Wits School of Governance this week.

Oya said that media reports were reinforcing this perception of China.

“What I find striking is [that] the same standards of reporting are not applied to other foreign countries,” he said.

“That is not the right term to use, for not just related to China, but for any other investment,” he said.

The word was insulting to countries that experienced real colonisation.

Oya said many of these investments had yielded a considerable number of jobs and had not been as bad as they were sometimes made out to be.

“A lot of these investments have been in sectors such as manufacturing and services, which create a lot of jobs and generate production capabilities that were not there. And they create conditions for the generation of linkages with other sectors, including domestic business.

“That is not because they are Chinese, because it happens with investment from Turkey, from India or from Bangladesh. So I don’t think it is helpful to describe this as a new form of colonialism,” he said.

Responding to Chinese companies importing labour into some African companies, Oya said the law applied to all companies – foreign or not.

“People who work in these new investment projects do not necessarily face worse conditions than if they were employed by a local firm.

“The labour laws are a wide phenomenon. In countries where you have weak labour law enforcement or no laws, all companies benefit,” he said.

The historical context of the country should be kept in mind – South Africa is in a better position as its labour laws and policies are tighter, he said.

Profit repatriation and capital flight in some countries on the continent differed vastly. In some cases, locals rather than foreigners were the ones moving money out of the country.

“Most of the capital flight in Angola is probably explained by domestic elites rather than foreign elites. Profit repatriation will most likely be more significant in resource sectors, or sectors such as oil because of the size of the profits and the nature of the companies involved, compared with other sectors such as manufacturing or services,” he said.

These industries did not repatriate profits because they needed to reinvest to be sustainable.

Lesetja Malope
Business writer
City Press
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August 18 2019