Africa is not China but can copy it

Head of continent's development bank says Beijing has an important role to play in industrialization

It took China about 30 years to transform itself from a poor country to an important economic power, but Africa is trying to make the transformation sooner, says Donald Kaberuka, president of the African Development Bank.

"We have a lot to learn here from what they have done in such a short period of time," says Kaberuka, who attended a seminar at the Center for China and Globalization in Beijing in late July. "I hope it takes Africa less than 30 years."

Kaberuka also met with Chinese government and business leaders to discuss boosting China-Africa business links. It was his sixth visit to China, his fourth as president of the African Development Bank, established in 1964 to finance development of African countries.

Africa's growth is continuing apace, with a 4.5 percent rise expected this year, and 5 percent in 2016, according to an AfDB report.

But while the world frequently compares Africa to China in the 1980s and 1990s, Kaberuka says he thinks it is important to point out some misunderstandings about Africa.

The international media often portray Africa as if it were one country, he says. An epidemic in Liberia and several other relatively small West African countries, for example, was reported as an epidemic in Africa.

"It is not quite right to compare China and Africa. China is 1.3 billion people, but it is one country. Africa is 1 billion people; it is 54 countries, with different currencies, trading regulations, languages, and so on," he says.

"There is a whole set of similarities and differences between these countries that people must be made aware of: Large economies, large populations; small economies; naturally rich countries; industrializing countries."

Kaberuka says it's true that there is a lot to learn from China's economic development. First is this: When Deng Xiaoping started the reform and opening-up of China, the starting point was increasing agricultural productivity.

"Chinese farmers were given the right to own their farms, and the fertilizer input was increased almost four times, so agricultural development in China moved very fast and there was enough food. As you boosted agricultural productivity, you've got supplementary labor available for the manufacturing sector. It won't be different in Africa," he says. "That is an important lesson for us. If you want to industrialize, begin by increasing agricultural productivity."

The second: It was not about the market or the state, it is about what works.

"I like very much Deng Xiaoping's famous phrase: It doesn't matter whether a cat is white or black, as long as it catches mice. That is something important for me. Another is: Keep learning as you go, and see what works," he says.

Kaberuka says another major priority is to attract more Chinese businesspeople to invest in African countries.

"The future for growth is in Asia-Africa, so getting Asian businesspeople to invest in Africa is a thing permanently on my mind," he says.

Another misunderstanding frequently advanced in the media, he says, is that the relationship between China and Africa is all about natural resources such as oil, gas and minerals, which he calls "a complete misunderstanding of the situation. There is a notion that the growth in Africa in the past 50 years is due to natural resources. Actually, that is not true.

"Natural resources growth is fast but very volatile. Countries growing on the basis of investments have less growth than the natural resources countries, but it's much more sustainable. What is driving growth now is investments, especially investments in infrastructure, demand, internal migration, increasing disposable income, expanding regional trade," he says, adding that such factors account for close to 30 percent of growth.

As markets become more sophisticated, the relationship between China and Africa is increasingly about the relocation of manufacturing.

"Which, for me, is a much deeper relationship than simply a trading relationship," he says. "I also see more companies from here (China), taking advantage of the huge demographic changes of my continent."

Since the industrialization of the United Kingdom, businesses moved around the world based on such factors as the competitive production of labor, technology and product markets, he says. In the case of the shoe industry, it was first developed in England, especially in Manchester and Leeds, then moved to the United States, then to the Far East to Japan, to Taiwan, to the Chinese mainland, and then to Southeast Asia and now it is moving to Africa.

"That doesn't happen automatically, but only if there's enough energy to attract the firms, if the logistics are in place. In the past few years, there have been many Chinese firms moving to Africa, moving to Ethiopia, because Ethiopian electricity is very cheap compared with China's, and the logistics have improved a lot.

"There's a Chinese saying: You build the nest, I bring the bird. So we are involved in the process of trying to build the nest, which is good infrastructure, certain services, some property regulation, so that the investors can bring the bird and prosper in the market," Kaberuka says.

Two things on top of Africa's agenda, infrastructure and industrialization, are where China is expected to play a bigger role, he says. Africa has a deficit of $500 billion in infrastructure, and the banks have created the Africa 50 Fund to try to mobilize capital from private markets for infrastructure, which is now mainly for African governments and institutions. This is expected to open to Chinese companies as well in the future, he says.

Infrastructure and industrialization have to be developed together, Kaberuka says, and industrialization must be developed on the basis of competitive infrastructure.

"Infrastructure is not enough. You need to also have logistics and logistics may involve soft elements, paperwork, bureaucracy, the speed of moving things. This is soft infrastructure, and we need both in industrialization," he says.

Industrial parks and special economic zones, a model often used by China in its economic development, are now widely used by African countries such as Ethiopia, Rwanda, Kenya, Tanzania, and Nigeria, which Kaberuka says could be a good model for the continent's industrialization.

"In the large countries, you cannot provide good infrastructure everywhere," he says. Industrial parks "might be a good way to begin, so as the government you provide land, electricity, water, telephones, you provide the basics, and the companies come to settle down".

With China leading the new Asian Infrastructure Investment Bank of which two African countries, Egypt and South Africa, are founding members there are also high expectations for the bank to operate outside Asia when there are new opportunities, Kaberuka says.

"I'd be more than willing to help them identify many more opportunities in Africa for infrastructure, for which the demand is huge. My sense is that the AIIB will bring a new agenda to international financial architecture," he says.

Kaberuka also says that China should not take seriously the critics who accuse it of being "new colonists" in Africa. "Globalization is about everybody being everywhere, and more energy should be spent on issues such as strengthening security, the justice system, economics and infrastructure rather than giving attention to the minority view ... of people who don't understand the issues", he says.

"Sensible people won't say that. They understand that it is important to grow Africa's economy, and to understand that China, like many other markets, has a role to play." He says he once went to a news conference in a European country that criticized China's presence in Africa, but on that same day, the president of that country had flown to China with a delegation of 100 businesspeople.

"You have American business here, you have Chinese business in Boston, you have African business in Guangdong. Everybody is everywhere, this is globalization," he says.

chenyingqun@chinadaily.com.cn

(China Daily Africa Weekly 07/31/2015 page32)