How China's Approach Beats the West's in Africa
Harvard Business Review Blog | by Stephan Richter | September 3, 2012
U.S. Secretary of State Hillary Clinton's recent 10-day tour across Africa represented a strategic caving-in of sorts. In many of the places she visited, the Chinese had gotten there first. In fact, China is everywhere in Africa these days, both exploiting the continent's vast natural riches and pursuing infrastructure projects long promised but never quite delivered by the West.
Building railroads from inland areas to the coast, with the eventual prospect of a network that spans sub-Saharan Africa? Putting in highways at affordable prices across the continent? Constructing state-of-the-art office complexes, within budgets that African nations can afford?
These are all goals that African leaders have pursued for a long time. In the past, a toxic combination of corruption, murky ties between ex-colonizing countries (and their business elites) and the new rulers, and overly complex planning structures derailed project after project. Given the ability to deliver projects on time and on budget, the Chinese offer Africa's governments and people a clean-cut deal: If you work with us, we will build it - period. No ifs, ands, or buts.
Given that Africa's economic growth has long been stunted by the lack of a dependable internal transportation infrastructure - within countries and among them - this is more than a tempting offer. It represents an opportunity of historic proportions.
Yes, the continent has airports and cell phones galore, but due to the wholly insufficient rail and highway infrastructure, trade is still hampered in a manner reminiscent of Europe before 1820. In that sense, the initiatives undertaken by the Chinese in Africa now are the historical equivalent of what the Napoleonic wars brought to a country like Germany. They are a long overdue wake-up call to get rid of outdated traditions in order to advance to the age of modern commerce and trade.
Without making light of the drawbacks of how the Chinese operate, including the fact that they rely mostly on their own workforces even for projects deep in Africa's interior, theirs is a vision that is very distinct from that of the West over the past 50 years.The formula the West applied to post-independence, post-1960 Africa was one that focused on democracy-building over market-building. The Chinese approach it just the other way around. And whatever the preferences of Westerners, it is clearly Africans who have to make the choice of whether to go with democracy first or markets first.
In the abstract, it is always preferable to focus on democratic structures. However, in countries where poverty is still rampant, an uncomfortable counterargument can be made, based on the track record of the past 50 years. In much of Africa, political growth remains as stunted as economic development. Political maturity - in the sense of a robust enough democracy for elections to result in actual power change - for the most part only works in countries like Ghana, where economic development is already advanced and broad-based.
Focusing on market-building first can empower a budding middle class - which provides a check to the vestiges of often clan-based political and economic feudalism. In this approach, economic development leads political development. That is pretty much how things transpired in Europe over the centuries. There, economic empowerment led the merchant classes to demand increased political rights, which eventually put the continent on the road to full-blown democracy.
For Westerners. it is confounding to see that theirs somehow ended up being the "ideological" approach. Focusing on ideology, mind you, was supposed to be the Communists' gig, due to their inability to offer anything meaningful in terms of material goods.
And yet, it was the United States that peddled democracy and human rights - a.k.a., broadly speaking, ideology. Faced with the negative fallout of that, Secretary Clinton has recently sought out a more balanced approach, focusing on business (and opportunity) over human rights (and hectoring).
Meanwhile, the Chinese have kept building bridges, railroads, and conference centers. Ironically, it is the Chinese - not the Americans - who can make a compelling case that their focus in Africa has been not on spreading ideology but on the practical business of securing natural resources and creating future customers and trading partners.
Such a customer focus, of course, runs fully counter to Marxist doctrine. Better yet, the Chinese can call on the estimable Adam Smith as the crown witness for their strategy in Africa. In assessing the economic strategies of great empires, he wrote:
To found a great empire for the sole purpose of raising up a people of customers may at first appear a project fit only for a nation of shopkeepers. It is however a project altogether unfit for a nation of shopkeepers - but extremely fit for a nation whose government is influenced by shopkeepers.
And indeed, as the African continent proves, the Chinese Communist Party is spreading its wings around the world via commercial, rather than military, means. It is thus very much a government influenced by shopkeepers, one that uses their vast range of activities for its own alliance-building purposes.