Africa News blog
African business, politics and lifestyle
U.S Secretary of State Hillary Clinton’s 10 day trip to Africa ends this week with many commentators viewing it at least partly as being aimed at offsetting China’s growing economic clout on the African continent.
In public, Clinton has delivered Washington’s traditional messages on the importance of fair elections and of fighting corruption and human rights abuses.
But the fact that top oil producers Angola and Nigeria are both on the tour has made clear the importance of the visit from the perspective of ensuring access to resources – an area of huge importance to China too.
China’s trade in Africa hit $107 billion in 2008 and there are now 750,000 Chinese workers living and working in Africa. Sources in both Washington, D.C. and Africa confirmed that Clinton’s subtle diplomatic strategy is to offer African leaders infrastructure assistance in exchange for oil resources and increased energy investments on the African continent.
China, meanwhile, may be marshalling reserves to help kick start African economies and fuel demand as well as to secure access to its resources.
A presidential visit followed by U.S. Secretary of State Hillary Clinton’s African tour cannot conceal a stark reality: China has overtaken the United States as Africa’s top trading partner.
That is one of the main problems facing Clinton on a seven-nation jaunt meant variously to spread Washington’s good governance message and shore up relationships with its key oil suppliers on the continent.
There is little doubt that the BRICs -- Brazil, Russia, India and China -- have become big players in Africa. According to Standard Bank of South Africa, BRIC trade with the continent has snowballed from just $16 billion in 2000 to $157 billion last year. That is a 33 percent compounded annual growth rate.
What is behind this? At one level, the BRICs, as they grow, are clearly recognising commercial and strategic opportunities in Africa. But Standard Bank reckons other, more individual, drivers are also at play.
Before Nicolas Sarkozy was elected president in 2007, he made clear he wanted to break with France’s old way of doing business in Africa – a cosy blend of post-colonial corruption and patronage known as “Françafrique” that suited a fair few African dictators and the French establishment alike.
“The old pattern of relations between France and Africa is no longer understood by new generations of Africans, or for that matter by public opinion in France. We need to change the pattern of relations between France and Africa if we want to look at the future together,” Sarkozy said in South Africa early last year.
Organisers have postponed a conference of Nobel peace laureates in South Africa after the government denied a visa to Tibet’s spiritual leader the Dalai Lama, who won the prize in 1989 – five years after South Africa’s Archbishop Desmond Tutu won his and four years before Nelson Mandela and F.W. de Klerk won theirs for their roles in ending the racist apartheid regime.
Although local media said the visa ban followed pressure from China, an increasingly important investor and trade partner, the government said it had not been influenced by Beijing and that the Dalai Lama’s presence was just not in South Africa’s best interest at the moment.
The overthrow of Madagascar’s leader may have had nothing to do with events elsewhere in Africa, but after four violent changes of power within eight months the question is bound to arise as to whether the continent is returning to old ways.
Three years without coups between 2005 and last year had appeared to some, including foreign investors, to have indicated a fundamental change from the first turbulent decades after independence. This spate of violent overthrows could now be another reason for investors to tread more warily again, particularly as Africa feels the impact of the global financial crisis.
Buoyed by recent discoveries of commercial scale oil deposits in Uganda, east African policy makers, foreign oil explorers and their local partners trooped to a five-star hotel on the Kenyan coast this week to reflect on the progress and chart future strategies.Viewed as a frontier region for oil exploration, east Africa’s first major oil find was made by Tullow Oil and Heritage Oil companies in the Albertine Basin, which spans the border between Uganda and the Democratic Republic of Congo (whose improving relations are making the exploitation of the reserves look morel ikely).Before that, Tanzania had found vast reserves of natural gas in Songo Songo and Mnazi Bay areas.Just like Rwanda, which hopes to revolutionise electricity generation in the region through methane gas from Lake Kivu, Tanzania hopes to power cars from the gas and generate much needed electricity from its natural gas.The regional economic power house Kenya has, however, had disappointing results so far in its search for oil.Although 32 wells have been sunk here since the 1950s, only traces of oil and gas have been found. It is now reprocessing data gathered over that period in the hope new knowledge and technology will reveal hidden deposits.Drilling, an expensive affair that prospectors say can cost a firm $200 million for one well, took a commercial break in the 1980s. But it has also seen a resurgence of interest, thanks to last year’s rise of crude in global markets.Kenya issued 14 exploration licenses last year and China National Offshore Oil Corporation (CNOOC) is set to sink its first well in the second half of this year in the eastern province.Kiraitu Murungi, the nation’s energy minister, told the meeting in Mombasa they were praying day and night for the new well and data reprocessing to show signs of oil.On the other hand, Uganda — long reliant on Kenya’s ageing oil refinery for its supply of petroleum products — has grand plans for its newfound oil resources.They include the construction of a state of the art modern refinery at an estimated cost of $1.3 billion to process its oil as well as oil from any new finds in the region.Uganda’s energy and mineral development minister, Hillary Onek, spoke of the plans with a grin and added that the region, believed to share common geology, could be headed for a better future as it taps its oil and gas reserves to power development.However, as officials and oil prospectors retired to the hotel’s restaurants and beach bar for a drink in the evenings, they must have wondered if a few obstacles may not block the path to that prosperous future.The global financial crisis is weighing heavily on the finance base of some companies prospecting in the region.Lack of local skilled manpower in oil and gas industry is also worrying. So is the big question of how to equitably manage revenues from oil and gas so that oil and gas do not turn into a curse for the region as they have elsewhere on the continent.Is east Africa ready to handle oil and gas? Will oil discoveries help local communities?
If anyone in Africa was worried that the global financial crisis might dim China’s interest in the continent, President Hu Jintao will be visiting this week to give some reassurances – as well as possibly to temper any unrealistic hopes for the amount of assistance to be expected.
As Chris Buckley reported from Beijing, this visit is also about China showing the wider world that it is a responsible power.
Far from being all bad news for Africa, the global financial crisis is a chance to break a dependence on development aid that has kept it in poverty, argues Zambian economist Dambisa Moyo, who has just published a new book “Dead Aid”.
Moyo’s book, her first, comes out at a time when Western campaigners, financial institutions and some African governments have been warning of the danger posed to Africa by the crisis and calling for more money from developed countries as a result. The former World Bank and Goldman Sachs economist spoke to Reuters in London.
With the naval might of the United States, Europe, China and others now lined up against Somalia’s pirate fraternity, shippers are hoping the nightmare year of 2008 will not be repeated.
Somali pirates — mainly gangs of poor young men seeking a quick fortune under the direction of older “financiers” and boat leaders – reaped tens of millions of dollars in ransoms last year in a record haul of 42 hijacks, 111 attacks, and 815 crew taken hostage.
That pushed insurance prices up, persuaded some ship-owners to go round South Africa instead of through the Suez Canal, and prompted the unprecedented rush of navies from 14 different nations to the region. Even China is in on the act, deploying its navy for the first time beyond its own waters. And Japan is considering following suit despite its post-World War II pacifist constitution.
There have been some early successes from all the deployments – half a dozen pirates arrested and a series of attacks blocked, by helicopter and boat. Bad weather, too, has given the pirates some real problems, drowning five of them when their pockets were stuffed with dollars after taking their share of the ransom from the release of a Saudi super-tanker.
Yet the pirates have still managed two new hijacks and 11 attacks in the first half of January. They are hanging on to 11 ships with 207 hostages – most notably a Ukrainian ship with tanks on board.
And with such a vast area of operations — plus fancy new speedboats that have taken them as far as Kenya and Madagascar, and GPS equipment to keep away from the warships — the pirates are confident of keeping their business going. So who will win this modern-day battle of the seas? Will the shipping industry lose as much to the pirates this year as they did last? Should they keep paying huge ransoms like the $3 million paid for the Saudi boat?
Maybe, some argue, it will never really be possible to eradicate such a lucrative business which, in one of the world’s most failed states, offers an opportunity for poor and hungry men to become millionaires after a few successful raids. As one pirate told us, they will carry on until there is government again in Somalia.