Exit the Dragon?

 

 

 

It would probably be an over-simplification to say that if China sneezes, then Sub-Saharan Africa gets a head cold. But there is no doubt that the rapid development of the region’s largest trading partner over the last two decades, has had positive spillovers for much of the latter.

In particular, China’s rapid industrialisation and infrastructural build-up underpinned a sharp jump in the demand for, and the prices of, SSA’s key commodity exports – such as oil, iron-ore, copper and platinum.

But China’s increasing transition towards domestic consumption, rather than investment and exports, has seen its growth rate slow markedly from the double-digit rates seen earlier in the century.

The concomitant fall in demand for minerals and other raw materials, has underpinned a sharp decline in Africa’s export earnings, investment and growth rates.

Rather than lament about any short-term pain, many SSA finance ministries are sensing a huge opportunity for long-term benefit. This stems from the view that the economic relationship was, in fact, a continuation of a familiar timeline.

As the ex-Governor of Nigeria’s central bank put it in 2013, “China takes from us primary goods and sells us manufactured ones. This was also the essence of colonialism. China is capable of the same form of exploitation as the west. China is a major contributor to the de-industrialisation of Africa and thus African underdevelopment”.

According to this narrative, the Chinese slowdown could be a welcome catalyst for many SSA economies to develop a more robust and ultimately profitable approach to economic progress. One that revolves around using its natural resources to drive local manufacturing, job creation and development rather than watching them disappear in crates at knock-down prices, only to return as items that could be easily produced at home.

To be sure, the exact mechanisms to achieve the end are still being thought through. But both the flesh and spirit have demonstrated new bursts of determination and vigour.

TNT Business

 

Photo Credit: GovernmentZA

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