TRALAC - Trade Law Centre

The new scramble for Africa

Wednesday, 14 April 2010

Source: Jamaica Observer

For the past decade there has been a new scramble for Africa. Scrambling for Africa is nothing new. It reached its apogee in 1884 when 13 European powers and the United States convened at the palace of German Chancellor Otto von Bismarck to carve up the continent into spheres of influence. No African attended and decisions were announced as though the African people mattered not at all. Now things have changed a great deal. Europe and the USA no longer dominate the world and the new scramble involves fewer players as well as different players.

The new scramble is not as overtly and arrogantly unilateral as in the late 19th century and reflects the changed realities of today. Europeans have united themselves in a constantly expanding community and the 27 members largely offer a common position in international affairs. Asia has three major world economic powers, China, India and Japan, with China and India hotly contesting across Africa. Africa ranks third behind the European Community and the USA in overall Asian trade.

Not to be outdone is the United States. The four big players across Africa, the EU, China, India and the USA share common goals but employ different strategies. Other participants lag far behind.

In 2008 the European Union announced a new agreement with the African, Caribbean and Pacific countries that linked aid, trade, investment and development. European trade with Africa in petroleum, cocoa beans, diamonds, machinery, motor vehicles, boats and ships, and medicines amounts to around ¤80 billion annually. European investments in Africa account for a mere three per cent of total outflows, equivalent to about ¤3 billion. Africa clearly does not rank highly in either the commercial or political activities of the Europeans in the 21st century.

For China, Africa is a major area of interest. Lacking the political baggage of its rivals, Europe, the USA or India, China explicitly states that it has no imperial ambitions in Africa. It carefully avoids involvement in African domestic politics and stresses long-term arrangements of mutual interest to both parties. As an industrialising country, China has an insatiable appetite for raw materials. Its largest investments are in Algeria, Angola, Gabon, Guinea, Kenya, Nigeria, the Sudan, South Africa, Tanzania, and Zambia. Algeria, Angola, Nigeria and the Sudan are rich in oil. Zambia has vast reserves of copper, and Gabon exports iron ore.

Chinese interests are not confined to raw materials. Rather, they have a much broader policy for investment in road and rail networks, schools, sports facilities, telecommunications, computer clusters, and energy-generating capabilities. With a Central Bank flush with hard currencies, and a close relation between Chinese government and commercial interests, China has a major advantage over its rivals. In Ethiopia Chinese firms are rebuilding the capital, Addis Ababa, along with the gift of a headquarters building for the African Union. They designed and built the memorial park to Kwame Nkrumah in Accra, Ghana. The Chinese built the first railroad linking Zambia and Tanzania and are now rebuilding it. And like much of the rest of the world, African shops and markets abound with goods imported from China.

Although overshadowed by the Chinese efforts, the Indians are not to be overlooked. Indian trade with Africa long preceded that of the Europeans, and Indian diasporas already existed along the east coast of Africa from Somalia to South Africa when Europeans were sporadic visitors and slave traders along the western coast. India has a long trade relation with its diaspora communities especially in Ethiopia, Uganda, Kenya, South Africa and Nigeria. But recently the Indian government has cranked up its support for Africa. It has offered to spend more than US$500 billion in development aid by 2013 and to extend US$5.45 in credits to African states. At the same time more than 300 Indian companies have invested more than US$1.8 billion in Africa.

The USA did not pay much attention to sub-Saharan Africa after the abolition of its transatlantic slave trade at the beginning of the 19th century. Until 1815 when the second war against the Barbary Coast pirates relieved the situation, merchandise trade in the Mediterranean was the focus of attention. By the 1980s, however, two issues forced a renewed interest in Africa. The first was the growing awareness of the scarcity of oil on the world market accentuated by the increasing demand, especially in Asia, as well as the declining supplies available from known sources. The second was the expansion of world terrorism and the self-declared intention of the USA to lead the global fight against it.

At present Nigeria, Algeria, Angola and Gabon supply between 15 and 20 per cent of US oil imports. Combined African daily oil imports exceed the total imported individually from Saudi Arabia, Mexico or Venezuela and fall slightly behind Canada, the single largest supplier of oil to the US. One motive for the renewed US involvement across Africa obviously lies in its interest in varying its sources of petroleum and limiting its dependence on volatile areas like Saudi Arabia, Iraq, Iran and Venezuela. Potential new oil exporters such as Ghana (and Brazil in the Americas) have also attracted unusual attention.

On October 1, 2007 the USA established a new military division, the Africa Command or AFRICOM, headquartered in Stuttgart, Germany, and signed bilateral military agreements with some 53 African states that emphasised their mutual concerns. Basically the USA pledged to refrain from direct military activity in Africa, but would supply arms and military training through private contractors at a steadily escalating cost that approximates US$2 billion per year. At the same time, trade with sub-Saharan Africa boosted by the African Growth and Opportunity Act (AGOA) of 2008 has exploded, almost doubling in five years.

For Africa this new scramble appears to have better prospects than before. But the eventual result will depend as much on Africans as on foreigners and this time one hopes that the Africans can take better advantage of the international relationships.