Africa's Shadow Rise: China and the Mirage of African Economic Development 9781350225411, 9781786994790

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About the authors

Pádraig Carmody teaches geography at Trinity College Dublin where he directs the Masters in Development Practice and is a senior research associate at the School of Tourism and Hospitality at the University of Johannesburg. His research centres on the political economy of globalisation in Africa and he has published in journals such as European Journal of Development Research, Review of African Political Economy, Economic Geography and World Development. He sits on the boards of Political Geography, Economies and African Geographical Review and is a former editor-in-chief of Geoforum and current associate editor of Transnational Corporations published by the United Nations Conference on Trade and Development. He is a Fellow of Trinity College and was elected to the Royal Irish Academy and the Royal Academy for Overseas Sciences in 2018. Peter Kragelund is head of the Department of Social Sciences and Business, Roskilde University. Peter holds an MA in Economic Geography from the University of Copenhagen and a PhD in International Development Studies from Roskilde University, Denmark. His main interests include changes in the global economy and how these affect developing countries. In particular, his research has examined how the tectonic shift brought about by ‘emerging’ economic actors’ renewed interest in Africa has affected the political economy of the host countries. His work has been published, inter alia, in the Cambridge Review of International Affairs, Development and Change, Development Policy Review, European Journal of Development Research, Extractive Industries and Society, Journal of Modern African Studies, Resources Policy and Review of African Political Economy. Ricardo Reboredo is a PhD candidate at Trinity College Dublin. His research interests include globalisation, development and Sino-African relations. His current work focuses on the effects of large-scale, Chinese-funded projects on development in southern Africa. He has published in a variety of journals including Urban Forum and African Geographical Review.

Acronyms and abbreviations

5G 5th generation (mobile technology) AfDB African Development Bank AI Artificial Intelligence AIIB Asian Infrastructure Investment Bank ANC African National Congress AU African Union BLNS Botswana, Lesotho, Namibia, Swaziland BP formerly British Petroleum BRI Belt and Road Initiative (of the Chinese government) BRICS Brazil, Russia, India, China, South Africa CCP Chinese Communist Party CCS Centre for Chinese Studies (Stellenbosch University, South Africa) CEE Citizen Economic Empowerment CEO Chief Executive Officer CGTN China Global Television Network CNMC Chinese Non-Ferrous Metals Company COPs Contracted Overseas Projects CSR Corporate Social Responsibility DA Development Agreements DAC Development Assistance Committee (of the OECD) DfID Department for International Development (UK) DIRCO Department of International Relations and Cooperation (South Africa) DRC Democratic Republic of Congo DSF Debt Sustainability Framework ECA Economic Commission for Africa (of the United Nations) EFFORT Endowment Fund for the Rehabilitation of Tigray EPA Economic Partnership Agreement EPZ Export Processing Zone EU European Union EXIM Export–Import FDI Foreign Direct Investment FOCAC Forum on China–Africa Cooperation FOREX Foreign Exchange

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FRELIMO Frente de Libertação de Moçambique FTZ Free Trade Zones FQM First Quantum Minerals GDP Gross Domestic Product GNI Gross National Income GPN Global Production Networks GVC Global Value Chain HIPC Highly Indebted Poor Country (debt relief initiative) HLF High Level Forum HRW Human Rights Watch ICBC Industrial and Commercial Bank of China ICC International Capacity Cooperation (project of China) ICCM International Council of Mining and Metals ICS India, China, South Africa ICT Information and Communication Technology IFIs International Financial Institutions IFC International Finance Corporation (of the World Bank) IMF International Monetary Fund INDECO Industrial Development Corporation (of Zambia) IPAP Industrial Policy Action Plan KCM Konkola Copper Mine LCP Local Content Policy MCTI Ministry of Commerce, Trade and Industry (Zambia) MEC Minerals–Energy Complex MOFCOM Ministry of Commerce (China) MOTA Ministry of Tourism and Arts (Zambia) MNC Multinational Corporations MSMEs Micro, Small and Medium Enterprises MTN Mobile Telecommunications Network MTCI Ministry of Trade, Commerce and Industry (Zambia) NAFC North Atlantic Financial Crisis NAM Non-Aligned Movement NCD Nigerian Content Division NDRC National Development and Reform Commission (of China) NFCA Non-Ferrous Africa Mining Corporation (subsidiary of CNMC) NNPC Nigerian National Petroleum Corporation OBOR One Belt, One Road (also known as BRI) ODA Official Development Assistance OECD Organisation for Economic Cooperation and Development

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OEM Original Equipment Manufacturer OOF Other Official Flows PF Patriotic Front (of Zambia) PPP Purchasing Power Parity RBV Resource Based Views (of the firm) RFI Resource-Financed Infrastructure RMB Renminbi ROE Return on Equity SADC Southern African Development Community SAIIA South African Institute of International Affairs SAPs Structural Adjustment Programmes SDGs Sustainable Development Goals SEZ Special Economic Zone SGR Standard Gauge Railway SI Statutory Instrument SME Small and Medium-Sized Enterprises SMME Small, Medium and Micro Enterprises SOE State-Owned Enterprise SSA Sub-Saharan Africa SSC South–South Cooperation SWAPO South West African Peoples’ Organisation TAZARA Tanzania–Zambia Railway TDC Trilateral Development Cooperation TICAD Tokyo International Conference on African Development TNC Transnational Corporation UAE United Arab Emirates UNCTAD United Nations Conference on Trade and Development UNECA United Nations Economic Commission for Africa UNIDO United Nations Industrial Development Organization USAID United States Agency for International Development USD United States Dollars VAT Value Added Tax WPAE Working Party on Aid Effectiveness WTO World Trade Organization ZAM Zambia Association of Manufacturers ZANU-PF Zimbabwe African National Union – Patriotic Front ZCCM Zambia Consolidated Copper Mines ZCCM-IH Zambia Consolidated Copper Mines Investment Holdings ZDA Zambia Development Agency ZMLCI Zambia Mining Local Content Initiative

Tables

4.1 Selected characteristics of Chinese development finance to Africa, 1956–2018 5.1 Ownership of major mines in Zambia, September 2015 5.2 ICS mines’ impact on local suppliers 6.1 Macro-level policies affecting linkage development in Zambia’s copper industry 6.2 Meso-level policies affecting linkage development in Zambia’s copper industry 6.3 Micro-level policies affecting linkage development in Zambia’s copper industry 6.4 Coordination and collaborative action in Zambia’s copper industry

102 125 132 157 162 164 167

Acknowledgements

Parts of this work were supported by the Consultative Research Committee for Development Research, Denmark, Grant 11053CBS; Enterprise Ireland grant CS 2015 1408E and by the University of Johannesburg, for which we are grateful. The authors also wish to thank Douglas Phiri and Wisdom Kaleng’a for fieldwork assistance in Zambia. Many thanks to Robert Rotberg, Ian Taylor, Hannah Freedman and Chelsea Gunter for their comments and Alexandra Gordon for her editorial guidance and assistance on one of the chapters which appeared in an earlier form as ‘Who Is in Charge? State Power, Agency and Sino-African Relations’, Cornell International Law Journal, 49, 2016, 1–24. Thanks also to John Morrissey, Michelle D’Arcy, Ian Taylor, Francis Owusu, Lyn Schumaker, Andrew Brooks and the Journal of Southern African Studies referees for their comments on the paper ‘The Geopolitics and Economics of BRICS’ Market and Resource Access in Southern Africa: Aiding Development or Creating Dependency?’, 43(5), 2017, 863–877, which also appears here in revised form. Patrick Bresnihan, Jim Murphy, Alex Hughes, Maggie Opondo, Kanchana Ruwanpura and Stefan Ouma gave insightful comments on ‘Economic-Geographic Theory from the South: African Experience in the Global Economy’, forthcoming, Geoforum, on which part of Chapter 1 draws. We also draw on P. Kragelund, ‘Towards Convergence and Cooperation in theGlobal Development Finance Regime: Closing Africa’s Policy Space?’, Cambridge Review of International Affairs, 28(2), 2015, 246–262, for Chapter 4, and P. Kragelund and P. Carmody, ‘BRICS’ Impacts on Local Economic Development in the Global South: The Case of a Tourism Town and Mining Provinces in Zambia’, Area Development and Policy, 1(2), 2016, 218–237 for Chapter 5. Thanks also to Michael W. Hansen and Lars Buur and the Resources Policy referees for their comments on the paper ‘The Making of Local Content Policies in Zambia’s Copper Sector: Institutional Impediments to Resource-led Development’, 51, 2017, 57–66, which appears in Chapter 6 in a revised form. Part of Chapter 7 draws from Pádraig Carmody (2020) ‘Dependence Not Debt Trap Diplomacy’, forthcoming, Area Development and Policy. Thanks also to Gregor Dobler for suggestions on sources and to Immanuel Darkwa for his help with some of the formatting of the bibliography and Kim Walker and the production staff at Zed Books. The usual disclaimers apply.

1 Africa rising: rhetoric or reality?

Although oil exporters experienced the greatest improvement in their terms of trade, China’s contribution to this was much more limited than in the case of minerals and metals. (Jenkins 2019: 152) Several commentators have argued that China’s appetite for Africa’s natural resources to maintain its own rapid industrialisation and economic growth is a new form of colonialism. According to this narrative, China is exploiting Africa’s natural resources for its own benefit while African countries are not fully benefitting from the sale of these resources. Furthermore, that natural resource sector, which is a significant part of Sino-African trade, has failed to create enough jobs and led to increasing inequality by rewarding only the politically connected with resource rents. It has also been said that high demand for natural resources is reinforcing Africa’s dependency on that sector and preventing the growth of the industrial sector. (Langdon et al. 2018: 526) In October 2009, before the blood of over 150 civilians mowed down in cold blood by the military junta in Guinea could dry, Chinese investors became the junta’s strategic partners for mining projects. The Chinese invested over $7bn in infrastructure in the poverty-wracked nation at a time when the world was aghast at the massacre of unarmed pro-democracy activists who had gathered in a stadium. It is estimated that the country may have the largest deposits of aluminium ore and bauxite in the world. (Bassey 2012: 40)

1.1 Africa rising? There is a little remarked paradox in African development. It is the world’s poorest continent, but also the one which has perhaps been widely seen to be ‘rising’ at the fastest rate in the last decade or so;

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at least in much of the Western and business media.1 In 2000, The Economist famously published a cover showing an insurgent shouldering a rocket-propelled grenade and called Africa the ‘Hopeless Continent’. However, in subsequent years it was to reverse course and become an enthusiastic promoter of the ‘Africa Rising’ narrative (Economist 2011). One of the primary reasons behind this abrupt change in perspective was the prolonged period of high commodity prices from 2003 (known throughout the literature as the ‘commodity super-cycle’) (cf. Farooki and Kaplinsky 2012), and its associated contracted overseas projects (COPs) for infrastructure development, many of them funded by China, which also boosted economic growth, in the short term at least. The convergence of the commodity super-cycle with the creation and spread of the ‘Africa Rising’ discourse directs our attention to the fact that the continent in the last decade hosted many of the world’s fastest-growing economies. As primary commodities account, by some estimates, for over 93% of Africa’s exports (UNCTAD nd in Stein 2014), high prices stimulated economic growth across much of the continent. However most of the benefits and profits from these go to foreigners (Taylor 2020). Other reasons which have been given for relatively rapid rates of economic growth on the continent include the adoption and diffusion of mobile phone technology (for a critique see Murphy and Carmody 2015), the role of improved institutions and liberalisation (Bates and Block 2018) and aggregate growth in consumption across the continent, making Africa attractive for foreign and domestic investors alike (Radelet 2010). In parallel, though also as part of the ‘Africa Rising’ narrative, a discourse about an expanding middle class on the continent flourished. This paid particular attention to the growth of shopping malls and housing estates and told the story of how approximately onethird of Africa’s population (300–500 million people depending on the exact definition of the group) now belong to the middle class (AfDB 2012; Kharas 2010); however, this is highly disputed, as described below. New ‘middle-class’ incomes also fuelled the desire for information technology, again feeding into the broader ‘rising’ narrative. Many countries on the continent also achieved substantial debt relief through the Highly Indebted Poor Country (HIPC) initiative of the World Bank and International Monetary Fund (IMF), and the later Multilateral Debt Relief Initiative. This conjunction of factors allowed for a ‘new scalar alignment’ to emerge between global, regional and national-level factors, which interact and co-constitute

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recursively, which facilitated or enabled faster economic growth in many countries (Carmody 2010). Gross domestic product (GDP) figures increasing by more than 5% per year across Africa for most of the post-millennium period led to an upsurge in academic and financial sector interest in the continent as international investors saw it as a place offering higher than average returns (Bright and Hruby 2015; Economist 2011). Whereas Ireland is sometimes cited as being the world’s biggest tax haven (Paul 2018) and consequently as having the highest profit rate in the world for US-based corporations operating there, Africa as a continent has been reported to have the highest profit rate of any continent for US companies, partly because of the relative paucity of investment and perceived high risks. However, risk perceptions have arguably changed in recent years leading to greater inflows of investment across economic sectors. Foreign direct investment (FDI) in Africa was just USD 9.1bn in 2000, whereas it is projected to be over USD 50bn for 2019 (UNCTAD 2019). As will be discussed in more detail later, FDI is not necessarily developmentally beneficial, but may generate faster economic growth. The Rwandan economy, which has made attracting FDI a key government priority and is often cited in relation to the ‘Africa Rising’ narrative, more than quintupled in size from USD 1.7bn in 2000 to over USD 9bn in 2017 (World Bank 2019), although there has been some debate about the veracity of Rwandan statistics (Himbara 2016; Ring 2018). However, tax revenues, which are harder to fake, have also shown a sharp upward trajectory, although the total tax take at USD 1.3bn is roughly the same as the amount of foreign aid the country receives (Himbara 2018). In recent years, the ‘Africa Rising’ narrative has come under scrutiny from both academic and media sources (Radelet 2016) and partly stalled. This is, in part, as a result of the 2014 commodity price bust, but there are also other reasons as the veracity of some of the claims being made became subject to greater investigation and scrutiny. For example, within the last decade only 4% of Africans had an income of over USD 10 a day (Africa Progress Panel 2012 cited in Taylor 2014a: 24). Among Africans surveyed ‘a full three-quarters (76%) report going without cash at least once in the previous year’ (Dulani et al. 2013: 3), bespeaking the prevalence of precarity among the vast majority of the population. Furthermore, inequality is rising across the continent and although the African Development Bank (AfDB) often praises the rise of the middle class in Africa, it also admits that ‘Africa’s Gini index – a measure of income inequality – has widened over the past six

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years … and is hardly better than it was in 1980’ (AfDB 2012: 3). Exacerbating the situation, half of all population growth in the world is projected to take place in Africa between 2015 and 2050 (UN cited in Mills et al. 2017) and by some estimates 90% of the world’s poor will live in Africa by mid-century (Peters 2018). According to the AfDB and the Organisation for Economic Cooperation and Development (OECD) (2017: 110), ‘Africa has the largest differences in distribution of benefits of human progress across the world’. Furthermore, according to World Bank statistics – an erstwhile promoter of the ‘rising’ discourse – a growing number of people on the continent are living in poverty (Beegle et al. 2016). Yet books and articles continue to be produced in the ‘Africa Rising’ vein, such as Africa’s Business Revolution: How to Succeed in the World’s Next Big Growth Market (Leke et al. 2018), even if they have somewhat more muted titles and claims now. A recent issue of The Economist magazine in 2019 was titled ‘The New Scramble for Africa and How Africans Could Win It’. Similarly, Carlos Lopes (2019: 35) argues that Africa tripled its GDP in the last 20 years, achieved amazing gains in the sectors of health and education, improved governance, created the second-most attractive region for investment, and affected a reduction of poverty, despite a demographic explosion that has created the fastest growing urbanisation drive observed in human history.

While these characterisations highlight Africa’s progress in a variety of social, political and economic areas, they often fail to consider the primary drivers of African growth. Ian Taylor (2014a; 2014b) has shown in detail why the recent rising influence of the so-called BRICS powers on the continent (Brazil, Russia, India, China and South Africa) is best characterised as a diversification of dependence for Africa rather than ‘Africa Rising’. A classic feature of dependence is unequal trade: that is, the export of low-value raw materials in exchange for higher value-added manufactured products, resulting in a ‘trade trap’ (Coote and LeQuesne 1996). This is compounded by the fact that there is a secular or longterm tendency for the price of raw materials to decline, and until recently at least, a trend for the price of most manufactured goods to increase, resulting in trade balance difficulties for many primary commodity exporters. On top of this, what economists call economic spillovers and linkages are greater for manufactured goods than resource extraction, leading to higher value addition and greater

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possibilities for process (doing things more efficiently) and product upgrading (where better-quality products are produced) in the former compared to the latter. Indeed, manufacturing FDI is seventeenand-a-half times more labour intensive than mining FDI in Africa (ECA cited in Graham 2015); a statistic which speaks volumes as to the development effects of different economic sectors. Only 26% of announced greenfield foreign direct investments in Africa in 2013 were in manufacturing (World Bank 2015). After independence many African countries contracted substantial debts to continue to finance imports at the same or increasing levels, particularly as they sought to diversify their economies by importing capital goods (machinery and plant). Thus, the trade trap often results in a debt and capability trap, where there is a type of ‘lock in’ of economic structures and associated skill sets around primary commodity production in the economy. This is again becoming increasingly manifest in many countries across the continent. Higher commodity prices during the super-cycle may have actually initially disguised, but ultimately intensified this risk, by encouraging African governments to undertake resource for infrastructure swaps, some of which have been very disadvantageous, including the notorious Chinese-funded Sicomines deal in the Democratic Republic of Congo (DRC) (Marysse and Geenen 2009), which gave China access to vast copper reserves in exchange for multi-billion-dollar loans to build infrastructure that helps to facilitate extraction. Reportedly the entire agreement around the deal was less than ten pages long and Maiza-Larrarte and ClaudioQuiroga (2019: 423) found that ‘the evidence shows that the DRC is exchanging part of its mineral wealth for deficient roads and poor equipment’, which has important implications for other resourcefinanced infrastructure (RFI) deals. According to the Economist Intelligence Unit (2002), increasing reliance on commodities in Africa and the resultant investment which it attracted could actually be considered a form of technological downgrading of the continent’s economy, despite the supposed existence of an ‘information revolution’ for example. A rising Africa, depending on how it is defined, and an increased number of people living in poverty are not necessarily incommensurable however. So how can we explain this seeming paradox? This book engages this question with a particular focus on the role of China in Africa’s development to argue that what the continent, or at least much of it, has experienced economically over the last fifteen years is best characterised as a ‘shadow rise’. We conceptualise much of the continent’s experience in these terms because relatively

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fast rates of economic growth have not, for the most part, been accompanied by concomitant structural transformation or reductions in poverty. Rather we argue that despite significant changes to the internal economic workings of the countries on the continent, the general quality of economic growth has been low in terms of both job creation and poverty reduction. As much of the economic growth on the continent has been driven by external resource demand, particularly from China, its upturn is partly a reflection of the structural transformation of that economy and the massive demand it has created. Thus, Africa’s rise is largely responsive – a shadow of the real rise of Asia, and China in particular, in the global political economy.

1.2 Renewed Chinese engagement with Africa China has been central to the story of Africa’s purported rise both in the media and in the academic literature. In a sense it has narrated Africa’s ‘new’ model and modes of interaction with the outside world (Brown and Harman 2013). Whereas the Western powers largely neglected the continent in the wake of the collapse of the Soviet Union, as their main interests there had been geo-strategic rather than economic, every year since 1991 the Chinese Foreign Minister has made Africa his first port of call in his overseas visits for the year. This can be explained by a combination of geopolitics and geoeconomics. Relative Western neglect across much of the continent from the early 1990s gave China a more open playing field (Kragelund 2009), which is intensifying as the Trump Administration in the US further selectively delinks from Africa (Owusu et al. 2019). Furthermore, after the Tiananmen Square massacre of pro-democracy protesters in Beijing in 1989, China sought out allies around the world to protect it from any Western-sponsored attempt at regime change – so-called ‘ants’ to protect the ‘elephant’ of China (Chinafrica 1990 cited in Taylor 1998). In geoeconomic terms, China became a net importer of oil in 1993 and is now the world’s largest consumer of this and many other natural resources. It produces and consumes more than half of the world’s steel and more cement was poured in China from 2011 to 2013 than was used in the entire twentieth century in the United States (Swanson 2015). This has created a strong imperative for the government to source supplies of strategic minerals and raw

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materials from elsewhere, often in Africa. Indeed, the Chinese economy is now heavily dependent on a variety of African raw materials including Angolan crude,2 and South African manganese, chrome and platinum,3 among many others. As a whole, Sino-African trade has risen sharply over the last decade, despite falls in 2016 and 2017 (largely in response to the Chinese economic slowdown and related commodity price bust of 2014/2015), and currently tops the USD 200bn mark (CARI 2018). According to the AfDB and OECD (2013), the resource sector accounted for 35% of Africa’s growth from the turn of the millennium and approximately 80% of export earnings in 2012. There were also of course multiplier and linkage effects from the resource sector, so this may substantially underestimate its overall contribution to economic growth on the continent. The Chinese drive to secure resources has been backed by a number of government and provincial-level initiatives, including the much remarked ‘Go Out’ policy from 2001 that sought to turn Chinese firms into internationally competitive players. In addition, 2006 saw the launch of the country’s Africa Policy, which laid down the framework of public support (preferential loans and buyer credits) for private and public enterprises wanting to engage in Africa. This framework included the boosting of development banks that offer low-interest loans to Chinese enterprises wanting to invest abroad and subsidies to Chinese companies that plan to set up production in Africa. Directly related to this, China in 2006 opened an ‘overseas and cooperation zone program’ intended to pave the way for Chinese overseas investments in so-called special economic zones (SEZs) throughout the world – six were originally approved in Africa, although there are now several dozen, both publicly and privately funded. The Forum on China–Africa Cooperation (FOCAC), which brings together political leaders from the different ‘partners’, and has been held every three years since 2000, has also been an important institution in backing both the geopolitical and geoeconomic aims of the Chinese state, which are intertwined (Kragelund 2009; Taylor 2011; Bräutigam and Tang 2014). These initiatives, along with other vectors of engagement, have given rise to a distinctly Chinese-inflected type of globalisation, which is heavily influenced both by outward-focused ‘umbrella projects’ such as the Go Out policy and Belt and Road Initiative (BRI) (discussed in more detail later) and the leading role of state-owned corporations in these ventures (Reboredo 2019). They are called umbrella projects because the Chinese state lays out the overarching framework – the umbrella in this analogy – but

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implementation is undertaken largely by individual Chinese state and private sector companies, taking their own initiative. Whereas in previous decades globalisation was a largely Westernled project this has now changed with rise of China and other emerging powers, as will be discussed during the course of this book. Globalisation in Africa is also changing in other important ways however, and it is necessary to understand broader patterns of economic restructuring on the continent in order to fully interrogate the nature and impact of increased Chinese presence. In order to situate China’s impact, it is first necessary to (re)conceptualise the nature of globalisation on the continent.

1.3 The nature of globalisation (in Africa) Globalisation has a variety of definitions but in general terms refers to increased interconnectedness between places in different world regions through flows of finance, trade, people, ideas and other phenomena. Globalisation is constantly evolving as the nature of interconnections change, through the adoption of new information and communication technologies (ICTs) for example; even as it tends to deepen as one flow, such as trade, sets off other flows (of money for example), in a generally recursively deepening fashion, although also with setbacks and backlash – exemplified by the election of Donald Trump in the United States in 2016 for example (cf. Owusu et al. 2019). The evolution of globalisation and processes ‘internal’ to the continent itself are changing its developmental trajectory, although a relational geographic approach rejects a containerisation of space into external and internal given the generally increased intensity of flows between places, and consequently the way in which they co-constitute or co-construct each other. It must be noted that China’s increased engagement on the continent is only one of the factors shaping Africa’s developmental trajectory, along with others such as rapid information technology diffusion or the emergence of ‘virtual capital’, such as Uber4 or Airbnb, which extracts value from assets it doesn’t own and labour it doesn’t manage (cf. Carmody and Fortuin 2019). Achille Mbembe (2016: 99), for instance, argues the continent is experiencing acceleration towards a kind of capitalism that is mostly disjointed, almost galactic in the sense that it consists of a seemingly random collection of disconnected enclaves. These enclaves are

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incongruously linked together in a contrived form that cannot be easily grasped within the conventional analytical paradigms. It is a capitalism of multiple nodal points, of scattered patterns, of spatial growth combined with neglect and decline. This form of capitalism is mostly extractive.

This accords with Ferguson’s (2006) argument that globalised investment flows on the continent ‘hop’ from one place to another, leaving other places disconnected and thus devalued. As will be discussed throughout the course of the book, the thrust of China’s engagement on the continent is consistent with the pattern Mbembe describes. Globalisation is defined not only by its spatiality – the ‘global’ part of the process, but by a distinct temporality, with periods of intense increasing interconnection, followed by setbacks or reductions. For example, with the ongoing trade tensions between the United States and China The Economist has coined the term ‘slowbalisation’. In another example, with the commodity price bust of 2014, rates of economic growth slowed significantly for SubSaharan Africa (SSA), with its economy growing just 1.6% in 2014 (Economist 2018a). This in turn had implications for the globalisation of the continent by reducing import demand, relative to what it would have been in the context of higher growth, for example. However, there has been substantial variation within and between countries on the sub-continent since then. For instance, largely based on increasing oil production, Ghana’s economy grew at 8.4% in 2017 (AfDB 2019), the third fastest rate of growth in the world, with countries like Burkina Faso, Benin and Côte d’Ivoire following closely behind. Interestingly, none of the latter countries are generally noted to be or thought of as resource rich.5 On the other hand, countries like South Sudan, Chad, the DRC and Nigeria, all of which were experiencing either negative growth or total stagnation, are either currently in conflict, or in the case of Chad, post-conflict. Chad is, however, a substantial oil producer and the commodity price drop affected its economy severely. To illustrate the gravity of this setback, it has been noted that Chad was already paying 85% of its oil revenue in debt repayments when commodity prices fell (AfDB and OECD 2017; Economist 2018b). The resource boom also encouraged sometimes imprudent borrowing. Indeed, the external debt stocks of some African countries, including Cameroon, Ethiopia, Uganda and Zambia, have risen over 200% in the last decade, and median public debt across the

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continent was 50% in 2018. While this is low by developing country standards, domestic interest rates tend to be higher in Africa than in developed countries, so loan repayments on domestic debt are more onerous to repay than would otherwise be the case. As of 2019, the IMF considers eighteen African countries as being in, or at high risk of, debt distress. Also, for foreign currency denominated loans there is a substantial currency risk, as exchange rates between soft and hard currencies are more volatile than between hard currencies such as the euro and the dollar – indeed this is the reason they are called soft as their relative values fluctuate dramatically, with a tendency towards depreciation. In a world of fiat currencies, rather than ones backed by gold, the value of a currency is largely tied to the nature of its economy. Fiat currencies, or ones issued by government edict, represent a claim on the current or future goods and services produced in the country. If you primarily export low-value products, whose prices tend downwards through time, your currency is also likely to depreciate, all other things being equal. So-called ‘commodity currencies’ like the Zambian Kwacha generally closely track the movements of their country’s main exports – in this case copper. It is also worth remembering that the higher growth rates of the first decade of this millennium came on the back of several decades of economic decline in most of Sub-Saharan Africa, which essentially means that ‘many African countries still have not caught up with post-independence income levels’ (Rodrik 2018: 3). Increased indebtedness across much of the continent may also mortgage the future. China’s role in this will be explored in more detail later. As noted above there are many other vectors of globalisation on the continent in addition to resource trade and investment, and it is important to situate the evolution of the phenomenon. For example Richard Baldwin (2019) has written about what he calls the ‘Globotics Upheaval’ (essentially the globalisation of robotics), which will displace many types of human work and make it potentially much more difficult for African countries to follow in the footsteps of China in terms of the development of labour-intensive manufacturing for example. Furthermore, manufacturing has become much more skill-intensive – again making it harder to compete for latecomers (Lopes 2019). What kinds of paradigms should inform our analysis of African economic development then in the future and the ways in which China will affect this? The present creates the future, as social conditions are directly transmitted from the past. However, the future also creates the present by virtue of altering current actions – people saving for pensions

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or having children to provide for them in their old age, for example. The present also creates the future and is shaped by it, by governments taking out Chinese-funded debt to construct infrastructure for example, based on growth projections, with implications for future economic growth through a variety of channels, such as heightened debt repayments and perhaps more efficient movement of goods. In order to understand what the future might bring to African economies we must first understand the present, and given its growing importance, the role which China has played and will continue to play in economic restructuring on the continent.

1.4 The African experience in the global economy Africa is the world’s least industrialised continent, and also its poorest. The central problematic of the continent’s development is its economic structure which was put in place under colonialism to be a primary commodity exporter (Rodney 1973). Not a single SubSaharan African country until recently had a manufactured product in its top three exports, according to the United Nations’ Comtrade data (Cramer 2016).6 Yet while Africa is often thought to have been by-passed by globalisation (Sachs 2005), its resource and raw material exports are central to the functioning of the global economy (Ferguson 2006; Moseley and Gray 2008). As such, Africa has been, and remains, vital to broader processes of global capital accumulation, and increasingly in China. Thus, centrality and peripherality depend on questions of definition. Whereas some tout the industrialising potential of increased Chinese engagement on the continent (e.g. Sun 2017), Africa is now less industrialised than in the 1970s. Value-added deriving from manufacturing in the past decade (2010) accounted for only 10% of gross GDP compared to almost 15% in 1975 (Rodrik 2018)7 and manufacturing’s proportional share of total exports from the continent fell in the 2000s, even if they rose in absolute terms – reflecting the uneven and somewhat paradoxical nature of recent development trends. In addition, much of the growth in manufactured exports has been in processed metals, which are essentially raw materials rather than ‘pure’ manufacturing. Add hereto that labour-intensive manufacturing played a diminishing role and that the majority of labour-intensive African manufacturing is conducted by micro and small enterprises often operating in the informal sector, with little track record of growing out of

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informality, and the sector’s contribution to broad-based development can be seen to be further in decline, even in the context of the relatively high rates of economic growth from the mid-2000s. Resource demand from China, in particular, and the extension and profusion of ‘global extraction networks’ (Carmody 2010), which when combined with other factors, such as international debt relief, low interest rates internationally and large-scale private capital flows resulted in a new ‘scalar alignment’ favourable to economic growth across the continent during the 2000s. For some, this seemed to preclude the need for more active industrial strategies (Roxburgh et al. 2010; Thakkar 2015). However, despite rhetoric about Africa as a ‘global powerhouse’, ‘rising’ or ‘the fastest billion’ (Mahajan 2008; Robertson 2012; Bright and Hruby 2015), and despite some governmental efforts to turn resource abundance into structural transformation via forward and backward linkages (Morris et al. 2012), often backed by Local Content Policies (LCPs) (Hansen et al. 2015), a large part of Africa’s continuing developmental impasse (Andreasson 2010) is the general absence of functional economic regions and national or territorial innovation systems8 (Morgan 2004), and the continent’s continued and deepening dependence on primary commodity exports as a source of revenue, foreign currency and employment (Taylor 2014a; Davies and Taylor 2015). This has meant that the quality of economic growth has been low from both sustainability and social perspectives, in most cases. What economists call the poverty elasticity of growth – that is by how much poverty falls for every percentage of economic growth – has also been low. ‘Although SSA witnessed high rates of growth during the 2000s (almost 50% higher than the global average), the number of people living at or below US$1.25 per day increased by 59%’ (Papaioannou 2014: 188). Furthermore, African rates of economic growth are also much less impressive if population growth is factored in. Despite the hype, during the 2000s per capita growth in GDP was 1.3%, as compared to 3.6% during the 1960s (Bond 2018). In fact, if natural resources are treated as savings, when extracted this indicates, even according to the World Bank, that the continent is getting poorer (Taylor 2016). Primary commodity production tends to be of relatively low productivity and generates fewer technological breakthroughs, linkages and consequently multipliers than manufacturing and some services. Thus manufacturing retains its centrality in terms of economic transformation. Moreover, primary commodities are notoriously volatile in terms of their prices (Dehn 2000) and the long-term trend of

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primary commodity prices continues downwards (Moseley 2014), giving added impetus to the imperative of diversification. The recent commodity price decline, or bust, has again reinforced the importance of industrial strategy for sustainable economic diversification, and generalised income growth (Radelet 2016; Carmody 2017).9 Given intense inter-regional competition in the global economy, pervasive scale economies and positive externalities, and handicaps such as the underfunding of universities in Africa (Saad and Zawadie 2011), the establishment of consolidated territorial innovation systems has proven very difficult on the continent. Territorial innovation systems are spatial conglomerations of firms and other institutions which interact intensively together to co-produce innovation. What type or types of theory are then appropriate to understand the current nature of economic development on the continent?

1.5 Studying Africa through various lenses Contemporary political economy changes in Africa are often studied through the lens of development (economics), rather than, for instance, economic geography (Murphy 2008) or international relations (Harman and Brown 2013) but it is unclear whether or to what extent this analytical lens detects all or even some of the most important facets of the restructuring that the continent is currently undergoing. These include informalisation, financialisation and informationalisation in common with other parts of the world, but with distinct geographies and an emerging ‘interegionalism’ with Asia in particular (Carmody 2010). This calls for the development of new concepts to understand differentiated geographies within and beyond the continent. Within economic geography, perhaps the most dominant approach in the last decade and a half has been that of Global Production Networks (GPN), i.e. ‘an organizational arrangement, comprising interconnected economic and non-economic actors coordinated by a global lead firm, and producing goods or services across multiple geographical locations for worldwide markets’ (Coe and Yeung 2015: 1–2). However, much less is known about firm and territorial development in places often excluded from these. The dominance of GPN theory, largely originating from Asia, is problematic in terms of studying and thinking about Africa’s experiences. While the ‘inclusionary bias’ in GPN research, whereby there is tendency to focus on places which are included in them, to

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the exclusion of places which have been disarticulated from them, has been critiqued (Bair and Werner 2011; Murphy 2019), this neglects places which have not been included in them to begin with – essentially a form of exclusionary bias.10 Although the nature of what constitutes inclusion, for example whether it includes consumption flows, can also be debated. In addition, GPN theory has further biases. The emphasis on production in GPN is inherently positive, as this generates employment, taxes, exports and sometimes innovation. However, this neglects how places may be adversely incorporated into the global economy on the basis of extraction networks or consumption and waste chains. While the full circuit of capital, where money is converted into capital and back into money, is necessary to realise profit (from production through exchange), GPN theory does not accurately and adequately encompass or capture consumption chains or indeed that commodities have an ‘after life’ as waste, before sometimes being recycled (Crang et al. 2013). Given this, are older forms of theory such as world systems or dependency more appropriate to examine Africa’s integration into the global economy (NdlovuGatsheni 2017; Hope 2017)? Does the continent’s burgeoning relationship with China represent a reconfiguration rather than a transcendence of dependency or do we need new types of theory which account for the changes wrought by, and the changing nature of, globalisation? With some notable exceptions, such as work by Murphy (2007), Ouma (2015), Bek et al. (2017) and Graham and Anwar (2018), which has engaged a wide variety of topics, there has been very little economic-geographic research on Africa. Much of what we know about the continent’s economies comes from the business and economics literature, although also with its own gaps. For example, while it is well known that there are many major corporations which have originated from South Africa, recent research has revealed that there are now a multitude of other African originating companies operating transnationally on the continent (Adeleye et al. 2015; Adeleye et al. 2016).11 There has also been substantial work done on informal small, medium and micro enterprises (SMMEs) in Africa (cf. Liedholm and Mead 1999; Alila and Pedersen 2001; Meagher 2010; Hansen et al. 2018). However, less research has been done on formal, small, medium and large exporters,12 despite the fact, for example, that more than 40% of formal Kenyan manufacturers export (Newman et al. 2016), many of which are not involved in GPNs.

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Consequently, currently dominant versions of economic geography occlude even as they reveal and there is a need to focus more on more ‘ordinary’,13 but also sometimes internationally competitive firms with growth potential, rather than just SMMEs, or those connected to GPNs, if developmental lessons are to be learnt.14 Are these successful manufacturing and service companies in Africa isolated occurrences or outliers, which have divergent intrafirm characteristics, or niche markets, which explain their success, or are they substantially conditioned by their selection environments15 and networks or a mixture of the two? What role do ‘vertical spillovers’ between firms in value chains (Newman et al. 2016), emergent clusters and functional regions (Oyelaran-Oyeyinka and McCormick 2006; Zeng 2008), GPNs and states on the continent play in enabling, facilitating and creating firm success through the reconfiguration of selection environments and the creation of new networks which may, at times, ‘substitute for the state’? (Bräutigam 1997; Meagher 2010). Multiple axes of strategic coupling between different actors, such as firms, training institutes and governments, are necessary for the development of successful industrial systems (cf. Carmody 2017). A relational economic-geographic perspective (Bathelt and Glückler 2003) which examines the ways in which economic outcomes are socially and historically co-produced (Pierce et al. 2011; Smith 2015; Niebuhr 2016), through colonialism for example (Pollard et al. 2011), can perhaps shed light on this. Creating competitive firm networks requires socially innovative assembly work (Ouma 2015). Such productive couplings or ‘institutional thickness’ (Amin and Thrift 1994) have been largely absent in Africa (Pedersen and McCormick 1999), or in some cases the couplings between state and firms has been unproductive or obstructive (Hampwaye and Jeppesen 2014; Charles et al. 2017). However, there is a need not just for more economic-geographic research on Africa, but also to rethink how we conceptualise the geography of globalisation.

1.6 Disaggregating ‘globalisation’: 1, 2, 3 There have been a number of economic-geographic concepts which have been developed in recent years based on Africa’s experience of economic development. This includes the continent’s thin integration into the global informational economy (Carmody 2013; Murphy and Carmody 2015). Given the fact that most of what the

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continent exports is un- or semi-processed primary commodities this concept could also perhaps be applied to its integration into the global economy more generally. However, there is also a need to differentiate different types of globalisation as they apply on the continent.16 Chakrabarty (2008) has written about what he calls ‘History 1’, which is where European experiences of class relations or nationalism are extrapolated as analytical categories to other parts of the world. However, reality more closely accords to what he calls ‘History 2’, which is the substantially messier reality of actually existing human interaction, and diversity of social life, structures and experiences, shaped not only by the seemingly powerful, but also those holding lower or more subaltern class, racial, gender, ethnic or national positionalities. Geographers have recently drawn on this theory. For example Derickson (2015: 647) discusses what she calls ‘Urbanization 1’ and ‘Urbanization 2’ … Urbanization 1 is exemplified by the planetary urbanization thesis that posits the complete urbanization of society, whereas Urbanization 2 is characterized by a more diverse set of interventions, united by a political and epistemological strategy of refusing Eurocentrism and ‘provincializing’ urban theory.

We can extend this analysis into thinking about contemporary and contemporaneous types of globalisation – Globalisation 1, 2 and 3 – where financial or corporate globalisation ‘from above’ (Korten 1999), in the form of GPNs for example, (Globalisation 1) may appear as a dominating or homogenising force, whereas in reality there are also a variety of different types of globalisation ‘from below’, such as African traders migrating to China (Lee 2014; Mathews et al. 2017) or small firms establishing marketing links and exporting internationally (Globalisation 2), even if they are interrelated. For example, as Faria and Whitesell (2020: 93) note in relation to commerce with Asia, The innovation and entrepreneurialism of African women, as stylists, salon owners, beauty school managers, fashion influencers, as well as wholesale distributors and small and mid-scale traders, is also foundational to the vibrancy of the hair trade.

These flows are not only ‘economic’ but also have cultural impacts, as do the flows of other commodities and ideas.

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As noted earlier, globalisation is a recursive and consequently generally deepening phenomenon. One flow, such as rice exports from Ethiopia to Saudi Arabia, sets off counter-flows of finance, to pay for the rice, which may then be used in other investment flows or to purchase commodities from elsewhere, setting off countless other flows. As Nordstrom (2007) has demonstrated, licit or legal and shadow globalisation are mutually interconstitutive; smuggled cigarettes intermingle with those that have had their duties paid on them when they cross borders, for example. This diversity offers potential not only for theoretical development, but practice, which can recursively inform theory. However, there is also another emergent form of globalisation on the continent which reflects the globalisation of functional dualism between the formal and informal sectors or circuits of the economy (Santos 1979; Mhone 1982: Murphy and Carmody 2015), meditated by ICTs (Globalisation 3). ICTs allow foreign formal sector firms, such as Uber, to break down spatial barriers to accumulation globally through extracting value from assets they don’t own and labour they don’t manage, sometimes in the informal sector (Meagher 2018: Carmody and Fortuin 2019)17 – a form of virtual capital. We can think of this as virtureal accumulation, where internet-based firms such as Booking.com capture part of the value of ‘real’ processes, in this case accommodation provision (Carmody 2015). Returning to China, it is important to note that a new BRI fund focused on boosting private sector growth in Africa targeting e-commerce and artificial intelligence (AI) has been established. Indeed there is meant to be an entire ‘information silk road’ (Hart-Landsberg 2018), though to what extent this will move beyond the planning stages has yet to be determined. ‘Virtual capital’ governs through the internet, mobile applications and customer surveillance, globally. According to some it is the ‘gig’ and informal economies which are the future of Africa (Adegoke 2018: Ng’weno and Porteous 2018), yet this need not be the case if more developmental states, such as Ethiopia and Rwanda, which are able to more successfully ‘negotiate China’, continue to emerge on the continent; although some argue that Ethiopia is currently undergoing a form of ‘neoliberal shock therapy’ (Molla 2019). The Ethiopian case – the pre-eminent example of industrialisation on the continent in recent years will be examined in more detail later, as it would appear that the developmental state model in Ethiopia which was constructed under the premiership of Meles Zenawi is now coming unstuck. Nonetheless there are important lessons which can be learnt from the Ethiopian experience if Africa is to experience a genuine rise in the global political economy.

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1.7 Africa’s shadow rise This book argues that the continent’s ‘rise’ is largely driven by developments elsewhere. As noted earlier, while rates of economic growth have often been high, the quality of growth is often poor and environmentally unsustainable or destructive. Moreover, it is associated with high levels of inequality and marginalisation of the majority of the domestic private sector and much of the population. Likewise, the capacity of African leaders to change the conditions of dependence which characterise their emergent relations with rising powers such as China are limited by the novel types of transnational networks which are being formed and the underlying structures of their economies. The book thus explores and develops the concept of Africa’s ‘shadow rise’. The concept is based on the idea that while certain indicators, such as levels of economic growth and exports, have trended upwards, before the recent slowing of economic growth in China, most of the continent has failed to undergo economic transformation. We, therefore, argue that ‘Africa’s Rise’ is largely reflective of the structural transformation of China, which has created extensive natural resource demand and global production and extraction networks throughout the world. Thereby, this book breaks open the black box of the power relations and economic impacts of China in Africa, largely using Southern Africa as an example, and explores the extent to which China and other BRICS powers have empowered different local actors and whether or not they have contributed to the diversification of local economies. The book is based on extensive fieldwork in Southern Africa by the authors, with most case material from South Africa, Angola and Zambia. The book proceeds as follows. Chapter 2 conceptualises the nature of Sino-African power relations and argues that the widespread emphasis in the literature on ‘African agency’ in shaping relations with China is overdone, as power resides largely in networks, many of which are dominated by Chinese actors. It argues that instead of focusing solely on agency – and who holds it – it is more fruitful to conceptualise the political-economic changes in Africa that coincide with China’s growing presence on the continent as assemblages, i.e. something that is in the process of becoming, rather than already in existence – and paying particular attention to the co-existence of power in numerous structures and actors. This analytical lens forces us to disaggregate Sino-African relations and seek to uncover the underlying processes at work in

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order to understand how China (along with other BRICS powers) has contributed to development processes on the continent. It is also important to remember that China is one among many actors involved in Africa, and that its stock of FDI on the continent is low in relative terms, with its total stock being equivalent to that which is invested in Germany by Chinese firms. Excluding Hong Kong, Africa accounted for only 7% of China’s outward foreign direct investment in 2015, perhaps accounting for around 10% of inflows into Africa in recent years (Jenkins 2019). Indeed in the first half of 2015, greenfield and expansionary Chinese FDI in Africa fell by 84% as compared to a year earlier and despite USD 43bn worth of FDI stock, France, the Netherlands, the US and the UK are all more important investors in Africa than China (UNCTAD 2019).18 Nonetheless China is still an important source of FDI, particularly given the small size of many African economies and the fact that, as Mohan (2015: 283) notes, ‘China’s high savings rate has had the effect of lowering global interest rates, indirectly facilitating investment in Africa’. Nonetheless FDI into Africa declined by 21% between 2016 and 2017 (UNCTAD 2018 cited in Dodd 2019) and Chinese FDI into Africa was only USD 3.1bn in 2017, which accounted for only 2.5% of its total outward investment that year (Abegunrin and Manyeruke 2020). Chapter 3 continues the analysis by scrutinising whether and to what extent the rise of China and other BRICS powers facilitates the creation of developmental states in Southern Africa or rather is reinforcing the extractive economies and dependency we already know from the history of the region. It introduces the concept geogovernance to emphasise how China – via the internationalisation of its state – is projecting its power across borders and argues that the sectorality of Chinese engagement in Southern Africa further embeds processes of translocalisation and simultaneously creates new markets for Chinese actors. Over time, this deepens the interdependence between China and Southern African countries. This deepening may lead to changing power relations but not necessarily to more aggregate power for Southern African states vis-à-vis China. South Africa, for instance, has effectively pressurised China to assemble locomotives and carriages in South Africa, i.e. ‘bargaining at the margins’, and Chinese oil pipelines and oil facilities in Angola, for instance, may give the Angolan political elite substantial bargaining power, i.e. what has been called the ‘obsolescing bargain’, where more power rests with the investor initially and then the government once infrastructure is built and the rules governing

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it may be changed.19 Despite growing bargaining power for some actors in Southern Africa, this chapter argues that the nature of the engagement has resulted in further deindustrialisation and greater dependence on resource exports – not the creation of developmental states, reinforcing the arguments from Chapter 2. Chapter 4 continues the analytical journey by examining how changes in China’s development finance, i.e. what is comparable to OECD countries’ ‘official development assistance’ (ODA) plus what is comparable to their ‘other official flows’ (OOF), affect African countries’ bargaining power with their traditional donors. It argues that despite isolated cases of increased agency for African governments the overall picture remains the same: China’s rebirth as an important development finance provider in Africa has not changed the power relations between African countries and their financiers. The reason is that despite claims that China is a ‘rogue donor’ (Naím 2007), China has slowly but steadily mimicked many of the OECD donors’ aid processes and products. Simultaneously OECD donors have embarked upon a process of ‘southernisation’ of their aid practices (Mawdsley 2018). The result is development finance convergence that likely leads to less rather than more bargaining power for African governments as they increasingly may not be able to play one partner off against the other. Chapter 5 focuses on Zambia and scrutinises the direct and indirect effects of investments from China, India and South Africa to the country for comparative purposes. It focuses on two sectors that are of great importance to the Zambian economy – namely investments in the mining and tourism sectors. It argues that if investments from these countries are to lead to long-term development and prosperity, they must set in motion a process of structural transformation. Regrettably, this is not the picture that emerges from our case study. In contrast, what we see is extraction of value and competitive displacement of local businesses. The Zambian economy is now less diversified than it was prior to the current commodity price boom due to a huge inflow of commodity-related investments that have little, if any, linkages to locally owned companies. The chapter also demonstrates that even if governance structures of many Chinese firms differ from those of companies originating in other BRICS economies, their engagement with locally owned firms does not differ substantially. In fact, they all mirror the engagement of many firms originating in the Global North. Consequently, the picture that emerges from analysing investments in two sectors of the Zambian economy resembles that which emerged in the analysis of the revival

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of Chinese development finance in Chapter 4: the renewed interest in Africa from a multitude of actors from both the Global South and the Global North has not necessarily led to more bargaining power in the hands of actors in Africa. The rise of China has had substantial impacts on commodity prices and investments in Africa, potentially offering a route out from underdevelopment through so-called resource-based development. Chapter 6 explores whether or not this is happening. The chapter retains its focus on Zambia but shifts its analysis towards Local Content Policies (LCPs). Understanding that the creation of local manufacturing linkages is crucial to resource-led growth and structural transformation, the resource rich economies of Africa and elsewhere in the Global South (and with the assistance of international actors) have begun to design and implement LCPs as a purported ‘magic bullet’ to achieve their goals. The chapter scrutinises how Zambia has sought to deal with the possibilities offered by growth in interest from foreign investors through LCPs. In particular, it examines the LCPs in Zambia’s copper sector and institutional impediments to resource-led development. After our more detailed case studies, Chapter 7 zooms out and analyses the most recent developments in Sino-African relations. It critically engages with the claim that China is pursuing debt trap diplomacy in Africa (and the rest of the Global South) and questions whether, or to what extent, China’s BRI, launched in 2013, is indeed changing its policy of non-interference. The chapter thereby seeks to further our understanding of what China’s growing ‘commodity power’ entails for the countries that it engages with. It argues that even if debt levels are increasing at a high rate across Africa, the meme of debt trap diplomacy is most likely misplaced. While between 2000 and 2016 governments in Africa and their state-owned enterprises (SOEs) contracted USD 130bn in debt from Chinese lenders (Bräutigam 2019), China only accounts for 5% of Africa’s total debt stock according to some estimates (Lwanda 2019), although others put the figure at 20% (Kagwanja 2019). Instead, the results we see are largely a feature of uneven capitalist development. Chapter 8 concludes the book. It examines who benefits from China’s engagement in Africa. In particular, it explores the relative benefits to different actors across value, supply and consumption chains. It assesses the relative benefits across classes in Africa and to external investors and populations. It explores the way in which politico-economic power is being reconfigured by domestic elites and examines the implications of this for the

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continent’s populations. Thereby, it underscores how the ‘Africa Rising’ narrative is over-blown and largely reflective of developments taking place elsewhere – in particular in China. What we see in fact is Africa’s shadow rise, i.e. a situation where certain indicators, such as economic growth and exports have trended upwards due to the structural transformation of China, which has created extensive natural resource demand and global production and extraction networks throughout the world, but where most of the continent has failed to undergo structural transformation, with poverty and inequality levels consequently remaining high. We conclude with thoughts on how this situation might be reversed.

Notes 1 This book will use the term Africa to refer to Sub-Saharan Africa (SSA) unless it is specifically referencing the continent as a whole. 2 Angola is China’s secondlargest source of crude petroleum behind Saudi Arabia and accounted for roughly 12% of total petroleum imports in 2017. 3 South Africa accounted for 43% of China’s manganese imports, 60% of its chrome imports and 62% of its platinum imports in 2016. 4 In September 2019 there were 13,000 registered Uber drivers in South Africa, 9,000 in Nigeria, and 6,000 in Kenya and Ghana (Dahir 2019). 5 Although Côte d’Ivoire does contain substantial, but largely unexploited oil and gold reserves. 6 Although for 2017 Mauritius’ third-largest export was ‘t-shirts, singlets, and other vests, knitted or crocheted’ (Mauritius Trade Easy 2018). 7 Although some care should be taken with such statistics given their general unreliability (Jerven 2013) and also the

fact that in recent decades manufacturing has undergone a process of ‘servitisation’, where some service functions which were previously performed in-house have now been out-sourced. 8 Exceptions do exist such as the Otigba industrial cluster in Nigeria (cf. Lorentzen et al. 2006; Oyelaran-Oyeyinka 2006). 9 Whether or to what extent terms of trade for commodities in fact fall has been discussed intensively. Critics of the declining terms of trade argument point to methodological issues, including which commodities are included in the analysis, time series and whether their contribution to exports or to GDP is analysed, but as Deaton (1999: 30) notes in relation to primary commodity prices, they will ‘eventually revert to base because, while short-run events can increase prices, sometimes for many years, long-run marginal cost is set by the poverty of the tropics and supply will eventually be forthcoming’.

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10 Global Value Chains (GVCs) account for 75% of world trade, but only 25% for Africa (Kaplinsky 2016). 11 Some prominent examples of these include the Nigerianbased Dangote group, which has operations across the continent and grew on the basis of extensive protection in its home market, of cement for example, and the Madhvani group of Uganda which is involved in sugar and chemical production, among other subsectors. 12 For the most part, given the capabilities required and customs regulations, enterprises must be formalised in order to engage in direct exports. 13 Robinson (2006) has written about the need to focus on ordinary cities, rather than just ‘global’ ones. 14 For example, SoleRebels (www.solerebels.com/) is an indigenous Ethiopian shoe company which now sells in fifty-five countries around the world (Nsehe 2012; Maula nd), with its own retail outlet in Taiwan.

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15 A selection environment refers to the contextual conditions of firm growth. For example, luxury goods producers are more likely to emerge where there are many high-income consumers. This constitutes part of the ‘selection environment’, which shapes what kinds of firms are formed, succeed or fail. 16 Held et al. (1999) have shown there are different types of globalisation which vary across space in terms of their extensity, intensity, velocity and impact. 17 Although despite its massive valuation Uber has yet to turn a profit. 18 Remarkably there was a nineteen-fold increase in FDI flowing to the continent from 1990 to 2013 (African Arguments 2015). 19 The American economist Raymond Vernon argued this was where the terms initially favoured the multinational company but this decreased through time as the scale of their investment increased.

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Continent Becomes a Global Powerhouse, New York: Thomas Dunne Books. Brown, W. and S. Harman (2013) ‘African agency in international politics’, in W. Brown and S. Harman (eds), African Agency in International Politics, London: Routledge. CARI. (2018) ‘Data: China–Africa Trade’, China in Africa Research Initiative, Johns Hopkins School of Advanced International Studies, http://www.sais-cari.org/ data-china-africa-trade. Carmody, P. (2010) Globalization in Africa: Recolonization or Renaissance?, Boulder, CO: Lynne Rienner. Carmody, P. (2013) ‘A knowledge economy or an information society in Africa? Thintegration and the mobile phone revolution’, Information Technology for Development, 19(1): 24–39. Carmody, P. (2015) ‘ICT4D and e-business’, in R. Mansell et al. (eds), International Encyclopaedia of Digital Communication and Society, London, Wiley-Blackwell. Carmody, P. (2017) ‘Assembling effective industrial policy in Africa: an agenda for action’, Review of African Political Economy, 44(152): 336–345. Carmody, P. and A. Fortuin (2019) ‘“Ride sharing”, virtual capital and its impacts on labour in Cape Town, South Africa’, African Geographical Review, 38(3): 196–208. Chakrabarty, D. (2008) Provincializing Europe: Postcolonial Thought and Historical Difference, Princeton, NJ and Oxford: Princeton University Press. Charles, G., S. Jeppesen, P. Kamau and P. Kragelund (2017) ‘Firm-level perspectives on state– business relations in Africa: the food-processing sector in Kenya,

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Tanzania and Zambia’, Forum for Development Studies, 44(1): 109–131. Coe, N. and H. Yeung (2015) Global Production Networks: Theorizing Economic Development in an Interconnected World, Oxford and New York: Oxford University Press. Coote, B. and C. LeQuesne (1996) The Trade Trap: Poverty and the Global Commodity Markets, Oxford: Oxfam. Cramer, C. (2016) ‘Guns and roses: crossing the river by feeling for stones in Ethiopian industrialisation – at speed’, paper presented at Africa’s Turn to Industrialize? Shifting Global Value Chains, Industrial Policy and African Development, London School of Economics and Political Science. Crang, M. A., A. Hughes, N. Gregson, L. Norris and F. U. Ahamed (2013) ‘Rethinking governance and value in commodity chains through global recycling networks’, Transactions of the Institute of British Geographers, 38: 12–24. Dahir, A. L. (2019) ‘A legal tussle over a strategic African port sets up a challenge for China’s Belt and Road plan’, Quartz Africa, 28 February, https://qz.com/africa/1560998/ djibouti-dp-world-port-casechallenges-chinas-belt-and-road/. Davies, R. and I. Taylor (2015) ‘“Africa rising” and the rising powers’, in J. Gaskarth (ed.), Rising Powers, Global Governance and Global Ethics, London: Routledge. Deaton, A. (1999) ‘Commodity prices and growth in Africa’, The Journal of Economic Perspectives, 13(3): 23–40. Dehn, J. (2000) ‘Commodity price uncertainty and shocks: implications for economic

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growth’, Centre for the Study of African Economies, University of Oxford. Mimeo. Derickson, K. (2015) ‘Urban geography I: locating urban theory in the “urban age”’. Progress in Human Geography, 39(5): 647–657. Dodd, N. (2019) ‘BRICS’ trade with Africa: long live the new king, just like the old king’, in J. van der Merwe, P. Bond and N. Dodd (eds), BRICS and Resistance in Africa: Contention, Assimilation and Co-optation, London: Zed Books. Dulani, B., R. Mattes and C. Logan (2013) ‘After a decade of growth in Africa, little change in poverty at the grassroots’, Afrobarometer Policy Brief, no. 1, http:// afrobarometer.org/sites/default/ files/publications/Policy%20 paper/ab_r5_policypaperno1.pdf. Economist. (2011) ‘The hopeful continent: Africa rising’, The Economist, http://www.economist. com/node/21541015. Economist. (2018a) ‘Don’t expect miracles: African economies are recovering, but plenty could go wrong’, The Economist, 37–38. Economist. (2018b) ‘On the rise again: increasing public debt in many African countries is a cause for worry’, The Economist, 38. Economist Intelligence Unit. (2002) ‘Business Africa’, Economist Intelligence Unit, 2: 1–15. Faria, C. and D. Whitesell (2020) ‘A Darling® of the beauty trade: race, care, and the imperial debris of synthetic hair’, Cultural Geographies, 27(1): 85–99, https://journals.sagepub.com/ doi/10.1177/1474474019864987. Farooki, M. and R. Kaplinsky (2012) The Impact of China on Global Commodity Prices: The Global Reshaping of the Resource Sector, New York: Routledge. Ferguson, J. (2006) Global Shadows: Africa in the Neoliberal World

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Economic Success, London and New York: Hurst. Mohan, G. (2015) ‘China in Africa: impacts and prospects for accountable development’, in S. Hickey, K. Sen, and B. Bukenya (eds), The Politics of Inclusive Development: Interrogating the Evidence, Oxford and New York: Oxford University Press. Molla, T. (2019) ‘Neoliberal shock therapy in Ethiopia’, Review of African Political Economy, https:// roape.net/2019/06/25/neoliberalshock-therapy-in-ethiopia/. Morgan, K. (2004) ‘The exaggerated death of geography: learning, proximity and territorial innovation systems’, Journal of Economic Geography, 4(1): 3–21. Morris, M., R. Kaplinsky and D. Kaplan (2012) ‘One thing leads to another: promoting industrialisation by making the most of the commodity boom in sub-Saharan Africa’, The Open University, Milton Keynes and University of Cape Town, Cape Town. Moseley, W. (2014) ‘Structured transformation and natural resources management in Africa’, in K. Hanson, C. D’Alessandro and F. Owusu (eds), Managing Africa’s Natural Resources: Capacities for Development, Basingstoke and New York: Palgrave Macmillan. Moseley, W. and L. Gray (eds), (2008) Hanging by a Thread: Cotton, Globalization and Poverty in Africa, Athens, OH: Ohio University Press and Nordic Africa Press. Murphy, J. T. (2007) ‘The challenge of upgrading in African industries: socio-spatial factors and the urban environment in Mwanza, Tanzania’, World Development, 35(10): 1754–1778. Murphy, J. T. (2008) ‘Economic geographies of the Global South: missed opportunities and promising intersections with

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Rodrik, D. (2018) ‘An African growth miracle?’, Journal of African Economies, 27(1): 10–27. Roxburgh, D. et al. (2010) ‘Lions on the move: the progress and potential of African economies’, https://www.mckinsey.com/ featured-insights/middle-eastand-africa/lions-on-the-move. Saad, M. and G. Zawadie (2011) ‘The emerging role of universities in socio-economic development through knowledge networking’, Science and Public Policy, 38(1): 3–6. Sachs, J. (2005) The End of Poverty : How We Can Make It Happen in Our Lifetime, London: Penguin. Santos, M. (1979) The Shared Space the Two Circuits of the Urban Economy in Underdeveloped Countries, New York: Routledge. Smith, A. (2015). ‘The state, institutional frameworks and the dynamics of capital in global production networks’, Progress in Human Geography, 39(3): 290–315. Stein, H. (2014) ‘The World Bank and neoliberalism: continuity and discontinuity in the making of an agenda’, World Financial Review, http://www.worldfinancialreview. com/?p=2580. Sun, I. Y. (2017) The Next Factory of the World: How Chinese Investment Is Reshaping Africa, Cambridge, MA: Harvard Business Review Press. Swanson, A. (2015) ‘How did China use more cement between 2011 and 2013 than the US used in the entire 20th century?’, The Independent, https://www. independent.co.uk/news/world/ asia/how-did-china-use-morecement-between-2011-and-2013than-the-us-used-in-the-entire20th-century-10134079.html. Taylor, I. (1998) ‘China’s foreign policy towards Africa in the 1990s’, Journal of Modern African Studies, 36(3), 443–460.

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2 Unpacking Sino-African power relations: is agency the appropriate analytical lens?

Recently, much has been written about the role of African agency in the continent’s emergent relationship with China (e.g. Mohan and Lampert 2012; Corkin 2013; Ziso 2018; Phillips 2019). Some scholars have argued that previous writing on the subject of Sino-African relations presented an unbalanced picture in which an all-powerful China subjugated weak African states, thereby replicating previous Orientalist tropes about the continent. More recent scholarship, however, has focused on the significant power of African political elites in shaping the nature of relations with China. This chapter seeks to conceptualise the nature of the power relations between China and African states by examining concepts deployed in these debates. We then test these concepts through case studies of Angola and Zambia – two of the African states with which China has been most engaged and two major commodity exporter mono-economies. Our analysis questions the degree to which most African elites indeed have power to change the underlying structures of the global and their own economies. This focus allows us to further understand the nature and impact of ‘Chinese-led’ development, which in turn explains why the economic growth it has spurred ultimately fails to induce economic transformation. In order to further our understanding of China and other BRICS powers’ effects on Southern Africa we use assemblage theory as an analytical framework. Assemblage theory simultaneously allows us to examine national as well as transnational power relations and how African states interact with international organisations, third-party states, international firms, domestic firms and civil society organisations. Thereby, we move beyond the now sometimes one-sided emphasis on African agency and introduce a multi-level analysis that illuminates how China in particular interacts with, and affects, Southern Africa.

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2.1 Is China an emergent hegemon in Africa? In a 2007 paper with Francis Owusu, one of the authors argued that China was a potential emerging hegemon in Africa and that it was in competition with the United States to become the most powerful ‘external’ power on the continent (Carmody and Owusu 2007). The competition between China and the United States in Africa has amplified in recent years, as evidenced by events such as the first US–Africa summit held in 2014 in Washington, DC, which was modelled on FOCAC (cf. Taylor 2011 for an overview of FOCAC). One of us has also argued elsewhere that the ‘rise’ of China in Africa undermines the very notion of ‘the West’ and that this is one of the reasons that China’s rejuvenated interest in Africa has elicited such hysteria in certain segments of the Western media (Carmody 2013). Aside from the macroeconomic statistics around rates of economic growth, balance of trade or foreign exchange reserves, in concrete geographic terms China–Africa relations are arguably the ‘canary in the mine’ of Western power, which has provoked a forceful response, particularly in recent years in the United States. One of US President Trump’s main economic advisors, Peter Navarro, has written provocatively titled books such as Death by China and The Coming China Wars in which he talks extensively about the supposedly nefarious influence of China in Africa (Navarro 2008; Navarro and Autry 2011). The industrial hollowing out of the United States was also largely blamed on China by Donald Trump during his election campaign. While after his election his foreign policy has been based on US retraction from overseas commitments, combined with a focus on opening up markets around the world (cf. Owusu et al. 2019), more recently the Trump Administration in the United States announced its ‘Prosper Africa’ initiative at the end of 2018. Interestingly this initiative was announced by (now former) United States National Security Advisor John Bolton despite the seeming socio-economic emphasis of the title. The three pillars of Prosper Africa are ‘1) Advancing U.S. trade and commercial ties, 2) Countering the threat from radical Islamic terrorism and violent conflict, 3) Ensuring U.S. taxpayer dollars are used effectively and efficiently’ (Wyatt 2019). However, the announced strategy is very short on detail and others argue that US companies face long odds in competing against Chinese state-backed loans in Africa (Silva 2019). The little detail that has hitherto emerged did so at the 2019 US–Africa Business Summit

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in Maputo, Mozambique. There, the United States Agency for International Development (USAID) Administrator and Deputy Secretary of Commerce (no cabinet-level officials attended the summit) laid out the initiative as a ‘new way of doing business’ which would synchronise the existing capabilities of government but provided little in the way of new mechanisms of engagement. With only USD 50 million behind it, Prosper Africa will likely have difficulty in ‘pushing back’ against China’s influence in Africa. In similar fashion, a selective retraction of US interests on the continent, including militarily, continues (Copp 2019). The question addressed in this chapter then is: will China become a hegemon on the continent or are we seeing a rise in African agency pointing towards multipolar power structures and orientations? In order to answer this question, it is first necessary to engage with and define the concept of hegemony.

2.2 From hegemony to hegemony? There are a variety of definitions of what constitutes hegemony. From a Gramscian perspective hegemony refers to the acquiescence/ consent of subordinate classes or countries to the dominance of the ruling class or power. In international realist parlance an international hegemon is able to set the rules of the game. The American state is no longer able to do this to the degree that it was, while still being the pre-eminent state in the international system (Wade 2011; Kiely 2016). Under the Trump Administration there has been a ‘battle for the Global North’ (Horner and Carmody 2020), over trade and future dominance in technologies, such as fifth generation (5G) mobile technology (EurAsia Group 2018),1 which is being partly being played out through new institutions and standard setting. China is busy concluding deals around the world and establishing new institutions on a bilateral and multilateral basis. For example, the new BRICS development bank is headquartered in China and that country has also recently announced the establishment of a joint bank with Malaysia which will circumvent the necessity to conduct trade between the two countries in US dollars. The development of the BRICS bank and also the Asian Infrastructure Investment Bank (AIIB) could be seen as somewhat of a retreat from bilateral practices which are sometimes accused of being neo-colonial (Hung 2016 cited in Kiely 2016). Yet it is important to note that such types of international institutions and multilateral fora can multiply

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(through active participation and consensus-building) and legitimise an aspiring power. Indeed, as Kiely (2016) explains, in the case of the United States, the hegemonic system is underpinned by a comprehensive international political structure which amplifies its global influence and makes overturning the current order difficult for any challenger. Moreover, according to Liu (2018) it was FOCAC which laid the ground for initiatives such as AIIB as China had limited multilateral experience prior to this and this forum is itself experimental. China has also agreed currency swaps with many countries around the world ranging from Switzerland and Russia to Argentina. In Zambia, the Bank of China offers customers a facility to conduct business in the Chinese currency, the Yuan (Zambian Watchdog 2011). The 2008/9 North Atlantic Financial Crisis (NAFC) will perhaps be regarded by future historians and international relations theorists as a time of an emergent hegemonic transition from the United States to China in the international system, even as rates of economic growth moderate there.2 For the first time in over 140 years, according to the IMF, in 2013 the US lost its position as the world’s largest economy, in favour of China, when measured at purchasing power parity (PPP) or what you can buy with Chinese currency in that country. Although the US economy is still substantially bigger when measured in dollars – the world’s primary reserve currency – and consequently of greater significance for the global economy. Furthermore the US retains substantial structural and institutional power as argued above. Others argue, however, that we are witnessing the emergence of ‘interdependent hegemony’, rather than the emergence of a new singular dominant power or power bloc in the form of China or the BRICS (Li 2014). Although the outcome will partly depend on the nature of economic relations between China and the United States after the trade war between them is over – i.e. if one side decisively wins the battle for the Global North, or there is a draw. However, China’s BRI has sparked a renewed debate about the nature and evolution of China’s engagements in the global political economy and whether or not these are targeted at achieving global hegemony, which will be discussed in more detail later. China is now Africa’s leading trading partner and a substantial source of new investment, although it was only in one recent year, 2008, that it was the biggest single foreign investor on the continent (United Nations Conference on Trade and Development 2014). In fact, there were nearly two-and-a-half times more investment projects started on the continent by American than Chinese corporate

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investors in 2017 (Adegoke and Matiashe 2018). Indeed, Pairault (2018) describes how the vast majority of Chinese economic activity on the continent is in service provision, including construction. For example, in 2013 Chinese COPS (construction) accounted for USD 40bn worth of projects, compared to just USD 3.1bn in new FDI flows (Wolf 2016a). Many of these construction projects are funded by loans from Chinese banks and take the form of what GonzalezVicente (2019) terms ‘state-coordinated investment partnerships’ in which Chinese policy banks finance projects undertaken for African governments by Chinese construction firms. The large-scale development projects that have resulted from such partnerships (e.g. Bui Dam, Addis Ababa–Djibouti Railway) are thus largely reflective of both African statist logics and the demand/overcapacity created by China’s meteoric growth and investment rates and over-accumulation. Profits from such projects largely flow back to China as do the demand linkages for many of the project inputs, such as steel. As has been described elsewhere, the way in which China deploys its power in Africa is different from that of previous actual or potential hegemons – as it is a form of flexipower or flexigemony which works with, rather than against the grain of African state–society formations (cf. Carmody and Taylor 2010). Flexigemony is where Chinese actors tailor their strategies to the histories and geographies of the particular countries they are engaging with in order to ensure resource, market and investment access, although some argue that given the scale and impact of ‘Global China’ that this is changing through the roll out of the BRI (e.g. Reboredo 2019), discussed in more detail later. As noted earlier there has recently been an upsurge of interest in the role of African agency in shaping the relationship with China. This body of literature may in part be seen as an implicit reaction to an over-emphasis on the power of China in much of the extant literature, which was natural given the dramatically increased scale of that country’s engagement on the continent. This newer literature instead argues that African elites have used their growing economic and political interests to exert power over international and domestic politics. Ziso (2018: 2) argues that Chinese capital is internalised differently within different African states and that rather than ‘viewing China’s presence in Africa as deliberately exploitative where Africa is a passive victim’ there is a need to view ‘the African state in relational terms as an institutional complex through which different social forces act’. This means there is no one necessary set of ‘impacts’ by China on the continent. Rather the impacts vary

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depending on how they are mediated and negotiated, which in turn will vary depending on regime type, although such is the scale of China’s influence and impacts that there are significant pressures and tendencies towards particular sets of outcomes. Furthermore some have argued that given the neopatrimonial nature of many Africa states, there are often similar impacts, as projects are primarily used to enhance personal wealth and/or political influence rather than for developmental ends. The politics and economics of increased Chinese engagement are then intimately inter-linked. As most African economies grew rapidly on foot of the global commodity super-cycle, governments saw tax revenues rise, aid dependence decrease, and a greater range of potential partners emerge from the ‘Global East’ (Kragelund 2012). As intimated earlier this conjuncture gave some of them substantial but confined leverage, as has the dependence of China on African oil and other strategic natural resources to power its economy. This reverse or inverse dependence of China on African oil and other critical mineral suppliers has created conditions of interdependence between Chinese and African political elites which is subject to bargaining. However, the situation is by no means fixed. The commodity price bust of 2014 saw the Western-dominated financial institutions of the World Bank and IMF increase their power on the continent again, with Angola turning to the latter institution for loans, for example. Evidence of interdependent hegemony, or the fact that China is not yet a challenger to the extant liberal order is provided by the fact that it already sometimes conditions its loans, as in the case of Angola, on having an IMF austerity programme in place (Lwanda 2019). Our working hypothesis is that when commodity prices are high, more power rests with African rentier states,3 and when prices fall more power rests with China and with other international actors. However, in order to interrogate this hypothesis, it is first necessary to more concretely define what constitutes agency in international relations and affairs. Is it the case that some African states have seen a strengthening of domestic sovereignty – achieving hegemony in the Gramscian sense domestically – and are therefore better able to bargain with external actors and powers? While the recent reorientation in the literature has been salutary and insightful, we argue that the emphasis on African agency risks unwittingly reinforcing ‘internalist’ explanations of African underdevelopment. By positing African elites as being in the ‘driving seat’, or at least being ‘co-pilots’, in relations with China this may imply that they have the power to fundamentally reshape the nature of their

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state–societies and induce high quality economic growth. What we argue is that, in contrast to some other accounts, the ‘power’ of African elites has generally been confined to bargaining rather than structural change, and is therefore highly circumscribed and limited, with the notable and partial exception of Ethiopia (Ziso 2018), discussed later. In order to see this, we have to go beyond the rather static and one-dimensional concept of agency often deployed in the literature and instead use assemblage thinking. This forces us to emphasise the provisional and spatial nature of social change and acknowledge that power is co-existing, multi-dimensional and in constant transition. The argument proceeds as follows: Section 2.3 interrogates the concept of agency and argues that, as often used, it has certain limitations if we are to understand societal change in contemporary Africa. Hereafter, Section 2.4 introduces assemblage theory and proposes that we can use this more open and fluid conceptualisation to enhance our understanding of how Chinese activities affect African power vis-à-vis the ‘West’ as well as with China. Section 2.5 then examines the evidence of power shifts that we have from two critical cases, namely Zambia and Angola. The Ethiopian case is then examined as a potential counter-example. Hereupon Section 2.6 concludes by posing the question: who is in charge?

2.3 Defining agency The relative importance of structure and agency have been long theorised and debated in the social sciences. Social constructivism has largely transcended this debate by showing that agents create structures through ideas (Wendt 1999). However, this raises the question of which agents have the power to create structures and reform them. If resource dependence is a common structure for much of Africa, do political elites on the continent have the power to change this? Of course whether or not they have incentives to is a different matter. The evidence to date would seem to suggest that resource, including land, dependence is a long-lived structure of African political economy and that it is currently being reinforced through trade and investment relations with China, as most of the continent continues to undergo relative deindustrialisation4 as a result of competitive displacement from cheaper Chinese, and other Asian imports in particular (United Nations Conference on Trade and Development 2012). Indeed the fact that the continent has a very

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substantial population of 1.2 billion people and has a small manufacturing sector has meant it is a key target area for Chinese exports (Abegunrin and Manyeruke 2020). One estimate suggests manufacturing value-added as a proportion of GDP in Sub-Saharan Africa fell from 25% to 10% from 1981 to 2017 (Lin and Yu 2019). Manufacturing growth has come second last among twelve sectors since 1990, just ahead of public administration (McMillan and Rodrik 2011 cited in Taylor 2020). However there is also substantial differentiation within the continent largely based on rates of economic growth and the related extent of domestic market formation (Wolf 2016a; 2016b; 2017), amongst other factors. Furthermore manufacturing output on the continent doubled in the first ten years of the new millennium (AfDB et al. 2011 cited in Lopes 2019a), although as overall economic output increased by more there was still relative deindustrialisation. The global structure of the World Trade Organization (WTO) circumscribes the ability of developing countries to adopt strategic trade and industrial policies which could help to foster a competitive manufacturing sector which could transcend dependence (Wade 2003)5 and most African resource-rich economies rely increasingly on revenues and export earnings from a select number of commodities (Bond 2006). Despite numerous government initiatives set in motion to achieve structural transformation the situation remains unchanged in most countries: African resource-rich economies export unprocessed commodities instead of processed goods which have high(er) value addition, broader and deeper linkages and more economic spillovers. In a sense then we can see that most African political elites have not shown the power and/or the incentives to change the structural basis of their economies’ incorporation into the global political economy (Taylor 2014), again with the partial exception of Ethiopia – a rare developmental state on the continent, although this is now under threat as is discussed below. As intimated previously, others might question what incentives political elites have to structurally diversify their economies given the often-substantial material gains which result from high political office on the continent through current governance arrangements (Ventures 2014). However the relative lack of power of developing, and particularly the least developed countries, in the global political economy is paradoxically in evidence in the WTO, despite its purportedly consensus-based governance structure. While according to an African delegate at the WTO ‘we have learnt to ask why, we have learnt to ask how, and we have learnt to say “No”’ (quoted

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in Lee 2013: 39), developed countries have refused to countenance substantial concessions which might lead to a more equitable world trading system, and low-income countries risk being further marginalised by mega-regional trade agreements which largely exclude them (Palit 2015), such as the new Comprehensive and Progressive Agreement for Trans-Pacific Partnership (the successor to the Trans-Pacific Partnership that the Trump Administration in the United States pulled out of). In some recent literature on African agency there has been a focus on how elites have been able to extract favourable spot prices for ‘their’ oil in Angola when being sold to China (Corkin 2013); how the Ethiopian government has been able to use China to finance investment in sectors not supported by ‘the West’ (Feyissa 2012); and how the Rwandan political elite has been able to leverage the ‘West’ due to the negotiating power it gets from having more partners (Grimm 2013). Thus, in the words of Vickers (2013: 677), for instance: ‘recent studies provide compelling evidence that Angolan political elites are very much in the driver’s seat of negotiating SinoAngolan relations’. However, how favourable deals are depends on the relative balance of power as expressed, partly, through economic demand and supply conditions, the strategic importance of the commodity in question and whether or not it is substitutable. For the most part, African political elites have demonstrated that they have not, as of yet, been able to change the terms of the extraverted and commodity-oriented trading relationships, either through the multilateral system or through the bilateral deals which have been struck with China – a sprinkling of Chinese-sponsored special economic zones on the continent notwithstanding. In a sense then the power or ‘agency’ of most African political elites has been confined to incremental bargaining rather than structural change, and is therefore highly circumscribed and limited, in most cases, in relation to external actors. A second objection to over-egging the importance of African agency in relations with China can also be raised which relates to the nature of agency itself. In psychology some theorists have cast doubt on the ‘mind’/brain division implicitly accepted in much international relations theory (Pally 2000). For them the brain is simply another bodily organ which responds to physical and chemical stimuli and has learnt from past experience. Therefore there is no separate ‘mind’, only the brain which will react in certain ways to certain stimuli and has learnt behaviours. This is not to dispute that some people have power over others, but rather to question

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the extent to which free will or voluntarism can be attributed to actions. In this context it then becomes very important to distinguish between agency and power. While some African political elites may have gained power in relation to external actors, relative to historical levels, this should not be confused with agency.

2.4 The assemblage line of Sino-African relations An alternative way to conceptualise political-economic changes and intra-elite relations between Africa and China is as assemblages. Assemblage essentially means ‘putting together’. It, thus, points to the fact that something is in the process of becoming – rather than already in existence. Assemblages are comprised of both material objects and people or other animals and resemble actor-networks (Latour 1987). They suggest emergence rather than resultant formation; give emphasis to the provisional and spatial nature of social change; and point towards heterogeneous actors and objects co-existing in open systems without forming a coherent whole. In this manner assemblages suggest that power is co-existing and in constant transition – locally as well as globally – set in motion by co-functioning actants, acting without intentionality as conventionally understood. Power thus not only exists in the nation-state, but also in numerous interstate structures as well as in non-state actors and in structures, as well as in actors (Acuto and Curtis 2014; Allen 2011; Anderson and McFarlane 2011; Sassen 2008). This line of reasoning essentially means that we cannot talk of Sino-African relations in its totality. Instead we have to disaggregate the relationship and analyse its constituent parts in order to understand the underlying processes and mechanisms at play. Moreover these processes and mechanisms do not act autonomously but work in tandem with other processes and affect other structures and relationships. In other words, the assemblages of the Sino-African relationship also influence other assemblages and other places at other times. To quote Acuto and Curtis (2014: 18): ‘Sequences and temporality become vital: assemblages are born into a pre-existing configuration of other assemblages’. Viewed in this frame, ‘African agency’ is not in opposition to ‘Chinese power’ as they are inter-constitutive. The power of China in international economics and relations arises, in part from the ability to fuel its economy, partly through African oil and mineral imports. Likewise, the increase in the power during the commodity

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super-cycle of the African political and economic elite derived substantially from a combination of rising commodity prices sparked to a large extent by Chinese demand (cf. Farooki and Kaplinsky 2012), reduced debt burdens, improved credit ratings and a diversification of development partners – again largely related to the surge of Chinese interest in African economies, and the indirect demand effects China exerts. The assemblage approach thereby goes beyond traditional agency approaches by probing where agency is to be found, how it is established and which actants shape its development. Some might question the ontological status of assemblages, arguing that under globalisation everything is increasingly interconnected with everything else. For example, Chinese political elites are not just connected to their African counterparts but to those around the world. In a sense then global socio-nature could be considered a meta-assemblage and sub-assemblages are merely heuristic devices to make theoretical analysis easier. Viewed in this frame it is ultimately ‘nature’ which is in charge as an actant, as its laws and rhythms defy human temporality and attempts to alter or limit them (Klein 2014; Moore 2015). We, however, see assemblages more as an empirical approach that on the one hand forces us to unpack or critically interrogate accepted realities and on the other hand drives us to scrutinise how ‘agency’ works and how it influences SinoAfrican relations. Thereby it enables us to further our understanding of evolving forms of power in contemporary international relations.

2.5 Power shifts in Sub-Saharan Africa? This chapter began with a question which sought to locate power in Sino-African relations to see which actors held it and along which dimensions. We have questioned some received wisdoms and the ontological status of the concept of agency. We now proceed to probe these issues more deeply through an examination of Sino-Zambian and Sino-Angolan relations. These two countries are particularly interesting because they are both major exporters of critical natural resources to China. Hereafter, we probe the Ethiopian case as a potential counter-example. China is now the world’s largest consumer of copper and also of oil. Zambia is currently the second largest producer of copper in Africa and Angola is the largest exporter of oil on the continent to China and has recently rivalled Nigeria as Africa’s biggest overall

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oil producer. Zambia and Angola are thus critical cases for the study of power and African agency. If we don’t see structural power changes as a consequence of China’s rejuvenated political and economic interest in Africa in these two cases that have long-term close collaborations with it, that are of real importance for China’s geostrategic visions, and where incumbent governments increasingly have turned towards China to finance their aspirations of becoming middle- (Zambia) or high-income (Angola) countries, the likelihood that we will see structural power changes in other African countries as a result of the global power shifts are arguably slim (cf. Flyvbjerg 2004 for a discussion of critical cases).

2.5.1 ‘China’ in Zambia Much has been written in recent years on Sino-Zambian relations. Particularly in the 2000s Zambia was a ‘hotbed’ of contention over the role of China on the continent and witnessed extensive antiChinese riots in the capital city Lusaka and in the Copperbelt region of the country in 2006 on foot of an election which presidential contender Michael Sata (nicknamed ‘King Cobra’ because of his vituperative tongue) lost. In that year Sata ran on an explicitly antiChinese platform, issuing statements such as ‘we need investors not infestors’. He tapped into discontent about the distribution of natural resource wealth and the highly unfavourable conditions under which Zambia’s copper industry had been privatised, to the benefit of foreigners (Fraser and Lungu 2007). In the capital city, Lusaka, there was also substantial resentment against Chinese traders who were often felt to be displacing locals from the market – an example of Chinese-inflected Globalisation 2. Sata eventually ascended to the presidency in 2011, after a campaign which was still critical of the Chinese presence in the country but was less explicitly racist in order to appeal to more moderate voters (Fraser 2017). On coming to power, Sata’s first diplomatic guest or visitor in State House was the Chinese ambassador. This signalled both the economic importance of the Sino-Zambian relationship and that Sata wished to have a cooperative rather than a conflictive relationship, although he did give the ambassador a televised ‘dressing down’ about the need for Chinese investors to observe local laws (Fraser 2017). More importantly, maybe, he sent Zambia’s first president, Kenneth Kaunda, to China to thank the government and government entities for the financial support that Zambia had received from China since independence, such as that for the Tanzania–Zambia (TAZARA railway) constructed in the 1970s.

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By 2012 he was admonishing his own minister for labour for his confrontational approach towards investors, particularly Chinese ones (Uzar 2017). Zambian miners’ real wages declined with the copper price from 2013 and while ‘intolerance was justified in the populist moment as a reflection of anger at inequality; it now floats free of any programme’ (Fraser 2017: 456). Given the growing dependence of the Zambian economy on China for exports and investment, Sata’s positionality shifted on assumption of the presidency as he was structurally enrolled and inducted in the inter-elite actor-network (cf. Hampwaye and Kragelund 2013).6 When the Chinese ambassador was leaving the country after completing his term the Zambian foreign minister under Sata said ‘You became part of us. You blended in so well. It is sad that you are leaving’ (Patriotic Front [PF] 2013). The export-oriented copper assemblage remained intact. While Sata did introduce some ‘populist’ policies, such as increasing minimum wages and trying to ensure that all receipts from mining transited through the Zambian banking system to ensure that appropriate taxes were paid, the confrontational stance which he adopted towards Chinese engagement in Zambia quickly moderated (Cheeseman et al. 2014). Indeed, according to one report shortly before his death the Chinese government paid for Sata’s hospital stay in Israel in 2014 (Zambian Watchdog 2014). The enrolment or translations of Michael Sata and his PF government into the China-centred copper export assemblage resulted, in part, from the commodity’s contradictory or bivalent character as both a ‘national’ resource and international commodity (Fraser and Larmer 2010). The nature of Zambia’s economic relations with China meant there was both a demand for, and supply of, cooperation forthcoming from the previously highly critical president. The structural nature of the dependent relationship forged with China is consequently very much in evidence. This is not to deny that Michael Sata did not try to exert power both vis-à-vis the West and China (cf. Kragelund 2014). Examples include a decision to go against the ‘traditional’ development partners’ long-term agenda of privatisation, first by de-privatising the formerly state-owned telecommunication provider Zamtel. The official reason for this decision was one of economics: a commission formed by Sata himself reached the conclusion that Zamtel had been undervalued and hence, the sale had been illegal. The political undertone cannot be missed. Sata used his muscles to fight the ‘West’ and to pursue a domestic political goal of bringing ownership

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back into Zambian hands. This material and symbolic confrontation (Cruise O’Brien 2003), represents a reinscription of African nationalism, in some ways similar to that of late Zimbabwean President Robert Mugabe, who was a close friend of Sata’s. In a similar vein, the Zambian government in 2012 decided to cancel the Zambian Railways privatisation agreement and in 2014 the Industrial Development Corporation (INDECO) was revived (Saunders and Caramento 2018). Moreover, the Sata-led government chose to flex its muscles vis-àvis private investors. This was done through a number of laws passed in parliament. The most important of which included one banning dollar-denominated transactions to minimise large-scale tax avoidance and the passing of the Bank of Zambia (Amendment) Act 2013 that enabled it to better monitor and regulate foreign exchange flows, imports and exports, international transactions, equity investments and international money transfers in and out of the country (cf. Chapter 6). The Sata-led government also seemed eager to crack down on companies that did not abide by the laws governing the country. In this regard, it did not spare Chinese companies and hence, it took over the Chinese/Australian-owned Collum mine because of ‘gross abrogation of mining and environmental laws’, the failure to pay mineral royalties, and of the shooting of thirteen miners (Chawe 2013).7 The circumstances around the shootings are highly contested however, with Sautman and Hairong (2014) arguing that the fractious labour relations at the mine were an outcome of neoliberalism in Zambia, rather than particularly poor working conditions at the ‘Chinese’ mine. Another tentative sign of increasing Zambian agency vis-à-vis external actors came with the release of the 2015 budget that caused a certain amount of tumult in the mining sector as it announced an overhaul of the mining fiscal regime (Economist Intelligence Unit 2014a). As a result of the changes, which among others include an increase of the royalty, i.e. the payment proportional to the purchase price of the ore to the owner of the reserve, from 6% to 8% for underground mines, Canadian-owned Barrick Gold announced that it would close down the big Lumwana mine. It was subsequently slated for sale in the second half of 2019, particularly targeting Chinese investors (Denina and Brumpton 2019). This at first looked like the Zambian state exerting power over or against the cornerstone of the Zambian economy – large-scale foreign mining companies, especially as the minister of finance, Alexander Chikwanda, was quoted as saying that Zambia in fact resisted the

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‘stampede’ by the very mining companies that used the threat of closing down operations to force him to nullify the changes that he proposed to the mining fiscal regime: ‘[the mining tax changes] will pass through in [their] current form … These people don’t allow us to think about our own ideas, they just want to think for us … some mining companies want to stampede us to change the tax regime’ (quoted in Zambian Economist 2014). On closer inspection, however, the overhaul of the mining fiscal regime was not necessarily a sign of increasing Zambian agency. First and foremost, analysts saw this more as sign of weakness than strength on the part of the Zambian state. As the Economist Intelligence Unit (2014b) put it in November 2014: ‘The raising of taxes suggests the government has bowed to internal pressure to increase the mining sector’s contribution to revenue collection’. More importantly, the change of the mining fiscal regime was essentially a change of tax levels (royalties and income tax), not an alteration of how taxes are calculated. As Conrad (2014) explains in detail, the Zambian mining fiscal regime is characterised by vagueness, where vagueness benefits the mining companies – not the Zambian state. Since 2008 ‘797 statutory instruments (essentially, ministerial directives to amend, update or enforce existing primary legislation) affecting the mining industry, both directly and indirectly, have been issued by the Zambian government’ (Mills et al. 2017: 124). The impacts of this are especially apparent with regard to the base for royalty calculations and how to measure quantities of output. As regards the former, some mining companies determine the base for royalty calculations on the price that they get paid by buyers overseas; others on concentrate or on the smelter output production. How to measure quantities of output is not clear either: some use production figures, others concentrate figures (either when sold to domestic smelters or when exported), and finally some use the number of copper cathodes (sheets) produced. The result is that albeit mining companies in Zambia pay a lot more tax now than immediately after the mines were privatised in the late 1990s, ‘the number of mines actually paying tax is known to be relatively few’ (Conrad 2014: 93). In fact, the World Bank estimated at one point after privatisation, that when investment allowances were considered, the effective tax rate on copper mining in Zambia was zero. However, when copper prices have risen Zambian governments have attempted to raise revenues from copper mining and instituted windfall taxes. When prices fall these are often rolled back or removed, although in some instances they have also been increased as described below.

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Over the space of sixteen years the tax regime for mining was changed ten times (Mitimingi and Hill 2018), as governments flipflopped on the regime – largely dependent on the copper price, but also as a result of the contract between the incumbent party and the citizens to distribute the benefits of the national wealth (Rakner 2017). Recently, as public sector debt levels rose in Zambia, partly as a result of a lower copper price, the government increased mining taxes and duties to offset this (Mfula 2018). Thus the alteration of the mining fiscal regime did not signal African agency in the way implied by the use of the term in some of the recent literature. Rather, the lack of real changes in the mining fiscal regime which allows for a continuation of lack of clear definitions and rules may give the Zambian political elite power vis-à-vis its electorate, or be primarily for their benefit, not necessarily over Chinese actors, as public information about how much tax is paid by whom and why is at best scarce and often (also) opaque. Changes to the mining regime were partly an attempt to assuage a public, a substantial portion of whom, rightly or wrongly (Hairong and Sautman 2013), have been enraged by working practices at Chinese or Chinese-associated firms, even though these tend to make greater use of ‘permanent’ rather than sub-contracted labour (Lee 2017). In a sense then this represented an attempted hegemonic strategy to achieve consent on the part of the governed. It also appeared to have been relatively successful as the PF were re-elected in the presidential by-election in 2015. However, the subsequent election in 2016, which again returned the PF’s Edgar Lungu as president, was marred by allegations of extensive vote rigging, with the leading opposition figure subsequently arrested on suspicion of treason after his motorcade supposedly refused to yield to the president’s one (video footage of which is available on YouTube). He was, however, subsequently released in 2017 after a deal was reportedly brokered by the Commonwealth (BBC 2017). Instead of agency, these developments in the mining regime point towards numerous power transitions at local, national and global levels – none of which nonetheless alter the structural underpinnings of Zambia’s international relations. As laid out above, assemblages are essentially actor-networks where both human and non-human actants exert power. This allows us to go beyond an analysis of how Zambian state actors seek to exert power to also analyse how the very structures of a resource-rich economy and global political economy limit their ability to fundamentally change power structures.

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China, or Chinese and also other foreign actors in Zambia derive their power not only from their ability to grant or deny new loans or investments of importance for the Zambian government in its quest for modernisation and economic development. More importantly, China derives part of its power in Zambia from the structurally embedded nature of dependence that originates in the sunk investments in copper mines, conveyor belts and other infrastructures, jobs linked to them and dependence on copper for foreign exchange earnings and some taxes. As Greg Mills (2017) notes: Since privatisation in Zambia in 2000, mining companies have consistently provided 80% of export income, 12% of GDP and around one third of all tax income. More than $10-billion has been invested, over 85% of all FDI in this period, most of it by the three biggest companies – Konkola, Mopani, and First Quantum’s Kansanshi and Sentinel mines.

The mining sector is characterised by the extreme capital- and technology-intensiveness, not only of the mines themselves but of many of the activities in the value chain that begins with the exploration phase and continues with mine construction, ores extraction, smelting/leaching, refining, all the way to fabrication of final goods and eventually scraps. Especially the first parts of this chain require heavy engineering skills and substantial capital. Given this, the costs of exercising extensive ‘agency’ through the partial nationalisation of Chinese or other mines would be extensive. Due to its previous history, state socialism is no longer a realistic option in Zambia or elsewhere. Instead what we have witnessed is power or ‘agency at the margins’ in terms of the raising of minimum wages and threats to renationalise less capital-intensive firms. Londsdale (2000) refers to this as ‘agency in tight corners’. However the central agency was to reproduce the extant structure of the actor-network, despite the formal right to assert full sovereignty over ‘national’ resources, such as copper. Thus arguably the hegemony of transnational capital (Taylor 2017) was reproduced through a slight renegotiation of the contract of extraversion (Carmody 2010) to facilitate legitimation. Even this type of agency is precarious as the windfall taxes imposed on copper miners when prices were high were quickly reversed when prices fell on foot of the so-called global financial crisis, or as it is referred to more accurately in China the NAFC, although as noted above this has now changed given rapid debt

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accumulation in Zambia. Likewise, recent examples of Zambian agency vis-à-vis the mining companies in reality did not change the power structures between the complex transnational mining corporations and the understaffed Zambian tax authorities. In a similar vein, the banning of dollar-denominated transactions was revoked due to widespread criticism from foreign investors in Zambia – again signalling a limit to the power of the Zambian political elite (Becker 2014). Thus the agency of the Zambian state in relation to the international market (China being an important part of this) has been very limited in both extent and temporality. The contours of economic and resource dependence have remained intact under the Lungu government with copper continuing to account for well over 60% of total exports (Trading Economics 2019).

2.5.2 The Angola case President Eduardo Dos Santos was in power from 1979 until 2017 and was consequently one of Africa’s longest serving leaders. He remained in power during that country’s long civil war and for more than a decade after the end of that conflict. Corkin (2013) in her book attributes substantial agency to the Angolan government in negotiating the relationship with China. In some recent years Angola has been China’s biggest African supplier of oil and she argues this gave the country’s government substantial leverage in its negotiations. This is undoubtedly true, but as with the Zambian case the overall structure of dependence on resource exports has remained in place.8 Arguably, rather than structural transformation, the principal focus of the regime has been on its own maintenance, which has been spectacularly achieved, with the ruling party ‘winning’ more than 70% of the votes in the 2012 election and 65% in 2017 (Chutel 2017). The Angolan state has been able to leverage its external connections, both economic and political, to achieve this goal. State power then has been deployed to market or structure the country’s extraversion portfolio to best effect (Peiffer and Englebert 2012). According to Power (2012: 998): State power in Angola does not reside primarily in the government or in the ruling party the MPLA … per se, but more accurately in a clique of technocrats and advisors centred on the President … This group, named the Futungo after the Presidential palace, is a nebulous group of unelected officials and businessmen around the President Eduardo dos Santos which became the key structure of power in the 1980s, in tandem with the side-lining of MPLA

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party organs and formal state structures. Sonangol [the state oil company] essentially exists to harness and further their agenda … and as such it constitutes a structure of power alongside the formal state institutions, a kind of ‘parallel state’ … Thus far the Chinese credit lines have remained firmly in the grips of the Futungo and there has been evidence of their misappropriation.

This is in contrast to Corkin (2013: 5) who argues that ‘Angolan political elites, in a post-civil war environment, are attempting to use Chinese financial assistance as a state building device’. The discrepancy between these two perspectives may be explained by differences in the definition of what constitutes a state. Power is referring to what is sometimes called the ‘shadow state’ (Reno 1995), whereas it appears that Corkin conflates this with the formal state. At the heart of this lies the locus of power. According to Corkin (2013: 25) ‘in describing state power, Mann (1986: 113) distinguishes despotic and infrastructural power, the former referring to “the range of actions that the elite is empowered to undertake without routine” and the latter the ability to execute them’. However, this dualist conception of power is at odds with assemblage thinking in which power resides not primarily in actants but in networks: power rests in the ability to execute it, without which it cannot exist. What was the nature of the power of the Angolan state and powerful clique around the former president known as the Futungo? According to Marques de Morais (2011) after the end of the civil war in Angola in 2002 ‘the government took a fateful step, calling on China to fulfil the promise of reconstruction – in the same way it had outsourced its national defence needs to Cuba from 1975 to 1989’. By way of example the construction of the Kilamba Kiaxi housing complex in Luanda employed more than 10,000 Chinese workers and security for this multi-billion-dollar development was provided by the Presidential Guard. What this example demonstrates is both the power of the Angolan state (to provide security) and its weakness in terms of public and social service provision. The development then resulted from the power of the assemblage of Angolan state and Chinese actors to put together building sites, import materials and labour etc. and provide security. However, it also encounters resistance. ‘The large Chinese presence has resulted in growing resentment from Angolans and increasing personal attacks’ (Shinn and Eisenman 2012: 342), given the nature of the Angola model where 70% of the contracts for construction and infrastructure from oil-backed loans from China

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had to go to Chinese companies. China’s Export–Import Bank has a requirement for its ‘mining specific development’ contracts that half of the total value of the project be allocated to Chinese inputs, including labour and materials (Sharife 2011 cited in Wengraf 2018). Furthermore the fact that much African labour is unskilled gives credence to the need to import labour from China for many of these projects, although some Chinese companies such as Huawei have set up training centres (Mohan 2015) and the proportion of Chinese workers employed on construction projects varies substantially between countries (Centre for Chinese Studies 2006). Shinn and Eisenman (2012: 343) also detail how the Angolan political elite wished to maintain relations with a variety of external partners to prevent China developing a ‘monopoly of influence’. However, when the oil price fell, on foot of the NAFC, President Dos Santos made two trips to Beijing to ensure continued access to Chinese funding. This shows both the constrained temporality and relatedly, spatiality of ‘Angolan agency’ in the bargaining relations with ‘external’ actors, particularly China. As the oil price plummeted below USD 45 a barrel in 2015, on foot of the shale oil and gas revolution in the United States and a slowing Chinese economy, the ‘agency’ of Angolan political actors became even more constrained. The new Angolan president who came to power in 2017, João Lourenço, has attempted to increase his legitimacy and develop his own powerbase by taking key positions and influence away from the dos Santos family (de Alencastro 2018). Indeed de Alencastro (2018: 22) argues that on foot of declines in the oil price ‘for Angola, the re-entrance of the IMF as a political player will signify the end of Angola’s period of autonomy and sovereignty’. In this sense Angolan elites are ‘hemmed in’ (Callaghy and Ravenhill 1993) by combined resource and external dependence.

2.5.3 The Ethiopian exception? According to many analysts China has had a generally deindustrialising impact on African economies as its generally higher-quality and lower-cost manufactures outcompete locally produced ones (Kaplinsky and Messner 2008). While this might be true at a general or broad level as Gillian Hart (2002) notes, globalisation is locally produced and mediated. Consequently ‘China’ does not have universal but rather differential ‘impacts’. Furthermore there are a variety of channels or ways in which China impacts on manufacturing development in Africa. For example increasing commodity prices in the early part of the century – the period of the

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strong ‘Africa Rising’ narrative – fed into greater demand for nontradeables, such as construction, which stimulated this industry in many countries thereby contributing to domestic market formation as Christina Wolf (2016a; 2017) has analysed. As C. K. Lee (2017: 47) writes in relation to Zambia, ‘to leverage the China difference, however, two local preconditions – elite political will and state developmental strategy – are pivotal, without which Chinese state capital can become a perilous proposition’. Ethiopia is often held up as a country which is rapidly transforming its economy by forging close connections with and following the Chinese model of economic development (Ziso 2018). However, this success is now under threat as will be described in more detail below. Interestingly, Ethiopia is not a member of the WTO, and although it has observer status and claims to be interested in joining so far this has not come to pass. This has allowed it to pursue strategic trade and industrial policies in a way that members of the WTO cannot.9 Because the country is geo-strategically important to the Western powers, as a result of its role of combating Islamic fundamentalism in Somalia, they and the international financial institutions (IFIs) have also given it greater latitude in the deployment of strategic trade and industrial policy. This has, in turn, allowed the government there to ‘negotiate China’ more effectively than many other countries and to begin the process of industrialisation (Arkebe 2015), although there has also been support from other governments and agencies such as Italy, the US and also the United Nations (Bräutigam et al. 2018). The warmth of relations with Western governments has however, waxed and waned through time. Ethiopia held a highly disputed election in 2005 subsequent to which the ruling Ethiopian People’s Revolutionary Democratic Front government placed many actual or suspected opposition supporters in detention or concentration camps. When Western governments reduced aid and criticised such actions the Ethiopian government drew closer to China and attempted to learn from and implement aspects of its development ‘model’. This yielded important development dividends. Ethiopia has been growing its economy at approximately 10% a year for roughly the last decade,10 largely through investment in infrastructure but also through the development and implementation of an active and effective industrial policy (Arkebe 2015; Staritz and Whitfield 2017), partly targeted on attracting foreign investment, from China in particular. Ethiopia has the third highest rate of public investment in the world, but private investment is the sixth lowest (World Bank 2013 cited in Ziso 2018). Some of the

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largest infrastructural investments have been funded by China, such as the Standard Gauge Railway (SGR) to Djibouti11 (cf. Chapter 7) and what is sometimes described as Africa’s first light rail system, in the capital city of Addis Ababa. Furthermore manufacturing valueadded has grown at 15% per year in some recent years (Tomkinson 2016) although the picture is somewhat more mixed than this might suggest. In the words of Bräutigam et al. (2018: 161): Industry in general, and the manufacturing sector in particular, have made significant advances, each tripling in size over the past decade. However, relative to other economic sectors, manufacturing has declined somewhat, from 6% to 4% [of GDP], and the absolute industrial value-added per capita, about US $60 in 2013, remains one of the world’s lowest.

Despite some progress in structural development of the Ethiopian economy, its relations with China are still characterised by dependence. For example it runs a substantial trade deficit with that country, which is implicated in the accumulation of external debt, among other impacts (Cheru and Arkebe 2019). The country also runs a trade deficit with the United States of approximately half a billion dollars a year (AMI Newswire 2018). Thus while China has invested more than $13 billion in country [Ethiopia] since the turn of the millennium on everything from a massive dam project on the Blue Nile to roads … U.S. trade with Ethiopia is taking on new geopolitical significance following reports earlier this year that Sinosure, an export and credit insurance company owned by the Chinese government, stopped extending support to Chinese investments in Ethiopia. (AMI Newswire 2018)

In part this is because of rising debt levels, partly as a result of trade with China, and the fact the Ethiopian government (rightly) restricts profit repatriation (Fick and Shepherd 2018). The IMF has recently raised the risk of debt distress in Ethiopia to ‘high’ as a result of the fact that foreign currency debts amount to 350% of annual exports (Economist 2018a), creating substantial pressure to liberalise the economy.12 There are also other issues. Industrial growth in Ethiopia is partly driven by low wages. Average wages in Ethiopia are now approximately one-eighth of what they are in China; a ratio similar to that when Japan began its catch-up phase with Britain (Frankema and van Waijenburg 2018).13 In fact, Ethiopian garment workers have

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an average base wage of only USD 26 a month – the lowest in the world, which is, somewhat incredibly, less than 8% of the average for equivalent workers in China; a country not noted for its high wages (Barrett and Baumann-Pauly 2019). The much-vaunted ‘Ethiopian miracle’ is then partly based on ‘sweating labour’, in the same way as many other developmental states historically. There has, however, been substantial employment creation on foot of this. Oya and Schaefer (2019) found that among Chinese construction companies they surveyed in Ethiopia the average number of employees was 3,970, whereas in the textile, garment and leather products sub-sector the figure was 1,845. From a zero base in 2000, Chinese firms had directly created approximately 40,000 jobs in the country by 2017. Furthermore according to World Bank (2012 cited in Abegunrin and Manyeruke 2020) statistics, 69% of the Chinese firms operating in the country have given some type of training just for Ethiopian workers. Africa’s first electric railway, the Addis Ababa–Djibouti SGR, which was financed with Chinese money, opened in 2017 and has facilitated export-oriented manufacturing investment in Ethiopia, such as in the Eastern Industrial Zone outside Addis Ababa which is completely Chinese-owned (Ziso 2018) and where the shoe manufacturer Huijan has a major plant (Giannecchini and Taylor 2018) which produces about two million pairs of shoes yearly and employs 3,500 people. Eighty per cent of the leather used in the factory is sourced in Ethiopia (Hauge 2016) and the company has announced that it will be moving its headquarters to Ethiopia. While Ethiopia is commonly held up as an exception in terms of the ‘impact’ of China on its development, as noted above it still demonstrates substantial dependence, even if some of its economic interactions have been beneficial. For example ‘Ethiopia is not currently an important source of imports for China. Ethiopian exports to China are dominated by sesame seeds [eaten as a snack in China] which accounted for about 85 per cent of the total between 2006 and 2015’ (Zwede 2017 in Jenkins 2019: 173). In fact these seeds are Ethiopia’s second biggest export after coffee and ‘foreign currency earned through the sale is appropriated by Ethiopia’s stateowned Commercial Bank and used to fund Chinese projects in what effectively amounts to a revolving credit facility’ (Ziso 2018: 177). Economic relations are also extractive in other ways. Ethiopia was the biggest market in SSA for Chinese engineering and construction firms in both 2014 and 2015 (NBS database cited in Jenkins 2019). Between 2004 and 2016 Chinese investments and

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contracts in the country amounted to USD 17.62bn (China Global Investment Tracker cited in Ziso 2018). The attention Ethiopia has received from China is partly because it houses the headquarters of the African Union (AU), the construction of which was funded by the Chinese government and which Ziso claims it needs in order to realise its designs for the continent. Also many Chinese companies are reported to get exemptions from customs and other regulations, which gives them a competitive advantage over other firms in the country (Ziso 2018). This lack of transparency accords with poor scores by Chinese multinationals in a global study by Transparency International – scoring 2 out of a possible 10 points (cited in Ziso 2018). The dependent nature of the Ethiopian economy is manifest in increasing levels of debt and consequent pressure to liberalise through the sale of state assets to pay this down. ‘Ethio Telecom, Ethiopian Airlines, Ethiopian Power, and the Maritime Transport and Logistics Corporation are intended to be sold to local and foreign investors’ (Demsis cited in AMI Newswire 2018). This is despite the fact that Ethiopian Airlines is widely regarded as Africa’s best airline, its success in technological learning, and its vital role in the country’s economic development thus far (Arkebe and Taffere 2019). Despite the crash of one of its Boeing aircraft in 2019 it still reported a profit of USD 260 million for the year and has been Africa’s most profitable airline in several recent years (Beresnevicius 2019). The fact that the Ethiopian government has had an effective monopoly on telecommunications has allowed it to raise money for infrastructural investments, along with other measures such as docking public servants a month’s pay a year. However, record levels of foreign investment and other inflows were recorded in Prime Minister Abiy’s first year in office. ‘“In the past seven months alone, through investments, loans, grants, remittances and services, we brought $13 billion”, Abiy, 42, said Tuesday in a televised address, without giving details on sources of the funds. “If we didn’t do this, it would’ve been impossible to get out of our troubles”’ (quoted in Gebre 2019). Thus the ‘Ethiopian miracle’ may be unravelling as it engages in neoliberalisation, even if shortterm growth increases with new inflows of foreign investment. There may also have been a political motive for the economic liberalisation as the Endowment Fund for the Rehabilitation of Tigray (EFFORT) ‘owns almost all the major industries in Ethiopia including Banking, Construction, Agribusiness, Mining,

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Communication, Insurance and other pillars of the economy that are vital to the well-being of the country’ (Mulugeta 2013). Abiy is ethnically Oromo and under his premiership the dominance of the Tigrayan community in Ethiopia is ebbing. However, political liberalisation under his leadership has resulted in an upsurge of protests and conflicts as the authoritarian lid is lifted. This will also potentially undermine the developmental state model in Ethiopia.

2.6 Conclusion: who is in charge? African countries ought to be able to adopt a … strategy of integrating trade, financing and development considerations in their approach to the BRICS … [however] Africa does not appear to have established the necessary capacity to negotiate such outcomes. (United Nations Economic Commission for Africa 2013: 32 quoted in Taylor 2014: 160)

While not fully unpacking this statement, there are multiple issues of power at play here. The first is the power capability of African elites to negotiate deals with China and the other BRICS countries that would promote industrialisation. The second is the desire of African political elites to do so given the benefits which flow to them from current arrangements. The third is the desire of China and the other BRICS to promote industrialisation in partner/competitor countries and the fourth is the ability to do this given the constraints imposed by the WTO which has severely circumscribed the ability to deploy strategic trade and industrial policy instruments, in most cases. While China has a high-profile ‘International Capacity Cooperation’ Initiative to export surplus manufacturing capacity to partner countries, some see this as facilitating the export of debt (cf. Kenderdine and Ling 2018). China largely promotes external neoliberalisation (free trade and investment) (Carmody 2019) to ensure its own strategic interests through the ‘new constitutionalism’ of the WTO (Gill 2003). African political elites are, in turn, often happy to deploy the ‘strategy of extraversion’ – courting foreign actors to serve their own ends (Bayart 2000). This coincidence of interests has resulted in a China–Africa assemblage which is itself embedded in a broader structure of empire (Hardt and Negri 2000). For example in 2005/6 15% of World Bank-funded projects in Africa were undertaken by Chinese firms (Chaponniére 2007).

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A focus on African agency is in different ways both salutary and obscurantist simultaneously. Writers in this school are correct to argue that African political elites are powerful. However, their primary power is in their ‘vertical’ relations with their domestic citizens, and their ability to arbitrage or leverage external relations to achieve this. In some cases, such as Zambia, this resulted in the achievement of a fragile Gramscian hegemony, at least for a time. In others such as Angola, the interplay between Chinese and ‘Western’ development aid has been leveraged towards the maintenance, deepening and now perhaps, reconfiguration of authoritarian rule. Depending on demand and price conditions African states and political elites have been able to exercise ‘agency’ at the margins in relation to capturing a greater share of national resource rents for themselves or their treasuries. However, as of yet they have been unable to fundamentally alter the nature of the dependency which characterises their relations with China and other foreign powers and companies, even in the case of Ethiopia, which has had substantially better positioning in relation to, and capabilities in dealing with, foreign actors than many other countries on the continent. Specifically in relation to China this is because of the successful internationalisation of the Chinese state. Gonzalez-Vicente (2011: 403) specifically argues that the internationalisation of the Chinese state comprises: (i) the re-territorialization of the state through transnational sovereignty arrangements, or what the state governs; (ii) the negotiation and struggle for spaces of statehood within the increasingly capitalist Chinese state (domestically and abroad), or who governs; (iii) and the transformations of power, culture and governmentality within the internationalized state and the attendant micro-politics of everyday affairs and politics of state transnationality, or how the state governs.

The nature of this restructuring has placed developmental limits on Chinese interactions with Africa. In the case of Ghana, for instance, Phillips (2019: 101) argues: First, although the agency of Ghanaian elites has shaped the outcomes of recent bilateral investments, Ghanaian state agency has been exercised primarily in brokering external sources of finance and in relation to domestic institutions and political factions. Second, Chinese investment did shift the aid modalities

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and relative power of Ghana’s traditional development partners, but international finance institutions and US agencies maintained influence over macro-economic governance and sectoral policies, respectively. As such, the scope of Ghanaian agency in relation to external finance and bilateral and multilateral relations was narrow, and market orthodoxies of development remained dominant.

The last decade has been a momentous time in African political economy. Many regimes were able to leverage the commodity boom into sustaining regime maintenance. Widespread debt relief from the World Bank and IMF on the continent reduced the leverage of Western powers, even as the power of China on the continent grew, partly because it was ‘knocking on a wide-open door’ as World Bank/IMF structural adjustment programmes (SAPs) had opened their economies. African political elites also preferred China’s ‘nonconditional foreign policy’14 and Western powers had neglected the continent as it largely fell outside of their geopolitical gaze or code in favour of the dynamic economies of the East (Kragelund 2009). However, this has now changed and the power of the IFIs on the continent is growing again as commodity prices have fallen and debt levels have risen. The continued dominance of the West over the financial vector of globalisation gives it considerable conjunctural and structural influence. While many regimes have been able to leverage external relations to bolster their rule, there has also, however, been an upsurge in demonstrations and resistance across the continent (Branch and Mampilly 2015). This was most dramatically expressed in the north of the continent through the ‘Arab Spring’, although this has now largely been reversed (Egypt) or descended into something approaching anarchy (Libya). Nonetheless repressive regimes do bring forth resistance and this has been witnessed from Uganda to Sudan, where long-time President Omar al-Bashir was removed from power by the military after extensive protests in 2019. Indeed some refer to the revival of protests across the region as a second Arab Spring. As to the question of who is in charge, this depends on the issue area under consideration. Many African states have become more effective at projecting power across distance and strengthening domestic sovereignty. The AU has also been quite effective in exerting agency around the SDGs and Paris Agreement, for example (Lopes 2019b). African states have also been able to exercise ‘positive’ agency at the margins, through renegotiation of resource

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contracts on more favourable terms, for example, and to resist the predations of European Union (EU) Economic Partnership Agreements (EPAs), for the most part, with only fifteen countries having signed these (Lopes 2019b). However the overall contract of extraversion remains firmly in place. This contract takes the form of an actor-network which is largely stable in terms of its constitution and configuration, even if the personalities involved change, as in the Zambian and Sudanese cases, for example. This speaks to an older insight from structuration theory, which is that while it is true that agents create structures, they are recursively shaped by structures as well. Thus while structures do not create agents, they shape them, their positionality and identity and their latitude of action strongly. A potential flaw in the recent (over)emphasis on African agency is that it might unwittingly reinforce internalist explanations of African underdevelopment. Positing African elites as largely being in the ‘driving seat’ in relations with China risks implying that they have the power to fundamentally reshape the nature of their state– societies. This is patently untrue. In this chapter we have raised reservations about how agency is conceptualised in African studies and cautioned that it needs to be, if not discarded, at least situated in the context of massive power differentials between states in the international system and the continuing and arguably deepening power of transnational capital, all of which are constituted through actor-networks. While it is certainly accurate and salutary to highlight the power of African state elites and other actors on the continent, there is a need to temper this through recognition of the ongoing realities and structural conditions highlighted above. We now move to explore these issues of power and economics in more detail specifically in relation to Southern Africa.

Notes 1 Lesotho is reported to be the first country in the world with a functioning 5G network. 2 As has been noted an elephant growing at 6.5% a year is more impressive than a rabbit growing at 10% (Arkebe and Lin 2019), at least in the short term. 3 Rentier states denote states that derive a substantial portion of their revenues

from rents; where the lion’s share of these rents come from abroad; where the rents accrue to the government directly; and where only a few people are involved in the generation of the rent (cf. Beblawi 1990). Typically in rentier states political elites benefit substantially and disproportionately from rent inflows, whereas the majority

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of the population may be immiserised. This means that the manufacturing sector may be growing in absolute terms, but shrinking as a proportion of the economy, as other sectors grow more quickly. In recent years The Economist has claimed that African manufacturing is growing as quickly as the rest of the economy, but this may in part be a reflection of the slowing of extractives in the context of the end of the global commodity super-cycle in 2014. Although it should be noted that Nigeria has adopted multiple import bans (cf. Oyejide et al. nd). Although he was a member of the Zambian political elite having previously held several ministerial portfolios he ‘performed’ disaffection with the status quo and incumbent elites (Fraser 2017). The owner of the mine was an Australian citizen of Chinese origin. However, the Chinese embassy was able to ‘insist’ that workers who had been shot in that incident by Chinese managers were compensated (Sautman and Hairong 2014) bespeaking the power relations. Wolf (2017), however, argues that Angola has come some

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way in terms of domestic market formation financed to a large extent by incomes from oil. However, the new Prime Minister Abiy has formed a panel to resume the process of accession (Girma 2019). It should be noted that there are questions about the veracity of Ethiopian statistics and that it has been reported to have the highest level of childhood malnutrition in the world (Oxfam International cited in Wengraf 2018). It is important to note that this project was negotiated with China in advance of the announcement of the BRI (Anthony 2020). Across the continent the IMF lists eighteen countries as at risk of debt distress (Economist 2018b). For a more in-depth discussion of the reasons behind Ethiopia’s ‘industrialisation’ see Carmody (2017). This is not strictly true as relations with China are dependent on nonrecognition of Taiwan and also conditionality around awarding of contracts to Chinese companies is often attached to loans, representing a re-scaling rather than an abolition of conditionality (Carmody 2016).

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A. Kobayashi (ed.), International Encyclopaedia of Geography, London: Elsevier. Hung, H. F. (2016) The China Boom: Why China Will Not Rule the World, Cambridge, MA: Harvard University Press. Jenkins, R. (2019). How China Is Reshaping the Global Economy, Oxford and New York: Oxford University Press. Kaplinsky, R. and D. Messner (2008) ‘Introduction: the impact of Asian drivers on the developing world’, World Development, 36(2): 197–209. Kenderdine, T. and H. Ling (2018) ‘International capacity cooperation: financing China’s export of industrial overcapacity’, Global Policy, 9(1): 41–52. Kiely, R. (2016) The Rise and Fall of Emerging Powers: Globalisation, US Power and the Global North South Divide, Cham: Palgrave Macmillan. Klein, N. (2014) This Changes Everything: Capitalism vs. the Climate, London: Allen and Lane. Kragelund, P. (2009) ‘Knocking on a wide open door: Chinese investments in Africa’, Review of African Political Economy, 36(122): 479–497. Kragelund, P. (2012) ‘Bringing “indigenous” ownership back: Chinese presence and the Citizen Economic Empowerment Commission in Zambia’, Journal of Modern African Studies, 50(3): 447–466. Kragelund, P. (2014) ‘“Donors go home”: non-traditional state actors and the creation of development space in Zambia’, Third World Quarterly, 35: 145–162. Latour, B. (1987) Science in Action: How to Follow Scientists and Engineers through Society, Cambridge, MA: Harvard University Press.

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Contemporary China, 23(90): 1073–1092. Sharife, K. (2011) ‘All roads lead back to China’, Pambazuka, https://www.pambazuka.org/ global-south/all-roads-lead-backchina. Shinn, D. H. and J. Eisenman (2012) China and Africa: A Century of Engagement, Philadelphia, PA: University of Pennsylvania Press. Silva, J. (2019) ‘Competing against Chinese loans, U.S. Companies face long odds in Africa’, New York Times, https://www.nytimes. com/2019/01/13/world/africa/ china-loans-africa-usa.html. Staritz, C. and L. Whitfield (2017) Made in Ethiopia: The Emergence and Evolution of the Ethiopian Apparel Export Sector, Roskilde: Roskilde Universitet. Taylor, I. (2011) The Forum on China–Africa Cooperation (FOCAC), New York: Routledge. Taylor, I. (2014) Africa Rising?: BRICS – Diversifying Dependency, Oxford: James Currey. Taylor, I. (2017) Global Governance and Transnationalizing Capitalist Hegemony: The Myth of the ‘Emerging Powers’, London and New York: Routledge. Taylor, I. (2020) ‘Afro-Asian trade and the “Africa rising” story’, in R. Anthony and U. Ruppert (eds), Reconfiguring Transregionalisation in the Global South: African–Asian Encounters, Cham: Palgrave Macmillan. Tomkinson, J. (2016) ‘Beyond faith and fatalism in development discourse: global conditions and national development prospects in Ethiopia’, paper presented at the International Initiative for the Promotion of Political Economy Conference, Lisbon. Trading Economics. (2019) ‘Zambia exports’, https://tradingeconomics. com/zambia/exports.

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and the New Scramble for Africa, Chicago, IL: Haymarket Books. Wolf, C. (2016a) ‘China and latecomer-industrialisation processes in sub-Saharan Africa: situating the role of (industrial) policy’, African Review of Economics and Finance, 8(1): 45–77. Wolf, C. (2016b) ‘China and latecomer industrialization processes in sub-Saharan Africa: a case of combined and uneven development’, World Review of Political Economy, 7(2): 249–284. Wolf, C. (2017) ‘Industrialization in times of China: domesticmarket formation in Angola’, African Affairs, 116(464): 435–461. World Bank. (2012) ‘Chinese FDI in Ethiopia: a World Bank survey’, The World Bank, Washington, DC, https:// openknowledge.worldbank.org/ handle/10986/26772?show=full. World Bank. (2013) ‘Ethiopia economic update: laying the foundation for achieving middle income status’, The World Bank, Washington, DC, https://www.worldbank.org/en/ country/ethiopia/publication/

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3 China’s interests and impacts in Southern Africa

3.1 Introduction The previous chapter explored the nature of power relations between Chinese and African states. This chapter takes a deeper dive into Southern Africa to further probe the question as to whether the rise of China and the other BRICS1 powers is facilitating the creation of more developmental states or is reinforcing extractive economies and dependency in the region? This is one of the central questions facing Southern Africa in terms of its development and a profoundly important one for understanding the ramifications of (hitherto low-quality) Global South-led growth. According to the United Nations Conference on Trade and Development (2011), ‘South–South economic relations are, generally, not purely or primarily market-driven, and relations between Southern states and firms hold out the potential for more constructive integration’. This chapter examines whether or not this is the case in regard to Southern Africa’s relations with China and also South Africa: the two most influential countries among the BRICS grouping in the region.2 In order to examine this question this chapter reviews recent literature, analyses trade data and draws on interviews conducted with academics and diplomats in Pretoria and Johannesburg in South Africa in 2014.3 Before addressing the question specifically, it is necessary to contextualise the nature of China’s engagement with the region.

3.2 Conceptualising Chinese and BRICS’ engagement in Southern Africa China has had some level of interaction and engagement with Southern Africa for centuries but since 2008 it has been Africa’s largest single trading partner. This also applies to many countries

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of the Southern African Development Community (SADC).4 For example, South Africa is now China’s biggest trading partner on the continent, and also South Africa’s biggest export market, accounting for 14% of its total in 2014 but dropping to only 8.5% by 2018, partly as a result of falling commodity prices (calculated from IMF 2016 and 2019). The EU, as a collective, remains a more important trading partner for the SADC region as a whole,5 signing an EPA with the SADC EPA group in 2016.6 The countries of Southern Africa have differing levels of engagement with China depending on their histories, politics and geographies. For example, partly because of ongoing tension between Zimbabwe and some Western powers, as well as its consequent ‘Look East’ policy, China accounted for more than 28% of the country’s exports in 2014, versus only 1.5% going to Britain, the former colonial power (calculated from IMF 2016).7 Interestingly China also accounted for 28% of Mozambique’s exports in that year. There is also an increasing ‘strategic coupling’ (Yeung 2016) between China and South Africa. South Africa is arguably the key state in the region as far as China is concerned. According to one Chinese academic the combination of South Africa’s domestic achievements and consequent international reputation and position in Africa afford it ‘irreplaceable unique advantages’ (Linhua cited in Yong 2012: 7) and it joined the BRICS grouping in 2010, at China’s invitation. South Africa at one point accounted for approximately a quarter of China’s total trade with the continent (Yong 2012). Thus, while South Africa’s inclusion in the BRICS grouping seems anomalous, given the relatively small size of its economy, it increases the geographical representativeness of the grouping and serves a gateway function for BRICS powers, particularly China, though the extent of this function varies sectorally. This has prompted changes in domestic policies. For example in 2013 the South African Minister of Finance expanded ‘Gateway to Africa’ reforms, specifically referencing BRICS countries (Gordhan 2013). These reforms allow holding companies for operations in Africa to be set up which are not subject to South African foreign exchange restrictions. South Africa thus serves a number of important functions for investors from China and this, combined with the importance of the trade relationship, has reconfigured regional geopolitics. Researchers at the South African Institute of International Affairs (SAIIA) noted that some of South Africa’s neighbours feel that the South African state cares more about the BRICS than it does about them (Interview with Christopher Wood and Elizabeth

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Sidaropoulos, Johannesburg, 13 August 2014) – perhaps because it gives South Africa a seat at the ‘top table’ of international relations. Indeed, they argued that South Africa serves as an ‘echo of China’ in debates about the continent’s development (Wood interview 2014), while Alden and Schoeman (2013: 112) talk of South Africa institutionalising ‘a BRICS-oriented foreign policy’. Closer alignment with China reflects a shift from a greater concern with ethics in foreign policy under Nelson Mandela’s presidency to ‘realpolitik’ subsequently, with South Africa abstaining for example in 2014 on the United Nations’ vote to refer North Korea to the International Criminal Court, for example (Allison 2014).8 While some Chinese analysts argue that China and South Africa’s economies are complementary and that the countries have similar outlooks on world affairs, and on the need to reform structures of global governance in particular, it could also be read as reflecting a new dependency (Yong 2012). Indeed a 2012 African National Congress (ANC) discussion document warned of ‘neo-imperialistic economic relations’ being forged (quoted in Alden and Schoeman 2013: 116). South Africa realises that it is ‘amongst giants’ (Interview with Dr Sookal, South African Department of International Relations and Cooperation, Pretoria/Tshwane, 13 August 2014) in the BRICS, but that it has a certain degree of influence which flows from its relative economic size in Africa and its status and consequent geopolitical positionality on the continent, although this also has its limits (cf. Taylor 2011). ‘Specifically regarding the BRICS, actors from those states are in Africa not because of some notional love of Africa or Africans, but for reasons based on capitalist logics’ (Davies and Taylor 2015: 153), although there are also ancillary and related geopolitical motivations. Markets are perhaps as important a motivation for Chinese engagement on the continent as resource access, as trade between the two was, at least until recently when commodity prices fell, roughly balanced. However, by 2016 Africa exported only 19.7% of the value of it imports from China to that country, with the resultant trade deficit having to be financed, and consequently a source of debt (calculated from Dodd 2019).9 However this is a feature of uneven capitalist development, rather than something unique to China; although it does have distinctive features by virtue of its mixed economy model. The situation in Southern Africa shows elements of this, but with some distinctive features. As a result of Angolan oil, the SADC region ran a trade surplus of almost USD 10bn with China in 2014 (calculated from IMF 2016). However, when Angola was excluded the balance of

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trade with SADC favoured China almost two to one,10 with some major resource exporters, particularly South Africa and Zambia, running very substantial trade deficits. Thus, China is extractive of both value and resources from the Southern African economy. This is evidenced by the fact that the cost of shipping a container from China to Durban, Sub-Saharan Africa’s busiest port, is more than double that on the return journey (Rodrique 2010), where is it primarily lower value, often unprocessed, raw materials which are being transported. Hardwood accounted for 69% of the total value of Mozambican exports to China in 2008 (Ilheu 2010 cited in Bunkenborg 2014), and perhaps substantially more when illegal exports are included (Environmental Investigation Agency 2012). Furthermore, given China’s commodity power, or competitiveness, container ships often return empty to that country. ‘As a measure of China’s growing power in the world, nothing is quite as poignant’ (Fuller 2016). As the director of the BRICS Secretariat at the South African Department of International Relations and Cooperation (DIRCO) noted, all of the BRICS countries have an interest in the African market (Interview with Dr Sookal, South African Department of International Relations and Cooperation, Pretoria/Tshwane, 13 August 2014). He explained further that there was room for all to ‘come in in a coordinated way. We shouldn’t be trampling each other’, perhaps recalling Kautsky’s theory of ‘ultra-imperialism’, where world powers cooperate to exploit weaker countries, rather than engaging in war with each other. However, each of the BRICS powers competes economically at the same time as there is geopolitical unity around certain issues such as ‘non-interference’ in internal affairs. Consequently interactions among the BRICS might be better characterised as ‘co-opetition’ (Brandenburger and Nalebuff 1997). However, as China accounts for 60% of the total economic output from the BRICS, and consequently is the leader of the group, its strategies in the region are particularly important and interact with those of South Africa, with substantial impact, particularly as South Africa is the single biggest foreign investor regionally.

3.3 China’s engagement and geo-governance in Southern Africa The structure of Chinese engagement in Southern Africa is informed by the nature of state engagement and ownership in that economy

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and has a distinct sectorality, both spatiality and temporality. Chinese investment on the continent and region was initially concentrated in the natural resources sector but has widened in recent years. Given the continued importance of state ownership in the Chinese economy and its highly interventionist economic approach, characterising it as neoliberal, as David Harvey (2005) does, is perhaps somewhat misplaced, even as it engages in selective neoliberalisation. For example, according to The Economist, state-owned companies in China may make up to 80% of the market capitalisation of the stock market there (Bevir and Gaskarth 2015) and these so-called ‘dragon’s head’ companies have played an important role in the expansion of China11 in Southern Africa. Furthermore many Chinese medium-sized enterprises investing in the region are offshoots of former SOEs, as their number was halved from the 1990s onwards (Alden 2012). The sectorality of Chinese engagement in Southern Africa, led by state-owned natural resource and infrastructure companies, has also led to a particular step-wise nature to engagement in the region. While the ‘Angola model’ of resource-for-infrastructure swaps has sometimes been over-stated in importance, it is nonetheless an important modality of engagement (Bräutigam 2009). It has also been controversial given loan conditionalities which require the contracting of Chinese companies to fulfil infrastructure requirements, often bringing labour with them. When these contracts are completed some Chinese workers stay on and set up small businesses in trading, as restaurateurs or farmers, for example (French 2014). As Lam (2016: 116) describes, some workers stay on due to ‘non-transferable social capital’ – that is, the connections migrants make abroad cannot be used to maintain social ascension back home. These sorts of Globalisation 2 processes deepen and further embed processes of translocalisation, or interpenetration of distant localities, and also create markets for other Chinese companies, such as banks. The sectoral, temporal and social embeddedness of these processes serves to deepen interdependence between China and the Southern African countries with which it has the most significant engagement, such as South Africa. However, Chinese expansion into Southern Africa has been undertaken in a context defined by what some have termed the global hegemony or sovereignty of transnational capital (Woodley 2015) and its accompanying institutions, such as the WTO and the World Bank’s International Centre for the Settlement of Investment Disputes.

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Fear of internal disorder projects itself through China’s global emphasis on maintaining existing patterns of order (however imperfect), upholding the sovereignty and territorial status quo of other states wherever possible. Existing international institutions are tolerable, as they have allowed China’s rise, and the stability they provide in interactions is preferable to the uncertainty of radical reform. (Bevir and Gaskarth 2015: 80)

Thus in its international economic relations the Chinese government plays a two-level game – promoting external neoliberalisation to achieve resource, investment and market access through the WTO, for example, while adopting a ‘flexeconomy’ (Stiglitz quoted in Carmody 2016) approach domestically and in bilateral relations; ostensibly without conditionality. Interestingly a report by the World Bank and China Development Bank (2017) attributes the success of American industrialisation to ‘robust free markets’, which belies the historical record (Chang 2002). The National Development and Reform Commission (NDRC) of China, its highest-level economic planning agency, encourages the ‘opening up’ of recipient countries in the BRI (NDRC 2015 cited in Ehizuelen and Abdi 2018). The ostensible lack of political or economic conditionality for Chinese engagement is functional in accessing resources and markets as this approach is popular with Southern African political elites, who benefit from it and had often resented prior Western conditionality. However, the creation of new transnational alliances or assemblages between Southern African and BRICS political elites, and sometimes capital, results in a deepening ‘uncertain territoriality’ of many gatekeeper states in the region (Chari 2015). The projection and penetration of Chinese and South African state/capital interests into Southern Africa represents a form of geogovernance, where power is projected across borders.12 As noted earlier, while there has been much written recently about the importance of African agency in relations with China, the power in these relations are in the networks, in which Chinese actors often play the dominant role. This relates to the continuing strong role of the government in the economy, and internationalisation of the Chinese developmental state, primarily for its own, rather than others’ benefit (Alden 2019). As noted earlier, its increasing power is also demonstrated through the establishment of a variety of institutions such as the AIIB and BRICS’ development bank in 2015, which is headquartered in China (Stuenkel 2016). As Adem (2010: 340) notes ‘China has thus not completely shunned multilateralism, but it clearly prefers bilateralism in its

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relations with African countries’ because it is easier to extract more favourable resource and market access deals through bi-, rather than multi-lateral relations. In particular China does not want to reduce bilateral credit to African countries because that is how it gets influence (Wood interview 2014)13 and the fact that many of the loans are concessional rather than grants heightens this (confidential personal communication 2019). Van der Merwe (2019) calls this the ‘infrastructure-for-influence’ approach. Howard French (2014) argues that China’s willingness to defy risk perceptions has made it a well-regarded partner, although some of the projects which it has funded have turned out to be high risk, with the negative potential effects borne mostly by the debtors. ‘Unless African investment financed by Chinese loans generates substantial economic gains that boost debt servicing capacity of Sub-Saharan African governments, the credit implications of such lending include higher debt burdens, weaker debt affordability and weaker external positions’ (Rogovic quoted in IOL Business Report 2018). Although as will be discussed in more detail later this is now being rethought by China as many large projects have been ‘costly flops’ (Economist 2019). Influence is also attained through investment, which may, in turn, promote and facilitate expanded trade flows. In 2007, for instance, the state-owned Industrial and Commercial Bank of China (ICBC) (the world’s largest company according to Forbes (2019)) bought a multi-billion-dollar stake in the South African headquartered Standard Bank, which has an extensive branch network across the continent. It was the largest foreign investment in South African history. This intermingling of South African and Chinese originating capital has its analogue in political coordination between their respective states – the BRICS cooperation mechanism being a prime example. Geo-governance, or coordinated economic and political power projection across borders, in Southern Africa is achieved through foreign investment and trade, in addition to other modalities. It is often held in international relations that dominance in economic production is a major source of state power (Cox 1987). Because the US has the world’s largest economy, when measured in US dollars, it must, it is often held, be the world’s most powerful country. However, power flows not only from production but also from necessary circulation and exchange of products and services to close the circuit of capital. The opening up of territory for the realisation of value through purchases of commodities is a particularly important element of geo-governance – ‘commodity power’.

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While power of state and capital are sometimes held to be separate, they are linked and partly inter-constitutive through the taxes raised on production and exchange, and labour and through exports. The power of the Chinese state partly rests on sales by ‘its’ corporations in other markets. This does not mean that different governments in Southern Africa do not pursue their own elite interests or develop policies based on perceptions of those of the ‘nation’, such as indigenisation policies in Zimbabwe, but that they do so under conditions shaped by regimes of power which structure and are partly constituted through trade, aid and investment relations. This enables continued resource extraction based on the strengthening of the implicit transnational contract of extraversion between political elites and transnational corporations (TNCs) which has underlain Southern African (under)development. South Africa only exports 47%, in value terms, to China of what it imports from that country (calculated from IMF 2019) and feels there should be more ‘equal exchange’ in terms of trade between the different members of the BRICS grouping (Telephone interview with Dr Jaya Josie, BRICS Programme at Human Sciences Research Council, South Africa, 8 August 2014). South Africa does raise its own developmental needs in its bilateral relations within the BRICS, even if it often sides with China on issues of international affairs. For example in 2012 the then South African President, Jacob Zuma, told the Chinese government that the balance of trade between the two countries was unsustainable – attempting to redress the balance of commodity power and its developmental impacts. In order to try to achieve this ‘South Africa has put the issue of beneficiation on the table with China’ (Interview with Christopher Wood, Johannesburg, 13 August 2014); an example being that most of the locomotives and carriages for the North and South China Rail contracts with South Africa are to be built in-country.14 However this represents a form of bargaining at the margins, which does not change the overall dependent nature of the relationship or the over-arching global trade and capital regimes as formalised in the WTO.15 Chinese policy makers argue that trade should take place on the basis of ‘comparative advantage’ (Yong 2012), a theory which makes completely unrealistic assumptions (Sheppard 2016) but is meant to promote ‘win–win’ outcomes. In the same way as it served previous economic hegemonies, it now serves the interests of the Chinese ‘dragon economy’, which inhales ‘air’ (natural resources) and breathes out ‘fire’ (low-priced manufactured goods that displace other producers around the world). According to business professor Mills Soko (quoted in de Wet 2015) ‘The government’s refusal to raise tariffs on cheap steel

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imports from China suggests that it will prioritise its relationship with China at the expense of domestic interests’16 and that ‘it is clear that the ANC leadership has made a strategic decision to strengthen economic, diplomatic and political relations with China in ways that surpass South Africa’s bilateral relations with other countries’. However, it depends on which domestic interests are at play. Based on the firms they interviewed Wenzel et al. (2013: 15) found that ‘in opposition to the politicians and publicists, South African firms seem to perceive the positioning of BRICS private and state-owned businesses in African markets rather as a threat than an opportunity’. There are a number of reasons for the extent of this inter-state strategic coupling, including the scale of trade, development lessons that can be learnt from China in relation to state-owned enterprise management and reform, and the political attractions of China for the ruling ANC, which faces restive or resistant elements of civil society domestically (Hart 2014) and saw its majority decline in the 2019 general election. It also partly relates to the way in which the elements of the ruling political elite are being absorbed/admitted into the prevailing social structures of accumulation of the Minerals– Energy Complex (MEC) in South Africa (Fine and Rustomjee 1996). For example, the current President of South Africa, Cyril Ramaphosa is one of the richest men on the continent, partly as a result of his holdings in the platinum mining company Lonmin.17 In 2015 he said that ‘We trade more effectively with China because the relationship is based on win–win; mutual benefit that they can get out of the relationship and that we can get out the relationship’ (quoted in Davis 2015). However, while the relationship has been largely beneficial to MEC capital, given resource demand from China, the ANC is arguably facing a crisis of legitimacy given its inability to ‘adequately’ solve or address the enduring problems of poverty and inequality. The Chinese model, where civil society is repressed in return for development may be attractive to the ANC, although obviously the political system in South Africa is much different to that of China, with the exception of Hong Kong which saw extensive protests in 2019. As Obiarah (2007 cited in Power et al. 2012: 181) notes, China provides a powerful development model which urges economic growth before human rights, which has a number of possible effects on African development debates. First, African leaders can use this model to deny political rights to their people and rebuff efforts at building good governance and promoting democracy.

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However, ‘South Africa’s leadership speaks glowingly of China’s political system that fuses the interests of the ruling party with that of the government’ (Olander and van Staden 2015). There is also close cooperation with other ruling parties in Southern Africa. The Chinese government has supplied arms and radio jamming equipment to the ZANU-PF regimes in Zimbabwe. After a 2008 agreement with FRELIMO in Mozambique there have been exchanges of party personnel with the Chinese Communist Party (CCP), up to cabinet level (Njal 2012 in Alden et al. 2014). In 2009 a private18 Chinese company, Tenwin International Group, offered thirty motorbikes to FRELIMO to help support its re-election campaign (Chichava and Alden 2014). The CCP has also funded ruling parties in the region, such as SWAPO (South West African People’s Organisation) in Namibia (AidData nd) and a Chinese company has recently signed a contract to deliver a facial recognition system to the Zimbabwean government (Chutel 2018). An Angolan academic has noted that Chinese involvement is ‘a good idea’ as ‘China is the weapon that Africa can use to end western hegemony’ (quoted in Corkin 2013: 41). Globalisation is often thought to be private-sector-led. However, this is not the case for China, where there is a globalisation of state power.19 This globalisation of state power is also reflected in recipient states of Chinese investment. During the commodity boom there was evidence of a tentative shift away from neoliberalism to neo-developmentalism, or state planning – at least in parts of the region: in Zambia, for example, where the government took back control of the national telephone company and railways (see also Chapter 2). This was partly a result of the policies of non-interference propounded and promulgated by the BRICS powers, and their role modelling. Some countries, such as South Africa, have also developed substantive industrial policies such as the Industrial Policy Action Plan (IPAP) (South African Department of Trade and Industry 2018). However, this policy emphasises the attraction of foreign investment and is compatible with South Africa’s maintenance of what the Brazilian ambassador there called a ‘liberal market economy’. For example Volkswagen’s Uitenhage facility in South Africa is the sole maker of the new Polo Sedan, in addition to other components for the entire Volkswagen Group. African state elites are acutely aware that the previous Western near-monopoly on transnational power and finance has been broken and some, such as Angola, were able to strategically play off different foreign powers against one another, depending on the stage of the

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commodity cycle (Hicks 2015; Soares de Oliveira 2015). However, this power related to high natural resource demand prior to 2015, as African state elites were able to leverage the effects of sunk costs. In theory, once pipelines or oil facilities have been constructed their embeddedness within the juridically sovereign territories of African states may confer substantial bargaining power and leverage on domestic political elites. In practice, however, the nature of economic interactions with China in particular have resulted in deindustrialisation20 across much of the region, greater dependence on resource exports and consequently a diversification rather than a transcendence of dependency. Manufacturing now accounts for less than 10% of Zambia’s GDP – less than a third of its share in the late 1980s, whereas in South Africa it has fallen, as a proportion, by more than half (Alden and Schoeman 2013). This became particularly problematic in the context of slowing economic growth in the BRICS, which was partly responsible for the price of oil falling below USD 40 per barrel in 2015, with substantial price declines for hard commodities, such as copper, also registered. This substantially reduced the policy space available to resource export-dependent Southern African states as discussed previously. Thus telling donors they could ‘go home’, as one Zambian government official did, may have been premature (Kragelund 2014).

3.4 Chinese-inflected space and places While China’s impact on local economic development in Southern Africa has been explored elsewhere (Fessehaie and Morris 2013), the grounding of particular capital flows, in combination with the actions of governments and labour, creates specific spatial forms through which power is geographically expressed, embedded, expanded and renewed. The nature and longevity of BRICS’ engagement with Southern Africa will be partly shaped by the types of geographic spaces being created, their constitutive social relations and consequently the nature of their embeddedness. Land, resource and market and investment access find concrete expression in particular spatial structures, which serve to embed these relations. While there are a multiplicity of different types of spaces being created and social relations are being reshaped across scales, it is worth discussing some of these to examine emergent patterns and processes. This reveals that there are different ‘BRICS’

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spaces’21 in formation in the region. China exercises substantial influence at different points in time through certain urban nodes, such as through the Chinese-funded construction of Kilamba Kiaxi in Angola and the construction and rehabilitation of power plants in Zimbabwe, for example. Other important types of these spaces are Chinese special or multi-facility economic zones. As per Giannecchini and Taylor (2018), the term SEZ has developed into a blanket phrase which can describe a variety of industrial initiatives include Free Trade Zones (FTZs), Free Ports or Export Processing Zones (EPZs) among others. While differing depending on both type and context, all of these zones are spatially delineated areas designed to attract foreign investment via customs, legal or fiscal incentives. SEZs were one of the keys to China’s economic success as deployed under Deng Xiaoping’s ‘ladder step’ approach which sought to create geographically uneven concentrations of wealth in coastal areas that would then serve as staging points for inland capital accumulation (cf. Yeh and Wharton 2016). As noted earlier, beginning in 2006, the Chinese government developed an SEZ programme for Africa, as part of a wider competition to establish Chinese zones around the world. These have had mixed reception, impact and success. The proposed zone in Mauritius was ultimately abandoned to reappear under the guise of a ‘Smart City’ (Cowaloosur and Taylor 2019), whereas the one in Zambia is very active. These zones are mainly built as investments by large state-owned enterprises, but their main tenants are small and medium-sized enterprises, accounting for 85% of the businesses in them (Power et al. 2012). In some cases, the zones are built by provincial governments in China. As has been described elsewhere these zones have both economic and political purposes (Carmody et al. 2012). They are designed to take advantage of factor endowments, such as resources and labour, and thereby also meant to catalyse additional and related investment. Where they have been constructed and are operational, they also signify a deepening of engagement and interdependence with China. The SEZ in Zambia is in Chambishi, with a ‘sub-zone’ in the capital city, Lusaka. The scale of investment in the Zambian economic zone is in the hundreds of millions of dollars and creates a ‘graduated sovereignty’ in Zambian territory (Ong 2000). There have also been a number of other SEZs launched in Zambia as part of the BRI with a touted USD 1bn in investment (ZambiaInvest 2015), although the actual amount invested so far appears to be much smaller (ZambiaInvest 2016). Eighty per cent of Chinese

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investment in Zambia is in the extractive sector (Alves 2011 cited in Abegunrin and Manyeruke 2020). For some these are, in reality, ‘pseudo-economic zones’ designed to allow Chinese companies to take advantage of tax breaks, rather than being developmentally beneficial (Michel et al. 2009). However, according to the Chinese ambassador to Zambia: We would also like to introduce mature Chinese enterprises with comparative advantages to Zambia to help address the country’s over-reliance on import of consumer and manufactured goods. Therefore, the establishment of the Cooperation Zone can help both Zambia develop and mature Chinese industries redeploy and win more space of development at home. (quoted in Southern Weekly in Bräutigam and Tang 2011)

The suggestion here is that the zone will serve as a springboard to economic transformation, a discourse which has been repeated across the continent. However, the zone is focused on copper extraction and processing, rather than value addition. [A]t Chambishi in Zambia, five initial companies had grown to 26, with some $322 million worth of equipment and plans to invest over $1bn … Three of the companies were apparently Zambian, but most appeared to be Chinese, and at least six were subsidiaries of the core developer, CNMC [Chinese Non-Ferrous Metals Company], although several minying (private) Chinese firms had invested. (Bräutigam and Tang 2014: 85)

However as Bräutigam and Tang note, in contrast to China, none of these zones have been designed to develop synergies with local technology institutes or universities, even if several of them have been developed by Chinese companies with experience of zone development at home. Such linkages might reduce dependence and contribute to economic transformation and greater state autonomy. Back in Zambia in 2014, when the Chinese director in charge of the Chambishi Special Economic Zone looked out of the windows of his palatial office, he saw many empty factory premises waiting for investors to take up residence. Time will tell if the zone will flourish or falter, but at present it seems that the Chinese state has been in no position to command its capital to fulfil Zambia’s development dreams. (Lee 2014: 65)

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if that is the goal. Thus the zone remains based on copper mining or extraction, has limited local linkages and profits are repatriated to China. Despite the state-guided nature of investment, this fits with an extractive economy model, despite the promise to engage in economic diversification. Other governments in the region have also established SEZs based on the Chinese experience, such as the one in Nacala in Mozambique which has attracted approximately USD 2bn in investment since 2009. There are also privately funded SEZs, such as the one in Sofala in Mozambique, which is a joint venture between Chinese and Mozambican capital. Dependence is also manifest through other spatial flows. The region is heavily dependent on both China and South Africa economically. For example, raw and refined copper and the associated mineral cobalt account for approximately 75–80% of Zambia’s exports in most years, and China by itself takes 48% of these, with South Africa a distant second at 10%. In terms of imports, 57% of these come from South Africa and 14% from China (Observatory of Economic Complexity 2015). This trade pattern means China is extractive of Zambian resources, with very negative long-term implications for sustainability, but also profits through commodity sales and investments. For example Lee (2014) found that among the Chinese construction companies she surveyed in Zambia profit rates could be as high as 30%, versus an average of 7% in China. The perils of a primary export-oriented and consequently importdependent economy were amply demonstrated in Zambia, which was recently caught in a price scissors. In the context of the dramatic drop in the copper price in 2014/15, Zambia was running a fiscal deficit equivalent to 6.5% of its GDP and a ‘very sharp and sudden trade deficit which currently stands at K1.2 billion [approximately USD 110 million]’ (Centre for Trade Policy and Development 2015: 1). The copper price approximately halved from 2010 to 2015 from roughly USD 10,000 to 5,000 a tonne. This, in turn, increased the bargaining power of transnational capital with operations in Zambia. After previously raising them, the Zambian government reduced mining royalties to 9% in 2015 and to between 4% and 6% in 2016 (Jamasmie 2015, see also Chapter 2). The latest proposals have mining royalties capped at 7.5%, with the Chamber of Mines arguing that this would ‘safeguard the health of the mining sector and promote additional investment’ (Mfula 2019). Zambia’s debt to GDP ratio increased dramatically from 25% in 2012 to over 70% in 2018 as will be discussed in more detail later (Mills 2019).

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South African companies are also extractive of value and profits from the regional economy through exports and investments. However, some of the imports coming from South Africa may be transhipped from China (Jenkins and Edwards 2015). In the China–South Africa strategic coupling, the case of the South Africa-based ShopRite, Africa’s largest retailer, is illustrative. ShopRite has a major effect on the countries in which it operates, through competitive displacement of local companies, for example, while also helping Chinese and other South African capital realise value through the sale of their products. Zambia hosts twenty-five of these stores and aside from some vegetables and poultry supplies sourced locally, everything else in one of the stores in Livingstone, Zambia, was produced either in China or South Africa (Interview with ShopRite manager, Livingstone, Zambia, 12 August 2015). In order to attract it to set up in-country Mozambique exempted ShopRite from excise duty on the import of its initial stock (Söderbaum 2004). Checkers, owned by ShopRite Holdings, also has approximately 240 supermarkets operating in Botswana, South Africa and Namibia, an example of Globalisation 1 – the dominating or homogenising force which elicits response from actors ‘below’, including workers in the company. South African and Chinese (trans)national capital are increasing their presence and shaping the regional economy through their commodity sales, facilitated by the infrastructure provided by companies like ShopRite and through their investments in resource extraction. This trend has created a strong relationship of dependency between the region and South Africa and China partly because it no longer produces, or at least in the same quantities, many of the things it used to domestically, such as mining equipment.

3.5 Conclusion This chapter has examined economic relations between China and Southern Africa, especially Zambia. Specifically, it scrutinised whether and to what extent China and other BRICS powers are facilitating the creation of more developmental states in Southern Africa or reinforcing the region’s extractive economies. The chapter found increased trade with, and investment from, China to be a mixed blessing. On the one hand, these activities have arguably increased economic growth in the region, although of course we cannot know what the counter-factual would have been. In Zambia for

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instance, the Chambishi SEZ has brought in hundreds of millions of dollars of investment, though it is important to note that it has not been the transformative project it was originally billed as. This is largely due to the fact that the zone is focused on extraction and processing of copper, rather than value addition. As such, its local linkages are fairly limited. On the other hand, overall relations are characterised by a deepening dependence on China, undergirded by unequal patterns of trade and consequently resource and value extraction from the regional economy. Indeed, few Chinese investments have been designed to create the types of local-level networks that could accelerate or contribute to economic transformation or diversification. In similar fashion, the chapter introduced the concept of geo-governance and argued that the sectorality of Chinese engagement in Southern Africa further embeds processes of translocalisation while simultaneously strengthening existing structures of accumulation. Yet extractive patterns of engagement are not limited to Chinese firms. As the chapter explained, South African companies have similarly contributed to the extraction of value and profits from the regional economy. As a totality, this pattern of engagement has severe negative implications for sustainability. While policy space has, at times, increased for African governments, increasing dependence on commodity exports, which are highly price volatile, makes this unstable. It is to the issue of policy space and whether it is increasing or decreasing, based on increased Chinese engagement on the continent that we now turn.

Notes 1 Both Brazil and Russia recently experienced severe recessions and lacklustre recoveries; hence their economic rise is ‘on hold’, although Russia’s geopolitical influence arguably continues to grow, with Forbes ranking Vladimir Putin as the world’s most powerful person in 2015 and 2016 and second in 2018 and 2019 (no ranking was released in 2017). It is also important to note that there is a diversity of different types of actors from China, for example, operating in Southern Africa, with different

modalities and objectives (cf. Mohan et al. 2014). 2 South Africa has long been influential in the wider region. 3 Attempts were made to interview Chinese diplomats but these were not successful. Given Russia’s relatively small ‘footprint’ in the region the interviews focused on diplomats from Brazil, India and South Africa, in addition to knowledgeable academics. These were semi-structured interviews, where a short list of initial questions were developed. Pádraig Carmody

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retained notes from the interviews for verification. 4 The exceptions are Zambia (Switzerland), Seychelles (France), Malawi and Mauritius (India) and the BLNS (Botswana, Lesotho, Namibia, Swaziland) countries (United States). There is controversy about exports of Zambian copper to Switzerland, with some suggesting much of them end up in China and that there is transfer mispricing taking place (Zambia Institute for Policy Research and Analysis 2015). If Zambia received the same price for its copper exports as Switzerland it has been estimated that its GDP would almost double (Osbourne 2012). 5 Although only by 5.7% according to IMF data for 2014 when Hong Kong and Macau are included in the statistics for China. 6 This encompasses Botswana, Lesotho, Mozambique, Namibia, South Africa and Swaziland, but not other members of SADC. 7 For 2018, however, Zimbabwe was reporting only 1% of its exports going to China, perhaps suggesting problems with the statistics (IMF 2019). In 2019 there was also a publicised ‘Twitter spat’ between the Zimbabwean government and the Chinese ambassador to the country as government statistics underestimated the amount of aid from China by a factor of forty. The fact official statistics seem now to under-estimate the size of Chinese engagement may suggest the Zimababwean government is sensitive about its reliance on it. 8 While there are tensions between North Korea and China, particularly over the

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former’s nuclear programme, they are close allies. In some cases valuable and potentially life-saving foreign exchange is spent on luxuries. For example in 2014 Benin imported USD 411 million of fake beards and wigs from China (Abegunrin and Manyeruke 2020). With exports accounting for 59% of import value from China. We are using this term here to refer to the Chinese government and state-owned corporations. As per Paquet (1996: 3), geo-governance can be best conceptualised as ‘the ways in which effective coordination is effected in a world where resources, knowledge, and power are distributed through geographical space’. China’s flexigemony in Africa allows for it to project power over distance as consent informed by coercion where influence is backed by economic heft (Carmody et al. 2012). For a critique of the New Development Bank cf. Bond (2016). In practice this deal was subject to massive corruption, with billions of rand effectively looted from state coffers (cf. Bateman 2019). While Chinese policy makers issue pronouncements that they will never accept restrictions on China’s external trade, in 2006 China put in place temporary ‘voluntary export restraints’ on textile and clothing exports to South Africa, demonstrating the country’s strategic importance to it. However, as noted earlier in response to sharply falling steel prices the South African government did impose a

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10% duty on steel imports (Bond 2015). 17 The infamous Marikana massacres of striking miners by police in 2012 took place after a wildcat strike at one of Lonmin’s mines in South Africa. In an email the day before the massacre Ramaphosa had said that ‘concomitant action’ had to be taken against the miners and called them ‘plainly dastardly criminals’. 8 This is a somewhat relative 1 concept for Chinese companies as the CCP requires a representative in every company with more than fifty employees (Abrami

et al. 2014). This is just one of the ways in which the state ‘intervenes in ways that are informal, ad hoc, and in many cases invisible to outsiders’ (McMahon 2018: 8). 19 Indeed the BRICS grouping itself is a form of globalisation which is state-instigated and led. 0 There is a debate as to what 2 constitutes deindustrialisation. However, it is defined here as a falling share of manufacturing in overall economic output or what might be called relative deindustrialisation. 21 This is a term coined by James Sidaway, in conversation, and gratefully acknowledged and used with permission.

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Alden, C. and M. Schoeman (2013) ‘South Africa in the company of giants: the search for leadership in a transforming global order’, International Affairs, 89(1): 111–129. Alden, C., S. Chichava and P. Roque (2014) ‘Mozambique: caution, compromise and collaboration’, in C. Alden and S. Chichava (eds), China and Mozambique: From Comrades to Capitalists, Auckland Park, South Africa: Fanele. Allison, S. (2014) ‘SA on North Korea: realpolitik trumps human rights, again and again’, Daily Maverick, http:// www.dailymaverick.co.za/ article/2014-11-19-sa-onnorth-korea-realpolitik-trumpshuman-rights-again-and-again/#. VoqILPmLSUk. Alves, A. (2011) ‘The Zambia– China cooperation zone at a crossroads: what now?’, SAIIA Policy Briefing, no. 41. Bateman, C. (2019) ‘Transnet’s new execs out to nab looters of billions’, BizNews.com,

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https://www.biznews.com/ undictated/2019/05/10/transnetnew-execs-nab-looters. Bevir, M. and J. Gaskarth (2015) ‘Global governance and the BRICS: ideas, actors and governance practices’, in J. Gaskarth (ed.), Rising Powers, Global Governance and Ethics, London: Routledge. Bond, P. (2015) ‘China’s path into Africa blocked by growing potholes’, TeleSUR, http://www. telesurtv.net/english/opinion/ Chinas-Path-into-AfricaBlocked-20151213-0004.html, retrieved 6 October 2016. Bond, P. (2016) ‘BRICS banking and the debate over subimperialism’, Third World Quarterly, 37(4): 611–629. Brandenburger, A. and B. Nalebuff (1997) Co-opetition, New York: Doubleday. Bräutigam, D. (2009) The Dragon’s Gift: The Real Story of China in Africa, Oxford and New York: Oxford University Press. Bräutigam, D. and X. Tang (2011) ‘African Shenzhen: China’s special economic zones in Africa’, Journal of Modern African Studies, 49(1): 27–54. Bräutigam, D. and X. Tang (2014) ‘“Going global in groups”: structural transformation and China’s special economic zones overseas’, World Development, 63: 78–91. Bunkenborg, M. (2014) ‘Ethnographic encounters with the Chinese in Mozambique’, in C. Alden and S. Chichava (eds), China and Mozambique: From Comrades to Capitalists, Auckland Park, South Africa: Fanele. Carmody P. (2016) The New Scramble for Africa, 2nd edition, Cambridge: Polity. Carmody, P., G. Hampwaye and E. Sakala, (2012) ‘Globalisation and the rise of the state? Chinese geogovernance in Zambia’, New Political Economy, 17(2): 209–230.

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de Wet, P. (2015) ‘SA and China: a love founded on state control’, Mail and Guardian, http://mg.co.za/ article/2015-08-22-sa-and-chinaa-love-founded-on-state-control, retrieved 4 December 2016. Dodd, N. (2019) ‘BRICS’ trade with Africa: long live the new king, just like the old king’, in J. van der Merwe, P. Bond and N. Dodd (eds), BRICS and Resistance in Africa: Contention, Assimilation and Co-optation, London: Zed Books. Economist. (2019) ‘China is thinking twice about lending to Africa: too many past projects have been costly flops’, The Economist, https:// www.economist.com/middleeast-and-africa/2019/06/27/ china-is-thinking-twice-aboutlending-to-africa. Ehizuelen, M. and H. Abdi (2018) ‘Sustaining China–Africa relations: slotting Africa into China’s One Belt, One Road initiative makes economic sense’, Asian Journal of Comparative Politics, 3(4): 285–310. Environmental Investigation Agency. (2012) ‘Appetite for destruction: China’s trade in illegal timber trade’, https://eiainternational.org/wp-content/ uploads/EIA-Appetite-forDestruction-lo-res.pdf. Fessehaie, J. and M. Morris (2013) ‘Value chain dynamics of Chinese copper mining in Zambia: enclave or linkage development?’, The European Journal of Development Research, 25(4): 537–556. Fine, B. and Z. Rustomjee (1996) The Political Economy of South Africa: From Minerals–Energy Complex to Industrialisation, London: Westview Press. Forbes. (2019) ‘The world’s biggest companies’, Forbes, http://www. forbes.com/global2000/list/.

French, H. W. (2014) China’s Second Continent: How a Million Migrants Are Building a New Empire in Africa, New York: Alfred A. Knopf. Fuller, T. (2016) ‘China’s trade unbalances shipping’, New York Times, http://www.nytimes. com/2006/01/29/business/ worldbusiness/china-tradeunbalances-shipping.html. Giannecchini, P. and I. Taylor (2018) ‘The Eastern Industrial Zone in Ethiopia: catalyst for development?’, Geoforum, 88: 28–35. Gordhan, P. (2013) ‘Budget speech’, Treasury of South Africa, http://www.treasury. gov.za/documents/national%20 budget/2013/speech/speech.pdf. Hart, G. (2014) Rethinking the South African Crisis: Nationalism, Populism, Hegemony, Athens, GA and London: University of Georgia Press. Harvey, D. (2005) A Brief History of Neoliberalism, Oxford and New York: Oxford University Press. Hicks, C. (2015) Africa’s New Oil: Power, Pipelines and Future Fortune, London: Zed Books. Ilheu, F. (2010) ‘The role of China in the Portuguese speaking African countries: the case of Mozambique’ (Part II), Centre for African and Development Studies, Technical University of Lisbon. IMF. (2016 and 2019) ‘Direction of trade statistics’, http://data. imf.org/?sk=9D6028D4-F14A464C-A2F2-59B2CD424B85 &ss=1409151240976. IOL Business Report. (2018) ‘Moody’s: Chinese lending to sub-Saharan Africa can support growth, but brings risks’, IOL, https://www.iol. co.za/business-report/economy/ moodys-chinese-lendingto-sub-saharan-africa-cansupport-growth-but-bringsrisks-18118184.

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Diplomacy in Africa: Powering Development?, Basingstoke: Palgrave Macmillan. Rodrique, J. (2010) ‘Maritime transportation rates for a 40 foot container between selected ports’, https://people.hofstra.edu/ geotrans/eng/ch7en/conc7en/map_ container_shipping_rates.html. Sheppard, E. (2016) The Limits to Globalization: Disruptive Geographies of Capitalist Development, Oxford and New York: Oxford University Press. Soares de Oliveira, R. (2015) Magnificent and Beggar Land: Angola since the Civil War, London: Hurst. Söderbaum, F. (2004) The Political Economy of Regionalism: The Case of Southern Africa, Basingstoke and New York: Palgrave Macmillan. South African Department of Trade and Industry. (2018) ‘Industrial Policy Action Plan 2018/19–2020/21: economic sectors and employment cluster’, https://www.gov.za/sites/default/ files/gcis_document/201805/ industrial-policy-action-plan.pdf. Stuenkel, O. (2016) Post-Western World: How Emerging Powers Are Remaking Global Order, Cambridge: Polity. Taylor, I. (2011) ‘South African “imperialism” in a region lacking regionalism: a critique’, Third World Quarterly, 12(7): 1233–1253. United Nations Conference on Trade and Development. (2011) ‘South–South integration is key to rebalancing the global economy’, UNCTAD, Geneva. van der Merwe, J. (2019) ‘Notes from the hinterland: theorising BRICS and their geographies of resistance’, in J. van der Merwe, P. Bond and N. Dodd (eds), BRICS and Resistance in Africa: Contention, Assimilation and Co-optation, London: Zed Books.

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4 Towards convergence and cooperation in the global development finance regime: the end of African agency? Historically African governments have had some opportunities to increase their room for manoeuvre in relations with the international donor community by playing off one donor against the other, via partial implementation of donor policies, and in some cases even by hoodwinking them. The end of the Cold War and the gradual demise of funding possibilities other than development aid from the Development Assistance Committee (DAC) members meant that these options to a large extent evaporated. African countries still carved out some room for manoeuvre via negotiation strategies where donor and recipient government representatives shaped the outcome in terms of control over politics/policy (Whitfield 2008), but intensified coordination and incremental innovations in the aid regime such as the Poverty Reduction Strategy Papers and the HIPC Initiative meant that donors came to control ever larger parts of recipient countries’ politics/policies (Kragelund 2012). This is in stark contrast to the official rhetoric of the Paris Declaration and the Accra High Level Forum on Aid Effectiveness both of which paid attention to ownership and agency for countries to fund and design their own development plans. As spelled out in Chapter 2 the revival of China’s interest in Africa is often highlighted as being an opportunity to reverse this tendency as ‘emerging’ donors provide African governments with a choice that may strengthen negotiation leverage and thereby carve out agency. Clapham (2006), for instance, argues that the drastic reduction of African bargaining power vis-à-vis the West following the end of the Cold War is now counterweighted by the presence of China. This is echoed by Woods (2008) who maintains that the competitive pressures introduced by ‘emerging donors’ in the aid system negatively affects Western donors’ bargaining position; Harman and Brown (2013) who suggest that this situation may create agency for African states in the international system; Chin (2012) who insists that China is perceived in Africa to provide a

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desirable alternative to ‘traditional’ donors; and Ayers (2013: 23), who argues that ‘Africa’s political leaders have a new found leverage a propos Western conditionalities’. This chapter critically reviews the most recent developments in Chinese and OECD approaches to development finance to Africa. It argues that although we can detect a number of incidents that point towards more agency for African governments, already noted, the revival of China’s development finance does not fundamentally alter the power relations between African countries and their financiers as the tendency now is towards convergence and cooperation between China and DAC donors, and not divergence and competition, which could have created agency as it did prior to the end of the Cold War (cf. Kragelund 2019; Mawdsley 2018). This follows the trend of other ‘emerging’ donors who increasingly play by DAC rules and thereby minimise the possibility of playing off one partner against the other (Mawdsley 2012). The argument proceeds as follows. Section 4.1 briefly outlines how China’s re-entrance into the global aid regime has affected the policies and actions of (other) central aid actors. Following this, Section 4.2 examines a number of cases where Chinese development finance may have had a positive impact on African agency vis-à-vis ‘traditional’ donors. This opening, however, may have been a one-off affair. Section 4.3 critically analyses the effects of recent changes in the development finance regime to Africa on African agency paying particular attention to how Chinese development finance is changing, and in many ways converging with DAC aid; how trilateral development cooperation blurs the differences between donors; and how the OECD seeks to integrate China in the global aid regime. These aspects may point towards less (than anticipated) agency for African governments in the future. Section 4.4 concludes.

4.1 China’s re-entrance into the aid regime China’s re-entrance into the global aid regime has sparked much debate, most of which is automatic or knee-jerk and to a large extent unrelated to the (albeit limited) knowledge that we have about Chinese aid (Bräutigam 2009; 2011). Both academic and grey literature on the subject is booming (Kragelund 2019: Figure 1.3). This, however, is not surprising as the economic and political rise of China implies what Gu et al. (2008) termed a ‘tectonic power

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shift’ in the global arena, which may challenge orthodoxies in the ‘established’ aid system. This is so because China is perceived to provide an alternative route towards development to the (post-) Washington Consensus. This alternative route includes aspects of gradualism, state-drivenness combined with market-based learning, strong leadership and attentiveness to agriculture and infrastructure. The NAFC made this alternative even more attractive for developing countries. Moreover, China’s aid is both practical and symbolic. China offers finances for infrastructure: it funds and builds hospitals, health centres and schools and does so faster and often cheaper than DAC donors do it (Humphrey and Michaelowa 2019; Swedlund 2017). Similarly, China is willing to support African ‘statesmanship’ via construction and sponsoring of grand stadia. Although China’s aid to Africa is still small compared to the main DAC donors’ aid disbursements, China’s visibility and rapid growth make some observers feel that: ‘DAC members are losing their pre-eminent status in defining development and how to achieve it’ (Eyben 2013: 78). Therefore, China’s ‘return’ to the aid regime has often been portrayed as having an impact on other key development actors. Wissenbach (2009), for instance, states that China’s presence has negatively affected the EU–Africa relationship. Likewise, Grauls and Stahl (2010) argue that the Chinese presence has made the EU’s policy vis-à-vis Africa more pragmatic and less normative. In more concrete terms, it seems that OECD donors are changing their aid incrementally in response to the rejuvenation of China’s (and other ‘emerging’ donors’) interest in Africa. In fact, the perceived efficiency and successfulness of China and other ‘emerging’ donors’ development cooperation with Africa has made major ‘traditional’ actors question the current development agenda and has contributed to provoking a stronger focus, at least discursively, on national interest among main traditional actors.1 Mawdsley (2018) has recently termed this process the ‘Southernisation of development’, pointing to the increasingly stronger focus on ‘win–win’ outcomes of development finance originating in the Global North; the renewed focus on economic growth (rather than poverty alleviation) as the main aim of development aid from the Global North; and the deliberate mix of vectors of finance such as investments, subsidised credits and aid in development finance from the Global North (cf. Kragelund 2019). Both at the bilateral and at the multilateral level we see several examples of this shift. The EU, for instance, has already moved in this direction. In its aid to China, for instance, it is paying more

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attention to environmental sustainability – not only because it enhances global goods, but also because it helps European firms export green technologies (Lundsgaarde 2012) and the EU in its shared vision for a stronger Europe declared that ‘development policy will become more flexible and aligned with our strategic priorities’ (Keijzer and Lundsgaarde 2017: Box 1). Bilateral donors are also now more open about the self-interest of their aid programmes. British aid, led by the ruling Conservative Party, for instance, will according to the party’s agenda for international development aid be ‘subject to rigorous tests of value for money and effectiveness’ to, among others reasons, make sure that it also ‘will bring benefits to the UK’ (Mawdsley 2011). More recently, it published a new aid strategy in 2015 stating, ‘The UK’s development spending will meet our moral obligation to the world’s poorest and also support our national interest’. Similarly the Dutch government in 2013 confirmed, ‘our mission is to combine aid and trade activities to our mutual benefit’ and the Danish government in its budget priorities for 2017–2020 stated, ‘we will be driven by the wish to promote Danish foreign and domestic policy interests at one and the same time’ (Keijzer and Lundsgaarde 2017: Box 1). Alongside these developments the formulation of the Sustainable Development Goals (SDGs) that were approved by the General Assembly of the UN in September 2015, signalled an acknowledgement that challenges relating to development, e.g. inequality, poverty, housing, gender inequality and the environment, are also widespread in the Global North and not just in the Global South. Moreover, and importantly here, the spatial coverage, ambition and complexity of the SDGs implied that the financial requirements for meeting them were much higher than any initiative previously set in motion. Therefore, finance had to go beyond development aid from the ‘traditional’ development partners to also include trade, investment and debt forgiveness/rescheduling from all development partners and much higher levels of private sector involvement and investment. In essence what we see is a tendency for DAC donors to be franker about their focus on issues that directly stimulate economic growth and productivity in developing countries. In donor parlance, this is sometimes described as a ‘development effectiveness paradigm’2 where the focus is on economic growth and industrial productivity rather than social sectors and where the private sector of the donor country directly benefits from the transfers. Above all this discursive change manifested itself during the 2011 Busan High Level Forum

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on Aid Effectiveness where the aid discourse was replaced by a development discourse (Eyben 2013; Mawdsley et al. 2014). The Busan High Level Forum (HLF) was different. First, China and other Southern state actors actively participated in writing the documents. Second, the focus was on ‘differential commitment’, i.e. while Northern donors were obliged to follow the prescriptions of the Busan HLF, Southern donors could do it on a voluntary basis (Kim and Lee 2013). Hence, Western officials went some way to convincing Southern development partners to sign up to principles on aid effectiveness on condition that the special nature of South– South Cooperation (SSC) was recognised. The result was that the aid effectiveness debate was replaced by a broader development effectiveness paradigm that took the ‘emerging’ donors’ development finance mechanisms into account.

4.2 China and enlarged bargaining power in Africa? The ‘China–Africa’ literature often relates the rejuvenation of China’s interest in Africa with growing power to African governments to withstand the conditionalities of the IFIs and the DAC donors. Most often, this relationship is only hinted at, without detailing how or to what extent this change of power is taking place. A number of illustrative examples do, however, exist in the literature. They include inter alia Angola, who turned to China when the IFIs led to an embargo on aid to the country; the DRC, which also received large infrastructure-for-resources loans from China but eventually followed IMF procedures; Ethiopia, which used Chinese money to develop its energy sector countering the recommendations of the DAC donors; Mozambique, who secured funding for largescale infrastructural projects due to engagement with China; and Zambia, which used the presence of China to bash DAC donors during the most recent presidential elections. In 2002, after decades of civil war, the Angolan government was ready to rebuild the country. The IMF, being the main gatekeeper for development finance to Angola followed its usual procedures and demanded both political and economic reforms in return for large-scale loans. The Angolan government, backed by large deposits of oil and rising commodity prices, however, refused to follow the neoliberal prescriptions laid down by the IFIs and announced that it would stop negotiations with the IMF whereupon funds were cut. Instead, the Angolan state secured credit lines from the

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Chinese government to rebuild key infrastructure. At the beginning of 2011, credit lines worth approximately USD 14.5bn had been provided from three Chinese state banks to Angola. This money funded some 100 infrastructure projects, all in line with the Angolan government’s national development strategy (Mohan and Lampert 2012). Meanwhile, the Angolan economy grew at an incredible twodigit speed and Angolan debt was rescheduled. The combination of vast oil resources, rapid economic growth during the decade that had passed since the end of the Angolan civil war, and the reduction of the debt burden meant that several actors made an effort to partner strategically with Angola, and after years of record high economic growth in Angola key politicians from the USA and the UK went there to strengthen bilateral relations even further (Power 2012; Tan-Mullins et al. 2010). The improved situation led Angola to secure credit lines worth more than USD 3bn from countries as diverse as Germany, Spain, Canada and Brazil (Corkin 2013). This seems to be part of a deliberate strategy by the Angolan state, which according to Corkin (2011) has made a virtue of maintaining its sovereignty by diversifying its development partners and thus not relying solely on development finance from Chinese state-owned and private-owned financial institutions. The DRC also saw the enlargement of its agency due to China’s interest in its vast resources. Up until the 2006 presidential elections, DAC donors dominated the development scene in the DRC. They, however, did not fund the kind of infrastructure investments that President Kabila needed in order to keep up popularity among voters (and to increase his chances of re-election). Moreover, an IMF loan programme had been terminated and due to the IMF’s position as gatekeeper, the DRC was not in a position to access finance from DAC donors to finance the so-called ‘five public works’ electoral promise. Kabila, therefore, turned towards China, which was interested in the resource-rich Katanga Province. The result was the Sicomines agreement, a joint venture between two Chinese companies and the Congolese state, funded by non-concessional loans from the Export–Import Bank of China and repaid via profits from the mine. The agreement and credit lines worth USD 6bn gave the joint venture access to copper and cobalt in return for finance for infrastructure (Bräutigam 2011; Jansson 2011; 2013). At first sight the Sicomines agreement resembles the Angolan case described above, that is, China was used to enlarge agency when the IFIs cut off other financing possibilities for the DRC. Moreover, this happened at a time when the DRC sought to cancel

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most of its official debts. However, a more careful reading of the agreement and its development over time brings a more complex story to the fore – a story about amendments to the size of the loan and removal of the guarantees provided by the Congolese state visà-vis the Chinese banks resulting from criticisms by ‘international society’. In fact, ‘all the DRC’s traditional donors united behind the agenda to reduce the size of the loans … and to remove the Congolese state’s guarantee’ (Jansson 2011: 15). In the words of Maiza-Larrarte and Claudio-Quiroga (2019: 436): ‘owing to active engagement by the IMF and other Western financial actors … the agreement was revised and the amount of debt was substantially reduced’. Like Angola and the DRC, Ethiopia, Mozambique and Zambia have also been courted by a variety of Chinese actors seeking to access markets and resources and all three countries have used this interest to strive to extend agency. According to Humphrey and Michaelowa (2019: 21), Ethiopia is the second most important recipient of Chinese development finance in Africa (after Angola) and receiving almost USD 11bn in development finance from China between 2000 and 2014. A large chunk of this money has been channelled towards the Ethiopian energy sector, which used to be underdeveloped. To make up for this, the Ethiopian government in 2013 launched a twenty-five-year Power Sector Master Plan to expand the capacity of the sector dramatically. Historically, the World Bank has been the most important financier of hydropower in the country (Africa-Asia Confidential 2009), but this seems to be changing now. Chinese companies and Chinese development banks are heavily involved in the expansion of the sector.3 Central to this apparent shift are contrasting views on debt sustainability. Whereas the IFIs see it as prudent debt management, i.e. the country’s repayment ability via a revenue model, China looks at development sustainability, that is, the ability to repay the loans in the long term via economic development. Based on this difference, the World Bank was reluctant to finance the mega hydraulic projects set in motion by the Ethiopian government. As said by Feyissa (2012), the presence of China and its readiness to provide development finance for infrastructural projects provided the Ethiopian government with policy space to develop its energy sector in contrast to the recommendations of the ‘traditional’ partners. According to the Embassy of the People’s Republic of China in Ethiopia (2012), the former State Minister for Foreign Affairs, Dr Tekeda Alamu, on a visit to China in 2010, highlighted this enlarged agency by noting that China ‘had made available to Africa,

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and the developing world, possibilities for consolidating sovereign choices and independently chosen paths of development’. Moreover, Ethiopian government officials in interviews with Humphrey and Michaelowa (2019: 23) indicated that the World Bank, as a result of the growing competition with China as a development financer in Ethiopia, has been persuaded to pay more attention to infrastructure. In the words of Ethiopian officials: ‘We have been aggressively working with the World Bank, saying “please invest in roads”, and they say, “What about capacity building, or something else?” and we say, “No, roads”. And they have responded’. Mozambique is a somewhat similar case. Since the end of the civil war Mozambique has depended heavily on funds from ‘traditional’ donors to finance its development, but the Mozambican government had a hard time persuading ‘traditional’ donors to finance large-scale infrastructural projects (Wethal 2017). The rejuvenation of China’s interest in Mozambique has resulted in new funding options for Mozambique and the Chinese EXIM (Export–Import) Bank is willing to fund large-scale infrastructural projects, but unlike popular belief the new funding possibilities from China by no means automatically entail more agency. In fact, Wethal (2017: 493) concludes that ‘Mozambique’s negotiation strategies in development cooperation are not really altered [compared with “traditional” development partners] when cooperating with China’. Zambia is no different in terms of its attractiveness to Chinese actors: booming commodity prices resulted in an ever larger share of the Zambian budget being made up of incomes from copper and cobalt and an ever-smaller share coming from aid from ‘traditional’ partners. In fact, Zambia’s dependence on aid has changed dramatically. In 2001, aid contributed some 53% of the budget. Ten years later, in 2011, the Minister of Finance reckoned that aid would contribute less than 8%. Although financial transfers from China to Zambia comparable to aid are still small and unpredictable, the combination of reduced aid dependence and the visibility of China in the aid landscape has nevertheless incrementally affected policy space in Zambia by allowing the government to flex its muscles vis-à-vis the traditional donors. This has among other things resulted in the drafting of a new national development plan, without the direct involvement of the donors, and the recurrent critique of the DAC donors by key political figures in Zambia, asking them to ‘pack their bags and go’ if they keep interfering in internal affairs. Moreover, as noted earlier, it has led to the de-privatisation of key strategic enterprises, the passing of the Bank of Zambia (Amendment) Bill 2013,

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which enabled the Bank to better monitor and regulate foreign exchange flows as well as imports and exports (Kragelund 2014), and the associated Statutory Instruments 33 and 55, respectively, that prohibited the quoting of goods and services in foreign currency and empowered the Bank to monitor currency flows (see also Chapter 6). Surely, Angola demonstrated an ability to increase its agency visà-vis the IFIs and DAC donors? What is not as clear, however, is whether this relates only to the availability of development finance from China or rather to the vast oil resources (or both) which has made Angola attractive to firms and development finance institutions all over the world – despite Angola’s unwillingness to follow strict neoliberal lending procedures. A somewhat similar argument could be put forward in the Zambian case where Chinese aid is only of minor importance. Here, the growing economy reduced the role of aid drastically. This enabled the Zambian government to criticise DAC donors and thereby carve out some agency. Since the initial battles, Zambia’s government has been undaunted in its fight with ‘traditional donors’. On a regular basis, both IFIs and bilateral donors freeze funds to Zambia or threaten to make Zambian authorities repay already disbursed loans. Zambia, on its side, continues to negotiate with China to finance new infrastructural projects. Officially, Zambia and its ‘traditional development partners’ fight over the ‘right’ way to reform the Zambian economy. In reality, bilateral donors’ main concern is embezzlement: of late, a number of ministries have been hit by cases of fraud resulting in withholding of money from among others Finland, United Kingdom, Sweden and Ireland (Africa Confidential 2018a; 2018b; 2018c; 2019). In the case of Mozambique, what really mattered in terms of agency was the difference between the Chinese economy and the Mozambican economy. According to Wethal (2017) this difference makes equality in negotiations impossible. Thereby, Mozambique’s relationship to China mirrors that of its relationship to ‘traditional’ donors and in reality it has not carved out agency – neither vis-à-vis China nor vis-à-vis DAC donors. The Ethiopian case is somewhat unique. Although the link between different views on repayment/profitability and increased agency may be widespread throughout Africa, Ethiopia has historically been able to exert much leverage on its Western donors due to a combination of a strong developmental state with a clear vision of development and its particular position in regional geopolitics (cf. Hayman 2008). Moreover, what seems to be the determining factor

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in Ethiopia is not the costs of finance but the ‘hassle factor’, i.e. the scope and magnitude of social and environmental impact assessments that have to be conducted in order to secure the finance. In the words of an Ethiopian official: ‘For hydroelectric and railroads, we don’t even talk to them [the World Bank], we just go straight to the Chinese’ (quoted in Humphrey and Michaelowa 2019: 23). Lastly, the DRC case at first paralleled the Angola case: although Congolese authorities at first took advantage of the Chinese offer to play China off against the IMF and thereby secure large-scale loans from China to finance its infrastructure (Maiza-Larrarte and Claudio-Quiroga 2019), in the end these loans followed traditional IFI procedures and thus, in reality, the DRC did not manage to change the rules of the game. Whether or not these five illustrative cases are representative of Sub-Saharan Africa at large is open for interpretation. Using a combination of survey data from traditional donors in fifteen African countries and in-depth interviews with officials in Ghana, Tanzania and Uganda, Swedlund (2017) questions the common assumption that the availability of new sources of development finance increases the bargaining power of African governments by enabling them to be more selective. In contrast, she argues that this is not the case and concludes that ‘there is nothing like a consensus among development practitioners that China is decreasing the bargaining power of their agencies’ (Swedlund 2017: 394). The above cases were deliberately chosen to document that what at first appear as changes in agency due to the revitalisation of China’s interest, and the consequential competition among donors, may indeed (also) point towards other developments. We should therefore not expect large-scale expansion of agency in Africa as a consequence of the current developments in the donor landscape.

4.3 China, the OECD and the changing regime of development finance While several ‘emerging’ donors have shown interest in closer collaboration with the DAC (most notably South Korea, which was admitted to the DAC in 2010, but also Turkey, Thailand, Indonesia and Russia (Mawdsley 2012)), a number of ‘emerging’ donors have been perceived as having little or no interest in the foreseeable future of converging towards DAC standards. They include, among others, India and China (McEwan and Mawdsley 2012).

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This situation may, however, be changing gradually. This section takes a closer look at how both Chinese and OECD development cooperation is changing and how this may entail that African governments have less, rather than more, agency in the future. First, it scrutinises recent changes in China’s development finance to Africa, whereupon it examines a recent phenomenon in international development cooperation, trilateral development cooperation. Finally it looks at how international development actors seek to integrate China in their aid regime.

4.3.1 Incremental changes in China’s development finance to Africa Although the lion’s share of the ‘China–Africa’ literature acknowledges the shifts that have taken place in China’s relationship with African countries since the 1950s, and the role that development finance and economic engagement has played herein (see e.g. Kilama 2016; Large 2008), a part of it still perceives Chinese approaches to development finance as being relatively stable. This part highlights key changes in the late 1970s and again in the late 1990s, but pays more attention to the stable principles than the changing policies and foci. Li (2007: 70), for instance, maintains that Sino-African relations have been based on equal treatment, respect for sovereignty and common development for the past fifty years and Zhou (2012) insists that policy fundamentally remains unchanged despite changes in policies, methods and management of Chinese aid over the course of sixty years. No doubt these principles are still very important, but this focus on stable principles obscures our understanding of the increasingly sophisticated and complex nature of Chinese development finance to Africa (cf. Bräutigam 2019). Moreover, and more importantly here, the focus on stable principles leads us to notice the differences between Chinese and DAC aid rather than the similarities. In contrast, Table 4.1 compares sectoral foci, modality and aim of Chinese development finance to Africa over time paying particular attention to FOCAC as the main official platform for dialogue between China and the continent (although we have to bear in mind that these relations in practice are chiefly bilateral in nature). Thus, in the words of Alden (2012: 703) FOCAC is ‘a platform to recognise the achievements of the relationship; a setting for announcing future programmes and directions; and, increasingly, a process by which these aims are negotiated’. What happens at the level of FOCAC therefore has repercussions for the wider SinoAfrican relationship.

Economic aid

Solidarity, Efficiency mutual benefit and mutual and equality benefit

Modality

Emphasis

Int. politics and eco. motives

1989– 2000

Link aid, trade and investment

Grants and loans (towards more concessional loans – especially after the 1995 reform of aid)

FOCAC II 2003

FOCAC III 2006

FOCAC IV 2009

FOCAC V 2012

Specific pledges in relation to aid, loans and debt cancellation Global recession

Grants, concessional loans plus debt cancellation

Climate change

Grants and concessional loans

Coordination of positions in relation to global governance

Win–win cooperation

Grants and concessional loans

Common prosperity

Grants, concessional loans and debt cancellation

Safeguarding common interests

Diplomacy and economic cooperation

FOCAC I 2000

Eco. Geopolitics New world restructuring and order in China promotion of Chinese exports

Ideology and geopolitics

Driving factors

Diplomacy and eco. motives

Diplomacy

1978–89

Aim

1956–78

Table 4.1 – Selected characteristics of Chinese development finance to Africa, 1956–2018

Win–win cooperation

Grants, concessional loans, trade and investment

FOCAC VI 2015

Mutual benefits and common development

Grants, concessional loans, trade and investment

FOCAC VII 2018

Capacity building, technical training

Health, edu., and human resources

Trade and commerce, local industries, local materials and job creation

Source: Adapted from Kragelund (2019: Table 6.5).

Secondary focus

Main focus

HRD, health and cultural exchanges

Economic development, especially agriculture and local infrastructure

Business, agriculture and food security, infrastructure and climate change

CounterHealth, edu., terrorism, science and human tech. resources, health and environmental protection

Agriculture and infrastructure

Health, edu. and academic exchanges

Climate change, peace and security, agriculture and infrastructure

Humanitarian assistance, health, edu., poverty eradication, and climate change, anti- terrorism

Infrastructure, agriculture, industrialisation, natural resources, tourism and maritime silk road

Health, edu., poverty eradication, science and technology, climate change and environmental protection, antiterrorism and anti-corruption

Agriculture, industrialisation, natural resources, tourism, ocean economy, and trade and investments

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Table 4.1 presents a stylised picture of key characteristics of China’s development finance to Africa since the onset in 1956 to the most recent FOCAC held in Beijing, China, in September 2018. It demonstrates that while the overall aim of this relationship has been relatively stable, although it pays more attention to economic cooperation now than previously, both emphasis and focus have changed incrementally and followed, with somewhat of a time lag, the trends of the DAC donors. In this way, global warming has gradually come to play a more and more important role in Sino-African relations, first designated as environmental protection during FOCAC III, then named climate change in FOCAC IV but only receiving little attention, moving to a prominent position during FOCAC V, and finally in FOCAC VII combined with environmental protection (cf. Kilama 2016). Likewise, focus on infrastructure has changed from a strictly local focus to a more regional and continental focus, first linking different parts of Africa together; then linking China to the world. In the same vein, ‘softer’ issues such as health, education and personal exchange receive ever more attention. New on the agenda are also security and anti-corruption concerns, which are linked to the rapidly growing Chinese investments all over Africa. Finally, as can been seen in Table 4.1, the modality of Chinese aid is changing. While it is still, by and large, bilateral and provided via projects, the use of debt cancellation has waxed and waned and the use of pledges (most prominent in FOCAC III) is now arguably totally absent. China’s debt cancellation programmes which were set in motion around 2000 were inspired among others by ‘traditional’ donors’ HIPC discussions. The Beijing Action Plan, which was the result of FOCAC I, only offered very few pledges to African governments. These pledges made the abstract relationship very concrete and were well received by African heads of state. Therefore, the Addis Ababa Action Plan that followed FOCAC II included more pledges covering a wider area of the relationship. In 2006, Chinese officials took the idea of pledges to another level. The Action Plan that followed FOCAC III included numerous very specific pledges covering basically all areas of the collaboration. Since then, the use of pledges has gone down drastically and since 2012 pledges of aid have no longer been the most important vehicle to bring the institution forward.4 Moreover, FOCAC III was kick-started by President Hu Jintao’s tour to three African countries where he launched a ‘new type of China–Africa Strategic Partnership’ which, according to Taylor (2011), among other things paid particular attention to cultural

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interaction and cooperation in non-traditional security areas. These aspects differed from the focus on economic cooperation in the previous two FOCAC meetings and laid the foundation for a shift in emphasis towards including more political (and topical) issues. Table 4.1 demonstrates the incremental changes in China’s approach to development finance in Africa. It shows that the overall aim is no longer diplomacy and international politics but rather economic development; the main drivers have changed from internal restructuring in China to issues related to global governance. Similarly, modalities, emphasis and sectoral foci have changed incrementally. Now, Chinese development finance pays more attention to topical issues and gives more priority to social sectors. This resembles DAC activities over the past couple of decades and all in all, Chinese development cooperation may not be fundamentally different from DAC aid. This is not surprising as China uses its own development experience, influenced by Japanese (and Western) aid, to inspire its current activities (Bräutigam 2009).5 Alongside these changes we also see a move towards more transparency in the development cooperation activities of China including miscellaneous news on projects from the Ministry of Commerce (MOFCOM), the publication in 2011 of ‘China’s foreign aid’, the so-called white paper on China’s aid (IOSC 2011) and a ‘Foreign Aid Communication’ MOFCOM bulletin. This change, and in particular the publication of the white paper, is perceived to be related to the relentless criticism from the West regarding lack of transparency (FOCAC 2012; Grimm 2011), but it also points to a constant urge to improve aid and according to Grimm (2011: 9), the ‘Chinese government is curious about reporting structures that [DAC] donors apply, and might further fine-tune its reporting structure in the future’. The move towards more transparency has been mirrored in the sematic debate. Whereas China deliberately used to use the term ‘external assistance’ in policy papers to distance itself from the DAC community, it now uses the term aid like the DAC. Although we have to bear in mind that the changes that we see in these documents do not necessarily equate to real changes, these documents inform us that China is committed to a reform of its development finance.

4.3.2 Trilateral development cooperation Trilateral development cooperation (TDC), i.e. a formalised North– South–South development relationship, is a relatively new form of development cooperation which seeks to bring together the strengths

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of a DAC and an ‘emerging’ donor to the benefit of a recipient country. The idea is that the DAC donor supplies finances and institutional capacity while the ‘emerging’ donor makes cheap goods and services, appropriate technology and recent experiences of structural transformation available. It is perceived as cheaper, more efficient, and more relevant than ‘traditional’ development cooperation. It is therefore often hyped as the new black in development cooperation and during the 4th High Level Forum on Aid Effectiveness in Busan it was ‘listed as one of the eight “building blocks” of development’ (Masters 2014: 179), and by 2011, two-thirds of DAC donors had already engaged in TDC projects (Farias 2015). In the ideal world, the combination of finances and institutional capacity from the DAC donor and cheap appropriate technology from the ‘emerging’ donor provides the recipient country with more policy space to negotiate better deals. In reality, however, it may not turn out as rosy. In theory then, TDC puts African partners in the driving seat and proponents of this approach to development finance delivery stress the local ownership that derives from the collaboration with ‘Southern’ partners. According to McEwan and Mawdsley (2012), however, we still know very little about whether or not TDC actually increases ownership and more importantly, the Northern partner often controls the resources, initiates the collaboration and sets up the monitoring systems. Moreover, recipient countries may not benefit much from the improved allocation of resources in TDC as these arrangements often end up being very time consuming as procedures have not yet been set up. Empirically, we know very little about the developmental effects of TDC as most of the information we have originates in donor organisations – not from independent analyses of the impacts of TDC; as the term TDC covers a multitude of activities involving not only state actors but also civil society organisations, philanthropists and private sector actors; and as ‘DAC donors’ perceive their role in TDC in different ways: whereas some ‘dictate’ the cooperation others put emphasis on mutual planning, implementation and financing (Kragelund 2019). China is by no means one of the most active ‘emerging’ donors participating in TDC, but it is currently taking incremental steps to engage in this type of development cooperation. So far China has only engaged in relatively few TDC schemes with e.g. Norway, Germany, USA and Britain. According to Patey and Large (2012) these arrangements are still small-scale, but more significantly here, they are perceived to have only little African ownership.

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The less rosy view of TDC is therefore that it: ‘can also be read as an attempt to protect and replicate older patterns of northern hegemony, with the DAC bilaterals and/or northern-dominated multilaterals setting the agenda while pivotal states [‘emerging’ donors] act as little more than cheap contractors, with beneficiaries as passive recipients’ (McEwan and Mawdsley 2012: 13f). More importantly, the very collaboration between DAC and ‘emerging’ donors in the TDC may impede African countries’ ability to play one donor off against the other. This is apparently also a concern for African diplomats. In a lunch meeting with the American embassy, Julius Ole Sunkuli, Kenya’s former ambassador to China, according to a Wikileaks cable ‘...worried that Africa would lose the benefit of having some leverage to negotiate with their donors if their development partners joined forces’ (cited in Chandy and Kharas 2011: 748). In other words, TDC may effectively close down the negotiation space that has been opened with the return of China and other ‘emerging’ donors to the development arena.

4.3.3 Integration of China into the global aid regime: new institutional innovations Alongside the changes within China and the efforts to set up triangular cooperation described above, ‘traditional’ donors also seek to affect China’s development via a number of (new) institutional arrangements that all seek to integrate it into the global aid regime. This is done at both the bilateral and multilateral levels. The US, for instance, has established a working relationship with key Chinese actors on issues related to development aid since 2009 in order to enhance communication between the two parties, share experiences and collaborate in infrastructure development interventions. This has led to a number of visits by key actors of central aid agencies in both China and the US (Huang and Ren 2012) Likewise, in the UK, the Department for International Development (DfID) has acknowledged that China and other ‘emerging’ donors are key partners in development. DfID has therefore set up a team to share experiences with and learn from these donors. This is not only done at headquarters but also in individual African countries, such as in the DRC where DfID and China work together on an infrastructure project (Mitchell 2011). Small bilateral donors have also taken up the gauntlet. Danida, Denmark’s development cooperation entity, is also probing how and to what extent it can collaborate with China in Africa. It therefore commissioned a study on how to move forward. This study concluded that bilateral collaboration is

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possible if sensitive issues such as human rights and good governance are avoided and if more attention is paid to productive rather than social sectors (Patey and Large 2012). More importantly, however, several international bodies have sought to bring China closer to the established development agenda. The OECD has, through the DAC Working Party on Aid Effectiveness (WPAE), which met for the last time in 2012, sought to include all the ‘emerging’ donors, including China into the existing framework. Although China and other ‘emerging’ donors have been reluctant to interact too closely with the OECD under the umbrella of WPAE and thereby abide by that institution’s normative standards, the 2011 High Level Forum on Aid Effectiveness in Busan seems to have changed the situation incrementally. During this Forum European officials tried to persuade China (and Brazil and India) to sign up to voluntary principles on aid effectiveness on the condition that the special nature of SSC was also recognised (Africa-Asia Confidential 2011). The effect was that the strict aid effectiveness debate headed by the EU was replaced by a broader development effectiveness debate that took the ‘emerging’ donors’ development finance mechanisms into account (Carbone 2013). The DAC itself is also seeking closer collaboration with China. In 2009 it established the China–DAC Study Group, which seeks to facilitate mutual learning between China and the DAC in order to further development and reduce poverty. This is done partly via round tables that focus on aid quality and aid management, partly via policy symposia on issues such as infrastructure development and private sector participation in development. Furthermore, the DAC in 2011, for the first time ever, invited ‘emerging’ donor representatives including China to its yearly senior level meeting that charts out the future course of the DAC (Eyben 2013). Likewise, a couple of ‘emerging’ donors (though not yet China) have taken part in DAC’s (internal) peer reviews of the DAC members thereby easing the path to future cooperation (Zimmerman and Smith 2011). Finally, the DAC has recently adopted a ‘global relations strategy’ that aims to improve aid quality on the one hand and to provide for an enlarged DAC on the other hand. This is done via policy dialogue with, among others, China that aims at sharing views on development and integrating lessons learned from non-DAC development actors in future policies (OECD 2011). These early efforts by the DAC to align Southern development actors to its norms have been mirrored by other development actors. In 2008, for instance, the World Bank created the South–South

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Experience Exchange Facility, a special trust fund to finance knowledge sharing among development partners from the Global South as well as the Global North. The idea was to quickly disseminate experiences and results from SSC and thereby further cooperation (Abdenur and da Fonseca 2013). The Bank has also co-authored with the China Development Bank, as noted earlier.

4.4 Conclusions This chapter set out to critically review the most recent trends in Chinese and OECD approaches to development finance to Africa in order to determine how and to what extent China’s rejuvenated interest in Africa in fact enlarges the policy space for African governments to control and determine future development. It has shown that although the rejuvenation is of recent origin, OECD donors have already reacted to the new situation. Both EU and bilateral donors are paying more attention to mutual benefits of the aid that is provided, just like the Chinese. Likewise, OECD donors are changing focus from social sectors to productive sectors. The focus is therefore no longer (only) on poverty reduction and social development but also on economic growth and infrastructure development. In addition, both bilateral and multilateral donors have worked hard to set up institutions that could further the cooperation between China and the OECD donors. This change has gone hand in hand with incremental developments in Chinese aid, making Chinese aid look more and more like DAC aid. In recent years, aim, modality and sectoral focus of Chinese aid have changed. It now pays attention to topical issues and includes social sectors, just as DAC aid. Likewise, a number of institutional changes within China have made Chinese aid less opaque. These incremental changes all point towards convergence rather than divergence in the global development finance regime. Hence, the increased autonomy that is alluded to in much of the ‘China– Africa’ literature that is supposed to come about as a result of competition between donors may at best be a one-off affair. A less positive reading of the developments thus far shows that hardly any African countries in fact have been able to carve out real agency as a result of China’s revived interest in Africa. This chapter showed that Angola indeed was able to increase its policy space, but maybe more as a consequence of rising commodity prices than China’s interest. Mozambique and Zambia’s experiences are similar,

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though on a much smaller scale, while the Ethiopian case is probably more to the point as it shows how different interpretations of key concepts may be used for developmental purposes. Lastly, a different reading of the DRC case possibly shows that there is not much to the increased agency argument at all. It could either suggest that at the end of the day, the West is more important to China than Africa is, or it could suggest that China takes a pragmatic stance on its interaction with Africa. Moreover, it suggests that if we are to see changes in agency in the future, we have to look at other flows of finance than development finance to understand possible implications for African agency. Most importantly, the diminishing role of aid in the budget, high demand for primary commodities, improved credit ratings, economic growth and increased trade and investments will affect (some) African countries’ policy space. Similarly, clear policy visions, regional trade agreements and changing voting power in IFIs may provide African governments with increased agency. Several of these factors are related to China’s economic growth but not their development finance per se. In essence then, one could question the actual differences between Chinese practices regarding development finance and DAC standards on the same issues (cf. Bräutigam 2010). This is also clear in Chandy and Kharas’ (2011) analysis of the differences in aid principles between ‘emerging’ and DAC donors. They argue that the principles do not differ. What differs is the exact interpretation of the principles. This makes more and closer collaboration possible. As we have seen this is not only a future scenario but very much a reality at present. The result is that OECD and Chinese development finance will converge even more, which will close further whatever policy space was available for African governments to set and fund their own development.

Notes 1 The rejuvenation of China’s interest in development is by no means the only factor that has triggered the changes towards more focus on economic growth and self-interest. According to Carbone (2013: 488): ‘the cyclical reservations on the impact of aid have put foreign

aid under pressure in a number of European countries’. Thereby (lack of) aid effectiveness itself has contributed to the changes that we currently experience. 2 No formal definition exists of the development effectiveness paradigm, but according to Mawdsley et al. (2014: 30) it

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‘includes a renewed focus on economic growth, enhancing industrial productivity and wealth creation (rather than poverty reduction per se); greater integration between foreign aid and other policy areas, such as trade, investment and migration; and a growing and more visible role for the private sector’. 3 As usual in the literature dealing with these issues facts and figures are ambiguous. For instance, while Africa-Asia Confidential (2009) reports that China Export–Import Bank finances 85% of the costs of the Gibe dam (USD 1.9bn), the official webpage states that China Export–Import Bank finances 85% of the power transmission line from the dam to the substation amounting to approx. USD 34mn (EEPCo 2012). 4 During FOCAC V China did pledge credit lines worth USD 20bn but these credit lines do not meet the requirements for

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ODA, and hence cannot be compared to the large-scale pledges in 2006. In 2018, during FOCAC VII, China made pledges of grants, interest-free loans and concessional loans worth USD 15bn. Whether or not these pledges meet ODA criteria is uncertain. 5 This blurring of the differences between DAC and ‘emerging’ donors is even more evident if we include other ‘emerging’ donors other than China. While the groups of ‘emerging’ donors and DAC donors are extremely heterogeneous (cf. Rowlands 2012), sector focus, for instance, is often hinted at as the main difference between these two groups. However, aid allocations from sixteen ‘emerging’ donors (not including China) from 2001 to 2008 in fact shows that the majority of these donors spent more than half of their aid on social sectors – just like the DAC donors (cf. Dreher et al. 2011).

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The changing place of Africa in international relations’, International Affairs, 89(1): 69–87. Hayman, R. (2008) ‘Rwanda: milking the cow? Creating policy space in spite of aid dependence’, in L. Whitfield (ed.), The Politics of Aid: African Strategies for Dealing with Donors, Oxford: Oxford University Press. Huang, M. and P. Ren (2012) ‘China’s foreign aid and its role in the international aid architecture’, in G. Carbonnier (ed.), International Development Policy: Aid, Emerging Economies and Global Policies, Houndmills: Palgrave Macmillan. Humphrey, C. and K. Michaelowa (2019) ‘China in Africa: competition for traditional development finance institutions?’, World Development, 120: 15–28. IOSC. (2011) ‘China’s foreign aid’, Information Office of the State Council, Beijing. Jansson, J. (2011) ‘The Sicomines agreement: change and continuity in the Democratic Republic of Congo’s international relations’, SAIIA Occasional Paper, no. 97, South African Institute of International Affairs, Johannesburg. Jansson, J. (2013) ‘The Sicomines agreement revisited: prudent Chinese banks and risk-taking Chinese companies’, Review of African Political Economy, 40(135): 152–162. Keijzer, N. and E. Lundsgaarde (2017) ‘When unintended effects become intended: implications of “mutual benefit” discourses for development studies and evaluation practices’, Working Paper, no. 2017/7, Radboud University. Kilama, E. G. (2016) ‘Evidences on donors competition in Africa: traditional donors versus

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China’, Journal of International Development, 28(4): 528–551. Kim, E. M. and J. E. Lee (2013) ‘Busan and beyond: South Korea and the transition from aid effectiveness to development effectiveness’, Journal of International Development, 25(6): 787–801. Kragelund, P. (2012) ‘The revival of non-traditional state actors’ interests in Africa: does it matter for policy autonomy?’, Development Policy Review, 30(6): 703–718. Kragelund, P. (2014) ‘“Donors go home”: non-traditional state actors and the creation of development space in Zambia’, Third World Quarterly, 35: 145–162. Kragelund, P. (2019) ‘Using local content policies to engender resource-based development in Zambia: a chronicle of a death foretold?’ The Extractive Industries and Society, https://doi. org/10.1016/j.exis.2019.09.006. Large, D. (2008) ‘China and the contradictions of “noninterference” in Sudan’, Review of African Political Economy, 35(115): 93–106. Li, A. (2007) ‘China and Africa: policy and challenges’, China Security, 3(3): 69–93. Lundsgaarde, E. (2012) ‘The future of European development aid’, Futures, 44(7): 704–710. Maiza-Larrarte, A. and G. ClaudioQuiroga (2019) ‘The impact of Sicomines on development in the Democratic Republic of Congo’, International Affairs, 95(2): 423–446. Masters, L. (2014) ‘Building bridges? South African foreign policy and trilateral development cooperation’, South African Journal of International Affairs, 21(2): 177–191. Mawdsley, E. (2011) ‘The conservatives, the coalition and

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international development’, Area, 43(4): 506–507. Mawdsley, E. (2012) From Recipients to Donors: Emerging Powers and the Changing Development Landscape, London: Zed Books. Mawdsley, E. (2018) ‘The “Southernisation” of development?’, Asia Pacific Viewpoint, 59(2): 173–185. Mawdsley, E., L. Savage and Sung-Mi Kim (2014) ‘A “postaid world”? Paradigm shift in foreign aid and development cooperation at the 2011 Busan High Level Forum’, The Geographical Journal, 180(1): 27–38. McEwan, C. and E. Mawdsley (2012) ‘Trilateral development cooperation: power and politics in emerging aid relationships’, Development and Change, 43(6): 1185–1209. Mitchell, A. (2011) ‘Emerging powers and the international development agenda’, transcript of speech at Chatman House, London. Mohan, G. and B. Lampert (2012) ‘Negotiating China: reinserting African agency into China– Africa relations’, African Affairs, 112(446): 92–110. OECD. (2011) ‘DAC Global Relations Strategy’, Report No. DCD/DAC(2011)36/FINAL, Organisation for Economic Co-operation and Development, Paris. Patey, L. and D. Large (2012) ‘Cooperating with China in Africa’, DIIS Policy Brief, Danish Institute for International Studies, Copenhagen. Power, M. (2012) ‘Angola 2025: the future of the “world’s richest poor country” as seen through a Chinese rear-view mirror’, Antipode, 44(3): 993–1014. Rowlands, D. (2012) ‘Individual BRICS or a collective bloc? Convergence and divergence

amongst “emerging donor” nations’, Cambridge Review of International Affairs, 25(4): 629–649. Swedlund, H. J. (2017) ‘Is China eroding the bargaining power of traditional donors in Africa?’ International Affairs, 93(2): 389–340. Tan-Mullins, M., G. Mohan and M. Power (2010) ‘Redefining “aid” in the China–Africa context’, Development and Change, 41(5): 857–881. Taylor, I. (2011) The Forum on China–Africa Cooperation (FOCAC), New York: Routledge. Wethal, U. (2017) ‘Passive hosts or demanding stakeholders? Understanding Mozambique’s negotiating power in the face of China’, Forum for Development Studies, 44(3): 493–516. Whitfield, L. (ed.), (2008) The Politics of Aid: African Strategies for Dealing with Donors, Oxford: Oxford University Press. Wissenbach, U. (2009) ‘The EU’s response to China’s Africa safari: can triangular co-operation match needs?’, European Journal of Development Research, 21(4): 662–674. Woods, N. (2008) ‘Whose aid? Whose influence? China, emerging donors and the silent revolution in development assistance’, International Affairs, 84(6): 1205–1221. Zhou, H. (2012) ‘China’s evolving aid landscape: crossing the river by feeling the stones’, in S. Chaturvedi, T. Fues and E. Sidiropoulos (eds), Development Cooperation and Emerging Powers, London: Zed Books. Zimmerman, F. and K. Smith (2011) ‘More actors, more money, more ideas for international development co-operation’, Journal of International Development, 23: 722–728.

5 China’s impact on local economic development: the Zambian case

Between 1999 and 2014, imports to China from SSA increased more than fifty-fold, while exports from China grew almost thirty-fold. (Jenkins 2019: 115) Although China’s imports from SSA grew rapidly during the first decade of the twenty-first century, they were concentrated in a few countries with South Africa, Angola, Sudan, and the Republic of Congo accounting for around four-fifths of the total. At the peak of the commodity boom in 2011, only eight SSA countries sold more than 20 per cent of their total exports to China. These consisted of three oil exporters (Sudan, Angola and Congo), four mineral exporters (Democratic Republic of Congo (DRC), Mauritania, Zambia and South Africa), and one timber exporter (Gambia). (Jenkins 2019: 150)

5.1 Introduction During the past decade, research on how the fast-developing ‘emerging economies’ affect the rest of the Global South has flourished. In particular attention has been paid to how the BRICS affect Africa (see e.g. Carmody 2013; Taylor 2014a). The sheer size of China and other emerging market economies and labour markets is resulting in direct and indirect changes across the Global South (Farooki and Kaplinsky 2012) and, according to some, African exports to the BRICS overtook those to Europe in 2010 (Bright and Hruby 2015). In this context, China is particularly important because, as noted earlier, it accounts for approximately 60% of the total economic output of the BRICS and is Africa’s single largest trading partner, by far. We still have only scant knowledge of the local developmental effects in Africa of the changes wrought by this new balance of global economic power. This chapter aims to start prising open

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this black box by examining the effects of investments by some of the BRICS powers in two key areas of the Zambian economy: namely in a tourism town, Livingstone, in the Southern Province of Zambia; and two mining areas, the Copperbelt and North-Western Provinces of Zambia. In effect, the chapter aims to show how the practices undertaken by Chinese and other BRICS capital result in growth patterns that, while differentiated, tend to result in further inequality and the marginalisation of large segments of the domestic private sector. When examining these impacts it is important to go beyond macro-economic aggregates to assess the extent to which the tectonic shift in the global balance of economic power leads to structural transformation in the BRICS’ investment destinations and markets, i.e. the transformation that takes place when an economy diversifies away from dependence on a few primary resources to relying primarily on value addition related to resource extraction, manufacturing or (high-value) services. Thus, structural transformation is closely related to the upgrading and building of national technological capabilities among domestic firms and to how they use these capabilities to link up to multinational firms in order to create employment and wealth (Whitfield et al. 2015). Over the long term, structural transformation can be assessed using trade data or sufficiently disaggregated GDP figures, but as substantial BRICS trade and investment with Africa is of relatively recent vintage, and consequently we are interested in the trajectory of change, we take a different approach. We focus on the following aspects that relate to the possibility of structural transformation in the future: the direct and indirect effects of investments in Zambia by emerging economy companies, whether or not these are intentional; and the breadth and depth of linkage creation to domestic firms (see Section 5.2). The BRICS powers have different geographies of engagement in Africa. For example, the Brazilian ambassador to South Africa argued that there were ‘many more important countries’ in Africa than South Africa for Brazil in economic terms, as bilateral trade between the two amounted to a ‘not very impressive’ USD 3.5bn (interview, Pretoria, 14 August 2014). On the other hand, he noted that more than eighty Brazilian companies operate in Angola. Odebrecht, the Brazilian construction conglomerate, is the largest private sector employer in that country (Soares de Oliveira 2015), although it has recently been involved in a massive international ‘cash for contracts’ corruption scandal known as ‘Operation Car Wash’. In the Zambian case, there has been relatively little engagement or investment from

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either Brazil or Russia (Kragelund 2011). Consequently, this chapter focuses on the impacts of investment from the other BRICS: India, China and South Africa – hereafter ICS. As noted earlier, according to UNCTAD (2011) South–South economic relations are less market-driven than North–South ones and Ian Taylor (2014b) has noted that emerging powers tend to have more state-directed or state-led economies. While this may be true as a general statement, there is substantial variation between them. For example, the state played a key directive, ownership and investment role in apartheid South Africa (Fine and Rustomjee 1996), and this legacy is still much in evidence in that country through continuing state ownership in the transport sector, for example. On the other hand, so-called ‘dragon’s head’ state-owned resource and construction companies have been much more prominent in leading Chinese engagement in the continent. However, sometimes workers who arrive with these companies on fixed-term contracts stay on and set up their own small businesses, as noted earlier, with the result that Chinese engagement in the region sometimes changes in nature along the way, from large to small firms (cf. Gu 2009). Since the late 1990s, more and more Chinese people have migrated to Zambia for shorter or longer periods of time to benefit from the recent boom in commodity prices, the resultant construction boom and opportunities to make profits or work in mining, agriculture, services and manufacturing. Some of these migrants also make use of Zambia’s tourism attractions, and the country has also become a tourist destination for the growing middle and upper classes both in Southern Africa and China. In 2012, China was already the single biggest market for Zambian tourism (outside of countries on the African continent) although in 2013 the USA topped the list (MOTA 2014). This trend continued in subsequent years with a ‘reduction in arrivals from China and an increase of arrivals from the USA and UK’ (Policy Monitoring and Research Centre 2017). This partly explains why tourism in and around Livingstone in the south of the country has increased, particularly given that many tourists now prefer to visit Victoria Falls from the Zambian rather than the Zimbabwean side, given recent and ongoing political instability in that country. In 2019 the Zambian president warned that these might dry up as a result of climate change, as they slowed to a trickle in that year. The ICS ‘footprint’ is also evident in other sectors of the economy. Since the mines in Zambia were privatised in the late 1990s, increasing numbers of them have been taken over and/or opened

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by companies from the ICS (see Table 5.1). In contrast to the era of state-owned mining in Zambia, the new mine owners – whether from the ICS or the Global North – do not make use of local suppliers to any great extent. Instead, they often either source directly from their home countries or bring in suppliers from there. This chapter seeks to analyse the complex – and often contradictory – picture of the local effects of the presence of ICS companies in Zambia. We argue that despite the firm conviction expressed by, for instance, the former chief economist of the World Bank, Justin Yifu Lin, that changes in China will lead to structural transformation in Africa, as lower value industries are off-shored there, the picture is less rosy – at least in the short term – due to the sectoral composition of investment, technological and import dependence, the relative lack of linkages and spillovers from ICS firms to the local economy, and the attendant, differentiated economic narrowing. For policy reasons, particularly the economic liberalisation policies of SAPs (en)forced on Zambia by the World Bank and the IMF during the 1980s and 1990s, much manufacturing in the country was competitively displaced. Zambia no longer produces many of the things it used to produce domestically, such as mining equipment – or at least it does not do so in the same quantities. Manufacturing accounted for roughly 10% of GDP in 2013 (Rasmussen et al. 2014), whereas in 1992 the figure was 30.5% (Central Statistical Office 2014). As a labour-intensive, relatively low-tech industry, clothing is often thought to offer a first step onto the industrial ladder. However, as noted earlier in 2014 Zambian production of textiles, clothing and leather was only 2.9% of what it was in 1985, although other manufacturing sub-sectors – particularly those based on natural resources or those that are costly to transport over long distances, such as cement – saw substantial absolute growth during the recent commodity and related construction booms. The decline of the textile, clothing and leather sector was largely caused by displacement by imports, often second-hand clothes or new ones from China (Hansen 2000; Brooks and Simon 2012). One of the objectives of SAPs was to attract FDI. However, as Amsden (2007) notes, FDI is not necessarily developmentally beneficial. It partly depends on sector, the nature of linkages to the local economy and government policies. The destructive effects of FDI are on full display in the Niger Delta in Nigeria for example, where oil extraction has been associated with pollution, deepening poverty and conflict (Obi and Rustad 2011).

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While some, such as Lee (2014; 2017), have argued that Chinese state capital in Zambia opens up developmental opportunities, given its more ‘patient’ nature, the reality is that the Zambian economy is becoming both less diversified, as the proportional share of manufacturing in the economy decreases through what some have called premature deindustrialisation (Arkebe 2015) or ‘detransformation’ (Noman 2013); and more foreign dominated, with all of the problems this creates due to its sectoral imbalance. Where FDI has led to or been part of structural transformation in Ireland or China, for example, it has tended to be heavily concentrated in manufacturing rather than natural resource extraction. We explore these issues through case studies of two sub-sectors in Zambia which are purported to be complementary to economic growth in the ICS – mining, and the tourism-dominated economy of Livingstone, a town bordering Zimbabwe in Southern Zambia. Both of these are of great economic importance to Zambia in terms of exports (mining) and job creation (services). However, both are examples of the increasing foreign domination of the economy, through imports as well as investments. While mining is a capitalrather than labour-intensive industry, most services are labour intensive. Both sub-sectors are dominated by FDI, and hence developmental benefits depend largely on the linkages between these investments and the rest of the economy. Historically, neither of these has been linked to structural transformation – mining because of its enclave structure with few linkages to the local economy, and services due to their often non-tradeable nature and limited potential for technological development and upgrading. FDI in these two sub-sectors affects local economies directly, through employment for example, but may displace local manufacturers, hoteliers, traders and others and consequently be net value extractive as profits are repatriated offshore. The two sub-sectors are examples of different types of investments currently entering Africa, which differ in terms of their labour intensity and linkages to the rest of the economy. While the Zambian mining sector primarily attracts some Indian private investment as well as large-scale Chinese government-funded or governmentinduced investments to support its relatively rapidly growing and increasingly infrastructure-driven economy, the service economy of Livingstone primarily attracts private investment from South Africa specifically, given its less tradeable nature. If ICS investments in these sectors are in turn developmentally beneficial for Zambia, investments in these and other areas that have

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historically shown more potential for triggering economic development may indeed contribute to Zambia’s structural transformation. Conversely, if ICS investments do not contribute to structural transformation in Zambia, then it is unlikely that they will lead to transformation elsewhere in Africa, in the short-term at least, unless they are strategically integrated into a broader industrial policy, as has been the case in Ethiopia (cf. Noman and Stiglitz 2015). This chapter proceeds as follows: Section 5.2 lays out the analytical framework where, in analysing the effects of the ICS on Zambian development in the context of economic liberalisation, we pay attention not only to local linkages and the creation of spillovers, but also to the distinctive ways in which foreign investments are linked to, and constitute, ‘global’ production and consumption networks. Section 5.3 outlines the most recent developments in the mining and tourism sectors in Zambia and briefly discusses our methodology. This then forms the basis of our analysis in Sections 5.4 and 5.5, respectively, of how ICS investments affect local development in these two areas of the Zambian economy. Section 5.6 concludes the chapter.

5.2 ICS and structural transformation in Africa: an analytical framework The launch of the ‘Asian Drivers’ research programme more than a decade ago sparked a discussion of how to assess the impact of emerging economies on the rest of the Global South. The research programme proposed an analytical framework that distinguished between direct and indirect, as well as between competitive and complementary impacts (cf. Kaplinsky and Messner 2008). The main advantage of this framework was that it allowed researchers to go beyond aggregate assessments of how the rise of emerging economies affected a particular country in the Global South, and instead to analyse how various channels of interaction such as trade, FDI, finance, changes in global governance structures, migration flows and environmental spillovers affect countries differently; as well as how effects differ between importers and exporters in a country and between consumers and producers, for example. In order to unpack the causal mechanisms behind these impacts, the concept of ‘driver’ has been unfolded in the literature (cf. e.g. Farooki and Kaplinsky 2012; Schmitz 2006). These contributions show that the way the Global South is affected is a matter both of

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unintentional and intentional impacts. In the case of the former, the pertinent question is who is driven by processes of economic restructuring; while in the latter case it is who drives these processes. Both questions add human agency to the analysis, although this concept can be problematised, as discussed earlier, and it is perhaps more accurate to refer to intentionality rather than agency (Woodley 2015). Although the concept of ‘driver’ indirectly allows for an examination of changes over time, it does not seek to explain the temporality of restructuring forces at play. This is in contrast to the ‘flying geese’ concept originally developed by Akamatsu Kaname in the 1930s and then refined in the 1960s, which was of late picked up by, among others, the former chief economist of the World Bank, Justin Yifu Lin (Lin 2012; Korhonen 1994; Chandra et al. 2013; Bräutigam 2003). The flying geese concept is often used loosely to refer to the spatial pattern of economic growth in East and South East Asia. The metaphor refers to the inverse V-shape formed by migrating geese. In reality, however, it is a refined model depicting the sequencing of import, production and export, in a similar way to Vernon’s product cycle theory. Kaname’s version of the model described how ‘poor’ countries first import consumer goods, then begin production of these (when consumption has reached a level that makes domestic production profitable) at the same time as they initiate the import of capital equipment, and finally begin exporting consumer goods, which stimulates the production of capital equipment. Each type of good undergoes a process from import, via production, to exports, and the real value of each of these processes in the ‘poor country’ first increases then decreases – forming an inverse V (Kojima 2000). The most recent development of the model has involved the analysis of regional development patterns – or the international positioning of countries – that led to the relocation of older industries in emerging economies to countries with lower production costs. This final version of the flying geese model forms the basis of optimistic predictions of how economic growth in China, in particular, may lead to structural transformation in African economies (cf. e.g. Lin 2012; Chandra et al. 2013; Arkebe and Lin 2019). The argument is that as labour reserves are absorbed in China, the country is moving from labour-intensive towards more capital-intensive production. In the process, labour-intensive jobs will move towards other world regions with lower wages – including Africa – although real product wages for the most part remain higher in Africa than in competitor regions and countries, such as Vietnam. According to

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Lin (2012), this relocation to Africa is already happening. This is demonstrated by the substantial amounts of Chinese FDI flowing into manufacturing and mining in Africa, and by the establishment of SEZs in a number of countries on the continent, noted earlier. Lin argues that due to the sheer size of the Chinese economy, ‘China will not be a goose in the traditional leader-follower pattern of industrialisation for a few lower income countries but a dragon’ (Lin 2012: 405). In a similar vein, Chandra et al. (2013: 77) state, somewhat optimistically, that: ‘It seems reasonable to suggest that the leading dragon phenomenon alone can create sufficient labourintensive manufacturing jobs for developing sub-Saharan African countries to bring them to par with most industrial countries’. Whether or not this transpires depends on the relocation of lowwage jobs to Africa, in addition to the nature and extent of these investments and whether or not transnational companies link up to local companies and create spillovers. Following Hansen et al. (2009: 122), linkages here denote ‘inter-firm transactions that go beyond arm’s length, one-off transactions and involve longer-term collaborations between the parties’, whereas spillovers refer to the transfer of knowledge as a result of a linkage (Morrissey 2012). However, according to the former Nigerian Minister of Finance, Ngozi Okonjo-Iweala, ‘we don’t have a lead goose, a Japan’ (quoted in Economist 2015: 36). These different bodies of literature inform our analysis of how investments by the ICS in Zambia’s tourism and mining sectors affect the potential for structural transformation in the country. They highlight the causal mechanisms at play and stress the importance of drivers; they point to the direct and indirect, as well as the complementary and competitive effects of investments; and finally they highlight the importance of industrial policy and purposive linkage creation if ICS investments are to substantially contribute or lead to structural transformation in Zambia.

5.3 The mining and tourism sectors in Zambia Zambia is sometimes described as a mono-economy, not least due to the importance of copper mining for exports. Raw and refined copper, and the associated mineral cobalt, accounted for over 75% of Zambia’s exports, and nearly a third of government revenue in 2014 (Saunders and Caramento 2018). As noted earlier, China and South Africa are the country’s two most important trading partners.

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However, the pattern of trade – exporting resources and importing primarily manufactured or processed goods – is problematic, particularly given problems with price volatility. As the International Council on Mining and Metals (ICMM 2013) noted in relation to the importance of minerals in the composition of Zambia’s exports: ‘at 80%, this level of export dependence is now the highest of all the world’s mining economies alongside Botswana. It is a source of considerable vulnerability in the event of a down-turn in commodity prices’. Tourism is of growing importance to the Zambian economy. It is perceived to offer great potential for economic diversification and economic development beyond the ‘Line of Rail’, as most of Zambia’s tourist attractions are located in rural areas. Hence, tourism has been singled out as one of six sectors with the highest job creation potential in Zambia’s ‘Industrialisation and Job Creation Strategy’ and, alongside mining and some other sectors, it was identified as a main growth area in both the Sixth and Seventh National Development Plans (Government of Zambia 2011; 2017). This is by no means coincidental given its recent growth. Although data is sparse – and often of poor quality – the Ministry of Tourism and Arts (MOTA) publishes a yearly statistical digest of tourism (MOTA 2014). According to the recent digest, close to one million international visitors came to Zambia in 2013 – an increase of 6% compared to the previous year. Approximately half of these are categorised as leisure tourists, and total earnings from tourism were estimated at USD 540 million for 2013. ‘The number of arrivals of Zambia increased from 362,000 in 1998 to 1.08 million in 2017 growing at an average annual rate of 6.83%’ (Knoema Corporation nd). There was a more than 13% increase in arrivals in 2017 as compared to 2016. These aggregate figures, however, cannot conceal the fact that revenues from tourism are heavily skewed in Zambia. The vast majority of revenue from international tourism goes to Lusaka and Livingstone. For instance, of a total of 57,000 jobs in the hospitality sector, approx. 22,500 are located in the Southern Province (mostly Livingstone and Siavonga) and 18,500 in Lusaka. Likewise, of a total of 74,000 bed spaces, almost 20,000 are located in the Southern Province and 29,000 are located in Lusaka. This is particularly significant as accommodation establishments make up more than 90% of total earnings from tourism in Zambia (MOTA 2014). Two of the authors of this work have conducted numerous fieldtrips to Zambia in the past decade. Our results draw on data from these and more recent fieldtrips. As part of a larger comparative

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research project on ‘successful’ domestic firms, the second author has conducted fieldwork in Lusaka, the Copperbelt and NorthWestern Provinces repeatedly in recent years. Data collection for this project entailed four components: mapping domestic suppliers to the mines, a survey, case studies and interviews with key stakeholders – including the mines. A total of sixty-nine companies were mapped (2012) of which some turned out to be too young, had too much foreign ownership or declined to take part in the survey. Hence, a total of forty-four suppliers to the mines were surveyed (2013–2014). Twelve firms were singled out for longitudinal case studies (2012– 2016). Fieldwork for this chapter was conducted by the first author in South Africa in August 2014 and in Livingstone in August 2015. Interviews about the nature of the local economy were carried out with a total of seven businesses in Livingstone. Most of these were foreign-owned, but a local retailer was also interviewed to assess the impacts of foreign business.

5.4 ICS and the Zambian suppliers to the mines As noted earlier there has been extreme price volatility in the international copper market in recent decades. Prices increased from approximately USD 1,500 / metric tonne in 2001/2002 to almost USD 9,000 / metric tonne before the NAFC struck in 2008, after which prices fell by two-thirds in six months. Copper prices then picked up once again, surpassing their pre-financial crisis levels, only to plummet again to USD 4,500 / metric tonne in 2016, before recovering somewhat to over USD 7,000 in 2018, before again falling to approximately USD 5,600 in mid-2019 (Market Insider 2019). This price oscillation for the country’s main export has had direct impacts on the Zambian mining sector. First, the boom meant that old mines were revamped, and new explorations were set in motion, especially in Zambia’s ‘new Copperbelt’ (Negi 2010a). Second, the post-financial crisis bust meant that several mines changed owners, and new owners from the ICS took over mines previously owned by mining companies based in the Global North. The result is now that six out of sixteen major mines in Zambia are majority Chinese-owned (38%), three are Indian-owned (19%), and one is South Africanowned (6%) (see Table 5.1). Additionally, one mine has just been taken over by a Kazakhstan-based company. This is in sharp contrast to the situation in the 1980s and 1990s when all the mines were

Chingola

Luanshya

Konkola

Luanshya

Lubambe

Chililabombwe

Solwezi

Kansanshi

mines

Kalulushi

Chibilumba

2012

2009

2004

2001/2005

2014

1997

ZCCM-IH (20%)

(40%) / Vale SA (40%) /

African Rainbow Minerals

CNMC (85%) / ZCCM-IH (15%)

(20.6%)

Vendanta (79.4%) / ZCCM-IH

(80%) / ZCCM-IH (20%)

First Quantum Minerals (FQM)

Jichuan

CNMC (85%) / ZCCM-IH (15%)

ENRC (90%) / ZCCM-IH (10%)

Kazakhstan

China

South Africa

China

India

Canada

China

China

mines

Chambishi

2010

Company (CNMC)4

construction

Ownership1

Chambishi

Chambishi

Chambishi

China Non-Ferrous Metals

Under

Owner

/ UAE

Luanshya

Baluba mines2, 3

Takeover/ operation

metals

Location

Mine

Table 5.1 – Ownership of major mines in Zambia, September 2015

10,567 tonnes (2013)

41,000 tonnes/year

(2011/12)

200,000 tonnes

270,724 tonnes (2013)

19,000 tonnes /year

100,000 tonnes/year

refining)

NA (incl. toiling and

17,800 tonnes (2014)

Copper production / capacity

mining

(Continued)

Underground

Open pit

mining

Underground

Open pit

Underground mining

Underground mining

NA

Open pit

Type

Kitwe, Mufulira

Mopani

Province

Central Province

Chingola

Solwezi

Solwezi

project

Nampundwe

Nchanga

Sentinel

Trident FQM

FQM

Vendanta

Vendanta

(39%) / ZCCM-IH (10%)

Jinchuan (51% ) / Albidon

CNMC

ZCCM-IH (10%)

Glencore (73%) / FQM (17%) /

Barrick

Owner

Canada

Canada

India

India

Australia

China /

China

Canada

Switzerland /

Canada

Ownership1

ND

280,000 tonnes/year

ND

NA (Pyrite)

NA (Nickel)

29,500 tonnes (2014)

113,000 tonnes (2012)

208.000 tonnes (2014)

Copper production / capacity

ND

Open pit

mining and open pit

Underground

NA

NA

Open pit

mining

Underground

Open pit

Type

1

Ownership is by no means a straightforward concept when it comes to large-scale transnational mining corporations. While the parent company may originally come from one country, headquarters may now be located in another country and all the non-Chinese companies in this table are publicly traded corporations. As succinctly put by Lee (2014: 34): ‘national label may conceal more than they reveal when it comes to the interest of capital’. This table lists ownership based on the origin of the parent company. 2 Baluba and Muliashi mines are still partly under construction and are operated by Luanshya mine. 3 Operations currently suspended. 4 CNMC owns several downstream subsidiaries including leaching plants and smelters.

2015

2012/2015

ND

ND

2014

Southern

Munali nickel

Under

construction

Luanshya

2000

2011

Takeover/ operation

Copper mine2

Muliashi

Solwezi

Lumwana

and Nkana

Location

Mine

Table 5.1 – (Continued)

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majority owned by the state-owned Zambia Consolidated Copper Mines (ZCCM), and the post-privatisation era (1997–) when one in seven mines was Chinese-owned, one was Indian-owned, and two were South African-owned (Fraser and Larmer 2010), and the sector was characterised as a ‘white “old boy’s club”’ by a Chinese manager in the Non-Ferrous Africa Mining Corporation (NFCA) (cited in Lee 2014: 37). According to Lee (2014), the main reason for this shift in ownership patterns was the different logics that govern Chinese state-capitalist and ‘Western’ mining companies, respectively. Chinese state-owned mining companies, she says, are governed by a logic of ‘encompassing accumulation’, i.e. seeking both profit and political influence to ensure long-term resource supply, whereas ‘Western’ mining companies are governed only by the imperative of profit maximisation. During the NAFC, these different logics led to different corporate strategies that eventually meant that ‘Western’ mining firms scaled back or shut down operations, while Chinese corporations continued their activities undaunted – and later reaped the rewards as the copper price rose. As a result of this governance structure, in 2009 CNMC adopted the ‘“three not’s” or “no’s” (san bu) policy: to not lay off workers, not cut back on planned investment, and not hesitate to make new investments’ (Hairong and Sautman 2013: 18). That notwithstanding, the more recent – and potentially longer-term – downturn in the copper price has meant that there have been layoffs at the company, which cited problems with electricity supply as the reason. As a result of oscillating commodity prices and the different logics that govern different mining companies, described above, Chinese mining companies are now powerful actors in the Zambian commodity-led economy. Furthermore, Chinese demand, to a large extent, determines global copper prices, as it is the world’s largest consumer, and thus affects export earnings, tax revenues, employment possibilities and the value of the local currency in Zambia. Moreover, the governance structures of Chinese mining corporations affect local suppliers’ opportunities to benefit (or not) from their presence. We now turn to the local suppliers to the mines.

5.4.1 The weight of copper in the local economy: the Copperbelt and North-Western Provinces compared Upon arrival in Kitwe, the provincial capital of the Copperbelt region, one cannot fail to notice the weight of copper in the local economy. Roads are worn down by heavy trucks, and trucks loaded

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with copper which head southwards to South Africa. Northwards, slow-moving and extremely wide trucks bring mining capital equipment, such as large-haul mining trucks, dump trucks, tipper trucks and quarry trucks, to the mines in the Copperbelt and North-Western Provinces. Along the road, large billboards testify to the growing importance of transnational Original Equipment Manufacturers (OEMs) such as Atlas Copco, Caterpillar and Sandvik and when entering town one is met by large, modern, well-maintained OEM sales outlets. Similarly, a number of international support services such as banks, accountancy firms, insurance companies, law firms and the like have established offices in town – very visible examples of Globalisation 1. The importance of the Copperbelt region for the political and economic elite is underscored by the frequency of domestic flights to the area. During the boom, a private airline company, Proflight Zambia, increased the number of flights to the Copperbelt to five times a day on weekdays, though somewhat fewer during weekends and public holidays. By 2019 this had reduced to four times a day (Proflight Zambia 2019). Likewise, private lodges, upmarket restaurants, shopping centres and gated communities cater to the growing domestic and international middle class who benefited from the economic upswing driven by the mines. However, the dramatic fall in the copper price led some mines, such as Mopani, to suspend operations with negative consequences for regional economic development. Although Solwezi is a much more recent mining hub than Kitwe, the weight of copper is also noticeable in and around the town. Service providers have established offices there and so have the OEMs. On the outskirts of town, new compounds are being built for workers who commute every day to the Kansanshi mine. This picture of a general development boom in both Kitwe and Solwezi when copper prices were high was diametrically opposed to the conditions of the local suppliers. In Kitwe, suppliers are located in three different areas of town – all characterised by lack of economic activity. Machines lie idle and owners/managers spend most of their time approaching either supply chain managers at the nearby mines or government entities in an attempt to win contracts. They are being doubly marginalised: by the increasingly globalised capital equipment market (cf. Farooki 2012); and by local ‘briefcase traders’, i.e. one-man businesses without offices who supply goods without adding value to them. Whenever a mine needs a specific spare part, the briefcase trader goes to South Africa (or elsewhere), purchases it and

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brings it back by bus or other means to Zambia. Proflight Zambia offers direct flights between Ndola and Johannesburg. Low overhead and transportation costs, along with the often cheaper cost of imports, make these traders competitive. ‘Of the approximately $1.75 billion procured by the Zambian mining industry annually, only $87 million (5%) was spent on locally manufactured goods’ (ICMM 2014 cited in Saunders and Caramento 2018: 1171). Nigeria performs somewhat better on this score. ‘Average annual spend for fabrication [for the oil industry] is estimated at US $1.5 billion. Of this, only about 40 per cent is domiciled in Nigeria’ (NNPC-NCD 2010: 9 quoted in Ovadia 2016: 78). In Solwezi, the situation is slightly different. The mines are open pit and characterised by new capital-intensive technologies, leaving very little room for small-scale local suppliers, who mostly supply low technology equipment and/or spare parts to the mines. Moreover, new mining capital equipment comes with a warranty and maintenance scheme, locking the mines into longer-term relations with OEMs. At first, therefore, opportunities for local suppliers seem greater in the Copperbelt than in the ‘new Copperbelt’. On closer examination, however, the difference is not that great, as OEMs have entered into aftermarket services and thus supply services for both relatively new, as well as older equipment. This reality facing local companies is at odds with the impression one gets from looking at the list of suppliers for the various mines operating in the country, which are in some cases very large. Lumwana and Luansha’s databases, for instance, include roughly 1,000 companies each; Mopani’s includes more than 1,400 companies; and Konkola has some 4–5,000 in its database (Interview, Kitwe and District Chamber of Commerce and Industry, Kitwe, 17 August 2012). The problem is that hardly any of these companies supply to the mines on a regular basis. Instead, the mining companies make use of OEMs that stock essential supplies for them. Some of these OEMs, like Lafarge, Dunlop and Sandvik, have been in Zambia for a very long time and are commonly perceived to be Zambian, despite their foreign ownership. Thus, although some mining companies claim that up to 70% of their procurement ‘is directed towards “local” suppliers, the majority of these firms are branch offices or agents and distributors of OEMs’ (Ahmad and Walker 2005: 11). To make matters worse, most of the companies on the mines’ list of suppliers that are indeed local are briefcase traders – most of which are not even registered with the main bodies in Zambia and which operate, to a large extent, outside of the

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tax laws. Finally, most suppliers in Zambia – local as well as foreign – do not produce but only import. This is borne out by the large volumes of exports of capital mining equipment from South Africa to Zambia (Fessehaie 2014). According to a high-ranking representative of the Chamber of Mines in Zambia: ‘the reality [now] is that even the most basic supplies to the mines such as boots and overalls are imported’ (Interview, Lusaka, 20 August 2012). This picture was echoed by the Zambian World Bank office that has recently finalised a facilitation process discussing local content. What is left – despite more than a decade of booming commodity prices – is approximately fifty local value-adding mine suppliers supplying pumps and valves, vehicle wear or spare parts, storage equipment, health and safety equipment, and civil/construction. Although no reliable figures exist, the Ministry of Mines and Minerals estimates that some forty local companies supply materials and services to the mines. This figure contrasts sharply with the mines’ own supplier databases, but these databases include briefcase traders – who according to Fessehaie (2012a) numbered somewhere between a few hundred and 5,000 prior to the NAFC – and international companies. Our mapping exercise located fifty-four Zambian-owned suppliers to the mines in the three provinces with the highest concentration of suppliers to the mines, namely Lusaka, Copperbelt and North-Western Provinces. These suppliers met the following criteria: they had five or more permanent employees (thereby excluding briefcase traders) and they had been in existence for more than three years (thereby excluding companies set up in connection with a specific contract). This picture, then, is in sharp contrast to the ZCCM days, when industrial policies on the one hand ‘resulted in the development of a local supply cluster of diversified activities, including a thriving manufacturing sector composed of large state-owned entities, smaller private enterprises established by Zambians and by European and Indian migrants, and, to a lesser extent, subsidiaries of TNC Original Equipment Manufacturers’ (Fessehaie 2012b: 445); but on the other hand, these suppliers lacked technical capabilities, were not able to meet price and quality standards, and consequently were not able to compete with international actors when Zambia launched its liberalisation and privatisation programme in the 1990s.

5.4.2 The ICS mines and the local suppliers As outlined above, oscillating commodity prices driven partly by changing ICS demand, affect the suppliers to the mines through

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changes in levels of investment and operations and hence the overall level of economic activity in the mining centres in Zambia. Changing commodity prices also alter the sourcing policies of the mining corporations: in times of boom they are more willing to engage with local companies, whereas times of bust usually mean contraction and cost-saving procedures in the sector, resulting in a squeezing out of local suppliers. However, what matters most for local suppliers is the governance structure of the mining corporations, and in particular the extent to which they make use of their own suppliers (and the depth and breadth of these linkages); whether and to what extent they are governed by short-term shareholder doctrines; whether or not they provide working capital to suppliers; and how they collaborate with local stakeholders to build capacity among suppliers (cf. Haglund 2009; Lee 2014; Fessehaie and Morris 2013). Below, we turn to how specific ICS mines affect local suppliers in Zambia (see also Table 5.2). Presently, there is only one South African-owned mine in Zambia, the Lubambe mine in Chiliabombwe. It is a relatively new and small mine in a town with no history of manufacturing or valueadded services for the mines. Hence, the only direct effect on the local community has been the resettling of some 200 households in the mining area, the employment of local blue-collar workers, and the opening of a shopping mall dominated by South African shops, including a ShopRite (see below). As the mine is located in the Copperbelt region, suppliers located in Ndola and Kitwe should benefit from the additional mining activity. According to Fessehaie and Morris (2013), South African mines tend to be governed by the same shareholder doctrines as ‘Northern’ mining corporations. The Indian-owned company Vedanta owns three mines in Zambia, the most famous of which is the Konkola Copper Mine (KCM), acquired from the government of Zambia in 2004. Although KCM’s value chain is considered to be more price driven than those of other mines and is characterised by lower levels of trust and loyalty vis-à-vis suppliers (Fessehaie 2012a), the company has worked closely with Kitwe District Business Association. In particular, KCM has chosen suppliers from the association’s membership list and, importantly, it facilitated suppliers’ access to finance from commercial banks by signing contracts that stipulate that they will pay the money directly to the bank, upon which the bank can deduct what is owed before the supplier gets their payment (Interview, Kitwe District Business Association, Kitwe, 16 August 2012). Moreover, KCM initiated a pilot project on local linkages after it took over the mine, but this

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Table 5.2 – ICS mines’ impact on local suppliers Country of origin

Direct positive effects

Direct negative effects

Indirect positive effects

Indirect negative effects

South

–

Relatively new

Booming

Cyclical

mine

economy

investments

Africa

Extensive use

Decreasing

of OEMs for

year-on-year

aftermarket

production

services India

Willingness

Difficulties

to take part in

paying suppliers

–

Cyclical investments

local content

Local suppliers

Price-driven

initiatives

only awarded

mine

Access to

insignificant

working capital

contracts Erratic orders

China

Maintains links

No willingness

Counter-cyclical

Increasing

to low-tech

to take part in

investments

use of

Zambian

local content

Upgrading

Chinese

suppliers

initiatives

possibilities

suppliers

Timely

for critical

payments

supplies

Continuous orders

never materialised as a full-fledged programme (Interview, Mines’ Suppliers and Contractors Association, 15 August 2012). The bust in commodity prices altered the situation radically: lack of timely investments has increased the costs of doing business, forcing KCM to retrench workers, reduce costs by cutting off local suppliers and renegotiate contracts with others; and then KCM had difficulties paying its suppliers in Zambia. The price-driven nature of KCM was further evidenced by local suppliers who complained that they are only awarded insignificant contracts and that KCM did not engage in proper skills upgrading activities (Interview, Zambian supplier, Kitwe, 11 August 2014). By 2019, the Lungu government

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had placed KCM into administration and planned to sell it, giving rise to further fears about the rule of law in the country. According to the IMF (2019: 10) the outlook [for Zambia] is clouded by the ongoing drought and heightened debt vulnerabilities. Growth is projected to slow to 2 percent in 2019, reflecting a decline in mining sector activity in an uncertain environment for mining companies and the drought’s impact on hydro power production.

The situation is somewhat different for Chinese state-owned mines. When the first Chinese mine invested in Zambia in the late 1990s it had only scant knowledge of the business environment and not much international experience. Whereas Chinese companies in other sectors of the economy coped with a lack of experience by relying on suppliers from China (Broadman 2007), in the mining sector this led to a situation where Chambishi made widespread use of Zambian briefcase suppliers. However, two decades have passed since CNMC first invested in Zambia and today things look very different. First, Chambishi, like other mines, soon realised that briefcase traders failed to provide essential after-sales services, did not necessarily meet lead times, and hence were not perceived as costeffective, even if they appeared cheap initially. Chambishi (and other Chinese mines) therefore adopted a three-pronged strategy vis-à-vis suppliers: it built close relations with key suppliers and in doing so developed a quality-driven value chain; moreover, changes in the global mining equipment sector have meant that Chinese companies are also now strong in this line of business (cf. Farooki 2012) and Chambishi increasingly made use of suppliers from China, while maintaining a price-driven value chain for suppliers of lesser or low importance (cf. Fessehaie and Morris 2013). The Zambian suppliers are all part of the price-driven value chain, and hence while state-owned Chinese mines are generally valued locally for their counter-cyclical investments (see e.g. Lee 2014; Hairong and Sautman 2013), their relationship with local suppliers does not differ much from that of Indian and ‘Northern’-owned mines: it is an arm’s-length relationship that provides little room for spillovers or subsequent structural transformation. This is supported by Negi’s (2010b: 35) ethnographic account of changes in the ‘new Copperbelt’ in which he describes how, at a local business meeting aimed to encourage local suppliers to link up to the mines, managers from the two big mines in the region,

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Kansanshi and Lumwana, stressed: ‘how their respective mine was “empowering” local people by giving them contracts, even though each acknowledged that there were limitations to this goal because the companies, in the final analysis, sought to source the cheapest possible goods and services’. In other words, price seems to be a determining factor in all major mines operating in Zambia. The three-pronged strategy described above results in diverse responses from the local suppliers and their representatives in Zambia. One supplier, for instance, claimed that ‘Chinese-owned mines prefer Chinese suppliers’ (Interview, Zambian supplier, Kitwe, 28 November 2012). This was echoed by two other suppliers: one who maintained that ‘Chinese suppliers make competition stiff’ (Interview, Zambian supplier, Kitwe, 11 October 2013) and another who claimed that ‘all mines try to bypass local suppliers, but the Chinese are the worst. They simply import everything from China or use Chinese sub-contractors located in Zambia’ (Interview, Zambian supplier, 11 October 2013). This view was shared by a representative of the Mines Suppliers Association who stated that ‘foreign mining companies – and in particular the Chinese – bring in own contractors to do all the work’ (Interview, Mines Suppliers Association, Kitwe, 15 August 2012). Responses varied, however: a fourth supplier made use of his familiarity with a Chinese-owned mine to make contacts in China to source steel. This enabled him to cut costs and maintain continuous shipment to the mines (Interview, Zambian supplier, Kitwe, 15 October 2012); another supplier regarded the Chinese-owned mines as far better in terms of timely payment and continuous orders than ‘Northern’owned mines and in particular the Indian-owned KCM; and finally, one supplier had taken advantage of its working relationship with a Chinese-owned mine to become an assembly plant for Chineseproduced wheelbarrows that were then sold to the mine. Thereby, the breadth of linkages was increased, and a process of technological capability building was initiated.

5.5 ICS and their impacts on a Zambian tourism town As noted earlier, tourism is an important industry for the Zambian economy and, when combined with travel, was the fastest growing economic sector in the Zambian economy in 2018 (African Travel and Tourism Association 2019). The international tourism industry in Zambia is centred on Livingstone, in the Southern Province,

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which is known as Africa’s ‘adventure tourism capital’ (Rogerson 2004). Livingstone has undergone substantial economic restructuring in recent decades as during the 1970s and 1980s, with the growth of a cluster of import-substitution textile and clothing manufacturers as well as the establishment of a vehicle assembly plan, Livingstone became popularly styled as “Manchester” city. [However, in] … the 1990s the local manufacturing economy was in decline; the motor assembly plant closed and of the 43 textile and clothing factories in the 1990s, only two were left in operation in 2002. (Rogerson 2004: 185)

This was a consequence of SAPs, which opened up the economy to cheaper imported manufactures. In addition, improved air travel, growing regional inequality and the growth of the middle class and the political troubles of neighbouring Zimbabwe have all contributed to the growth of tourism in Livingstone. There have been major investments by South African multinational hotel chains, and by 2001 it was estimated that Livingstone hosted approximately a quarter of a million tourists annually. This had broader effects on the national macro-economy. In 2005, nature tourism alone (when both direct and indirect effects are included) contributed nearly 16 percent of Zambian exports, 6.5 percent of GDP, 7 percent of government revenues, 10 percent of formal sector employment and nearly 6 percent of wages. (UKAid and the World Bank 2011: 1)

Over a quarter of a million tourists visited the city in 2018 (Lusaka Times 2019). Tourism is considered by many orthodox analysts to be a growth sector for African economies, given its complementarity to BRICS growth. Since 2012, China has been the largest outbound tourist market in the world (World Tourism Organization 2013), and South Africa is the most important tourist source market regionally, but as in the mining sector described above, we only have scant knowledge of the impacts of the ICS on local economic development in Livingstone. Fieldwork in Livingstone revealed an economy heavily dominated by South African corporations. For example, the local Protea hotel1 is one of the biggest hotels in the town and the landscape is

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littered with other South African companies such as Hungry Lion and Steers (fast-food outlets), Ocean Basket (restaurant), Engen (petrol stations) and MTN (Mobile Telecommunications Networks, selling Chinese manufactured Huawei phones). There are also two large ShopRites and a Spar (both South African supermarket companies) in a town of approximately 150,000 to 200,000 people. A number of interviews were conducted with hotels and other local- and foreignowned businesses in the city in order to assess the developmental impact of current investments. The interviews revealed an import-dependent economy dominated by foreign companies and, to a lesser extent, expatriates. With the exception of a daily flight to and from the national capital Lusaka in a small twenty-seater plane, the only air link is to Johannesburg. This infrastructure represents a form of ‘capillary capital’ which facilitates flows of people and (foreign) goods. For example, while hotels consume manufactured goods such as bed linen and furniture, a manager at the Protea noted that aside from some food and tours nothing else for the hotel, except labour, was sourced locally (Interview, Livingstone, 13 August 2015). The company has also grown rapidly in Zambia: its first hotel was established in 2000, and it now has six hotels and also the Southern Belle houseboat on Lake Kariba. According to a book produced by the company ‘Protea Hotels Zambia’s vision is to be present in all major towns and business centres in Zambia’ (Protea Hotels nd: 93). Following the growing importance of China for Zambia and vice versa, Zambia is now promoted as a tourist destination for Chinese tourism. In order to promote Zambia, the Chinese embassy in Lusaka now collaborates with actors like the ‘China Outbound Travel and Tourism Market’, one of the most important Chinese actors in the outward Chinese tourism market, China Global Television and China Southern Airlines. Chinese investors have also become aware of the potential of tourism in Zambia. In Livingstone, this led to the opening of three Chinese-owned hotels, including the two recently opened ones: Golden Chopstick hotel, and the forty-oneroom Oriental Swan. Although the latter represents an investment worth approx. USD 1.3 million (Zambian Daily Mail 2014) it is on a much smaller scale than Protea, for example. One of the managers of one of these hotels noted in an interview that the food they served was ‘typical Chinese’, which presumably was primarily imported. An interview with a ShopRite manager revealed that, aside from some vegetables and poultry supplies sourced locally, everything else in the store was produced in either China or South Africa

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(Interview, Livingstone, 12 August 2015). This means that the South African and Chinese economies capture value from Zambia through the almost exclusive sale of their products in ShopRite. Additionally, profits flow back to largely South African shareholders in ShopRite from the sale of these products, although the chain also has a secondary listing on the Zambian stock exchange. The manager noted that the store they worked in employed 150 locals on ‘permanent’ contracts. While this perhaps constitutes a positive developmental impact of this investment, local grocers and traders are displaced, as are manufacturers who cannot compete with the lower cost to quality ratios of South African and Chinese goods. When asked about the level of competition in Livingstone, the ShopRite manager said that there was also a Spar (another South African company) in the town, but they didn’t provide much competition. This theme of the monopolisation of markets was echoed by managers of one of the Hungry Lion fast-food outlets in the town, who said they were ‘dominating the market’. However, one of these managers also noted that ‘the economy of Livingstone is not viable’, as it is now based on tourism, which is small scale (Interview, Livingstone, 13 August 2015). As with ShopRite, much of Hungry Lion’s inputs come from South Africa, benefiting that economy rather than Zambia’s. These South African corporations exert intense competitive pressure on local businesses. For example, one of the Spar managers we interviewed had previously run his own retailing business, but could not compete with ShopRite and Spar, so he decided to close up shop and work for them instead. ‘If you can’t beat them, join them’ he said (Interview, Livingstone, 12 August 2015). Another small-scale retailer who was interviewed noted that he was thinking of shutting down, given the near monopolisation of the market by ShopRite in particular. He noted that it was sometimes cheaper for him to buy mealie meal (a local staple food) from ShopRite for resale, rather than from the national milling company because of the bulk discounts which were available to ShopRite. According to this retailer ‘business is dying’ in Livingstone (Interview, 14 August 2015). South African and Chinese companies are thus increasingly dominating the Zambian economy through their commodity sales facilitated by the infrastructure provided by ShopRite, among others. An interview with a manager of the local branch of Stanbic (Standard Bank) also revealed that most loans taken out by small and medium-sized enterprises (SMEs) were for trading purposes (Interview, Livingstone, 14 August 2015). As noted earlier ICBC is

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one of Standard Bank’s major shareholders and the Chinese economy thus benefits doubly from its products being sold in Zambia and from loans given out to buy them. The local small-scale retailer interviewed argued that the local economy was now based largely on trade and that there was a need to ‘emphasise local productivity’. South African and Chinese (trans)national capital, among others, are capturing value through the sale of commodities in the country, through profit repatriation from direct investments and through money circuits e.g. by loans from banks. Additionally, flows of tourists and business travellers also generate profit for South African- and Chinese-owned hotels in the town. Thus, many of the most profitable sectors of the local economy are being dominated by foreign, often South African, and to a lesser extent Chinese, capital, which also exercises dominance in local markets through commodity imports.

5.6 Conclusions In their pronouncements the (BR)ICS powers often talk of the need for ‘win–win’ globalisation. But this does not represent a fundamental break with Western-led globalisation; rather, the two share important features. Current ICS-led or inflected geogovernance in Southern Africa arguably replicates some of the features of earlier rounds of globalisation through the competitive displacement of local businesses and the extraction of value from local economies. Hence, what we have seen in the mining and tourism sectors in Zambia is an economy that is increasingly dominated by external actors – and above all ICS actors – not less so. This is a result of increased demand for primary commodities that led to a commodity boom, renewed interest in the mining sector, rising incomes for some in urban areas of Zambia and, consequently, consumptionrelated investments by South African firms in particular. These types of Globalisation 1 also prompt traders to cross borders regionally to source and sell goods, as e-commerce in Africa is at a nascent stage, accounting for around 1% of total retail sales. This may, however, change in the future. As demonstrated in this chapter, this newfound interest in the Zambian economy has not led to a structurally transformed economy. Rather, the Zambian economy is now less diversified due to a

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huge influx of commodity-related investments that have no, or only few, linkages to locally owned companies. This has led to a situation where hardly any spillovers have occurred. This makes it hard to build local technological capabilities, and hence works against structural transformation rather than promoting it. This despite the fact that Chinese state-owned mining companies, for instance, are driven more by potentially ‘developmentalist’ governance structures than other players in mining, while South African firms largely pay lip service to LCPs in the service sectors. As shown in this chapter, neither governance structures nor recognition of affirmative action policies change the fact that the way these actors engage with locally owned firms largely mirrors the price-driven motives and interactions of actors from the Global North. This chapter has also demonstrated that we have to go beyond the widely held ‘China in Africa’ notion if we are to understand how the current era of globalisation affects the Global South. ICS actors are increasingly important in the economies in many countries in the rest of the Global South. Although state-owned companies from China have a governance structure that differs from that of many other ICS companies, their engagement with locally owned firms does not seem to differ substantially or fundamentally. It has been shown that despite minor differences across sectors and ownership structures, the effects of ICS investment mirror those of ‘Northern’ investors. Consequently, Lin’s (2012) analogy of China being a dragon that will structurally transform African economies is most likely wrong – at least in the Zambian case where ICS investments target the mining and the service sectors, and where these investments to a large extent follow a similar path to investments from the Global North, i.e. with limited linkages and spillovers to local companies. Whether China, India and South Africa could indeed take the role of leading geese if their investments were to target low-wage manufacturing, as Lin originally assumed, is an empirical question. We now move to an examination of the nature of impacts of LCPs in practice to see whether or not they offer a possible vector of structural transformation in the current context where Chinese trade and investment loom large.

Note 1 Since 2014 this has been part of the American-owned Marriot

group but retains its operational headquarters in Cape Town.

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of South–South Relations, London: Zed Books. Central Statistical Office of Zambia. (2014) http://www. zamstats.gov.zm/. Chandra, V., J. Y. Lin and Y. Wang (2013) ‘Leading dragon phenomenon: new opportunities for catch-up in low-income countries’, Asian Development Review, 30(1): 52–84. Economist. (2015) ‘Industrialisation in Africa: more a marathon than a sprint’, The Economist, 35–36. Farooki, M. (2012) ‘The diversification of the global mining equipment industry: going new places?’, Resources Policy, 37: 417–424. Farooki, M. and R. Kaplinsky (2012) The Impact of China on Global Commodity Prices: The Global Reshaping of the Resource Sector, New York: Routledge. Fessehaie, J. (2012a) ‘The dynamics of Zambia’s copper value chain’, School of Economics, University of Cape Town, Cape Town. Fessehaie, J. (2012b) ‘What determines the breadth and depth of Zambia’s backward linkages to copper mining? The role of public policy and value chain dynamics’, Resources Policy, 37: 443–451. Fessehaie, J. (2014) ‘Regional industrialisation research project: case study on the mining capital equipment value chain in South Africa and Zambia’, CCRED, Johannesburg. Fessehaie, J. and M. Morris (2013) ‘Value chain dynamics of Chinese copper mining in Zambia: enclave or linkage development?’, The European Journal of Development Research, 25(4): 537–556. Fine, B. and Z. Rustomjee (1996) The Political Economy of South

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Africa: From Minerals–Energy Complex to Industrialisation, London: Westview Press. Fraser, A. and M. Larmer (2010) Zambia, Mining, and Neoliberalism: Boom and Bust on the Globalized Copperbelt, New York: Palgrave Macmillan. Government of Zambia. (2011) Sixth National Development Plan 2011–2015, Lusaka: Government of Zambia. Government of Zambia. (2017) Seventh National Development Plan 2017–2021, Lusaka: Government of Zambia. Gu, J. (2009) ‘China’s private enterprises in Africa and the implications for African development’, European Journal of Development Research, 21(4): 570–587. Haglund, D. (2009) ‘In it for the long term? Governance and learning among Chinese investors in Zambia’s copper sector’, The China Quarterly, 199: 627–646. Hairong, Y. and B. Sautman (2013) ‘“The beginning of a world empire”? Contesting the discourse of Chinese copper mining in Zambia’, Modern China, 39(2): 131–164. Hansen, K. T. (2000) Salaula: The World of Secondhand Clothing and Zambia, Chicago, IL: University of Chicago Press. Hansen, M. W., T. Pedersen and B. Petersen (2009) ‘MNC strategies and linkage effects in developing countries’, Journal of World Business, 44: 121–130. IMF. (2019) ‘Staff Report for the 2019 Article IV Consultation’, https://www. kcmtoday.com/downloads/ send/22-2019/72-imf-executiveboard-concludes-2019-article-ivconsultation-with-zambia. International Council on Mining & Metals. (2013) ‘ICMM assesses mining’s contribution to Zambia’s national and local

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economy’, https://www.icmm. com/document/6290. International Council on Mining & Metals. (2014) Enhancing Mining’s Contribution to the Zambian Economy and Society, London: ICCM. Jenkins, R. (2019) How China Is Reshaping the Global Economy, Oxford and New York: Oxford University Press. Kaplinsky, R. and D. Messner (2008) ‘Introduction: the impact of Asian drivers on the developing world’, World Development, 36(2): 197–209. Knoema Corporation. (nd) ‘Zambia – number of arrivals’, https://knoema.com/atlas/ Zambia/Number-of-arrivals. Kojima, K. (2000) ‘The “flying geese” model of Asian economic development: origin, theoretical extensions, and regional policy implications’, Journal of Asian Economics, 11(4): 375–401. Korhonen, P. (1994) ‘The theory of the flying geese pattern of development and its interpretations’, Journal of Peace Research, 31(1): 93–108. Kragelund, P. (2011) ‘Back to BASICs? The rejuvenation of non-traditional donors’ development cooperation with Africa’, Development and Change, 42(2): 585–607. Lee, C. K. (2014) ‘The spectre of global China’, New Left Review, 89: 29–65. Lee, C. K. (2017) The Specter of Global China: Politics, Labor, and Foreign Investment in Africa, Chicago, IL and London: University of Chicago Press. Lin, J. Y. (2012) ‘From flying geese to leading dragons: new opportunities and strategies for structural transformation in developing countries’, The World Bank, Washington D.C. Lusaka Times. (2019) ‘Livingstone records increase

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in tourist arrivals for 2018’, Lusaka Times, https://www. lusakatimes.com/2019/01/02/ livingstone-records-increasein-tourist-arrivals-for-2018/, retrieved 13 August 2019. Market Insider. (2019) ‘Copper price’, Business Insider, https:// markets.businessinsider.com/ commodities/copper-price, retrieved 13 August 2019. Morrissey, O. (2012) ‘FDI in subSaharan Africa: few linkages, fewer spillovers’, European Journal of Development Research, 24: 26–31. MOTA. (2014, 2013) ‘Tourism statistical digest’, Ministry of Tourism and Arts, Lusaka. Negi, R. (2010a) ‘The mining boom, capital, and chiefs in the “New Copperbelt”’, in A. Fraser and M. Larmer (eds), Zambia, Mining, and Neoliberalism: Boom and Bust on the Globalized Copperbelt, New York: Palgrave Macmillan. Negi, R. (2010b) ‘The micropolitics of mining and development in Zambia: insights from the Northwestern Province’, African Studies Quarterly, 12(2): 27–44. Noman, A. (2013) ‘Infant capitalists, infant industries and infant economies: trade and industrial policies at early stages of industrialization in Africa and elsewhere’, in J. Stiglitz, J. Y. Lin and E. Patel (eds), The Industrial Policy Revolution II: Africa in the Twenty First Century, Basingstoke and New York: Palgrave Macmillan. Noman, A. and J. Stiglitz (eds), (2015) Industrial Policy and Economic Transformation in Africa, New York and Chichester: Columbia University Press. Obi, C. and S. A. Rustad (2011) Oil and Insurgency in the Niger Delta: Managing the Complex Politics of Petro-Violence, London: Zed Books.

Ovadia, J. S. (2016) The PetroDevelopmental State in Africa: Making Oil Work in Angola, Nigeria and the Gulf of Guinea, London: Hurst. Policy Monitoring and Research Centre. (2017) ‘State of Zambia’s tourism’, https://www.pmrc zambia.com/wp-content/uploads/ 2017/11/Infographic-Stateof-Zambias-TourismDiversification-and-Broad-BasedWealth-Creation.pdf. Proflight Zambia. (2019) ‘Domestic flights timetable 2019’, https:// proflight-zambia.com/img/ cms/timetable/P0%20Full%20 Timetable_2.pdf. Protea Hotels. (nd) ‘Protea hotels Zambia, best of Zambia’, World Trade Centre Africa Initiative and GV Pediac.com. Rasmussen, P., K. Mukoni and G. Lwanda. (2014) Zambia: 2014, http://www. africaneconomicoutlook.org/ fileadmin/uploads/aeo/2014/PDF/ CN_Long_EN/Zambia.pdf. Rogerson, C. M. (2004) ‘Adventure tourism in Africa: the case of Livingstone, Zambia’, Geography, 89: 183–188. Saunders, R. and A. Caramento (2018) ‘An extractive developmental state in Southern Africa? The cases of Zambia and Zimbabwe’, Third World Quarterly, 39(6): 1166–1190. Schmitz, H. (2006) ‘Asian drivers: typologies and questions’, IDS Bulletin, 37(1): 54–61. Soares de Oliveira, R. (2015) Magnificent and Beggar Land: Angola since the Civil War, London: Hurst. Taylor, I. (2014a) Africa Rising?: BRICS – Diversifying Dependency, Oxford: James Currey. Taylor, I. (2014b) ‘Emerging powers, state capitalism and the oil sector in Africa’, Review of African Political Economy, 41(141): 341–357.

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UKAid and the World Bank. (2011) ‘What would it take for Zambia’s tourism industry to achieve its potential’, http:// siteresources.worldbank.org/ INTZAMBIA/Resources/ zambia-tourism-summary-notes(online-copy).pdf. United Nations Conference on Trade and Development. (2011) ‘South–South integration is key to rebalancing the global economy’, UNCTAD, Geneva. Whitfield, L., O. Therkildsen, L. Buur and A. M. Kjær (2015) The Politics of African Industrial Policy: A Comparative Perspective, Cambridge: Cambridge University Press.

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Woodley, D. (2015) Globalization and Capitalist Geopolitics: Sovereignty and State Power in a Multipolar World, Oxford and New York: Routledge. World Tourism Organization. (2013) ‘China: the new number one tourism source market in the world’, World Tourism Organization, http://media.unwto.org/en/ press-release/2013-04-04/ china-new-number-one-tourismsource-market-world. Zambian Daily Mail. (2014) ‘Livingstone gets new hotel’, Zambian Daily Mail, http://www. daily-mail.co.zm/livingstone-getsnew-hotel/.

6 Resource-based development via Local Content Policies? Institutional impediments to resource-led development in Zambia The booming demand for Africa’s primary commodities from the BRICS countries has led to a series of interrelated transformations. Directly, booming commodity prices pushed GDP growth rates of resource-rich economies upwards and made cheap loans available to governments of these countries. Indirectly, the commodity boom also resulted in a greater share of BRICS’ ownership of the mines (see Table 5.1 for Zambia, for instance), technological developments that made extraction of poor-quality minerals economically profitable, and a radical change of the governance structure and ownership patterns of first- and second-tier suppliers to the mines in Southern Africa (Farooki 2012). The combination of change in ownership, developments of new mining towns (Negi 2014) and the entrance of new mining value chains has pushed local suppliers to the side and thereby reduced the potential of broad-based economic development and structural transformations via forward and backward linkages. The commodity super-cycle and the general dissatisfaction with the lack of local benefits of resource extraction have been forceful arguments in favour of economic nationalism. Economic nationalism in the broadest sense of the term refers to a line of reasoning that goes like this: the people of a country, rather than foreign entities (private or public), should benefit from the country’s resource stock and policies should be put in place in order to ensure that this happens. The re-emergence of economic nationalism, or what Ponte (2004) calls ‘politics of ownership’, in the Global South (cf. Andreasson 2015; Childs 2016; Jacob and Pedersen 2018) has led to a series of state-led efforts to secure greater benefits of resource extraction. They include so-called indigenisation policies to make certain that domestic firms get a bigger slice of the economic pie by means of capacity building, targeted loan schemes, and sector codes to ensure that all public entities as well as foreign businesses source from local companies (Kragelund 2012), and the more recent LCPs

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that in short seek to make sure that companies operating in a particular country source services and products locally. LCPs by no means only concern Chinese extractive investments but the scope and magnitude of these investments in Africa as well as the particular governance structure of Chinese extractive TNCs (cf. Lee 2014) have triggered the spread of these policies to all resource-rich African economies. No doubt, the counter-cyclical investments by Chinese investors during and just after the NAFC reduced detrimental impacts of the crisis for the resource-rich economies and more broadly and hence, more specifically, also for local suppliers whose livelihoods are the mines (Morris et al. 2011). Moreover, accounts from the oil sector in Niger seem to suggest that lower industry standards in the Chinese oil industry compared to counterparts originating in the Global North lower entry barriers for domestic suppliers and thereby, potentially, further linkage formation and knowledge spillovers (Schritt 2018). On the other hand, several studies point to the characteristics of Chinese extractive corporations and the negative effects of these for linkage formations (see also Chapter 5). According to Schritt (2018), for instance, Chinese oil companies in Niger are accused of not offering training to local workers and thereby impeding the transfer of knowledge and they seem to bring in their own first- and second-tier suppliers thereby pushing out local suppliers (Farooki 2012). This chapter seeks to build on the growing literature on the resource–development nexus in Africa by critically reviewing the use of LCPs as a means to achieve broad-based development and structural transformation. Based on insights from Zambia, this chapter argues that even if LCPs are well-designed, well-implemented and accepted by the main stakeholders, they fail to make a positive difference if they are offset by other policies at the macro, meso and micro levels. What is important, therefore, is the political economy of the policy climate more broadly – not the LCPs alone.

6.1 Introduction Whether or not resource abundance leads to sustained economic growth and structural transformation has been the subject of intense debate for half a century. History has shown us that it is indeed possible, but econometric studies have also revealed that the likelihood of success for less-developed countries taking this development

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route is slim. Of late, the pendulum in this debate has swung back again: based on insights from the linkage literature, researchers, politicians and think tanks alike now advocate ‘local content’ policies as a strategy that can enable resource abundance to engender sustained economic growth and structural transformation. The majority of this literature, however, overlooks the importance of ‘contextual factors’ in accounting for the resource–development nexus. This chapter uses primary data from private sector organisations, government entities and suppliers to the mines in Zambia’s Copperbelt and ‘new Copperbelt’ (North-Western) Provinces to shed new light on which ‘contextual factors’ are of importance in explaining the resource–development nexus; and on how policies at the macro, meso and micro level may impede or support structural transformation. It exposes how governance of the mining sector, and in particular the passing and revoking of numerous laws governing the sector, has led to a continuous marginalisation and exclusion of locally owned suppliers to the mines, despite the fact that these very suppliers are at the top of the political agenda when it comes to endorsing local content. It thereby adds to the existing literature on local content by prising open the black box of ‘contextual factors’ to further our understanding of how institutional developments affect mines–supplier linkages. It argues that in Zambia the current work on implementing local content policies in the mining sector most likely will not have the intended beneficial effects due to other policies, which pull in the opposite direction. The post-millennium commodity boom led by the BRICS and the associated investments in resource extraction in the Global South has revived the study of the resource–development nexus. Most notably, multilateral organisations such as the World Bank, UN agencies and Regional Development Banks have bought into the ‘making the most of commodities’ argument (cf. Morris et al. 2012) and are now advocating LCP as a magic bullet for broadbased development and structural transformation in resource-rich African economies. Although LCPs can lead to sectoral transformations that may, or may not, lead to ‘positive developmental outcomes’ (Ovadia 2014; 2016b), local content is often ‘limited, shallow, and inefficient’ (Hansen et al. 2015). The argument is structured as follows. Section 6.2 presents a brief summary of the resources and development debate and explains why resource-led development has once again risen to the top of the political agenda. In doing so, it introduces the linkage theory debate and argues that we have to account for ‘contextual factors’ to

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understand whether or not LCPs may lead to resource-led development. Section 6.3 provides a short introduction to the role played by copper in the Zambian economy, followed by Section 6.4, which describes the minimal role played by Zambian-owned sub-suppliers to the mining sector. Section 6.5 deploys the analytical framework presented in Section 6.2 to explain why the politically articulated focus on copper as an engine of growth has not led to the development of linkages to Zambian-owned suppliers. It tells the story of how successive policies, year in year out, have had (unintended) negative effects on the ability of local suppliers to link up to largescale transnational mining corporations. Section 6.6 concludes that the resource boom has led to a development bust due largely to inappropriate policies that have prevented spillovers from TNCs to local suppliers.

6.2 Resources and development: ‘contextual factors’ as an explanatory factor Natural resources have long been high on the development agenda in Africa – and for good reasons. First, natural resources were the backbone of many ‘now-developed’ economies’ early take-off such as Australia, Canada and Sweden. Second, the development of natural resource-based development was supported by the economic thinking of that time. For example, David Ricardo had argued that with constrained supplies, commodity prices would inevitably rise over time. Finally, most African economies did not have substantial manufacturing sectors at independence. Therefore, many economic advisors as well as African heads of state reasoned that they had better stick with what they had, namely natural resources, although many countries also implemented policies of import-substitution industrialisation (ISI) (Riddell 1990). Things did not turn out to be quite as rosy in most resourcerich African economies as economists and political scientists had hoped in the late 1950s and 1960s. In fact, a combination of elite appropriation of resource rents, inadequate tax systems and volatile commodity prices meant that African economies failed to tap the full potential of their resources. The result was that after three decades of resource-led economic development, some statistical evidence suggested that resource-abundant economies had performed less well than their resource-poor counterparts in terms of overall economic growth, savings rates and employment levels, and export

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diversification; as well as in terms of democratic and institutional development. This situation is typically referred to as the resource curse or the paradox of plenty (Di John 2011; Mikesell 1997; Rosser 2006; Karl 1999). The resource curse is often explained by way of declining terms of trade, unstable commodity prices and Dutch disease.1 All three of these economic explanations have been criticised based on the key assumptions underpinning the models and on the methodologies adopted and, more importantly, for failing to explain why strategic growth-enhancing policies that could counter each of these three processes were not adopted by the political elite. A number of hypotheses have been presented to explain this political paradox. They include historically specific institutional arrangements (path dependency), emotional behaviour on the part of the elite where periods of boom bring about a tendency towards optimism which results in excessive government spending; and rational actor hypotheses that focus on the fact that resources provide the elite with an opportunity to engage in rent seeking (Beblawi 1990; Di John 2011; Mikesell 1997; Saad-Filho and Weeks 2013; Karl 1999). Based on the argument that the resource curse is not inevitable, natural resources have once again risen to the top of the development agenda in Africa (United Nations Economic Commission for Africa 2013). Public–private initiatives have been set in motion to manage resource rents better, voluntary norms and standards have been imposed to increase transparency and accountability (and thus minimise developmentally harmful rent-seeking behaviour), TNCs are changing their outsourcing patterns, new actors – especially from China and India – have altered the bargaining position between ‘traditional’ TNCs and the state, and new mining laws have been drafted and implemented (Besada and Martin 2015; Carbonnier et al. 2011). This has led to a renewed focus on the (potentially) positive developmental effects of resource extraction. A key focus in all these debates is the break with concerns about enclaves and a move towards focusing on the developmental benefits of linkages from extractive industries. In the past, three types of linkages were identified, namely production linkages (forward and backward), fiscal linkages and demand linkages. Production linkages, in particular, were singled out as being of the utmost importance for development in terms of accumulation, learning and technology transfer (short-term benefits), and economic transformation, added value and taxation (long-term benefits) (Hansen 2013; Morrissey 2012; United Nations Conference on Trade and

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Development 2007). The more recent literature broadens the concept of linkages to include inter alia side stream/horizontal linkages that refer to how some capabilities are transferable, i.e. that capabilities developed in one sector – as a result of being linked up to a TNC – may contribute to a company’s ability to be profitable in another sector. Likewise, it introduces the concept of depth and breadth of linkages to denote the degree of value added in the linkages, the multiplicity of actors involved, and the share of sales going to local customers, respectively (Bastida 2014; Dietsche 2014; Farooki and Kaplinsky 2014; Hansen, 2013; Morris et al. 2012). Despite the potential benefits of linkage formation: ‘a common feature of the extractive industries, especially when TNCs are involved, is the relatively limited incidence of linkages with domestic suppliers’ (United Nations Conference on Trade and Development 2007: 140). This is supported by Morrissey (2012) who argues that in the extractive industries only few linkages are formed and those linkages form even fewer spillovers, i.e. transfers of knowledge as a result of a linkage. As a result of the renewed focus on ‘resources-for-development’, the linkage debate has been revived and, alongside this, LCPs have been celebrated by academics, think tanks and politicians alike. In the words of Ovadia (2016b), LCPs are perceived as opening up a route to economic development through resources. This is echoed by Dietsche (2014: 93), who states: ‘the story goes that if linkages were built, more people would at least indirectly benefit from capitalintensive mineral resources exploitation because access to economic opportunities would be broadened’. In reality, however, the focus of policies has been rather one-sidedly on backward linkages. This has come about via the formulation of LCPs in which responsibility is placed on mining companies to provide economic opportunities for local suppliers, directly or indirectly. According to Hansen et al. (2015: 2), local content is ‘the extent to which MNCs [multinational corporations] purchase inputs and services locally’. This definition hints at two important issues related to LCPs. First, the term ‘local’ has a spatial, an economic and a legal dimension. The spatial dimension refers to where local suppliers are located. It may refer both to the proximity of the supplier to the mining company (this is normally the meaning of ‘local’ in mining companies’ corporate social responsibility (CSR) policies), or to the nation (its usual meaning in official documents). The economic dimension includes everything from employment, purchase of locally produced products/services, and value addition in locally

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purchased products/services. The legal dimension refers to ownership. Whereas ownership by local suppliers was previously perceived as important in order to ‘make commodities work for development’, nowadays value addition is perceived as more important. In fact, there is now a tendency in the literature to totally disregard ownership (Bloch and Owusu 2012; Kazzazi and Nouri 2012) and instead focus on spatial location. Second, it is important to distinguish between legally binding2 and non-binding regulations as well as positive (incentive schemes and subsidies) and negative (threshold) policies. Ovadia (2016a) documents how LCPs in Africa have changed from being ‘hard’ policies characterised by concrete targets and regulation, to ‘soft’ policies that are voluntary in nature and pay more attention to training and skills development. The fluffiness of these two aspects means that the various actors involved in LCPs may easily ‘side-track’ the original meaning and intention of the policy, and instead pursue counter-productive policies. Moreover, it is important to keep in mind that as LCPs predominantly focus on backward linkages other linkages of equal importance for structural transformation are often overlooked (cf. Whitfield et al. 2015). Likewise, the political economy nature of LCPs is often not fully considered (Hansen et al. 2015) and, as this chapter points out, the narrow focus on LCPs neglects the crucial role of other, complementary policies and contradictions between these and sector-specific LCPs. A political economy perspective helps us understand why LCPs are adopted and enforced in some sectors of the economy and not in others – and why they seem to work better in some countries compared to others (Ovadia 2016b). By focusing on the rents that can potentially be extracted from the sector, we get a better understanding of why certain policies are enforced while others are not (Hansen et al. 2015). It also points our attention towards the fact that LCPs often facilitate the continuance in power of the local political elite, through allowing them to capture rents from resource extraction and to use these to finance political settlements, thereby reducing the risk that competing powerful groups might emerge. This perspective is therefore helpful in explaining why the work of some political institutions ends up overruling the work set in motion by other political institutions. A political economy perspective thus informs us that LCPs will only succeed – i.e. lead to deep links between the mines and domestic suppliers – if the ruling elite benefits directly (via rents) or indirectly (via legitimacy and networks) from the policies. To benefit

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directly, ruling elites must have direct ownership of parts of the supply chain, as in Angola (cf. Soares de Oliveira 2015). Ruling elites can also benefit indirectly from job creation in regions where they were elected, from the possibility of influencing contracts and tenders to pay back supporters, or from shaping credit facility schemes to benefit their supporters. Equally important, but disregarded in most analyses of LCPs, is domestic policy coherence and coordination, i.e. the degree to which the LCPs are consistent with related policies, and the extent to which they result from well-coordinated action within the sector, as well as the question of enforceability, i.e. are the policies clear and enforceable? Do they encompass sanctions? Morris et al. (2012) noticed that one of the reasons why the LCP in Ghana did not work properly was the lack of coordination between the laws regulating the mines and the LCP. In particular, the institution that was to enforce the LCP was banned from working with the multinationals in resource extraction. Likewise, particular laws affecting the import of semi-manufactured goods applied only to some of the players in the value chain – not all of them – thereby counteracting the official intention of the LCP. Overall, these authors found several inconsistencies in the Ghanaian policy framework that worked against the LCP. These inconsistencies were mirrored in Tanzania and Zambia and may be related to a lack of strategic thinking about how to reconcile the promotion of commodity extraction with the structural transformation of the economy (cf. Lombe 2018). Related hereto, Morris et al. (2012: 205) noted a lack of ‘will and … capacity to implement their strategic vision and policies to promote linkage development’ in countries that had problems ‘making the most’ of commodities. Inspiration from the renewed debate on linkages and industrial policies may inform our understanding of how other policies influence the outcome of LCPs. In short, Morris et al. (2012) hypothesise that ownership (both of mining firms and their suppliers), infrastructure (scope and quality), capabilities and institutions, and the policy environment all affect the depth and breadth of linkage formation in the mining sector. The hypothesis regarding the policy environment has been further developed by Farooki and Kaplinsky (2014), who point towards contextual factors as an explanatory factor for whether or not linkages develop and bring about spillovers that may facilitate upgrading and structural transformation. Contextual factors are divided into macro-level, meso-level and micro-level policies, as well as coordination and collaborative action. In this framework macro-level

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policies include the enforcement of property rights, macro-economic stability, the exchange rate regime, overall skills development and physical infrastructure; meso-level policies include specific support to the sector, including capacity building, skills development and innovation; and micro-level policies address firm-level challenges and include firm-level upgrading, and direct support to leading firms to develop their supply chain strategies. Coordination and collaborative action simply refer to the organisation needed by public and private entities to implement the policies. In this framework, contextual factors determine whether or not LCPs will succeed in bringing about backward linkages and thus facilitate capability building, upgrading and eventually structural transformation.

6.3 The importance of copper in the Zambian economy Zambia is currently the second most important copper producer in Africa. Copper production makes up between 70% and 78% of Zambia’s foreign exchange earnings, and copper exports account for roughly 75% of the total value of Zambian exports (Bova 2012; Mobbs 2012; Pariona 2017; Trimmer III 2017). As noted earlier, copper prices rose rapidly, reaching almost USD 9,000 / metric tonne just before the outbreak of the NAFC in 2008, following which prices lost two-thirds of their value in six months. Since then, copper prices picked up once again, surpassing their pre-financial crisis level in 2014, whereupon they again dropped drastically to USD 4,500 / metric tonne at the beginning of 2016, before most recently increasing to USD 6,000 /metric tonne in 2019 (IndexMundi 2019). Industrial copper mining is by no means a new thing in Zambia. It began in the Western half of Northern Rhodesia (Zambia) in the late 1920s, but large-scale production did not really take off until the post-Second World War boom of the 1940s. At independence in 1964, the Zambian mining sector was controlled by foreign companies, which owned all the big mines in the country. A combination of domestic struggles over the ‘right’ ethnic and spatial distribution of the country’s mineral wealth, and dissatisfaction with the level of investment in the mines from the two owners led Zambia’s first President Kenneth Kaunda to ‘Zambianise’ the mines. The result was that the Zambian state secured 51% ownership over the mines while the original owners kept management and marketing contracts until 1974, whereupon the companies were merged into ZCCM (Larmer 2010).

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By the end of the 1990s, copper prices were historically low, many of the original deposits were depleted, some mines were closed down, capital equipment was run down, and hardly any resources had been devoted to exploration in search of new ores (Adam and Simpasa 2010; Fraser 2010). This was the situation when Zambia embarked upon its privatisation programme. The Privatisation Act was passed in 1992, but the privatisation of ZCCM did not begin until 1996, with interested companies handing in bids in early 1997. The main document guiding the process was the Mines and Minerals Act from 1995, which allowed the government to enter into so-called ‘Development Agreements’ (DA) with the new buyers. These DAs were designed by two international consultancy companies and turned out to be extremely lucrative for the new mine owners (Fraser and Lungu 2007). The result of the privatisation process was that ZCCM was split up into seven mining companies with majority ownership from India, South Africa, China, Canada and the United States. The Zambian state retained minority ownership in most mines through ZCCM Investment Holdings (ZCCM-IH). Since then, some mines have changed ownership and several new mines have opened. The seven mining companies have now become eight, which operate fourteen different copper mines in Zambia (see also Chapter 5).3 Critically for this study, the privatisation also entailed major changes for the suppliers. While ZCCM had one central database of suppliers containing some 400 companies, most of which had long-term collaborations, all the new mine owners created their own supplier databases. These databases soon ended up being massive. First, the large-scale retrenchment – as part of the privatisation process – meant that many former miners created their own one-man businesses, all of which were eager to enter the databases. Second, the DAs allowed mining companies to import equipment and supplies from abroad.4 In other words, they brought their home supplier base with them to Zambia. The result was that ‘privatisation saw the demise of [local] manufacturing activities and the emergence of a vast array of [local] service providers’ (Fessehaie 2012a: 168). The NAFC of 2008–2009 also had a great impact on the copper sector in Zambia and hence on sub-suppliers to the sector. First, the crisis forced mining houses to reorganise supply chains to cut costs, which meant that many one-man businesses were forced out. Second, many suppliers sought to diversify their markets by targeting agriculture, industrial sector construction and transport (Fessehaie

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2012a). In addition to this, the global mining equipment business was reorganised, resulting in the mergers of companies from the Global North and the emergence of new, large-scale mining equipment firms in emerging economies (Farooki 2012). In sum, less space was available for local suppliers to the mines to operate.

6.4 Suppliers to the mines in Zambia These domestic and international changes in the copper sector have had significant implications for the local suppliers. In the days of ZCCM, government policies resulted in the development of a local supply cluster of diversified activities, including a thriving manufacturing sector composed of large state-owned entities, smaller private enterprises established by Zambian and by European and Indian migrants, and, to a less extent, subsidiaries of TNC Original Equipment Manufacturers. (Fessehaie 2012b: 445)

The situation was not sustainable. It was largely driven by government subsidies, and local suppliers, who lacked technical capabilities, were not able to meet price and quality standards and consequently were unable to compete with international actors when Zambia began its liberalisation and privatisation programme in the 1990s. Hence, when new mine owners took over at the turn of the century, local suppliers were not able to meet international standards and, due to large-scale retrenchments in the mining sector, a group of so-called ‘briefcase traders’, i.e. one-man businesses supplying goods without adding value to them, mushroomed. Many of these traders had previously worked in ZCCM’s supply chain and thus had contacts with South African or European OEMs. The mines’ databases of suppliers include briefcase traders and hence do not provide an accurate picture of the state of local suppliers in Zambia. As noted earlier, Luansha’s database, for instance, includes roughly 1,000 companies; Mopani’s includes more than 1,400 companies; and Konkola’s database numbers some 4–5,000 (Interview, Kitwe and District Chamber of Commerce and Industry, Kitwe, 17 August 2012). The lion’s share of these companies are briefcase traders. According to Fessehaie (2012b), the number of briefcase traders in Zambia amounted to somewhere between a few hundred and 5,000 prior to the NAFC. The regular

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suppliers, however, are OEMs, many of which are located in Zambia (Kragelund and Carmody 2016). Thus, although some mining companies claim that up to 70% of their procurement ‘is directed towards “local” suppliers, the majority of these firms are branch offices or agents and distributors of OEMs’ (Ahmad and Walker 2005: 11). This picture is echoed by a World Bank employee in Lusaka: ‘96% of all inputs for the mining industry in Zambia are sourced from outside the country. Only 4% are sourced from Zambia – and most of this is services’ (Interview, World Bank Office, Lusaka, 12 August 2015). What is left – despite more than a decade of booming commodity prices – is between fifty and sixty Zambian-owned value-adding mine suppliers supplying pumps and valves, vehicle wear or spare parts, storage equipment and health and safety equipment. Most of these are located in Lusaka, Copperbelt and North-Western Province. These suppliers are being doubly marginalised: by the increasingly globalised capital equipment market (cf. Farooki 2012); and by local briefcase traders, who are competitive due to low overheads and transportation costs. Furthermore, the new open-pit mines in North-Western Province, for instance, make use of new mining capital equipment that comes with a warranty and maintenance scheme, locking the mines into longer-term relationships with OEMs. In relation hereto, OEMs have entered into aftermarket services and thus supply services both for relatively new as well as older equipment.

6.5 Contextual factors and the effects on linkage formation in the Zambian mining sector Like numerous other resource-rich African economies, Zambia has recently published a LCP, the ‘Local Content Strategy, 2018–2022’ that seeks to promote inclusive and sustainable growth through increased use of locally available goods and services (MCTI 2018). The Zambian LCP is based on the ‘Zambia Mining Local Content Initiative’ (ZMLCI) that aimed to ‘make mining work for Zambia’. Essentially, this initiative is a public–private partnership facilitated by the World Bank and the International Finance Corporation (IFC) and supported by several bilateral donors. It aims to enhance local content and the use of locally manufactured inputs in the mining industry. Since the formulation of ZMLCI, it was first translated into a draft policy paper entitled ‘Strategy Paper on the Promotion

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of Local Content’ (MTCI 2014), and then into the strategy proper in 2018. The plan is to enact legislation to implement this strategy by mid-2019 (Kragelund 2019). Whether or not the Local Content Strategy results in linkage formation that leads to spillovers and ultimately structural transformation via enhanced ‘utilisation of national human and material resources’ (Ovadia 2016a: 20) depends on the design of the policy, whether or not it is supported and enforced by key political institutions, and the extent to which it is consistent with related policies affecting the mining sector in Zambia. This section examines policy coherence and coordination in the mining sector in Zambia with the aim of analysing the extent to which policies at the macro, meso and micro level are consistent with the Local Content Strategy and whether / to what extent they support indigenous participation in resource extraction in Zambia. Table 6.1 provides a schematic overview of the main macro-level policies and initiatives affecting suppliers to the mines in Zambia. It briefly describes each of them and carves out their main effects on the mines as well as on the domestic suppliers. To the extent possible, vague policy formulations that may have negative effects on the suppliers to the mines are highlighted in italics. At the macro level, three historical acts stand out, namely the Privatisation Act of 1992 that paved the way for the privatisation and commercialisation of state-owned enterprises in Zambia; the Mines and Minerals Acts of 1995 that established the incentives under which the mining companies were to be privatised, skewed competition between mines and their suppliers by granting the firms that held mining rights value added tax (VAT) exemption on all inputs and eliminating customs and excise duties on all machinery and equipment whereas suppliers ‘paid a customs duty ranging from 15 to 25 per cent for some goods … plus VAT on all imports’ (Morris et al. 2012: 184f), and permitted the government to enter into the so-called ‘Development Agreements’; and finally, the DAs negotiated between 1997 and 2000, which provided more incentives than the Mines and Minerals Acts permitted. These three acts totally dissolved the linkages established between ZCCM and its network of suppliers and neither the government of Zambia nor the donor community implemented measures to support Zambian suppliers to transition from the former protected environment to the international competitive environment. The acts also paved the way for new mine owners with markedly different governance structures (cf. Lee 2014). Hence, even though the Development

Privatisation and commercialisation

of state-owned enterprises in Zambia

Additional incentives to the mines

Privatisation Act

(1992)

Development

Established the incentives under

which the mines were to be

privatised

Mines and Minerals

Act (1995, 2008,

2015 and 2016)

Agreements

Description

Main policies/ initiatives/ actorsa

support local industry

Mining companies are expected to

mines

Duty and quota free imports for

deductibility on capital equipment

duty rebates on electricity, and 100%

charge for mine products, excise

period for new mine owners. No VAT

Established a 15–20-year stability

took over

ZCCM dissolved and new owners

Effects on mines

Table 6.1 – Macro-level policies affecting linkage development in Zambia’s copper industry

magnitude of local content (Continued)

of Statutory Instruments to define the scope and

2016 amendment opens up for the introduction

and owned by citizens or citizen-owned companies

suppliers and service agencies located in Zambia

2015 amendment reintroduces preference for

make use of local suppliers

2008 revision removes clause that mines should

does not define local content

Establishes a preference for Zambian goods, but

Cost penalty on suppliers

suppliers

Stipulate that mines should also make use of local

New linkages established to foreign suppliers

Linkages to so-called sprinter companies collapsed.

Effects on domestic suppliers

Numerous amendments to tax

Mining Tax regime

Empowerment of Bank of Zambia to

SI 55

of ultimate destination

Increased electricity tariffs (30%

(amendments)

Load-shedding

Rise in costs

800 million)

large uncleared VAT backlog (USD

Increased administration has led to

NA

Bureaucratic and costly

Costly due to volatile exchange rate

Heated discussions with government

Decreased profitability

Effects on mines

Renegotiation of contracts with suppliers

locally

Mines claim that they cannot afford to source

NA

diversification

Potentially allowed for recap of economy to finance

and creditors

Currency mismatch between Zambian suppliers

Mines claim that they cannot afford to source locally

transformation did not materialise

Potential source of finance for structural

Effects on domestic suppliers

Sources: Conrad (2012); Fessehaie (2013); Fjeldstad and Heggstad (2011); Fraser and Lungu (2007); Government of Zambia (2015; 2016); Haglund (2013); IFC (nd); Kaiser Associates (2011); Kragelund (2012; 2014); Morris et al. (2012); World Bank (2011b).

a

The following policies also directly or indirectly relate to local content requirement, but are not directly related to the copper industry: the Petroleum Exploration and Development Act (2008); the Private Public Partnership Act (2009); the Zambia Public Procurement Act (2009); and the Road Development Agency Act (2009).

in 2014)

Trade documentation from country

transactions

Changed definition of domestic

VAT rule 18

SI 78

services in foreign currency

Instrument (SI) 33

monitor currency flows

Prohibition of quoting of goods and

Statutory

royalty tax

regime ending in a 4–6% sliding

Description

Main policies/ initiatives/ actorsa

Table 6.1 – (Continued)

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Agreements stipulated that mines should also make use of local suppliers, they did not define what ‘local’ meant and they did not set a lower limit for the use of local suppliers (Interview, Ministry of Mines and Minerals, Lusaka, 4 August 2016). Furthermore, it was unclear who was supposed to monitor and enforce the use of local suppliers. The result was that the domestic suppliers, which had thrived in the protected Zambian environment but were internationally not competitive (cf. Fessehaie 2012b), had to either close down or downscale dramatically. Instead, new mine owners brought in their own suppliers and OEMs located in Zambia’s expanded operations. The main law governing the relationship between the mines and their suppliers is the Mines and Minerals Act of 1995. In the past two decades, this law has been amended several times – most recently in 2015 and 2016 (Government of Zambia 2015; 2016). The most recent important changes include a reintroduction of a preference both for materials and products made in Zambia, and for contractors, suppliers and service agencies located in Zambia and owned by citizens or citizen-owned companies. This amendment thereby defines what is meant by local (see also discussion of the Citizen Economic Empowerment (CEE) below). Lately, a number of laws and by-laws have considerably influenced the possibility of increasing the use of local content. Most importantly, the government issued a number of Statutory Instruments (SI) to control the amount of money that was leaving the country and to stabilise the exchange rate. For example SI 33 made it illegal to quote goods and services in foreign currency. Moreover, it prohibited the paying, demanding or receiving of foreign currency as legal tender for goods, services or any other domestic transactions. SI 55, in turn, compelled exporters to put export earnings into Zambian banks before they used the money and stipulated that ‘exporters are required to repatriate foreign currency earned from exports back to Zambia’. Finally, SI 78 changed the definition of domestic transactions in order to implement SI 33. The SIs were perceived by the mines and the mining organisations as costly due to the paperwork related to meeting the requirements of SI 55 and due to the volatile exchange rates (SI 33). In the words of the mines, this made them less inclined to support local businesses. Specifically, the SI 33 gave way to a ‘currency mismatch between Zambian suppliers and their creditors, and given that many inputs are imported, payments are denominated in USD but local invoicing needs to be made in Kwacha’ (Genesis Analytics 2014: 66).

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The mismatch also affected domestic suppliers. As the Chief Executive Officer (CEO) of a supplier of capital equipment to the mines put it: We won a tender but then the SI 33 came into swim and the price was converted at the government designated rate. This negatively affected us, as the FOREX [foreign exchange] has not been stable over the past couple of months meaning you have to pump in a lot of kwacha for you to bring in a new stock. We are hoping that we can rewrite the order so that it can now match with the current FOREX otherwise it will be a loss. (Interview, supplier, Kitwe, 14 August 2014)

Not only did the SIs affect the profitability of the order, they also affected the overall relationship between the mines and their suppliers: The SI 33 and 55 led to a decrease in the invitations the mines were sending to us. After the revocation of the SIs, things have improved a bit. The problem was that sometimes we quoted in dollars at other times in kwacha depending on the kind of work that we did. With the introduction of the SIs this had to stop. (Interview, supplier, Kitwe, 11 August 2014)

Importantly, all of the SIs were revoked shortly after they had been passed. Thus, not only did their passing negatively affect the development of local content, the political limbo associated with the forceful debates over the policies and their ultimate revocation also negatively influenced linkage building. Policy uncertainty also characterised the tax regime – both with regard to the mining tax as well as with regard to VAT. As described in detail in Chapter 2, the mining tax regime has undergone major changes lately. The 2015 Budget speech kick-started what became a fierce power play between the government and the mining companies. In short, the Minister of Finance wanted to replace a profit-based tax system with a mineral royalty-based regime. The proposed amendments to the mining tax regime were retracted because of uproar among the mining companies who threatened to cut jobs, delay investments and close down operations if they were implemented. Approximately a year after the major changes in the mining regime were first proposed, they were reversed, and the only change kept was an increase from 6% to 9% royalty for open pit mines and no increase for underground mines. This, however, was unacceptable to

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the mines. Thus, as of 1 April 2016, the Zambian government introduced a sliding royalty tax rate from 4 to 6%5 (Interview, Ministry of Mines and Minerals, Lusaka, 4 August 2016). Although the mining regime continued almost unaffected, the lengthy process of mining regime amendments had major negative effects on the possibility of deepening local content in Zambia. First, what was perceived as a way to finance structural transformation processes did not materialise. Second, the heated discussions led to (increased) mistrust between the government and the mining companies that worked against the government-led local content initiatives, which required the mines’ collaboration. Finally, the proposed changes coincided with a major commodity price bust. Hence, it was relatively easy for the mining companies to claim that they could not afford to make use of local suppliers (see also below). VAT rule 18, in existence since 1997, was amended in 2013 to incorporate the requirements of SI 55. The amended rule stipulated that companies had to obtain import documentation, i.e. copies of export and import documents, tax invoices and proof of payment from the country of ultimate destination. According to the mining companies, this amendment was so administratively burdensome that it resulted in a large, uncleared VAT backlog and they claimed that they were particularly hard hit due to the discrepancy between where the money was going (Switzerland) and where the copper was going (China), essentially meaning that it had proven almost impossible for them to obtain all documentation needed to get VAT refunds. This led one mining company to close down and other companies to declare that they were no longer able to source locally. As a result of the ensuing heated debate, VAT 18 was amended (again) on 23 February 2015. The rule now stipulates that companies must either obtain import documentation from the destination country or transit documents – not both. Finally, the Zambian government’s decision to increase electricity tariffs by 30% in 2014, combined with a policy of load-shedding, meant that costs increased and profits decreased for the mining companies. The tariff hike led Mopani mine to renegotiate contracts with suppliers. Moreover, it negatively affected suppliers’ productivity. On top of all of this, it is worth mentioning that the NAFC forced some mining companies to downscale operations, others to pursue a cost reduction strategy that involved using only foreign suppliers (Lee 2014), and still others to close operations altogether. Table 6.2 provides a schematic overview of the main meso-level policies and initiatives affecting suppliers to the mines in Zambia.

Affirmative action policy that seeks

to empower Zambians to take part in

economic development. Includes SI 36

Citizen Economic

Empowerment (CEE) Act

(2006)

facilitate economic growth and structural

Industrial Policy (2009)

enhance job creation and diversification

of the economy

Makes provisions in law to compel MNCs

to give preference to Zambian products

Will replace the Commercial, Trade and

Industrial Policy

Competitiveness

Programme

Mineral Resources

Development Policy (2013)

National Industrial Policy

(2018)

NA

firms procure locally

Mandatory codes to make mining

mines and the government

to create a ‘win–win’ situation for

costs and ‘balanced’ tax regime

Focus on infrastructure, lower input

NA

to procure locally

codes to induce foreign companies

Voluntary and mandatory sector

Effects on mines

implement a LCP

Strategic objective to develop and

local business development

Reserves a portion of royalties for

linkages are underdeveloped

Furthers understanding of why

mines and suppliers

Will facilitate dialogue between

between local and foreign suppliers

Seeks to ensure fair competition

entities

procurement only applies to public

implemented. Preferential

Delayed and only partially

Effects on domestic suppliers

Sources: Genesis Analytics (2014); MCTI (2009); Kragelund (2012); MCTI (2018); World Bank (2011a).

Externally funded programme to

Jobs, Prosperity and

transformation

Main document guiding strategies to

Commercial, Trade and

on preferential procurement (2011)

Description

Main policies/initiatives/ actors

Table 6.2 – Meso-level policies affecting linkage development in Zambia’s copper industry

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At the meso level, the most important act is the CEE Act that was originally intended to supersede all other commercial and industrial acts in the country and thereby to empower Zambians to take active part in the economy. One of the most important means to this end was the so-called sector codes that were designed to induce all companies – private as well as state-owned – operating in Zambia to procure locally. Locally, in this context, either meant citizen-influenced, citizen-empowered or citizen-owned companies, where the first refers to companies with 5–25% Zambian ownership, the second to companies with 26–49% Zambian ownership, and the third to companies with more than 50% Zambian ownership. However, neither the sector codes nor most of the other means in the CEE were ever implemented, and the CEE never succeeded in superseding all other commercial and industrial acts in Zambia even though a lengthy process was set in motion, funded by the World Bank, to align all relevant laws and by-laws to the CEE (cf. Kragelund 2012).6 Nor did the CEE influence subsequent policies to create wealth and prosperity. The Commercial, Trade and Industrial policy from 2009 is almost silent with regard to how Zambian suppliers to the mines are to take part in the economy. It merely states that the government seeks to create fair competition between local and foreign suppliers. Likewise, the Jobs, Prosperity and Competitiveness Programme totally disregards the affirmative action approach taken by the CEE. Instead, it focuses on how to enhance job creation, diversify the economy and, ultimately, create broad-based wealth through interventions in the beef and dairy, tourism, copper mining and fabrication sectors. In the latter sector, the programme identified three factors that inhibit both growth in the sector and linkage formation between mines and suppliers, namely poor infrastructure, high input costs and an ‘unbalanced’, unpredictable tax regime. However, the programme is silent on how to turn these macro-level factors into linkage development. Moreover, it fails to define what local sourcing means and the main argument for support to local suppliers is that it will reduce mines’ supply costs (World Bank 2011a: 39). Recently, however, the guiding principles of the CEE have been updated. The Mineral Resources Development Policy (2013) that seeks to compel transnational corporations to give preference to Zambian products was aligned to the CEE in 2014 and now stipulates that 25% of purchases should go to citizen-owned companies. It is also linked to the amended mining regime and reserves a portion of

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the royalties for local business development. Thus, for the first time since the beginning of the commodity boom, policies at the meso level directly and indirectly address the link between TNCs and Zambian suppliers. Although the National Industrial Policy offers no definition of ‘local’, it highlights the strategic need to develop and implement a LCP. Table 6.3 – Micro-level policies affecting linkage development in Zambia’s copper industry Main policies/ initiatives/ actors

Description

Effects on mines

Effects on domestic suppliers

Zambia Mining

Collaborative

Encourages

Government

Local Content

public–private

mining firms

must identify skills

Initiative

initiative launched

to develop

deficiencies and

in 2012 to enhance

participatory

facilitate development

local content

approaches to

of downstream

and facilitate

local involvement, processing capacities

industrialisation.

including taking

Online database

Links to CEE

account of local

linking mines to

needs

suppliers

The Copperbelt

Three-year supply

Boost market-

Value-adding

SME Suppliers

chain development

based incentives

suppliers based in

Development

programme aiming

to use local

Zambia. No definition

Program

to assist five mining

suppliers.

of ‘local’. Training,

companies to make

Boost MNCs’

diversification of

use of local SMEs

CSR profile

products, and access

KCM SME

Forerunner to the

As above

As above

suppliers

CSSDP. Same

Development

objectives. Only

Programme

one mine: KCM

UNIDO

Global programme

No specific

No definition of ‘local’.

Subcontracting

that aims to help

focus on mining

Assessment of firm-

and Partnership

local firms face

companies

level capacity

exchange

challenges of

to finance

globalisation

Source: IFC (nd).

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Table 6.3 provides a schematic overview of the main micro-level policies and initiatives affecting suppliers to the mines in Zambia. At this level, the most important policy is the ZMLCI, briefly referred to above. The ZMLCI was launched in 2012 and since then the World Bank has worked closely with the major stakeholders in the sector – i.e. the Zambia Association of Manufacturers (ZAM), the Chamber of Mines, the Bank of Zambia and the Ministry of Mines – in order to transform the idea into implementable policies. Later, consultation with smaller, private sector organisations also took place in order to make sure that the Initiative fit the needs of the domestic suppliers. These discussions led to a list of recommendations for the Initiative, including the establishment of a credit guarantee facility; financial education for micro and small enterprises; establishment of a central collateral registry; and development of a national micro, small and medium enterprise (MSMEs) financing policy. They also led to the formulation of the document entitled ‘Making Mining Work for Zambia’ (World Bank 2015) and the launch of a number of related initiatives including ‘Let’s Work Zambia’, a World Banksponsored programme to support private-sector-led growth and in particular to create jobs, and the government of Zambia’s ‘Jobs Creation and Industrialisation Strategy’ (MCTI 2012). ZMLCI also kick-started an internal process. First, then VicePresident Guy Scott re-launched the initiative as the ‘Local Content Initiative’ in June 2013, broadening it from solely focusing on suppliers to the mines to include other sectors of the economy as well. He then appointed and chaired a steering committee to further develop this initiative, and finally the Ministry of Commerce, Trade and Industry in September 2014 drafted a ‘Strategy paper on the promotion of local content’ that acknowledges the need for local content legislation to make mining companies source from Zambian suppliers, and proposed setting the minimum level of local product sourcing at 35% (MCTI 2014). The new Local Content Strategy was published in 2018. It seeks to ensure strong linkages between foreign companies and the local economy via specific performance requirements, i.e. both transnational corporations and large-scale Zambian firms must utilise a minimum of 35% of ‘local inputs and/ or products in the production and provision of goods and services throughout the economy’ (MCTI 2018: 5). The strategy will be reinforced by harmonisation of relevant legislation; training staff in micro, small and medium-sized Zambian firms; and facilitating affordable finance. However, the process is lengthy and the 35% requirement only applies to ‘component/materials/services where

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the country has the comparative advantage’ (MCTI 2018: 12). According to the implementation plan, both the harmonisation of existing laws and legislative enactment of the strategy should have completed by mid-2019, whereupon key stakeholders must ensure that 35% of inputs are locally produced. Notwithstanding all the hype that surrounded the ZMLCI, it has had few tangible results. In fact, the only concrete initiative has been the recent launch (October 2015) of an online database for smalland medium-scale suppliers (in all sectors of the Zambian economy) enabling them to look up business opportunities. Essentially, it is a two-way online search engine where suppliers can look for potential suppliers and suppliers can search for business opportunities that match their capabilities. In order to increase the likelihood of the database’s success, all suppliers are required to have their capabilities appraised before they can enter the site. To date, approximately 100 suppliers – Zambian as well as foreign and in all sectors of the economy – have met the criteria and are now able to use the site. So far, only four mines have signed up to the site. The ZMLCI, however, should not be judged only on its relatively slow progress and haphazard implementation which led the World Bank (2016: 18) to declare in October 2015 that: ‘for a mining industry as old as that of Zambia and given the publicity given by all stakeholders to the importance of local content and local supplier development, it is surprising that a national policy does not exist’. The sluggishness of the Initiative is most likely linked to political economy issues such as the establishment of a credit guarantee facility, a central collateral registry and the development of a national financing policy for MSMEs, all of which are unlikely to translate easily into rents for the political elite. Hence, these issues are not prioritised (cf. Hansen et al. 2015). As is clear from Table 6.3, the ZMLCI did not develop in a vacuum. Rather, the work undertaken by the World Bank built upon several programmes seeking to promote subcontracting and LCPs in the mining sector in Zambia, as well as years of affirmative action policies in other sectors of the Zambian economy (Kragelund 2012). Common to all of these programmes in the mining sector in Zambia is that they have all been financially supported and initiated by the donor community, the involvement and buy-in from mining and auxiliary companies has been limited, and key ministries had neither the capacity nor the will to guide the process of policy-making. Moreover, none of them have defined what a ‘local’ company is (IFC nd) or distinguished between ‘participation by Zambians’, i.e. degree

Minister and Deputy Minister

Policy decisions made by

Minister and Deputy Minister

Policy decisions made by

Minister and Deputy Minister

Facilitates trade and

investment in Zambia

Ministry of Mines, Energy

and Water Development

Ministry of Trade,

Commerce and Industry

Zambian Development

Agency

Sources: Lundstøl et al. (2013); Morris et al. (2012).

Policy decisions made by

Planning

Mineral Act

Instrumental in implementing the Mines and

lead in formulating LCP

of the new National Industrial Policy and taking a

Key actor in the formulation and implementation

the energy supply policy of the country

of the Mines and Minerals Act and responsible for

Key actor in the formulation and implementation

of the mining tax regime

Key actors in the formulation and implementation

18, SI 33 and 55, and the mining tax regime

members

Ministry of Finance and

Played a decisive role with regard to e.g. VAT rule

Promotes interests of its

Chamber of Mines

Effects on mines

Description

Main policies/initiatives/ actors

Table 6.4 – Coordination and collaborative action in Zambia’s copper industry

Business Linkage Programme

access and access to finance

facilitate skills training, market

Special division for MSMEs to

implement LCP

Lack of political will to finalise and

assessment of supply chain

Capacity problems affect

levels

Capacity problems affect tax

a healthy global mining industry

Perceives local content as part of

Effects on domestic suppliers

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A F R I CA’S S H A D OW R I S E

of participation in ownership, management and employment, and the extent of ‘value addition in Zambia’ (Kaiser Associates 2011). Table 6.4 lists the major actors responsible for formulating, coordinating and implementing policies that affect how resources may or may not lead to development in Zambia. The Ministry of Mines, Energy and Water Development is the single most important actor in terms of coordinating actions designed to make copper lead to linkages and spillovers. According to Morris et al. (2012: 185), this ministry has had capacity problems since the signing of the DAs. Essentially, these problems meant ‘that no comprehensive assessment of the supply chain was conducted, nor were monitoring mechanisms established or support programmes designed’. In the twenty years that have passed since then, not all capacity problems have been solved. This negatively affects the ministry’s ability to technically monitor the mines ‘to verify what is being sold out of the country’ (Lundstøl et al. 2013: 33). These challenges are mirrored in the Ministry of Finance where lack of capacity and lack of staff negatively affect the tax base – and hence ultimately the possibility of financing structural transformation. According to Lundstøl et al. (2013), in 2008 Zambia only had two or three tax auditors to cover the entire mining sector. The relative strength of the Chamber of Mines amplifies the problem encountered by the key ministries. As outlined above, all the major macro-economic policies of the past few years have been revoked due to fierce critique either by the Chamber of Mines or its individual members. Also of importance is the Zambia Development Agency (ZDA) that facilitates investments in Zambia. In the mining sector, it provides a number of incentives through the ZDA Act, including duty free import of capital equipment and 100% mining deduction on capital expenditure. To counteract the potentially negative effect of these incentives on local suppliers, the ZDA has established a special division for micro and small enterprises to facilitate skills training, market access and access to finance to enable them to link up to the mines and thereby benefit from investments in the mines. This division also recently developed a Business Linkage Programme to further this process. It seeks to facilitate the development both of forward and backward linkages by matching TNCs with suppliers and by helping local companies to upgrade. So far, the programme has paid most attention to suppliers to international supermarket chains. It is clear from the four tables above that the LCPs do not singlehandedly influence the possibilities of establishing linkages between

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the mining companies and the domestic suppliers and thereby enabling structural transformation in the Zambian economy. In fact, several macro-, meso- and micro-level policies directly or indirectly affect the relationship between the mines and their domestic suppliers.

6.6 Conclusion Chinese demand for primary commodities has augmented the turn towards economic nationalism that we witness in resource-rich economies of the Global South. This chapter aimed to prise open the black box of one of the most widespread tools in the economic nationalism box, namely LCPs, and assess the extent to which these policies accelerate structural transformation and thereby assist a country like Zambia to ‘make the most of commodities’. The most recent literature on linkage development points towards contextual factors in explaining whether linkages develop or not. Based on this insight, this chapter analysed the most important contextual factors in the Zambian mining sector and probed how, and to what extent, policies at the macro, meso and micro levels affected the development of local content among Zambian suppliers to the mines. This chapter has shown that LCPs have only limited effect if they are not aligned to the broader practices in the sector. In fact, in Zambia the factors that really mattered in terms of linkage building between the mines and the domestic suppliers were macro-economic stability, the tax regime and the exchange rate regime (i.e. macrolevel policies). The meso-level policies that were meant to empower Zambian-owned businesses were dysfunctional and never came to play an empowerment role. Finally, numerous micro-level policies in the mining sector have been implemented lately in Zambia. While it is too early to assess the most recent initiative, the ZMLCI, the others have failed to define what local content is all about; they have been voluntary in nature; have only included a small percentage of the mines – and of the suppliers; and have not enjoyed the full support of the political and economic elite in the country. More importantly, these LCPs have been vague in areas where vagueness negatively affects the local suppliers. Hence while LCPs are hyped as the panacea to resource-led development and a tool used by almost all resource-rich economies in Africa, the chance that they will really change anything is extremely slim. First and foremost, ‘local content’ aspects have been part and parcel of all major documents/laws regulating extractive activities in Zambia for the past two decades,

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including the DAs, the Mines and Minerals Acts and the CEE Act, without having any real effect on the use of local suppliers in the mining industry. In fact, what has happened is that locally owned companies have become increasingly marginalised. Second, several ‘local’ local content initiatives have been set in motion in Zambia in the past but have not succeeded in changing the overall tendency towards ever-expanding room for transnational OEMs to operate. Finally, it seems that the effects of LCPs are offset by the other initiatives that the government is setting in motion. The analysis of contextual factors in Zambia also highlighted the importance of distinguishing between legally binding and non-binding regulations as well as positive (incentive schemes and subsidies) and negative (threshold) policies if LCPs are to function as intended. Moreover, it is important to acknowledge that the potential for local content depends on the stage of production in the value chain (cf. Hanlin and Hanlin 2012). While there is hardly any potential for local manufacturing content in the exploration phase, the potential is much higher in the site design and construction phase which is characterised by a more labour-intensive process and is relatively high in the operation phase proper. It also depends on the particular commodity. While copper mining companies spend up to 20% of their budget over the lifetime of an operation on manual labour, this figure is much lower in the oil and gas sectors, for instance. Finally, it is important to distinguish between economic and political conditions that have to be met in order for LCPs to facilitate resource-led development (cf. Hansen et al. 2015). The economic conditions include the policies themselves (are they clear and unambiguous?); the institutions in the host economy (do they support and facilitate interaction between the multinational resource extractor and the local suppliers?); the level of absorptive capacity in the host economy (does a local industry exist at all to benefit from the spillovers of the investments?); and the willingness of investors to outsource products and services to local firms (to what extent does the governance structure allow for outsourcing of key products/services?). The political dimensions are less well established but include the extent to which LCPs facilitate the continuous command of power by the local elite by allowing them to capture rents from resource extraction and thus minimise the risk that competing powerful groups will emerge (see also Ovadia 2012). Thus, to date, LCPs have not been implemented in such a way, or may not have the potential to engender structural transformation. As such they are again reflective of Africa’s shadow rise and the power of prevailing patterns of geo-governance.

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Are the prospects better for mega or meta-projects, particularly the BRI announced by China in 2013? Will this result in ‘industrialisation by invitation’ for the continent or a deepening of dependence? The next chapter moves on to explore this question.

Notes 1 Dutch disease refers to a situation where an export boom leads to an upsurge of foreign exchange that sets in motion a fall in the exchange rate and a rise in domestic income, which results in a situation where tradeables become less competitive on world markets and simultaneously inflate the price of goods and services that cannot be imported. This brings about a movement of labour and capital to nontradeables, rising imports and eventually, a lopsided economy. 2 Legally binding local content regulation is often at odds with WTO provisions that prohibit, inter alia, discriminatory

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treatment and performance requirements. Most mines have ZCCM-IH minority ownership and some mines have several owners. It should be noted though that the DAs did stipulate that the mines should make use of local sub-suppliers (as well). Four per cent for copper prices below USD 4,500 / tonne, 5% for prices between USD 4,500 and USD 6,000 / tonne, and 6% for prices over USD 6,000 / tonne. Since then, a Business Regulatory Review Agency has been established to coordinate new regulations affecting businesses in Zambia.

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MCTI. (2009) ‘Commercial, trade and industrial policy’, Ministry of Commerce, Trade and Industry, Lusaka. MCTI. (2012) ‘Strategy paper on industrialisation and job creation’, Ministry of Commerce, Trade and Industry, Lusaka. MCTI. (2014) ‘Strategy paper on the promotion of local content’, Ministry of Commerce, Trade and Industry, Lusaka. MCTI. (2018) ‘National local content strategy, 2018–2022’, Ministry of Commerce, Trade and Industry, Lusaka. Mikesell, R. F. (1997) ‘Explaining the resource curse, with special reference to mineral-exporting countries’, Resources Policy, 23: 191–199. Mobbs, P. M. (2012) ‘The mineral industry of Zambia’, in US Geological Survey (ed.), 2011 Minerals Yearbook (advance release), 43.41–43.48, Reston, VA: US Geological Survey. Morris, M., R. Kaplinsky and D. Kaplan (2011) ‘Commodities and linkages: meeting the policy challenge’, https://idl-bncidrc. dspacedirect.org/bitstream/ handle/10625/47513/IDL-47513. pdf?sequence=1. Morris, M., R. Kaplinsky and D. Kaplan (2012) ‘One thing leads to another: promoting industrialisation by making the most of the commodity boom in sub-Saharan Africa’, The Open University, Milton Keynes and University of Cape Town, Cape Town. Morrissey, O. (2012) ‘FDI in subSaharan Africa: few linkages, fewer spillovers’, European Journal of Development Research, 24: 26–31. Negi, R. (2014) ‘“Solwezi Mabanga”: ambivalent developments on Zambia’s new mining frontier’, Journal of Southern African Studies, 40(5): 999–1013.

Ovadia, J. S. (2012) ‘The dual nature of local content in Angola’s oil and gas industry: development vs. elite accumulation’, Journal of Contemporary African Studies, 30(3): 395–417. doi:10.1080/025 89001.2012.701846. Ovadia, J. S. (2014) ‘Local content and natural resource governance: the cases of Angola and Nigeria’, The Extractive Industries and Society, 1: 137–146. Ovadia, J. S. (2016a) ‘Local content policies and petrodevelopment in sub-Saharan Africa: a comparative analysis’, Resources Policy 49: 20–30. Ovadia, J. S. (2016b) The PetroDevelopmental State in Africa: Making Oil Work in Angola, Nigeria and the Gulf of Guinea, London: Hurst. Pariona, A. (2017) ‘Top copper producing countries in the world’, World Atlas, https:// www.worldatlas.com/articles/ top-copper-producing-countriesin-the-world.html. Ponte, S. (2004) ‘The politics of ownership: Tanzanian coffee policy in the age of liberal reformism’, African Affairs, 103(413): 615–633. Riddell, R. (1990) Manufacturing Africa: Performance and Prospects of Seven African Countries, London: James Currey. Rosser, A. (2006) ‘Escaping the resource curse’, New Political Economy, 11: 557–570. Saad-Filho, A. and J. Weeks (2013) ‘Curses, diseases and other resource confusions’, Third World Quarterly, 34: 1–21. Schritt, J. (2018) ‘Contesting the oil zone: local content issues in Niger’s oil industry’, Energy Research & Social Science, 41: 259–269. Soares de Oliveira, R. (2015) Magnificent and Beggar Land: Angola since the Civil War, London: Hurst.

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7 Debt trap diplomacy or structural transformation? The Belt and Road Initiative in Africa

In 2013 the Chinese government announced the One Belt, One Road Initiative (OBOR), which has subsequently become known as the Belt and Road Initiative (BRI). This is a massive programme of infrastructural investment in railways, roads and ports, for example, in countries around the world. It is one of China’s largest ‘umbrella projects’, and a top ‘brand’ for the country’s foreign policy, but it has also become associated with the contraction of debt by participating countries overseas. The issue of debt has become both a prominent and a thorny one in Sino-African relations, especially as powers such as the United States, Japan and the EU utilise it as a lever against what they perceive to be growing Chinese influence on the continent. For example, the terms of Kenya’s loan from China to build the new SGR have recently been released and show that the country had to securitise this against the port of Mombasa, one of the busiest in Africa (Kisero 2019; World Atlas 2019). Furthermore when negotiations with the IMF for a loan failed in 2018, Zambian President Lungu turned to China and the resultant loan has been securitised against the national power company (Flint and Waddoups 2019). In Sri Lanka, it was reported that Chinese firms took over a port on a ninety-nine-year lease after the government there failed to meet debt repayments on it (Abi-Habib 2018), although this is not quite accurate as discussed later. This has led to some, including the United States Vice-President Mike Pence to declare that China is pursuing a policy of ‘debt trap diplomacy’1 around the world (Haas 2018). In similar fashion, and clearly intended as a reference towards Chinese engagement policies, Japanese Prime Minister Shinzo Abe warned a group of African corporate and political leaders at the Tokyo International Conference on African Development (TICAD) of the dangers of accruing significant amounts of debt, stating: ‘if partner countries are deeply in debt, it interferes with everyone’s efforts to enter the market’ (Nyabiage 2019). However,

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others argue that pursuing a policy based on predatory lending would be detrimental to China’s geopolitical interests by turning both populations and political elites against it. According to Rana Mitter of Oxford University (personal communication 24 March 2019), deliberately trying to entrap countries in debt would run the danger of generating a backlash, both among populations and through time politicians, who are to a greater or lesser degree (depending on the context) reliant on public support. Indeed, much of China’s bilateral and public diplomacy has been based on differentiating itself from Africa’s traditional Western partners and projecting an image of its brand of ‘South–South’ cooperation as being inherently less exploitative than North–South relations in that capitalist imperatives are pursued in the context of constructive linkages and mutual growth (Carmody 2017). Every few years in the West – in the media and in political circles – there is what is called a moral panic about the rise of China. A moral panic is when there is widespread fear in the population, often stoked by the media, about a foreign influence ‘corrupting’ the body politic. Africa has often played a central role in these recent moral panics; as a supposedly predatory China is counterposed against representations of hapless and powerless African victims of its purportedly rapacious behaviour. For example, at the launch of the new United States strategy for Africa in 2018, then National Security Advisor John Bolton argued: China uses bribes, opaque agreements, and the strategic use of debt to hold states in Africa captive to Beijing’s wishes and demands. Its investment ventures are riddled with corruption, and do not meet the same environmental or ethical standards as U.S. developmental programs. (White House 2018)

These types of argument are then circulated largely without critical analysis by media outlets and thus come to inform broad public perception regarding the given topic. Previous moral outrage in the United States focused on China’s so-called rogue aid, where it was claimed to be aiding corrupt dictators and undoing Westernsponsored programmes of so-called good governance in Africa and elsewhere (Naím 2007). Peter Navarro, one of President Trump’s main economic advisors and director of the White House National Trade Council, devotes considerable attention to Africa in his books to show the malign influence of China on the continent (Navarro 2008; Navarro and Autry 2011). Indeed, Navarro has been one of

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the primary proponents of the ‘China threat’ imaginary – a statecentric geopolitical school of thought that portrays the country as the most significant threat to American interests in the strategically important Asia-Pacific region in particular. Yet what is the reality? Is China engaged in programmes of rogue aid and debt trap diplomacy, where it seeks to entrap other countries in debt in order to create vassal states, or are such discourses more accurately seen as reflecting a racialised fear of the West being supplanted or surpassed as the world’s dominant power centre, or are there elements of truth in both discourses? Furthermore, how does this relate to China’s signature foreign policy – the BRI – and the nature of Chinese-led growth on the African continent? This chapter answers these questions; essentially zooming out and analysing these most recent developments in Sino-African relations. It will be divided into three further sections. The first will introduce the BRI and theorise the debt question in the context of Chinese economic internationalisation. The second will consider the geopolitical/geoeconomic angle and whether intentionality matters in terms of rising continental debt levels. Finally, the third section will synthesise the aforementioned points and provide conclusions.

7.1 BRI, the ‘debt trap’ and the nature of large-scale Chinese projects First proposed by Chinese President Xi Jinping on a state visit to Kazakhstan in 2013, the BRI involves large-scale investment in infrastructure and energy projects and is framed as the mechanism through which increased connectivity and cooperation between China and ‘partner’ countries can best be achieved (Zeng 2019). While initial plans for the BRI characterised it as a regional development project with a broad focus on central Asia, subsequent iterations of the project (e.g. 2014, 2015) have rebranded it as a global initiative, open to all who wish to cooperate with China. This has principally come about as a response to the demands of largescale firms seeking to utilise the project toward their own objectives. In response to rising wages, some major companies, such as the Taiwanese company Foxconn, which assembles many of Apple’s iPhones, relocated their assembly operations inland in China (Grimmel and Li 2018). Some have suggested that such relocations inland incentivised the government to improve transport links to the

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east through the BRI, particularly as getting high technology to market is time sensitive, given rapid product turn-over times, and land transportation is quicker than that by sea. Furthermore this contributed to the development of the heretofore relatively neglected western provinces. The BRI starts in the inland city of Xi’an and the number of cargo trains travelling to Europe each year has increased dramatically, with more than 6,000 recorded in 2018 (Li 2018). However, many of these were empty just to receive Chinese government subsidies (Leng 2019). Integral to an accurate conceptualisation of China’s umbrella projects is the fact that the Chinese economy is suffering from extensive over-capacity and over-accumulation. This poses a challenge to CCP rule in that country as the party is dependent on maintaining an authoritarian social contract in which widespread acquiescence to this form of governance is dependent on continuing rapid economic growth and generalised improvement in living standards. China’s over-capacity crisis is partly a legacy of the massive investment stimulus which the Chinese government pumped into the economy to prevent a recession on foot of the NAFC. Indeed, in some recent years the investment ratio in China was close to 50%. This has resulted in saturated domestic markets and a deepening of the imperative to open up new markets overseas to alleviate this over-capacity problem. Xi’s umbrella projects thus present themselves as spatial fixes to the problems of over-accumulation domestically through transnational infrastructure/manufacturing investment which creates new markets for Chinese products while simultaneously hastening time-to-market and allowing for the offshoring of the less competitive, more labour-intensive elements of China-centred GPNs. Through extensive loans and the relations of (inter)dependence the projects establish, China is developing its geopolitical, economic, infrastructural and standards-setting power, which are interrelated. Nevertheless, far from being a centralised, top-down approach to geopolitics/geoeconomics, the BRI retains the fragmented and oftchaotic state–corporate relations that characterised earlier Chinese government umbrella projects like ‘Go Out’ or ‘Go West’. In fact, Beijing is generally limited in its control of the SOEs (both central and provincial) which principally drive and/or take part in BRIframed engagement. As Milhaupt and Zheng (2015) document, SOEs often ignore the central state’s policy decisions, and when the state does discipline SOEs it often does so as a regulator as opposed to a controlling shareholder (for more on the mechanisms behind BRI

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see Jones and Zeng 2019; Ye 2019). Thus while BRI is often portrayed by Western (largely US) officials as an aggressive ploy to load countries with unmanageable debt, once disaggregated it becomes clear that its rollout is far more disorganised than it is made out to be. In this fashion, many large-scale projects undertaken in Asia or Africa are in fact unrelated to BRI, despite the usage of the initiative as a broad framing mechanism. The evidence for so-called debt trap diplomacy is almost entirely based on the case of Hambantota port in Sri Lanka. In that case, port construction was driven by former President Mahinda Rajapaksa’s attempts to revive his home region’s economy and thus continued despite multiple feasibility studies showing it could not compete with the nearby Port of Colombo. A loan was secured from China EXIM Bank, yet once open, the port struggled to attract shipping and consequently was given or returned to China Merchants Port Holding Co. (a major Hong Kong-based conglomerate) on a ninetynine-year lease in 2017, in exchange for a further USD 1.12bn investment in the port (Maçães, 2018; Abi-Habib 2018). Jumping on the narrative, US Vice-President Mike Pence subsequently claimed that Zambia might have to hand over its main international airport in Lusaka in a potential repeat of the Sri Lankan case; but this was subsequently denied and disputed by the government there. However, it is important to note that in Zambia ‘because the details of the debt deals with China are not made public, the people have no way to find out what the government has promised’ (Heanue 2018). Furthermore when the Zambian government wanted to switch from analogue to digital television, a Chinese company was controversially brought in in a joint venture in order to facilitate the transition (DW 2019). According to one source approximately 80% of Zambia’s construction contracts go to Chinese companies (Zambian Reports 2017 cited in Hampwaye and Bbaala 2019). Likewise, as noted above, it has also been reported that the port of Mombasa would have to be turned over to China by Kenya if it defaulted on its debt for the newly built SGR (Niba 2019). The contract requires that a certain amount of freight be delivered to avoid such an eventuality. Even though the line has been loss making, it is touted by the Chinese government as a great success, with seat occupancy reportedly at over 90% on the two daily passenger trains (Ying 2019). It has also, however, been associated with other controversies. A study reported that cement was among the few products that local manufacturers contributed towards project construction and that anything that could not be easily procured was

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instead shipped in from China (including steel parts, machines and railway engines) (Wissenbach and Wang 2017). Moreover, there were reports involving Chinese managers of the railway diverting ticket revenues and another involving land purchases for the railway and the managing director of the Kenya Railways Corporation (Malalo 2018). Adding to these controversies, in its first year the SGR registered losses of USD 100 million (Standard 2018 cited in Taylor and Carmody 2020) and trucking companies are estimated to have lost hundreds of millions of dollars in revenue, with several thousand workers being retrenched (Olingo 2018 cited in Taylor and Carmody 2020). Furthermore, in relation to local Kenyans working on the railway, ‘those who were trained two years ago in anticipation have remained assistant shunting drivers since the launch … and only sit and watch as the Chinese drivers drive to the coast and back’ (Wafula 2018 cited in Tarrósy 2019: 175). Within the field of social sciences there is a debate about the extent to which scholars can generalise from critical or strategic case studies (Flyvbjerg 2006). Does this mean we should or should not be concerned about China’s lending practices globally? The cases of Hambantota and the SGR raise a number of important questions. The first one is around the intentionality of China’s international lending. Is China attempting to entrap countries in Africa, and elsewhere, in debt? As Professor Deborah Bräutigam (2020) suggests, this appears not to be the case, in general, although discerning intentionality is difficult. Additionally, even if it would damage China’s global foreign policy to pursue such a strategy, does the country’s structural power and importance as a market now insulate it from backlash in particular cases? For example, as noted earlier, Michael Sata, who ran on an explicitly anti-Chinese platform for the presidency of Zambia, had the Chinese ambassador as his first official visitor to State House after his inauguration. While this may be the case in certain situations, widespread (or even singular, highly publicised cases of) debt entrapment would also discredit the policy of so-called non-interference espoused in the Five Principles of Peaceful Coexistence. Furthermore China sometimes conditions its loans, as in the case of Angola, on an IMF programme being in place (Lwanda 2019). It should also be noted that over the past fifteen years, Chinese lenders have restructured (or waived) debts on over eighty occasions (Moore 2018), with one recent example being that of the Addis Ababa–Djibouti railway, in which repayment was extended by twenty years (from ten to thirty).

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The question of non-interference is one which Chinese officials are increasingly struggling to negotiate with since, as Chinese interests in Africa have grown, the policy has come under strain. According to Alden and Yixiao (2018: 40) until the era of China’s rise, as it had little political or economic influence around the world, it had little choice at that time but to adopt such a policy. However, in more recent times China has become much more engaged in security issues as conflict poses a threat to its investments (Alden et al. 2018). Indeed the Chinese Foreign Minister argued just such a point in 2016 (cited in Hodzi 2018). There is also, however, the question as to whether China’s foreign economic policy is substantially and substantively geographically differentiated. Gu and Carey (2019) argue that some projects are purely political and it is possible that certain projects have been targeted for support for geo-strategic reasons, even if they do not make short-term economic sense, either for China or for the countries in which they are located. For example, the port at Hambantota only had relatively few ships call at it in the years before it was effectively taken over (cf. Bräutigam 2020). Others, however, including Jones and Zeng (2019), argue that the ‘trap’ is in fact for Chinese firms, who ultimately are on the hook for unprofitable projects. However, Hambantota is close to one of the world’s most important shipping routes in the Indian Ocean and in 2016 China passed a law which forces all Chinese industries involved in international transportation to provide aid and supplies to its navy if needed (Maçães 2018). Dreher et al. (2019) find that African leaders’ birth regions receive substantially more Chinese aid than other regions of their countries. Fears that China is developing ‘debt colonies’ in the Pacific in order to increase its military footprint have also been expressed (Lagan 2018), although the nomenclature may be inappropriate as it suggests that debt is the primary motivation. While Bräutigam argues that China is not using debt strategically, Alden (2019) notes that great powers pursue their own interests thereby hinting that it may be used this way. As noted earlier, extending bilateral credit allows influence to be attained and retained. At the local or national level there are a variety of benefits to the political classes of such BRI or other infrastructure projects, particularly the domestic maintenance of their rule and the creation of Gramscian hegemony (see Chapter 2). In a recent paper, Kanai and Schindler (2019: 302) talk about an ‘infrastructure scramble’, in which elites ‘make massive investments in infrastructure connectivity

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to secure effective integration to transnational value chains as economic and geopolitical competition intensify’. For African elites, even though some of the projects, such as the massively expensive SGR in Kenya, are loss making, they generate short-term economic growth and job creation, improved infrastructure, which may enhance business conditions and also perhaps opportunities for contracts and corruption. Moreover, ‘the sectors with the greatest infrastructure requirements in SSA are power and transport. Almost half of China’s loans to Africa between 2000 and 2014 went to these two sectors … [and] Chinese projects were concentrated in these two sectors’ (Jenkins 2019: 157). As the AfDB (2018) has noted, the continent currently faces an infrastructure deficit of USD 130bn a year, with a financing gap (i.e. infrastructure investment needs minus the total amount of financing commitment made by all donors to resorb the infrastructure deficit) of between USD 68bn and USD 108bn. Thus African political elites are not hapless or powerless in such financing arrangements but active shapers, participants and beneficiaries from them. Indeed, it was reported in March 2019 that Kenya was seeking another multi-billion-dollar loan from China to extend the SGR, despite difficulties with previous phases and the country’s rapidly deteriorating debt profile (Mwangi 2019). However, China delayed further funding for this extension as the Ugandan government appeared to favour renovation of its existing railway rather than extension of the SGR into its territory (Business Daily 2019). Others argue, however, that it was China that decided against the extension, and that consequently Uganda chose to refurbish its century-old railway network (Biryabarema 2019). There is a moral hazard as politicians in recipient countries are attracted by the quick economic growth and employment creation such projects offer, even if debt has to be repaid over the long-term. For example, according to the IMF (2019) real GDP growth in Djibouti averaged close to 7% during 2014–2017. However, its debt profile deteriorated dramatically during that time, with most of the debt being owed to China. A substantial debt over-hang will reduce future economic growth as payments go to debt service rather than social spending, infrastructure development or other sectors, thereby depressing domestic demand and undermining the economy’s longerterm growth potential. Indeed Ansar et al. (2016 cited in Plummer 2019) found that in most cases in China, infrastructural investment had a negative effect on the economy through the debt channel. Thus rapid economic growth in the short term may disguise longer-term problems – another example of ‘Africa’s Shadow Rise’.

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7.2 Debt, intentionality and a smokeless war? While there are numerous (some might say countless) and sometimes much-needed Chinese-financed infrastructure projects being built, or already operational, across Africa they oftentimes contribute to increased and potentially unsustainable debt levels, even if the majority of debt in most countries is not owed to China (Bräutigam 2019). Many observers and institutions have cautioned against rising levels of unsustainable debt across much of the continent after substantial relief had been achieved through the HIPC and Multilateral Debt Relief Initiatives in the 2000s. Though this borrowing has largely taken place in the context of increased global debt accruement, African countries have accumulated debt at a far more rapid pace than other low- and middle-income countries. As per the World Bank (2019) the external debt stocks of some countries, including Cameroon, Ethiopia and Uganda, have risen over 200% over the last decade. Djibouti, where China has its first ever overseas military base located, increased its external public debt from 50% of GDP in 2015 to 91% in 2017 (Maçães 2018 and Trading Economics 2019 cited in Taylor and Carmody 2020). Furthermore it is reported that Chinese finance accounts for 77% of the country’s debt (Dahir 2019) and that it was under pressure from China that Djibouti evicted Dubai Ports from the operation of the port next door to its military base in 2018. Some have suggested this is part of a geopolitical and economic competition to dominate the trade through the Red Sea. The United Arab Emirates (UAE) is now building military bases in Eritrea and Somaliland, although regional rivalries in the Gulf may also play a role in this (Economist 2019). Another country which has received substantial attention in the literature in relation to its increasingly unsustainable debt is Zambia. China is often accused of luring that country into a debt trap despite only owning a quarter of that country’s external debt (Laterza and Mususa 2018), whereas interest rates on its Eurobonds have recently hit 17%. Some have argued that neoliberal policies forced on Zambia by the World Bank and IMF which created a dependence on international finance are also to blame for its looming debt trap, even as Chinese financing was one of the factors which reduced Western power in the country (Kragelund 2009). Professor Bräutigam (2020) argues that China looks to find ways to do business in places that are not creditworthy, through securing loans against resources for example, which are often priced below

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market values (Gopaldas 2018 cited in Dodd 2019). However, it has also given substantial loans to countries with dubious ability to repay, by securitising them against other assets, potentially giving China very substantial leverage if the loans go into default. As Dodd (2019: 89) notes, ‘China is not in the business of uncalculated risk, and their success is a testament to this’. China’s foreign, economic and political policies are driven primarily by that country’s, or at least its ruling parties’ interest, which could be argued to partially but incompletely correspond. According to Andrew Polk (2018 quoted in Maçães 2018: 89): The return on investment for a port in Sri Lanka or a rail line in Thailand matters less to Chinese officials than the ability to push participating countries to adopt Chinese standards on everything from construction to finance to data management, and to the extent that Chinese standards supplant Western ones, it will represent a direct threat to the profitability of non-Chinese companies.

This is one aspect of the geoeconomic competition between China and primarily Western companies – a smokeless war for the Global North (Horner and Carmody 2020), over who will control the heartland technology of mobile 5G for example, which is 100 times faster than fourth generation technology and will be essential to the operation of so-called smart cities and automated vehicles. China may therefore not intentionally be engaging in debt trap diplomacy, but whether intentionality is making a difference to outcomes is a matter of debate. As Flint and Zhu (2019: 100) argue: There is no need to conjure up a conspiracy theory to explain the connection between the agency of business, institutions such as the AIIB [Asian Infrastructure Investment Bank], and China’s national strategy. Once connectivity is identified as a need for firms to maximise profits then geopolitical outcomes will result. Specifically, China’s relative increase in power in Asia through regional integration will lead to a relative reduction in US hegemony.

Flowing on from that China is not afraid of punishing countries that defy it by using its economic and geopolitical power. For example in 2016 it closed a key border crossing with Mongolia after a visit by the Dalai Lama to that country, and has placed similar pressure on other countries, including South Africa. For its talk of free markets, China remains a highly authoritarian state.

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One could argue then that while the meme of debt trap diplomacy is misplaced and is partly driven by racialised fears of Western displacement, it also has some grounding in reality as dependence on China (Taylor 2014) and its growing commodity power increases across the world. However, this is a feature of uneven capitalist development, rather than something unique to China – although it does have distinctive features by virtue of the country’s mixed economy model. Perhaps periodic attachment to memes such as ‘rogue aid’ and ‘debt trap diplomacy’ also reflect, as the Chinese proverb would have it, ‘crossing the sea in full view’ or the strategy of hiding in plain sight (Pillsbury 2014). Attacking China or Chinese companies for engaging in commercial transactions, as Western companies do, would be self-evidently hypocritical for Western governments. However, deviance from Western norms around commerce or aid present a point of attachment for arguments against Chinese financing. Disentangling fact from fiction and fear from finance is a key task for further academic research.

7.3 Theorising Chinese-led development Narins and Agnew (2019) discuss the ways in which the BRI alters what they call ‘sovereignty regimes’ globally. One way to think of the BRI and the associated International Capacity Cooperation (ICC) project, which seeks to offshore excess industrial capacity (Kenderdine and Ling 2018) is that it represents an extrapolation of Chinese sovereignty, but on an experimental basis to see what will work in overseas contexts – creating what we can think of as an experimental sovereignty regime – crossing the oceans by feeling for the stones. This necessarily involves course corrections and adjustments with plans being mooted to sell off some Chinese-funded infrastructure in Africa to private investors for example (Olingo 2018). Many scholars have noted that there is no strict separation when we are talking about China and its state-owned corporations between territorial and non-territorial logics of power (e.g. Gonzalez-Vicente 2011). For Giovanni Arrighi (2005), transnational corporations pursue a non-territorial logic of power where they seek to open the entire world up to their capital accumulation. As one of us wrote elsewhere: Territorial logics of power relate to the state. For example, during the Cold War the US was willing to tolerate, and even subsidise, capitalist competitors such as South Korea in order to ward off the

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spread of communism. Thus the territorial logic superseded the “non-territorial” logic, which would have been around opening up South Korea’s market to American corporations’ exports and investment, for example. (Carmody 2019: 40)

However, given the prominence of Chinese SOEs in China’s domestic economy and in its internationalisation no such strict separation exists when we are talking of these. Rather it may be preferable to talk of a ‘state-capital logic’ which combines both geopolitical and geoeconomic motivations, at least at the highest levels of the state–corporate relationship. As noted earlier C. K. Lee (2017) refers to the logic of ‘expansive accumulation’, where the bigger and longer-term economic picture plays a part in investment decisions by Chinese SOEs. Therefore investment appraisals may be driven, partially and contextually, by geo-strategic and longer-term geoeconomic calculations. Indeed, as Dinny McMahon (2018) has extensively documented, many SOEs in China are unprofitable but are kept operational for strategic reasons, particularly social stability. According to Ian Taylor (2017: 9): State capitalism may be defined as a mode of production that is ‘capitalist’ in the connotation of the presence of wage labour, extractions of profit and market relations, but which is distinctive in that there is a chief owner in the state, a degree of central planning of production and/or investment, and national goals expressed through long-run economic development instead of pure profit maximisation.

A strategic logic would appear to be being extrapolated to the construction of megaprojects overseas through the BRI (Reboredo 2019) and there is a strategic coupling of the interests of Chinese and African political elites, although these are not always necessarily co-terminus. For example, in 2018 the Chinese ambassador in Kenya threatened a trade war with that country after a ban on imports of tilapia fish was threatened and then implemented (Einashe 2018). The Chinese government subsequently rowed back on its threat of retaliatory action and the Chinese president gave ‘a firm assurance’ that the trade imbalance with Kenya would be rectified (cited in Ombok 2018). Kenya exports USD 167 million to China but imports USD 3.78bn from that country and owes 72% of its bilateral debt to China (Einashe 2018). However, despite public pronouncements China has become more protectionist towards

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some African exports. For example ‘we have seen the import tariffs on rooibos tea increase from 15% to 35%, for no obvious reason’ (Bergh quoted in Planting 2018). Nonetheless there are still substantial benefits to African political elites from cooperation with China, particularly through the construction of megaprojects which generate short-term economic growth and employment, even if they fail to achieve structural transformation over the longer term – another example of the shadow rise. Beyond the elite level, there are a variety of potential benefits, and also problems with Chinese investment and trade, which have been explored elsewhere (Carmody 2016). One potential benefit is that Chinese manufacturing equipment may be more appropriate to many African countries’ conditions. As they are cheaper they may generate higher returns for entrepreneurs, even if they don’t last as long (Jenkins 2019). However, in terms of investment there may be limited linkages with local economies as noted earlier. One survey of a thousand Chinese firms in SSA found that they sourced less than half of their inputs locally (Sun 2017). Such strategies keep most African countries locked in neo-colonial style trade relations with China, with the vast majority of exports being primary goods and most imports consisting of manufactures. Ninety-nine per cent of China’s imports from SSA, excluding South Africa, are primary products or resource-based manufactures (Jenkins 2019). In contrast, and perhaps not surprisingly, more than 90% of Chinese exports to SSA are manufactures. According to Lamido Sanusi (2013), the former governor of the Nigerian central bank: So China takes our primary goods and sells us manufactured ones. This was also the essence of colonialism. The British went to Africa and India to secure raw materials and markets. Africa is now willingly opening itself up to a new form of imperialism. The days of the Non-Aligned Movement [NAM] that united us after colonialism are gone. China is no longer a fellow under-developed economy – it is the world’s second-biggest, capable of the same forms of exploitation as the west. It is a significant contributor to Africa’s deindustrialisation and underdevelopment.

This imbalance and the aforementioned character of Chinese-led growth makes the debt issue (intentional or not) a problematic one for African states since, as we have noted, there is a long-term tendency for the price of raw materials to decline. Yet it is necessary to consider that such issues are separate from the often simplistic

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arguments made under the broader ‘debt trap’ narrative. Ultimately, the narrative will likely continue to be used by Western powers as a lever against China’s varied forms of engagement, and statements such as the one above will likely make Chinese state officials, who have historically been very sensitive about the country’s international public image (at least within the Global South), quite concerned. Yet as evidenced by the eighty or more instances of loan cancellations or restructurings, as well as by reports that a ‘debt sustainability framework’ (DSF) for BRI (which as per Morris and Plant (2019) is identical to the World Bank–IMF DSF) is being prepared by Chinese officials (Calabrese 2019), it appears likely that the experimental nature of China’s overseas engagement will continue to condition future endeavours.

Note 1 Though coined by Indian intellectual Brahma Chellaney, the ‘debt trap’ narrative has

been publicised largely by US policy-makers.

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and London: Prentice Hall and Pearson Education. Niba, W. (2019) ‘Will Kenya’s Mombasa port be taken over by the Chinese?’, http://en.rfi.fr/ africa/20190114-kenya-mombasaport-china-debt-default. Nyabiage, J. (2019) ‘Japan seeks to counter China in Africa with alternative “highquality” development’, South China Morning Post, https:// www.scmp.com/news/china/ diplomacy/article/3023243/ japan-seeks-counter-china-africaalternative-high-quality. Olingo, A. (2018) ‘The Good, the bad and the ugly of Kenya’s SGR cargo’, East African (Nairobi), https://www.theeastafrican.co.ke/ business/Thegood-the-bad-andthe-ugly-of-Kenya-SGR-cargo/2560-4827106-vdl4b4z/index. html. Ombok, E. (2018) ‘Chinese President vows to correct trade imbalance with Kenya’, Bloomberg News, https:// www.bloomberg.com/news/ articles/2018-11-05/chinesepresident-vows-to-correct-tradeimbalance-with-kenya. Pillsbury, M. (2014) The HundredYear Marathon: China’s Secret Strategy to Replace America as the Global Superpower, New York: Henry Holt. Planting, S. (2018) ‘The doors to China’s $12trn economy are not wide open: the world’s secondlargest economy wants equal access in return’, MoneyWeb, https://www.moneyweb.co.za/ news/economy/the-doors-tochinas-12trn-economy-are-notas-open-they-say/. Plummer, A. (2019) ‘Kenya and China’s labour relations: infrastructural development for whom, by whom?’, Africa, 89(4): 680–695. Polk, A. (2018) ‘China is quietly setting global standards: A

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little-noticed effort could be a big deal’, Business Standard, https://www.business-standard. com/article/international/ china-is-quietly-setting-globalstandards-118050701235_1. html. Reboredo, R. (2019) ‘A “Bandung” view of the world: the political economy of Sino-South African megaprojects’, PhD thesis, Department of Geography, Trinity College Dublin. Sanusi, L. (2013) ‘Africa must get real about Chinese ties’, Financial Times, https://www.ft.com/ content/562692b0-898c-11e2ad3f-00144feabdc0. Standard (Nairobi). (2018) ‘Kenya’s Chinese-funded SGR makes losses’, https:// www.standardmedia.co.ke/ article/2001288644/sgr-makeslosses. Sun, I. Y. (2017) The Next Factory of the World: How Chinese Investment Is Reshaping Africa, Cambridge, MA: Harvard Business Review Press. Tarrósy, I. (2019) ‘The Belt and Road Initiative and Eastern Africa’, in J. van der Merwe, P. Bond and N. Dodd (eds), BRICS and Resistance in Africa: Contention, Assimilation and Co-optation, London: Zed Books. Taylor, I. (2014) Africa Rising?: BRICS – Diversifying Dependency, Oxford: James Currey. Taylor, I. (2017) Global Governance and Transnationalizing Capitalist Hegemony: The Myth of the ‘Emerging Powers’, London and New York: Routledge. Taylor, I. and P. Carmody (2020) ‘China’s spatial fix and Africa’s debt’. Mimeo. Trading Economics. (2019) ‘Country list government debt to GDP: Africa’, https:// tradingeconomics.com/ country-list/government-debttogdp?continent=africa.

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Wafula, P. (2018) ‘Exclusive: behind the SGR walls’, The Standard, https://www. standardmedia.co.ke/ article2001287119/shockingdetails-behind-sgr. White House. (2018) ‘Remarks by national security advisor ambassador John R. Bolton on the Trump administration’s new Africa strategy’, https://www.whitehouse. gov/briefings-statements/ remarks-national-securityadvisor-ambassador-john-rbolton-trump-administrationsnew-africa-strategy/. Wissenbach, U. and Y. Wang (2017) ‘African politics meets Chinese engineers: the Chinese-built Standard Gauge Railway Project in Kenya and East Africa’, Working Paper, no. 2017/13, China Africa Research Initiative, School of

Advanced International Studies, Johns Hopkins University, Washington, DC. World Atlas. (2019) ‘The busiest cargo ports in Africa’, World Atlas, https://www.worldatlas. com/articles/the-busiest-cargoports-in-africa.html. World Bank. (2019) ‘International debt statistics’, The World Bank, Washington, DC. Ye, M. (2019) ‘Fragmentation and mobilization: domestic politics of the Belt and Road in China’, Journal of Contemporary China, 1–16. Ying, T. (2019) ‘SGR marks two years of operations’, China Daily. Zambian Reports. (2017) ‘Opinion (part 3): is the Chinese honeymoon in Zambia over?’, Zambian Reports, 8 November. Zeng, J. (2019) ‘Narrating China’s Belt and Road Initiative’, Global Policy, 10(2): 207–216.

8 Conclusion

The laws of economics are like the laws of engineering … One set of laws works everywhere. (Lawrence Summers quoted in Klein quoted in Bassey 2012: 60) Continued purchase of US debt, especially by official sources after the financial crisis, shows the extent to which China is integrated into the US-led liberal international order, and in terms of the latter there are costs for the South (deindustrialisation and excessive dependence on primary commodities). These costs were partly hidden during the boom years before the financial crisis, and in the Chinese-led recovery from 2010, but they have become increasingly visible as commodity price increases have slowed or reversed. (Kiely 2016: 97) One clue to recent growth rate rankings among … China, India and then Africa … lies in the relative weight of manufacturing in the economy. While the GDP share of manufacturing value added in China is a whopping 44%, India boasts 25%, and Africa is a measly 11%. (Berhanu 2018: 5)

According to C. K. Lee (2009: 666) ‘[a]s Chinese capitalism in Africa is poised to become a major story shaping the global economy, the spirit of Bandung,1 rather than the trite rhetoric of “colonialism”, may provide a more relevant, productive and critical lens for observing development in the 21st century’. As noted earlier, she posits that Chinese SOEs are characterised by ‘expansive accumulation’, as they have longer-time horizons which allow them to make longer-term commitments, investments and employment contracts. However, after the commodity price crash even Chinese state-owned mining companies in Zambia engaged in lay-offs, for example. Furthermore, in relation to aid Lee (2014: 41) suggests that the $2 billion that went to Zambia in this period was subject to a higher rate of interest than World Bank

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loans (2% against 1.7%), had a smaller grant element (23% against 35%), and a shorter repayment period (10–15 against 15–25 years). These concessional loans were also conditional on non-competitive sourcing from Chinese companies. (Kiely 2016: 23)

It is difficult to see how the spirit of Bandung (i.e. Third World solidarity and cooperation) informs such arrangements. However there are also many other aid modalities, such as the agro-technology demonstration centres which have been constructed across the continent, which may fit better with this, even if they would ‘create a lot of opportunities for China’s agricultural enterprises’ (Shi quoted in China Daily 2006 in Bräutigam 2016). China’s SEZs may also fit such a mould, though as discussed earlier, they generally do not create the types of linkages that are required for successful value addition. This chapter will serve as the conclusion to the book. It seeks to synthesise the aforementioned arguments and broadly (yet critically) examine who benefits from China’s varied engagements in Africa. It thus assesses the relative benefits to both external investors and populations while exploring the way in which politico-economic power is being reconfigured by domestic elites. While not a repetition of the book’s main findings, the chapter will summarise the main arguments and elucidate what these can tell us about the everevolving Sino-African relationship.

8.1 Pros and cons As noted, the rise of China and its increased engagement with Africa is one of the most significant developments on the continent in recent decades. This book has explored various axes and channels of engagement of China in Africa, in order to explore its impacts. Broadly, we have argued that the ‘Africa Rising’ narrative is overblown and what the continent has generally experienced economically over the last fifteen years is best considered a ‘shadow rise’ – that is, growth contingent on developments elsewhere. Following this, we argue that despite significant changes to the domestic economies of countries on the continent, the general quality of economic growth has been low in terms of both poverty reduction and job creation. This is because most of the continent has failed to undergo structural transformation. This is not only due to the nature of the relationship with China, but failure to kick off structural transformation also rests on the political

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economy of policy making/implementation2 as depicted in Chapter 6 with reference to Zambia; on poorly designed liberalisation and privatisation policies set in motion by the IFIs (see e.g. Chapter 4); and lack of attention to capability building in resource-rich African economies (Chapters 3 and 5). However, China (and other emerging economies) have mattered hugely for Africa’s development in the past two decades. No doubt, Chinese engagement in Africa has sparked a number of developments that according to prevailing development thinking are necessary but not sufficient to bring about long-term sustainable development. They include among others higher commodity prices during the commodity super-cycle; increased infrastructural investment; cheaper and perhaps more appropriate wage goods, although there have also been concerns about quality;3 increased development financing through mechanisms such as the China– Africa Development Fund; increased imports of more affordable and factor-appropriate capital goods; and migrants bringing new skills and capital. Chinese engagement has also deepened challenges which hamper structural transformation. They include (but are not limited to): competitive displacement of local producers through imports or direct investment, in the construction sector, in the service sectors and among the suppliers to the mines (Chapter 5); poor quality infrastructure provision in some cases; and financing schemes that reinforce African economies’ focus on resource extraction (Chapters 4 and 7). Chinese engagement with Africa offers an alternative source of loans without macro-economic or governance conditionalities; an increased environmental degradation, such as deforestation, as a result of the resource-intensive nature of Chinese demand; a risk of increased, and in some cases over, indebtedness of countries on the continent; support for certain authoritarian governments, such as Sudan and Zimbabwe, with an overall decline in democracy registered across the continent in recent years;4 migrants out-competing locals for jobs and small business opportunities, in trading for example. However, recent research by Carlos Oya (2019) found that in Ethiopia 90% of all workers in Chinese-owned firms were locals, whereas the estimated figure for Angola is 74%; although there are questionable labour practices in some Chinese-owned businesses (although this also applies to companies owned by other nationalities also). As described above, whether more rapid economic growth is considered a positive or not is partly dependent on values. Some,

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such as deep ecologists like Naess (2003), would argue that economic growth, almost by necessity, degrades the environment and consequently view it as a negative. For others, such as the World Bank, economic growth is a virtual pre-requisite for poverty reduction. A middle position, espoused by the some such as UNCTAD, is relative decoupling, where economic growth is partially decoupled from environmental degradation. This has certainly not happened in Africa in recent decades as economic growth has been extremely environmentally intensive (Bassey 2012; Wengraf 2018). While a shared history of (semi-)colonial exploitation and consequent solidarity certainly shapes China’s interactions with Africa, with concrete material effects (Mawdsley 2012); self-interest, or what Alden and Schoeman (2013: 119) describe as ‘BRIC[S] countries’ unashamedly mercantilist approach to foreign and economic diplomacy’, would appear to be the primary motivation in foreign economic policies. Despite former South African President Jacob Zuma arguing that ‘we are now equal co-architects of a new equitable international system’ (quoted in Taylor 2014: 17–18), the reality is different. One merely has to see that the economic output of the city of Beijing is equivalent to that of all of South Africa to understand the power imbalances at play and consequently that despite higher growth rates in Africa, in general, structural transformation has been lacking. Yet some of the claims made against China’s negative impact on and in Africa are in fact overblown. For example, while many media reports claimed that extensive tracts of African land were being taken over to grow food for export to China, this has been extensively debunked by Deborah Bräutigam (2016). In fact, ‘according to the United Nations Commodity Trade database, it is China that been sending food to Africa’ (Bräutigam 2016: 3). While there are indeed substantial Chinese agricultural investments on the continent, these tend to focus either on growing food for domestic markets or as cash crops for export. In part, for example, this is because the price of rice in Cameroon is twice as high as it is in China, making it more profitable to produce for the domestic market. In similar fashion, at one point a Chinese-owned farm in Zambia supplied 10% of the country’s eggs. However, such investments are not unproblematic as they may displace local producers and take land away from food production in the case of cash crop exports, though, again, this is more of a feature of uneven capitalist development than any sort of ‘China-specific’ issue. In fact, these problems are common to other foreign originating investors in land as well and the biggest of these

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in Africa are the United States, UAE, Saudi Arabia, the UK and India (Land Matrix cited in Bräutigam 2016: 80). As this book has explored, both the positive and negative effects of China’s growing involvement in Africa are largely driven by politico-economic circumstances emanating from that country’s ongoing economic restructuring. In similar fashion, we have argued that while the recent reorientation in the literature towards newfound ‘African agency’ has been insightful, it risks unwittingly reinforcing ‘internalist’ explanations of African underdevelopment. While some African states have become more effective at projecting power across distance and strengthening domestic sovereignty, ultimately though, these countries have gained little leverage to change the structure of their economies. Instead, what we have seen over the past decade is ‘agency at the margins’ in terms of the raising of minimum wages and threats to renationalise less capital-intensive firms. The primary power of African states (though different in different contexts) has not changed the overall dependent nature of the continent’s relationships or the overarching global trade and capital regimes. As such, the contract of extraversion remains resolutely in place in the form of an actor-network which is largely stable in terms of its configuration, even if the personalities involved change, as in Zambia for example.

8.2 Partner, competitor, hegemon? Chris Alden (2007) famously asked whether China was a partner, competitor or hegemon in Africa. The answer is that these positions are not necessarily contradictory but mutually functional. For instance, appearing as a partner may enable market access to build ‘flexigemony’. The language of partnership and ‘mutual development’ has also been leveraged to create political connections with continental elites and bring them into the fold of FOCAC for example. China has not in the past been prescriptive about the economic models of partner countries (although this may now be changing with the roll out of the BRI (Reboredo 2019)). However, it does favour ‘free trade’ (market access and easy resource exports) and investment. This largely reinforces the status quo, rather than promoting a dramatic revision of the dominant resource export assemblage. For example, Chinese capital is increasing its presence and shaping Southern Africa’s regional economy through their commodity sales, facilitated by the infrastructure provided by South

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African companies like ShopRite and through their investments in resource extraction. This deepens value-extractive economic models, despite the promise and rhetoric of economic diversification and state-guided nature of investment. While there was recently some evidence of neo-developmentalism in the region, it is limited and overall the relationship with China can be characterised as one that Ian Taylor calls ‘diversifying dependence’. Additionally, much of the bargaining power which was achieved was as a result of the relative decline of influence of the World Bank and the IMF, though this has been latent rather than actualised because current arrangements often suit Southern African political elites and China, and the other BRICS remain substantially committed to the neoliberal principles, at least internationally, as this opens up markets and investment opportunities for their companies. Furthermore as we noted earlier there is a convergence between Western donors and China in their aid policies, which potentially closes down agency for African states. Consequently, it would appear unlikely that substantially more economically interventionist political economies will be built in Southern Africa in the future. As noted, there is a regional trade economy being reinforced in Southern Africa, which relies on mineral exports and imports of manufactured goods largely to and from China, with South African firms largely supplying wage goods and the logistical and infrastructural networks to facilitate these flows. The port at Durban in South Africa, Sub-Saharan Africa’s busiest, has been dug out to facilitate the handling of ships able to carry more than 15,000 containers (Bond 2014). China accounts for 90% of the production of containers globally, in addition to much of their contents (Rodrique et al. 2017). Even though Africa has approximately the same amount of Chinese FDI as Germany, it has nonetheless been an important platform for the growth of some Chinese companies. For example, a third of the giant phone manufacturer, Huawei’s sales were in Africa in 2004 (Nolan 2014 cited in Kiely 2016). Transsion, another Chinese company, accounted for 36% of all smart phone sales on the continent in 2017 and nearly 60% of feature phone sales (Kazeem 2019). Bond (2014) has described South Africa’s role in the region as ‘sub-imperial’ – being both dominated by external powers and (trans)national capital and, in turn, dominating the region. This represents a re-inscription of the role that South Africa has historically played, although arguably this time with China as an emergent potential hegemon, rather than Britain. Western powers still retain a

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substantial footprint in the region, with Britain being the biggest foreign investor in South Africa for example (Moghalu 2014).5 Thus, it may be more accurate to talk of an ‘interdependent hegemony’ (Li 2014) dominating the region, in a broader context of capitalist geopolitics.

8.3 Emerging economy or emerging power? According to Ian Taylor (2017) we need to draw a distinction between emerging economies and emerging powers. He argues that rather than the BRICS, for example, representing a challenge to the Western-dominated world order, there is a process of transformismo at play, which is ‘essentially co-optation and this process “was used by Gramsci to refer to the convergence of alternative paradigms until there ceased to be any substantive difference between them”’ (Morton 2000: 258 quoted in Taylor 2017: 198). However, some objections might be raised to this. The first is the nature of Chineseled or inflected globalisation, where there is no strict separation between geoeconomics and geopolitics, at least in the operation of SOEs. Many Chinese state-owned corporations are loss making. For example, according to a working paper for the OECD, ‘while China’s overall debt-to-GDP ratio is not particularly high, its non-financial corporate debt relative to GDP is higher than in other major economies. State-owned enterprises account for over three quarters of that debt with a size exceeding GDP’ (Molnar and Lu 2019: 1). Furthermore the number of loss-making SOEs has increased under Xi’s leadership. This is indicative of a shift away from the rebalancing of the Chinese economy from being investment to consumption driven. The NAFC necessitated a massive public sector stimulus in China, which raised the level of investment in GDP to over 48% in 2011 and it remained very high at 45% in 2018. In 2014 Standard Chartered Bank estimated total debt in the Chinese economy at 251% of GDP (Kiely 2016). Although Stent (2016: 2) notes the average published Return on Equity (ROE) ‘of the listed Chinese banks over the past few years has been consistently above 15%’ even as ‘since 2008, the Chinese economy has added about $12 trillion worth of debt, roughly the size of the US banking system in that year’ (McMahon 2018: xiv). In theorising the shape of China’s emerging power, it is useful to draw on what Agnew (2017) calls sovereignty regimes, such as

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classical, imperialist and hegemonic. As noted earlier, at one point up to 40% of China’s internal policies were designated as experimental (United Nations Development Programme 2013). This experimentational orientation has now been extended overseas through the ICC programme, for example. In fact, we can think of the spatial extension of the Chinese developmental state overseas in part, not just as reflective of the extension of sovereignty through assemblages or networks, but as constituting an experimental transnational sovereignty regime. Understanding the dynamics of this emergent regime calls for the construction and implementation of transterritorial research, which examines the nature of the interregionalism being constructed between China and Africa – one of the aims of this book. Significant in the construction of this type of research is the understanding that China’s engagement in Africa is multi-vector, encompassing elements of Globalisation 1, 2 and 3. However, these are not ontologically separate phenomena; rather, as noted earlier, workers on large state-sponsored projects (Chinese-inflected Globalisation 1) may stay on after their contracts are up and set up local businesses, which import from China for example (Chineseinflected Globalisation 2). In terms of virtual accumulation, or Globalisation 3, it is Westernbased firms such as Uber and Booking.com which have made much of the running on this, including in Africa, but there is also some Chinese presence on the continent in this. For example, Naspers, a South African company, has become the dominant company on the Johannesburg Stock Exchange largely due to their 2001 purchase of 46.5% of Chinese internet company Tencent (then a start-up). Tencent is now responsible for rolling out China’s draconian ‘social credit system’, where you can be put on a no-fly list or have your pet confiscated for minor infractions, such as smoking in a no smoking area. Indeed, Naspers’ stake in Tencent accounts for nearly the entire value of the company (Jooste and Cohen 2019), although it is now reducing its stake. The giant Chinese internet company Alibaba is also increasingly active on the continent. Alibaba’s founder, the billionaire Jack Ma, has recently been involved in setting up the Electronic World Trade Platform to allow SMEs to trade over the internet, with Rwanda the first country in Africa to join the initiative. In the literature on African agency there has been a focus on how best to ‘negotiate China’. Ethiopia initially seemed to do this best; however, relations between that country and China have remained characterised by dependence as evidenced by trade statistics and

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the role of the Chinese state and Chinese-based capital in its industrialisation drive. This combined with the pressures exerted by the broader global political economy are resulting in processes of neoliberalisation in that country. Whether it is able to effectively manage this process, as China itself has, or whether it too, along with much of the continent will be subject to ‘disciplinary neoliberalism’ (Gill 2003), remains an open question, although the proposed scale of economic liberalisation, driven by balance of payments problems, would suggest the latter course is more likely. The Chinese government and its companies have also shown no compunction about partnering with ‘rogue states’ in Africa. For example, Chinese companies have been involved in the exploitation of the infamous Marange diamond fields in Zimbabwe (the biggest producer in the world), where the government deployed the army to violently clear artisanal miners, with an estimated 200 of them killed (cf. Human Rights Watch 2009; Saunders and Nyamunda 2016). According to a BBC documentary on the subject some of the artisanal miners were subsequently enslaved on the fields, and the Zimbabwean military operated a torture camp there, among other abuses (Andersson 2011). As noted, Chinese companies are involved in diamond extraction there. This may have led to some European countries not to object to these diamonds being sold so that their companies might get a ‘piece of the action’. According to the Kimberly Process these were not ‘blood diamonds’ because that designation only applies to diamonds sold to fund rebel groups (Mtisi 2016). The Zimbabwe Ministry of Defence has also partnered with the Anhui province State Farm Agribusiness Corporation on an agricultural investment in that county (Bräutigam 2016). Furthermore the Chinese government has sold arms and radio jamming equipment to Zimbabwe, in addition to the recently signed facial recognition contract with the Chinese company CloudWalk. China is explicit that it seeks ‘win–win’ outcomes in its interactions with African countries, thus acknowledging its own interests. According to Six (2009 cited in Mohan 2015) the fact that both China and India are developing countries allows them to be more forthright about their self-interest in these engagements. However, the rhetoric used sometimes suggests that altruism is the primary motivation. ‘When asked why China gave aid to African countries, the then-Vice Minister of the Ministry of Commerce Fu Ziying, replied that China was in Africa “for friendship”’ (Xinhua, 2011 cited in Cheng and Taylor 2017: 1). Interestingly, this discursive

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style has been repeated by certain high-ranking South African government officials, including one from DIRCO who insisted that ‘our involvement with BRICS is based on an African agenda’ (Interview, DIRCO, Pretoria, 30 October 2017). However, the ‘mutually beneficial arrangements’ put in place are between state elites, with populations often seeing few of the benefits. Ultimately, how effectively African states ‘negotiate China’ largely depends on the nature of global regimes in which they are enmeshed, such as the WTO, and the nature of individual states. There is a vast literature on the nature of ‘the’ African state, although there is also huge variation among and between them. It is not possible to rehearse that literature here, but in her magisterial work Niang (2018) argues that the crisis of many African states is one of legitimacy for its populations, as it is an alien import in most cases which lacks social meaning for its citizens, with Ethiopia being a notable exception here given its long and unbroken tradition of independent statehood. She terms this the ‘fracture in accountability’. Struggles to reform the state and bridge this fracture will be of paramount importance, in guiding engagements not just with China, but also with other world powers and TNCs. Only through such reforms can an experimental sovereignty regime be constructed which will allow African countries to cross the (capricious) river of global economic integration by feeling for the stones (Lim 2019). Ziso (2018) refers to this as ‘southern neoliberalism’ or a ‘developmental state with neoliberal characteristics’. While the trade war between the United States and China seems to be encouraging countries to take sides, with the South African President Cyril Ramaphosa repeatedly speaking out in favour of the Chinese tech giant Huawei, this need not be the case as having multiple partners may increase latent policy space, although the challenge is to actualise it. South Africa is an associate member of the OECD, as is China itself (Halvorsen 2016). This is possibly reflective of Breslin’s (2016) ‘non-polar’ world order, where states may position themselves together on one issue while simultaneously being in opposition on another.

8.4 Development and the limits of bargaining power? As we have explained throughout this work, ‘whether China’s net impact will be beneficial or detrimental to development will vary from country to country and change from time to time’ (Hung 2016: 181),

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although as we have shown, to date the thrust of engagement works against the structural transformation of African economic transformation. As Ziso (2018) argues, Chinese capital (and indeed, engagement as a whole) is internalised differently within the different African states. As such, there is no singular set of impacts. Instead the impacts, while possibly similar given the scale of China’s influence, ultimately vary depending on the politico-economic landscape of the ‘partner’ country. Writing on Latin America, Kevin Gallagher (2016: 192) noted that ‘in the end it is Latin America’s responsibility to put the right policies in place. A failure to do so cannot be blamed on China or the United States’. However, it must be noted that this is a voluntarist conception of international relations which ignores constraints on policy formulation and places too much emphasis on agency, as does some of the literature on Africa, discussed earlier. In contradistinction Camba and Hung (2019: 307) argue that ‘the absence of strong domestic SOEs in the region, as well as the more homogenous kind of states in terms of capacity, mean that China’s impact [in Africa] has been more uniform’. As noted earlier China has not been the only factor in Africa’s ‘rise’. For example the Financial Times noted that ‘there is a glut of liquidity in the global financial system that is helping to fuel the current enthusiasm for far-flung markets such as those in Africa’ (Chung 2007). However, more recently, economists reported that structural shifts in the economy [in China], favoring expansion of the services sector rather than heavy industry (both steel and cement production are likely to have peaked in 2014), mean that 85% less energy is required to generate each unit of future economic growth than was the case in the past 25 years. (International Energy Agency 2015)

Furthermore in 2015 China devalued its currency (a way to boost exports and reduce imports, all other things being equal), which sent ‘shockwaves’ through African economies. Warren Buffet observed that ‘only when the tide goes out do you discover who has been swimming naked’ and Mills et al. (2017) argue this applies in the African case since global commodity prices have come down. According to the former head of the United Nations Economic Commission for Africa ‘the worrying pattern is the tendency for the continent to grow rapidly yet transform slowly, making it vulnerable to headwinds’ (Lopes 2019: 1). However, its

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debt to GDP ratio is negative if reserves are counted, putting it in a more favourable position relative to the period of SAP for example. Furthermore the continent has vast untapped energy potential. The European Commission’s Institute for Energy estimates that just 0.3% of the sunlight in the Sahara and deserts in the Middle East could supply Europe’s entire energy needs (cited in Lopes 2019). Thus the continent has massive untapped development potential in terms of natural and also its human resources. Unlocking this potential is the key challenge. Ovadia (2016: xii) has written of what he calls the petrodevelopmental state, which he says a defining feature of is that it ‘puts in place LCPs to nurture capitalist development’. According to him ‘China in particular is best understood as both imperialist and at the same time a new hope for economic and social development’ (2016: 6). He also argues that ‘local content policies provide the mechanism by which resource-rich countries emerge from centuries of underdevelopment and transform themselves into sustainable and democratic petro-developmental states’ (2016: 27). However, he cites estimates that fewer than 1% of the population of Angola are employed in oil production, exploration and services. For Cowaloosur and Taylor (2019: 222) the CSEZA [Chinese Special Economic Zones in Africa] epitomises China’s ambitious plan to harmonise several such dichotomies and create a winning formula for development, one that is more appealing to developing African countries than that offered by the proponents of purist neoliberalism. It thereby seeks to merge cooperation with dependency, socialism with neoliberal capitalism, and Chinese socialist capitalism with African particularism.

However, to date, the developmental impacts of this programme have been quite limited, with the partial exception of Ethiopia where they have integrated into a developmental state framework. Indeed in relation to Chinese-sponsored Free Trade Zones in Nigeria Adunbi (2019: 676) argues that while the aims of the zones are to increase the capacity of the state to improve its revenue base, expand on its physical infrastructure and create environmentally sustainable jobs, the outcome for the population has been deprivation, displacement and dispossession from livelihoods and ancestral inheritance.

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For African countries, identifying power imbalances in trade negotiations may be a first step toward reversing the trend of growth via the intensification of resource extraction. Indeed, the formulation of regional- or continental-level trading blocs with which to create a ‘China’ strategy could conceivably even the playing field, at least somewhat, in multilateral fora such as FOCAC. China has already signed a ‘Framework Agreement on economy, investment, trade and technical cooperation’ with the East African Community in 2011 (Abegunrin and Manyeruke 2020). However, as Taylor (2012) notes, ‘Africa [currently] has no credible China policy’, although the African Union has recently tried to bolster individual states’ negotiating capacity. This may have been compromised previously by the fact that it was reported that China was hacking the African Union’s computer systems daily, until this came to light in 2017 (Abegunrin and Manyeruke 2020). As noted earlier, China had previously gifted its new headquarters to the organisation. At the country level, individual policy and the ‘negotiation’ of China must take into account the themes discussed in this book. Understanding how and why successful industrial assemblages, of the type to create broad-based employment, function is paramount to African states seeking to reverse extant trends. Yet the manifold advantages that Chinese firms often have, including active state support, large domestic markets and soft financing, make it very difficult for African firms to compete (Carmody 2017). Successful industrialisation, and its consequent employment creation, will require capability development and multiple axes of strategic coupling. Yet beyond this, the types of assemblage constructed are only part of the broader picture of development, with the nature of the state, and the way those assemblages are articulated into global regimes, playing major roles in deciding whether or not they will be successful. The signs to date are not encouraging. BRI projects may achieve short-term gains at the expense of long-term pain and Africa’s unfavourable incorporation into this new global project will likely replicate previous forms of dependence. China brings both potential benefits and risks and costs to its increased engagement. Ethiopia, or at least the previous development regime in that country, showed the potential of leveraging China strategically to aid in domestic industrialisation efforts. A more articulated China strategy at the level of the AU would be an important first step in helping countries on the continent map out and coordinate what their collaborations might be, both in terms of intra-African cooperation and their engagement with China. Whereas China has shown it prefers bilateralism

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in its relations with African countries through FOCAC, for example, this could become a joint initiative of the AU, which as noted earlier has demonstrated commitment and effectiveness in a variety of areas, including the construction of the African Peace and Security Architecture. African countries need to leverage their collective power to have a better chance of withstanding being overwhelmed by Chinese strategic objectives, and to leverage the fragmented nature of Chinese engagements. To turn Africa’s shadow into a real rise will entail taking opportunities for industrialisation in agro-processing, off-shoring of manufacturing from China and other rising wage economies and LCPs and mineral beneficiation (Lopes 2019), combined with policies to promote exports and foster domestic market formation. This is a tall order in the context of the coming fourth industrial revolution but development ambition is an important spur to achievement (Cramer 2016). China is a highly and increasingly authoritarian state (Economy 2019) and is not afraid of punishing countries that defy it by using its economic and geopolitical power. As noted earlier for example in 2016 it closed a key border crossing with Mongolia after a visit by the Dalai Lama to that country. It is also reportedly involved in intensive surveillance and disciplining of its own population through the ‘Study the Great Nation’ mobile phone application and ‘re-education’ centres in Xinjiang, reportedly housing hundreds of thousands of Uighur Muslims. Given its political dimensions and the important role which SOEs play in it, the BRI is perhaps best conceived of as a politico-spatial fix to problems of over-investment and accumulation and the imperative of maintaining legitimacy domestically for the CCP. It is primarily designed to secure Chinese-based rather than other geographically embedded interests. As Lake (2017: 379) notes the CCP is Leninist in orientation, thereby empowering it ‘or China as a whole to act on behalf of subordinate peoples without their consent or even acquiescence’. This does not mean that China cannot be leveraged for developmental gain. Indeed as an economic superpower it must be.6 However, this will require a reconstruction of the relationship between external actors, including China, for most African states and between states and their populations (Galtung 1971 cited in Flint and Waddoups 2019). The previous model in Ethiopia has perhaps given some indication of what such a reconfiguration might look like, although like China this model was also highly authoritarian. As noted earlier, globalisation and its different varieties are evolving rapidly. In order to be developmental these will have to be skilfully negotiated. The capability of African

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states to do this is down to their nature and structures. Ultimately it is political struggles within Africa which will determine the nature of states there.

Notes 1 This refers to the Bandung Conference of 1955 which ultimately led to the creation of the NAM of developing countries. 2 Which is itself heavily influenced by factors such as China and the IFIs. 3 According to the McKinsey Global Institute (2017 cited in Lopes 2019) prices for certain products in Africa have gone down by up to 40% because of the presence of Chinese firms, but it is important to remember that ultimately you cannot consume if you do not produce. 4 ‘In 2015 almost two-thirds of African citizens lived in a country where safety and rule of law had deteriorated over the previous 10 years’ (Mills et al. 2017: 14). Raila Odinga, the Kenyan opposition leader attributes the ‘assault on democracy’ on the continent to the emergence of China as a dominant economic player. This has economic impacts as

democracies tend to outperform autocracies statistically given their greater accountability (Bates and Block 2018). ‘The continent’s democracies have typically posted economic growth rates that are one third faster than its autocracies’, in addition to being much less volatile (Mills et al. 2017: 52). 5 Although some of this may be from formerly South African companies, such as AngloAmerican, which have moved their headquarters to London. We are grateful to Victor Shubin for this point. 6 For example the Chinese telecoms company Huawei filed the most patents with the World Intellectual Property Organization (WIPO) in 2018 – more than 5,000 (CGTN 2019) – and this was the first year in world history that companies from Asia filed more patents with WIPO than those from the rest of the world combined.

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Index

Note: Page numbers in italic indicate tables and n following a page number refers to an endnote with relevant number. 5G (mobile technology), 34, 185; see also Huawei Abe, Shinzo, 176 Abiy, Ahmed, 55–6 Addis Ababa Action Plan, 104 Africa rising: creation of concept, 1–3; liquidity in financial system, 205; opportunities, 208; scrutiny of concept, 4–5; shadow rise, 5–6, 18, 22, 183, 196 African Development Bank (AfDB), 3–4, 7, 183 African Union (AU), 55, 58, 207–8 agency: of African elites, 37–9, 40, 57; African states, 58–9, 199; bargaining at the margins, 19–20, 76; interconnection with power, 41–2; limited agency for aid recipients, 20, 91–2, 95–100, 109–10; revision of Chinese loans, 96–7 agricultural investment, 196, 198, 203 AIIB (Asian Infrastructure Investment Bank), 34, 35, 185 Alibaba, 202 ANC (African National Congress): concern over China relations, 71; human rights vs economic growth, 77 Angola, 49–51; authoritarian rule, 57; bilateral relations, 96; Brazilian companies, 116; Chinese labour, 50, 51; debt rescheduling, 96; development finance, 37, 50–1, 95–6, 99,

109; economic growth, 96; elections, 49; elite (Futungo) agency, 40, 49–50, 51; infrastructure and construction contracts, 50–1; Kilamba Kiaxi housing complex, 50, 80; loan conditionality, 181; local workers, 197; oil employment potential, 206; oil exports, 42–3, 71; oil infrastructure, 19 anti-corruption, development aid, 103, 104 Arab Spring, 58 Asian Infrastructure Investment Bank (AIIB), 34, 35, 185 assemblages: Angola-China relations, 49–51; co-existence of power, 18–19; theory, 38, 41–2; Zambia-China relations, 44–9 Baldwin, R., 10 Bandung spirit, 195, 196 al-Bashir, Omar, 58 Beijing Action Plan, 104 Belt and Road Initiative see BRI (Belt and Road Initiative) Benin, economic growth, 9 Bond, P., 200 Botswana, Checkers supermarkets, 83 Bräutigam, D., 53, 181, 182, 184–5, 198 Brazilian companies, 116 BRI (Belt and Road Initiative): debt sustainability framework (DSF), 189; e-commerce and artificial intelligence, 17; encouragement of market access,

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74; fragmented rollout, 180; global initiative, 178; objectives, 178–9; potential benefits and risks, 207; umbrella project, 7–8 BRICS: development bank, 34, 74; economic growth slowdown, 79, 84n1; influence in Africa, 4; interest in Africa, 72; South Africa as gateway to continent, 70–1; see also ICS (India, China, South Africa) briefcase traders, 129–30, 133, 154–5 Burkina Faso, economic growth, 9 Busan High Level Forum on Aid Effectiveness (2011), 94, 106, 108 Cameroon, rising debt, 9 capitalism, extractive capitalism, 8–9 Chad, oil sector, 9 Chakrabarty, D., 16 Chamber of Mines (Zambia), 167, 168 Chambishi mine, 125, 133 Chambishi SEZ, 80, 81–2, 84 Chandra, V., 122 Chikwanda, Alexander, 45–6 China: Africa’s deepening dependence, 83, 84; bilateralism, 74–5; copper imports, 42–3, 82; currency devaluation, 205; debt, 201; economic overcapacity, 179; geoeconomic/geopolitical interests, 6–8, 102, 185, 201; geostrategic interests, 6, 43; National Development and Reform Commission (NDRC), 74; non-conditional foreign policy, 58; oil imports, 49; as partner in Africa, 199–200; SEZs (Special Economic Zones), 7, 80–2, 84, 206; strategic interests, 56;

surveillance and repression, 86n18, 208; umbrella projects, 7–8; varied impacts across Africa, 204–5; win-win selfinterest, 76, 203 China Development Bank, 74, 109 Chinese Communist Party (CCP), 78, 86n18, 208 Chinese companies: in Angola, 50–1; and BRI, 179–80; ‘dragon’s head’ (state-owned) companies, 57, 73, 85n11, 117; Huawei, 51, 200, 204, 209n6; longer-time horizons, 195; lossmaking, 201; territorial logics of power, 186–7; training of African workers, 51, 54, 145; World Bank projects, 56; in Zambia, 44, 45–9; Zambian mine ownership, 124–7, 125–6, 132, 133–4 Chinese workers: in Angola, 50, 51; competition with local workers, 181, 197; staying to settle in Africa, 73, 117 Citizen Economic Empowerment (CEE) Act (2006) (Zambia), 162, 163 Claudio-Quiroga, G., 5, 97 climate change, 102, 103, 104, 117 Collum mine, 45 Commercial, Trade and Industrial Policy (2009) (Zambia), 162, 163 commodities: African exports, 2, 7; China’s dependence, 6–7, 37; China’s exploitation, 1; paradox of plenty, 147–8 commodity prices: commodity super-cycle, 2; copper price volatility, 46–7, 48, 82, 124, 127, 152, 153; downturn, 12–13, 132–3; and economic growth, 9; oil downturn, 9, 51, 79; and power of African rentier states, 37, 59n3; and Western financial institutions, 37

INDEX

conditionalities, loan, 73, 75, 95–6, 181, 196 Conrad, R.F., 46 construction industry, 36, 50–1, 52, 54–5, 82, 180 copper: Chambishi SEZ, 81–2; price volatility, 46–7, 48, 82, 124, 127, 152, 153; Zambian exports, 42–3, 49, 82, 122–3; Zambian production/capacity, 125–6 Copperbelt region, 43, 127–9 Copperbelt SME Suppliers Development Program, 164 Corkin, L., 49, 50 corporations: African, 14, 23n11; Huijan (Ethiopia), 54; selection environments, 15, 23n15; Small and Medium-Sized Enterprises (SMEs), 14, 137–8, 164, 165–6, 202; successful African exporters, 14–15, 23n11, 23n14; see also Chinese companies Côte d’Ivoire, 9, 22n5 DAC (Development Assistance Committee): China-DAC Study Group, 108; development effectiveness, 94–5, 108; social sector aid, 111n5; southernisation of aid practices, 20, 93; trilateral donor cooperation, 105–7; Working Party on Aid Effectiveness (WPAE), 108; Zambian critique, 98 debt: cancellation and restructuring, 102, 104, 181, 189; China’s alleged debt trap diplomacy, 21, 176–7, 180–1, 185–6, 188–9; debt sustainability framework (DSF), 189; rising levels, 184; risks of debt distress, 9–10, 53; see also loans deindustrialisation, 38–9, 51, 60n4, 79, 86n20, 119

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democracy, China’s ‘rogue aid’, 77–8, 177, 197, 203, 209n4 Deng Xiaoping, 80 Denmark, development aid, 94, 107–8 Derickson, K., 16 development finance: Angola, 37, 50–1, 95–6, 99, 109; China-Africa Development Fund, 197; China’s changes since 1956, 101–5, 102–3; China’s new role, 20, 92–3; Chinese transparency, 105; convergence between China and Western donors, 20, 93–5, 200; development effectiveness paradigm, 94–5; for economic growth, 93; emerging donors, 91–2, 100; fraud concerns, 99; IFI conditionalities, 95–6; for infrastructure, 5, 36, 93, 103, 104; limited agency for recipient countries, 20, 91–2, 95–100, 109–10; mix of vectors, 93; self-interest of donors, 94; Sustainable Development Goals (SDGs), 94; terminology, 105; trilateral development cooperation, 105–7; Zambia’s agency, 95, 98–9; see also DAC (Development Assistance Committee); loans diamond industry, 203 Djibouti, 183, 184 DRC (Democratic Republic of Congo): conflict, 9; infrastructure-for-resources loans, 95; limited agency over Chinese loans, 96–7, 100; Sicomines deal, 5, 96–7 Durban port, 200 Dutch disease, 148, 171n1 East African Community, Framework Agreement, 207 economic geography, 13–15

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economic growth: affected by commodity prices, 9; and debt overhang, 183; favoured before human rights, 77–8; ‘flying geese’ concept, 121–2; and local content policies, 146; poverty elasticity, 12; and poverty reduction, 198; pros and cons, 196–9; resources contribution, 7 economic nationalism, 144 education, development aid, 103, 104 elites: Angola, 40, 49–50, 51; benefits from Chinese aid, 182–3, 188; benefits from Local Content Policies (LCPs), 150–1; Chinese projects, 32, 36–7; DRC, 96; limited agency, 37–9, 40, 57; material gains from political office, 39; rent-seeking, 148; strategies of extraversion, 56, 59, 76; Zambia, 57, 128 energy sector, 97–8, 111n3, 206; see also oil environmental degradation, 197, 198 environmental protection, 103, 104 Ethiopia, 51–6; Chinese engineering and construction projects, 54–5; Chinese investment, 52–3; Chinese trade deficit, 53; construction workers, 54; debt, 9, 53; development finance, 95, 99–100; developmental state, 17, 39; disputed 2005 election, 52; economic growth, 52; economic liberalisation, 55–6, 202–3; energy sector loans, 97–8, 111n3; foreign investment, 55; geostrategic importance, 52; infrastructure projects, 53; local workers, 197; low wages, 53–4; manufacturing industry, 53, 54; railway projects, 53, 54, 181; sesame seed exports, 54; SoleRebels, 23n14; state assets

sales, 55; textile industry, 53–4; US trade deficit, 53 Ethiopian Airlines, 55 European Union (EU): aid to China, 93–4; Economic Partnership Agreements (EPAs), 59, 70; pragmatic development policies, 93–4 EXIM (Export-Import) Bank, 51, 96, 98, 111n3, 180 Faria, C., 16 FDI (foreign direct investment): and economic growth, 3; for geostrategic reasons, 182; increase, 23n18; limited Chinese investment in Africa, 19, 35–6; not necessarily beneficial, 118– 19; Zambia, 48 Fessehaie, J., 130, 131, 154 finance: China’s currency devaluation, 205; currency swaps, 35; fiat currencies, 10; ICBC-Standard Bank investment, 75; liquidity in global system, 205; virtual capital, 17; see also development finance; FDI (foreign direct investment) financial crisis (2008/9) see NAFC (North Atlantic Financial Crisis) 5G (mobile technology), 34, 185; see also Huawei flexigemony, 36–7, 199 Flint, C., 185 ‘flying geese’ concept, 121–2 Forum on China–Africa Cooperation (FOCAC), 7, 35, 101, 102–3, 104–5 fraud, 99 FRELIMO, 78 French, H.W., 75 geo-governance, 19, 74, 75–6, 84, 85n12 geoeconomics, China, 6–7

INDEX

geopolitics: China, 6, 102, 185, 201; Ethiopia, 99 Ghana: economic growth, 9; LCP failure and policy incoherence, 151; limited elite agency, 57–8 gig economies, 17, 202 Globalisation 1 (financial/ corporate), 16, 83, 128, 138 Globalisation 2 (from below), 16, 43, 73 Globalisation 3 (virtual), 17, 202 globalisation: and Africa’s raw materials, 12; China’s multivector engagement, 7–8, 202; definitions, 8, 16–17; South African traders, 138; of state power, 78; temporality, 9–11 Gonzalez-Vicente, R., 57 GPN (global production network) theory, 13–14 Guinea, 1 Hambantota port (Sri Lanka), 180, 182 health, development aid, 103, 104 hegemony: China vs the West, 33–4, 185–6; definitions, 34; flexigemony, 36–7, 199; interdependent hegemony, 35, 200–1; trilateral development cooperation, 105–7 Highly Indebted Poor Country (HIPC) initiative, 2, 91 Hu Jintao, 104–5 Huawei, 51, 200, 204, 209n6 Huijan, 54 human rights, China’s ‘rogue aid’, 77–8, 177, 197, 203, 209n4 Humphrey, C., 97 ICS (India, China, South Africa): importance in Global South, 139; minimal linkages to local businesses, 20–1; Zambian investment, 116–17, 119–20; Zambian mining industry,

217

117–18, 124–7, 125–6, 131–4; Zambian tourism, 134–8 IMF: Angola negotiations suspension, 95; debt relief initiatives, 2; development finance conditionalities, 95–6; DRC termination, 96; SAPs (Structural Adjustment Programmes), 118, 135 India, Zambian mine ownership, 124–7, 125–6, 131–3, 132 Industrial and Commercial Bank of China (ICBC), 75, 137–8 inequality, 1, 3–4 information and communication technologies (ICTs), 8, 17 infrastructure projects: bargaining at the margins, 19–20, 76; Chinese finance, 5, 36, 93, 103, 104; financing gap, 183; loan conditionalities, 73, 95–6; power and transport sector loans, 183; shoe and leather industry, 54; see also railways International Capacity Cooperation (ICC) project, 186 international financial institutions (IFIs): in Africa, 58; decline of influence, 200; and Ethiopia, 52; global hegemony, 73–4; Zambia, 184 job creation, 119, 121–2, 123, 135, 162, 163 Jobs, Prosperity and Competitiveness Programme (Zambia), 162, 163 Kabila, Joseph, 96 Kaname, Akamatsu, 121 Kansanshi mine, 48, 125, 128, 134 Kaunda, Kenneth, 43, 152 KCM (Konkola mine), 48, 125, 129, 131–3, 154, 164 Kenya: SGR (Standard Gauge Railway) loan, 176, 180–1,

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183; tilapia imports, 187; trade imbalance, 187 Kilamba Kiaxi housing complex, 50, 80 Kitwe, 127–9, 131 Konkola mine (KCM), 48, 125, 129, 131–3, 154, 164 labour: competition with local workers, 181, 197; see also Chinese workers LCPs see Local Content Policies (LCPs) Lee, C.K., 52, 119, 127, 187, 195 Lin, J.Y., 118, 121–2, 139 linkages: definition, 122; limited linkages and spillovers, 139, 149, 168; policy environment for success, 151–2; potential benefits, 148–9; and structural transformation, 116, 119, 122, 138–9; see also Local Content Policies (LCPs) Livingstone, 83, 117, 119, 123, 134–7 loans: conditionalities, 73, 75, 95–6, 181, 196; credit implications of risk, 75; geo-strategic reasons, 182; Hambantota port (Sri Lanka), 180, 182; interest rates, 195–6; securitisation terms, 176, 184–5; Zambia, 176, 180, 195–6; see also development finance Local Content Policies (LCPs): benefits to ruling elites, 150–1; contextual factors, 146, 151–2, 169–70; definition, 149–50; for economic development, 146, 149–50, 206; economic nationalism, 144; indigenisation policies, 144–5; legal dimension, 150; mixed results, 146, 169–70; policy environment for success, 151–2; political economy perspective, 150–1; site design and construction phase, 170;

South Africa’s lip service, 139; spatial dimension, 149, 150; voluntary nature, 150, 169; Zambia Mining Local Content Initiative (ZMLCI), 155–6, 164, 165–6; Zambia’s macro-level policies, 156–61, 157–8, 169; Zambia’s meso-level policies, 161–4, 162, 169; Zambia’s micro-level policies, 164, 165–8 local suppliers: commodity price downturn effects, 132–3; competition from briefcase traders, 129–30, 133, 154–5; competition from foreign-owned OEMs, 128, 129, 154–5; ICS mines impact, 131–4, 132; inability to meet standards, 154; limited inputs sourced locally, 188; marginalisation in Zambia, 128–30, 146; mining industry, 131–4, 132; negative effects of privatisation, 153–5; in Niger, 145; price a determining factor, 133–4; supermarket chains, 83, 136–7, 168; Zambian online data base, 166 Lourenço, João, 51 Luansha mine, 129, 154 Lubambe mine, 125, 131 Lumwana mine, 45, 126, 129, 133–4 Lungu, Edgar, 47, 49 Ma, Jack, 202 McMahon, D., 187 Maiza-Larrarte, A., 5, 97 Mandela, Nelson, 71 manufacturing industry: Africa’s limited share, 11–12; China’s deindustrialisation impact, 38–9, 51, 60n4, 79, 86n20, 119; Chinese imports, 38–9, 188; Ethiopia, 53, 54; export share, 11–12; fall in valueadded, 39; robotics and skills, 10; transnational Original

INDEX

Equipment Manufacturers (OEMs), 128, 129, 154–5; Zambia, 118 Mauritius, Smart City, 80 Mbembe, A., 8–9 Michaelowa, K., 97 middle classes, 2, 128 migration flows see Chinese workers Mills, G., 48 Mineral Resources Development Policy (2013) (Zambia), 162, 163–4 Mines and Minerals Acts (Zambia), 153, 156, 157, 159, 167 mining industry: Collum mine shootings, 45; value chain activities, 48; see also copper; Zambian mining industry Ministry of Finance and Planning (Zambia), 167, 168 Ministry of Mines, Energy and Water Development (Zambia), 167, 168 Ministry of Trade, Commerce and Industry (Zambia), 167 mobile phones, 2, 200 Mongolia, and China, 185, 208 Mopani mine, 48, 126, 128, 129, 154, 161 moral panic, over China’s rise, 177 Morris, M., 151, 168 Mozambique: Chinese help to FRELIMO, 78; exports to China, 70, 72; infrastructure loans, 95, 98, 99; ShopRite, 83; Special Economic Zones (SEZs), 82 Mugabe, Robert, 45 multinational companies: African-originating, 14; FDI, 3; relocation to inland China, 178–9 NAFC (North Atlantic Financial Crisis) 2008/9: China’s public sector stimulus, 201; effect on copper mining sector, 153–4;

219

effect on copper prices, 48, 124, 152; effect on oil prices, 51; US loss of economic hegemony, 35 Namibia: Checkers supermarkets, 83; Chinese funding for SWAPO (South West African People’s Organisation), 78 Naspers, 202 natural resources see commodities; copper; oil Navarro, Peter, 33, 177–8 Negi, R., 133–4 neo-developmentalism, 78, 200 Netherlands, development aid, 94 Niang, A., 204 Niger, oil sector, 145 Nigeria: conflict, 9; Dangote group, 23n11; Free Trade Zones, 206; Niger Delta, 118; oil industry local suppliers, 129 OECD, 4, 20, 92, 93, 109, 204; see also DAC (Development Assistance Committee) oil: Angolan exports, 42–3, 49; local suppliers, 129, 145; potential employment opportunities, 206; price decline, 9, 51, 79 Ovadia, J.S., 149, 150, 206 Owusu, F., 33 Pence, Mike, 176, 180 Phillips, J., 57–8 Polk, A., 185 population growth, 4 poverty, 12, 198 power: bargaining at the margins, 19–20, 76; geo-governance, 19, 74, 75–6, 84, 85n12; interconnection with agency, 41–2; lacking in importdependent Zambia, 82–3 Power, M., 49–50 Privatisation Act (1992) (Zambia), 153, 156, 157 Protea hotels, 135–6

220

INDEX

railways, 19, 53, 54, 76; SGR (Standard Gauge Railway) loan, 176, 180–1, 183 Ramaphosa, Cyril, 77, 86n17, 204 raw materials see commodities rentier states, 37, 59n3 repressive regimes, 77–8, 203 robotics, 10 Rwanda, 3, 17, 40 Santos, Eduardo dos, 49, 51 Sanusi, Lamido, 188 SAPs (Structural Adjustment Programmes), 118, 135 Sata, Michael, 43–5, 181 security, development aid, 103, 104 SEZs (Special Economic Zones), 7, 80–2, 84, 206 shadow rise, 5–6, 18, 22, 183, 196 shipping industry, 180, 182, 200 ShopRite, 83, 136–7 Small and Medium-Sized Enterprises (SMEs), 14, 137–8, 164, 165–6, 202 Soko, Mills, 76–7 solar energy, 206 Solwezi, 125, 126, 128, 129 South Africa: Chinese investment, 75; exports transhipped via China, 83; ‘Gateway to Africa’ for BRICS, 70–1; industrial policy, 78; manufacturing industry, 79; Marikana massacres, 86n17; MineralsEnergy Complex (MEC), 77; Naspers, 202; political relations with China, 77; rail contracts, 19, 76; ShopRite, 83, 136–7; steel imports, 76–7, 85n16; subimperial power, 200; trade with China, 70, 76; Zambian mine (Lubambe), 124, 125, 127, 131; and Zambian tourist economy, 135–8; see also ICS (India, China, South Africa)

South-South cooperation, 69, 95, 109, 117, 177 Special Economic Zones (SEZs), 7, 80–2, 84, 206 Sri Lanka, Hambantota port, 180, 182 state capitalism, 187 Structural Adjustment Programmes (SAPs), 118, 135 structural transformation: analytical framework, 120–2; challenges, 118, 196–7; FDI not necessarily beneficial, 118–19; ‘flying geese’ concept, 121–2; investments by ICS companies, 116–17, 119–20; job creation, 121–2; knowledge spillover, 122; LCPs not always effective, 146; linkage to local economy needed, 116, 119, 122, 138–9; SEZs focussed on extraction not value addition, 81, 84; see also linkages structuration theory, 59 supermarket chains, 83, 136–7, 168 Sustainable Development Goals (SDGs), 94 SWAPO (South West African People’s Organisation), 78 Swedlund, H.J., 100 Taylor, I., 4, 104–5, 117, 200, 201, 207 Tencent, 202 territorial innovation systems, 13 textile and clothing industry, 53–4, 85n15, 118, 135 trade: Angolan oil exports, 42–3, 49; China-Southern Africa, 69–70, 85n4, 115; Chinese protectionism, 187–8; commodity exports, 2, 7; deficit with China, 71–2; exportoriented/import-dependent economies, 82, 188, 200; Red Sea route, 184; Zambian copper exports, 42–3, 49, 82, 122–3

INDEX

trade agreements, 40 trade trap, 5–6 training, by Chinese companies, 51, 54, 145 Transsion, 200 Uber, 8, 22n4, 23n17 Uganda: Madhvani group, 23n11; railway network, 183; rising debt, 9 UNIDO, Subcontracting and Partnership exchange, 164 United Arab Emirates (UAE), 184 United Kingdom, development aid, 94, 107 United Nations: North Korea, 71; Sustainable Development Goals (SDGs), 94 United States: on the ‘China threat’, 177–8; development aid, 107; Ethiopian trade deficit, 53; global influence, 34, 35; Prosper Africa, 33–4 urbanization, 16 Vedanta, 131 Whitesell, D., 16 World Bank: and Chinese firms, 56; debt levels, 184; debt relief initiatives, 2; on economic growth, 198; Ethiopian agency, 97–8; SAPs (Structural Adjustment Programmes), 118, 135; South-South Experience Exchange Facility, 108–9 WTO (World Trade Organization), 39–40, 52, 56, 74 Xi Jinping, 178, 183 Zambia: anti-Chinese feelings, 43; Bank of Zambia powers, 98–9; Chambishi SEZ, 80, 81–2, 84; commodity currency, 10; concessional loans, 176, 180,

221

195–6; construction contracts, 180; currency swaps, 35; debt, 9, 184; debt to GDP ratio, 82; deindustrialisation, 119; development aid reduction, 98–9; development finance agency, 95, 98–9; elections, 43, 47; export-oriented/ import-dependent economy, 82; financial and investment controls, 45; IFI neoliberal policies, 184; legislation see Zambian legislation/initiatives; Local Content strategy, 155–6; manufacturing industry, 79, 118; mining see Zambian mining industry; SAPs (Structural Adjustment Programmes), 118, 135; Sino-Zambian relations, 43–9; Special Economic Zones (SEZs), 80–2, 84; supermarkets, 83, 136–7; textile and clothing industry, 118, 135; tourism see Zambian tourist industry; Zamtel de-privatisation, 44–5, 78 Zambia Consolidated Copper Mines (ZCCM), 125, 126, 127, 130 Zambia Development Agency (ZDA), 167, 168 Zambian legislation/initiatives: Citizen Economic Empowerment (CEE) Act (2006), 162, 163; Commercial, Trade and Industrial Policy (2009), 162, 163; Development Agreements (DA), 153, 156–9, 157; Jobs, Prosperity and Competitiveness Programme, 162, 163; Mineral Resources Development Policy (2013), 162, 163–4; Mines and Minerals Acts, 153, 156, 157, 159; National Industrial Policy (2018), 162, 163–4; policy reversals and uncertainty, 48–9,

222

INDEX

160, 161; Privatisation Act (1992), 153, 156, 157; Zambia Mining Local Content Initiative (ZMLCI), 155–6, 164, 165–6 Zambian mining industry: briefcase traders, 129–30, 133, 154–5; Collum mine repossession, 45; dominated by FDI, 119–20; and electricity tariffs, 158, 161; foreign currency restrictions (SI 33 & 55), 158, 159–60; foreign ownership, 131–4, 132; government agencies/actors, 167, 168; ICS companies, 117–18, 124–7, 125–6; importance to economy, 82, 152; income from copper and cobalt, 48, 98; limited opportunities for local suppliers, 128–31; mining tax regime, 45–7, 48–9, 156, 158, 160–1; service providers, 128; South African ownership, 131; supplies from home countries,

118; transnational Original Equipment Manufacturers (OEMs), 128, 129, 154–5; VAT rule amendments, 157, 158, 161; wages, 44; see also copper; local suppliers Zambian tourist industry: accommodation, 123, 135–6; Chinese tourists, 135, 136; effect of climate change, 117; hotels, 135–6; import-dependent economy, 136–8; importance to economy, 123, 134–5; job creation, 119, 123, 135; South African and Chinese companies, 135–8; tourist numbers, 117, 123, 135 Zhu, C.P., 185 Zimbabwe: Chinese funding for ‘rogue state’, 78, 203; diamond industry, 203; exports to China, 70, 85n7 Ziso, E., 55, 204, 205 Zuma, Jacob, 76, 198