Published On: Thu, Aug 30th, 2018

FOCAC: China-Africa “sharity-driven” cooperation

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By Ehizuelen Michael Mitchell Omoruyi

In an interesting article written by political scientist Gerald Segal published in 1992, entitled “China and Africa”, the following conclusion could be read: “there may be grounds for believing that as China grows strong, it will grow somewhat more important for Africans, but in the Chinese perspective, it seems that while Africa will attract attention from the writers of official policy”. Eight years later, however, on a sunny November morning in Beijing, the Chinese president Hu Jintao greeted leaders from 48 African nations at the opening of the first formal China-African top summit, officially known as the Forum on China-Africa cooperation, or simply just FOCAC. As the clock ticks down, leaders of China and most African economies will gather in Beijing for the Forum on China and Africa Cooperation (FOCAC) summit. Since 2000, six FOCAC summits have been held at three-year intervals. The 18-year-old FOCAC has been the primary institutional platform and mechanism for the economic cooperation between China and African nations. It could be as a part of President Xi’s prestige diplomacy, the level of commitment China made at the 2015 summit in Johannesburg was surprisingly extraordinary: The US$60 billion is pledged over a three-year period in loans and other assistance including human resources, infrastructure, and manufacturing. This amount tripled the former US$20 billion commitment made by Hu Jintao during the 2012 FOCAC Summit in Beijing. I predict US$80-100 billion dollars this year. This year’s summit takes place in a year when China is celebrating the 40th anniversary of the “opening and reform” of the nation’s economy launched by paramount leader Deng Xiaoping in 1979. Hosting FOCAC this year offers China a symbolic occasion to progress towards the long-standing promise to use its own developmental success to help less advanced developing countries, which dates to Mao era but was prominently reiterated by Chinese President Xi Jinping at the Economic Forum in Davos in 2017. As China’s 40 years long of demographic dividend is coming to an end, China is actively seeking to seize fresh economic opportunities in higher-value added productive activities. This opens a new window for African economies to seize the opportunity offered by their own emerging demographic dividend era. The United Nations Population Fund (UNFPA) has identified four areas where China’s experience in capturing its own demographic dividend could be used to draw lessons for African nations: health and wellbeing; employment and entrepreneurship; right, governance and youth empowerment; and education and skill development.
In that direction and in the footsteps of the African Union’s 2017 summit theme of “Harnessing the Demographic through investments in Youth”, China’s hosting of this year FOCAC summit in September 2018 provides an opportune time for deepening skills transfer-related cooperation between China and African nations. This is because at a time of transitions, when frontier and less resources-driven African nations are emerging as potential candidates to take over the position that China long occupied as the global “poor and young” economic engine and “factory of the world”, and are ultimately likely become an African equivalent in the decades ahead, subject to closing the significant gap between demand and supply of skills required for the labour market of African nations transforming economies. According to the African Development Bank report, Africa has the fastest-growing middle class in the world today, comprising of 313 million people who spend at least US$2.2. According to 2017 African Economic Outlook, the continent has a young and increasing urbanized workforce, with a projected 12 million people added to Africa workforce yearly, and on top of that, its labour force is expected to rise from 620 million in 2013 to almost 2 billion in 2063. This presents an opportunity to reap a ‘demographic dividend’ and also provides a huge market for investors –particularly as the McKinsey Global Institute predict that Africa’s consumer spending will rise from US$860 billion in 2008 to US$1.4 trillion in 2020. Speaking of Demographic dividend, China demographic dividend supported China structural transformation during its reform and opening up, by adding 26.8 percent to the Chinese per capita GDP growth between 1982-2000, according to Cai and Wang.
Chinese firms have been rapidly increasing their business footprint in Africa, and they are a significant source of foreign direct investment to the continent. According to 2017 McKinsey report, there are over 10, 000 Chinese-owned firms operating in Africa presently – four times the previous estimate –and 90 percent of them are private firms, of all sizes and operating in diverse sectors. An essential factor in guaranteeing that these investments deliver on economic and social returns for both Africa and China hinges on closing the skills gap. Due to the fact that, one of the most significant issues they face on a daily basis is skills shortage among local. Skills shortages undermine structural transformation and the development of private sector. As a result, Africa’s economy still heavily relies on activities that mostly require low-skilled labour (such as agriculture or natural resources), which, by stunting the demand for skills, perpetuates the low accumulation of human capital. If Africa private sector and economy are to grow at a faster rate and be competitive globally, the continent needs to address the mismatch between the skills of vocational and tertiary institutions’ graduates and those required by the private sector. As for Chinese government, it has placed skills development for the youth at the heart of its bilateral ties with African nations by encouraging Chinese firms to create win-win outcomes via transferring skills and know-how among African youth. Recognizing the transformation in the world and priorities in China-Africa cooperation, at the last FOCAC summit meeting in South Africa in 2015, African and Chinese leaders heavily emphasized on education and skills transfer’ as the core of their relationship. Both parties believed that through the exchange of knowledge, skills, resources and technical know-how, China and Africa can support each other in advancing education and skill development. As such, skills that focus on creating capacity and empowering African youth to be “job-creators” rather than “job-beggars” is necessary for the structural transformation of Africa.
Almost two-thirds of Chinese firms offered some type of skills training. In firms engaged in construction and manufacturing, where skilled labour is a necessity, half provide apprenticeship training while experienced Chinese workers teach new African hires to begin work through hands-on teaching and gradually improve the new workers’ skill on daily operation. Still on closing the skills gap, two key Chinese telecom equipment providers, ZTE and Huawei are setting up training institutions in Africa to address local skills shortage they have identified for their own projects and business plans. Both firms have established a total of ten training centers across Africa and over 20, 000 African technicians are trained by Chinese IT and telecom company each year. Huawei has established eight training centers in Angola, Morocco, South Africa, Nigeria, Egypt, Tunisia, Kenya, and the Democratic Republic of Congo to train Africans in skills needed to operate and main wireless telephones and broadband internet systems; the firms has provided training to 12, 000 African students each year and over 60 percent of its 5, 800 employees on the African team are local, according to Tsui. Since 2013, Huawei and Nigeria’s Federal Ministry of Communication and Technology have organized an ICT based one-year knowledge training program for 1,000 females’ engineers. The program aims to bridge the gender divide in Nigeria by promoting “empowerment, employment, and the inclusion of women in the country’s development”. During this Ebola outbreak, the medical skills of over 13, 000 health workers and health professional were improved through training and capacity development. Huajian show factory sent 86 Ethiopian workers in 2012 to its production base in Jiangxi province for two months to acquire the necessary skills to initiate the operation. The firms have a program that is working closely with the Chinese government to train 300 Ethiopians.

Building local capacity, both in technical as well as regulatory expertise and skills, will be integral for the long-term sustainability of large infrastructure projects in Africa. The long-term horizons that railway or hydropower projects require to be economically viable makes local ownership and technical capacity imperative. Currently, in the case of Kenya and Ethiopia’s new SGR railways, the Chinese firms responsible for their construction have also been contracted for their operation over the next six years, with the aim of training domestic staff so that the projects can be locally maintained and managed into perpetuity without reliance on Chinese expertise. These projects showcase positive initiatives of Chinese training local staff and supporting the local economy. Skills transfer or knowledge sharing initiative from Chinese firms show why in the past, China has given a lot of concessional loans to African nations, but nowadays, China wants African people to have the capacity to create wealth for themselves –that is why the encouragement of training is now the core in China-Africa cooperation. In order words, there is a shift from a charity-driven relationship to a “sharity-driven” cooperation, that is technology shifts and broader trends of the world economy. This implies a vast and lucrative potential for reaping the productivity gains of a growth process of the type described by Lewis Model, but which itself will require a focused strategy by both African stakeholders and international investors for capturing those benefits. China and East Asia, in general, offer useful current reference points for such a procedure. It certainly will be the choice of individual African economies as to how to mould novel skill transfer-related opportunities into optimal national, regional, and continental development results over coming years, so as to meet the Agenda 2063, the African we want. This year, FOCAC partner China celebrates four decades of its own continuing work in that direction. And therefore, the 2018 FOCAC summit presents a critical opportunity for African and Chinese leaders to discuss the case for mutually beneficial infrastructure development, aid, investment, and trade opportunities to support mutual development.

Omoruyi is the Executive Director of the Centre for Nigerian Studies at the Institute of African Studies, Zhejiang Normal University.

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