Conclusion - Development Begins at Home

We have noted that the evidence shows that Chinese investment is neither an unqualified benefit for the economies of the region, nor simply a neo-colonial plundering of local resources. Because it has potential for both harm and good, our research teams were of the view that the impact of Chinese investment for good or ill depends very much on the way in which local politicians and governments approach the issue. Governments, it was agreed, can ensure that the impact of Chinese investment is positive rather than negative.

Claude Kabemba's picture

Director of the Southern Africa Resource Watch (SARW)

October 9th, 2012

We have noted that the evidence shows that Chinese investment is neither an unqualified benefit for the economies of the region, nor simply a neo-colonial plundering of local resources. Because it has potential for both harm and good, our research teams were of the view that the impact of Chinese investment for good or ill depends very much on the way in which local politicians and governments approach the issue. Governments, it was agreed, can ensure that the impact of Chinese investment is positive rather than negative.

The DRC study, for example, noted that the state needed to improve its mining resource management capacities, in particular through training and the promotion of the formal economy. We have already noted the South African study’s view that the government needs to gather more information on Chinese investment which must be used to inform a more strategic approach. But it was our Mozambique study which explored this issue at greatest length. We cite it here to illustrate problems common in lesser or greater degree to all our case studies.

The Mozambican study points out that the business opportunities which Chinese investment presents to elites are not always in line with their countries’ policies and regulations, and such mismatches between the national interest and the interest of individuals might provide part of the answer to the lack of political will to improve the capacity of the state to implement and oversee the country’s regulatory framework. In other words, it suggests that local political and business elites may have a strong incentive to allow resources to be exploited in contravention of local laws and rules because they benefit directly.

To illustrate, it argues that, while Chinese demand for unprocessed wood has driven the extraction of much of Mozambique’s forest and determined the export market of timber, the problem lies not so much with the Chinese, but rather with weak governance, poor implementation of the laws designed to protect the industry by the Mozambican authorities, and the lack of a clear strategy of the government to develop the timber business sustainably. Not only has illegal logging continued, but it is suggested that state-owned enterprises (which import 40-50 percent of Mozambican timber exports) are largely responsible for the illegal trade in logs, as they have an incentive to support national companies and favour timber processed in China rather than Mozambique.

An element that influences China’s preference for importing logs is the risk involved in paying in advance for sawn timber. Exporters claim that there is a risk of receiving products that are of low quality or otherwise unsuitable. For this reason, exporters are reluctant to ship sawn wood in case it gets rejected. These problems primarily reflect the poor governance and reputation of Mozambique’s timber industry. Yet, as long as a preference for unprocessed timber exists, Mozambique will have little opportunity to gain added value from the timber industry.

A key problem is weak regulation. Several countries have imposed a ban on the export of logs (or of logs from certain species of trees), trying to both reduce the rate of deforestation and create incentives for the growth of a national timber industry. In Mozambique, until recently most forest species could be felled and their timber exported as logs. Currently, the export of unprocessed timber is not illegal under Mozambican law, but the government has tried to reduce the amount of logs exported from the country by placing a ban on the export of certain species of wood. For several reasons, this ban has not significantly reduced the amount of logs exported from the country, although it has had some impact on the growth of the exports of sawn wood.

In other countries, too, lack of regulation or failure to enforce the rules that exist are responsible for weak or negative development impacts. Despite the complaints about exploitation, Chinese investment does have the potential to promote Southern African development. It was noted in Chapter X that China is clearly not engaged in the region as an act of solidarity, but is motivated by its hunger for resources to fuel economic growth. China needs the region, therefore, at least as much as the region needs China. This suggests that Southern African countries have greater leeway to negotiate the terms of Chinese investment and to ensure that it conforms to local laws and needs. The degree to which China helps to develop rather than to exploit the region depends on Southern African governments and their citizens more than it does on the attitudes and strategies of Chinese investors.

About the author(s)

Claude Kabemba is the Director of the Southern Africa Resource Watch (SARW). In 2006, the Open Society Initiative for Southern Africa (OSISA) asked him to spearhead the formation of SARW. He holds a PhD in International Relations (Political economy) at the University of the Witwatersrand (Thesis: Democratisation and the Political Economy of a Dysfunctional State: The Case of the Democratic Republic of Congo). Before joining SARW, he worked at the Human Sciences Research Council and the Electoral institute of Southern Africa as a Chief Research Manager and Research Manager respectively. He has also worked at the Development Bank of Southern Africa and the Centre for Policy Studies as Policy Analyst. Dr. Kabemba’s main areas of research interest include: Political economy of Sub Saharan Africa with focus on Southern and Central Africa looking specifically on issues of democratization and governance, natural resources governance, election politics, citizen participation, conflicts, media, political parties, civil society and social policies. He has consulted for international organizations such Oxfam, UNHCR, The Norwegian People’s Aid, Electoral Commissions and the African Union. He has undertaken various evaluations related to the work of Electoral Commissions and civil society groups interventions in the electoral process in many African countries. He is regularly approached by both local and international media for comments on political and social issues on the continent. His publication record spans from books (as editor), book chapters, journal articles, monographs, research reports, and newspaper articles.

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