Investors rush for Africa
New Era | 13 July 2009
Investors Rush for Africa
by Desie Heita
BRUSSELS, Belgium – Africa of today is to the world a maiden ready for courtship. Recent additional discoveries of natural gas and oil, compounded by high commodity prices, have endeared Africa, a continent once often referred to as the “dark continent,” to both the emerging and developed part of the world.
Immense uranium deposits in Namibia, copper, steel mining, and reservoirs of fuel in east and west Africa, have attracted the attention of emerging economies of Russia, China, as well as the developed countries of Europe.
As a result the three economies are now the leading suitors for Africa’s resources and each continues to shove love poems of “economic agreement and bilateral agreement” on Africa’s hands.
However, Europe says that it is genuine in its commitments of seeing a developed Africa for long-term benefits, unlike with China or Russia, whose only concerns are Africa’s mineral resources.
“We have a responsibility towards Africa to establish good governance and institutional democracy,” say Members of Parliament.
New Era talked to four Members of the European Parliament, here in Brussels regarding Europe’s position on the ongoing scramble for Africa’s riches. The parliamentarians are Kristof Fjellner and Daniel Caspary, from the group that represents the Christians and Conservatives as well as David Martin and Kader Arif, representing the Socialist Party in the European Parliament.
The parliamentarians say Africa’s development lies not in the one-off sale of its mineral resources to Russia and China but in the reciprocal trade of Economic Partnership Agreement (EPA) currently on offer from the EU.
Arif simply asks a rhetorical question: “China or Russia’s interest on Africa, are they real? These are their own short-term interests looking at furthering their economic growth and not for Africa’s growth.”
Conservative Fjellner says Europe cares about Africa’s future more than the price of commodities Africa has to offer.
“We like to see that the money from commodities does not end up in the hands of a corrupt few. We might be hard in our negotiations with Africa but in the end our trade agreement would benefit Africa,” says Fjellner.
It is now the job of African leaders, says Arif, “to decide what do they want for development and what sort of trade deal they want to accept”.
Europe’s only concern is that millions of money has been poured into Africa far too long without any development progress. Yet, in the very similar time period, Asia has managed with little development aid to emerge from poverty and attain emerging market status. There are lessons to be learnt by both Africa and Europe, says Caspary.
Yet while China and Russia continue to successfully capture Africa’s heart with their readiness to sign cash cheques for rail infrastructure and other state infrastructure development programmes, – in return for exploration for oil and other natural resources – Europe’s Economic Partnership Agreements have not been well accepted in Africa.
Parts of African countries continue to raise concerns over the threat of regional integration, that the EPA would make them unable to trade with either China or Russia.
EPA might not be the perfect trade agreement, but they are the best and genuine deal on the table for Africa this far, the two European political parties say in unison.
Ironically, the Christians Democratic and Conservative group and the Socialist Party do not necessarily agree on technical aspects of the EPA.
The Socialist Party, for instance, opposes the Most Favoured Nation clause just as Namibia and South Africa do, and that the EPAs do not advocate regional integration, again just as Namibia and South Africa claim.
Most Favoured Nation was introduced by the World Trade Organisation and requires a country to treat all trading partners alike that is no discrimination between sources of supply.
“The Most Favoured Nation clause is not needed in the EPA agreement,” says Martin.
On regional integration Martin says: “I still doubt the EPA agreements [especially that] in Africa they run counter to regional integration. It is difficult to imagine EPA being successful in Southern Africa Development Community (SADC) without South Africa, the big player in the region, being a member of the EPA agreement.”
In addition, says Martin, the implementation of the liberalisation of market is too front-loaded, and the Socialist Party would want to see liberalisation at the end of the agreement period instead of at the beginning.
However, the Socialist Party is not against the EPA because there is a need to have a trade agreement that helps pull Africa from poverty, says Martin.
