Dr. George Ayittey is one of the world’s foremost authorities on the continent of Africa. As a professor, he has published many thought-provoking books about the continent, including Indigenous African Institutions; Africa Betrayed; The Blueprint For Ghana’s Economic Recovery, Africa In Chaos and Africa Unchained: The Blueprint for Africa’s Future.
In addition to this, Dr. Ayittey was selected by Foreign Policy magazine as one of “The World’s Top 100 Global Thinkers.” He has testified before US congressional committees and the Senate of Canada. Dr. Ayittey has served as a consultant to the World Bank, US AID, and International Council on Metals and the Environment (ICME).
Dr. Ayittey has given lectures to various organizations, institutions and universities, including the National Bar Association, the International Monetary Fund (IMF), the US State Department, US Foreign Service, and the United Nations Development Program (UNDP). He has appeared on numerous radio and television programs, including Canada AM, CBS Nightwatch, ABC Nightline, MacNeil/Lehrer NewsHour, C-SPAN, BBC World Service, and CNN International.
Recently, Bold contributor, Richard Ivory, interviewed the economist about his life and work, and gained interesting insights on his views about the role of China in Africa, and those who question whether or not capitalism is compatible with the continent.
BOLD: Dr. Ayittey, thank you for taking the time to allow us to interview you. Can you share a bit about yourself and your upbringing?
DR. GEORGE AYITTEY: I was born in Tarkwa, Ghana. I was one of 10 children born by my father. I was never a gifted child but more of a rascal. Even my younger sister, Sherry, beat me in primary school. What changed me was an event I will never forget.
One night an uncle hauled me and my elder brother into a room to teach us spelling. You can imagine the foot dragging and screams – even at the time when there was no television. Nevertheless, he taught us how to spell two words: Mississippi and hippopotamus and said he would give a quarter to the one who would be able to spell those two words, the next day. At the appointed time the following day, my brother couldn’t spell those two words. I struggled with them , but eventually managed to spell them. And true to his word he did give me the quarter. That changed my entire outlook on life. I came to believe that anything is possible or achievable, given the right incentives. My position in class changed from near last to second, even beating my sister. From then on, my academic performance accelerated and won me scholarships to finance my entire education – from primary school to university. I finished my PhD at the University of Manitoba with a GPA of 4.0. All because an uncle of mine cared enough about my education to teach me spelling and gave me a quarter after successfully spelling two words. Not only did I come to believe in myself, but also that incentives work.
Now, I chanced upon economics by accident. Our teacher – an Englishman called Mr. Frostick – did not know squat about economics. In fact, he himself was studying for his degree in economics at a British University while teaching us the subject. If you asked him a question, he would open the textbook, which he always kept on his table, and read you the answer. Naturally, economics was not my favorite subject. History and geography were but I did poorly in them, at the university level. So when it came to a subject to specialize in, economics was the obvious one. As you can see, I became an economist by default.
BOLD: In the past few years, China has played a much larger role in the affairs of African nations. How would you describe this new relationship? Is China’s role in Africa a positive or a negative?
DR. GEORGE AYITTEY: Largely negative because of the way African leaders handled it. Don’t get me wrong, trade with China could have been a boon for Africa. Indeed it was, pushing Africa’s rate of growth to 5.1% in 2013. But African leaders miscalculated –a fact which has become self evident with China’s economy in crisis. Operating under a fallacious notion that the enemy of my enemy must be my friend, African leaders threw caution to the winds and trooped to Beijing to throw themselves prostate before China and signed a blizzard of “sweet-and-sour” deals with African countries – sweet-for China but sour for Africa. Fallacious because Africa’s own history teaches that every foreign entity that goes to Africa, does so to pursue their interests, not Africa’s. Americans go to Africa to pursue American interests. The French go to Africa to pursue French interests. The Arabs go to Africa to pursue Arab interests. Certainly, the Chinese are not in Africa because they love black people so much. Not all the deals African leaders signed with China were in Africa’s interest. As an example, infrastructure had collapsed in Africa and China needed resources which Africa has. So why not infrastructure for resources deals? Indeed, there were but scams –
With the “infrastructure-for-resources” deals, some shady Chinese middlemen or syndicates estimated the cost of the infrastructure project at grossly inflated prices. Then they sought financing from China’s EX-IM bank. Then they demanded a quantum of resources to be shipped to China for repayment. All this was done with a bow. The higher the cost estimate, the larger the loan and the larger the loan, the more starry-eyed the cash-strapped African government for securing it. If the African government wavered, the Chinese might build a presidential palace, sports stadia, or dash the president a helicopter.
It was essentially a “closed shop” deal, shrouded in secrecy, and signed with mostly autocratic regimes, opaque; without any competitive bidding and all stacked in China’s favor. If approved, it was a Chinese company that undertook the infrastructure projects and there was no protection against cost over-runs.
A typical case was the $23 billion deal China signed with Nigeria — an oil-producing country that does not produce enough refined petroleum products for its people and must import 85 percent of them. China was build 3 refineries with a combined capacity of 750,000 barrels a day that exceeds the domestic demand of some 450,000 b/d. In exchange, China wants to grab one-sixth of Nigeria’s 36 billion barrels of oil reserves In Egypt, China undertook to build a $2 billion refinery that would be the largest such plant in the Arab nation and Africa. The capacity of the refinery will annually amount to 15 million tons or 105 million barrels of oil or 287,671 bbl/d.
China offered Ghana a $3 billion loan on barter terms. The loan will be used to rehabilitate portions of Ghana’s dilapidated railway system, build infrastructure to capture gas that would otherwise be flared from oil production, and reconstruction of roads. In exchange for the loan, China demanded a daily supply of Ghana crude of 13,000 barrels – the entire portion of the Government of Ghana’s share in Jubilee Oilfields – for the next fifteen and half years! The ruling NDC government, which has a majority in Parliament, has agreed to sign the deal.
In these “sweet and sour” deals (sweet for China but sour for Africa), there were additional sweeteners. Infrastructure construction and rehabilitation were to be undertaken by Chinese firms, which would bring in their own workers and materials. And, in the case of Ghana, they also had the first right of refusal to purchase any gas that was captured by the gas infrastructure they were building.
Second, the deals, signed with mostly autocratic African governments, were not transparent and were secured through secrecy, outright bribery, kickbacks, building a presidential palace for Sudan’s despot, donating the blue tiles that adorn Robert Mugabe’s new £7m palace in Harare, a large Namibian presidential palace in Windhoek, and sports stadiums in Congo DR and Guinea.
In July 2008, there was outcry over the China-Niger oil deal. Civil rights groups called for a parliamentary inquiry into the $5bn (£2.5bn) contract and for scrutiny of how funds will be spent. China’s state oil company was given oil exploration rights in Niger in June. “A mining union in Niger said the deal with China took place in the greatest of secrecy and with contempt for regulation” (BBC, July 31, 2008). In Nov 2011, Niger vowed to commission an audit of the Soraz oil refinery being built by Chinese oil company, CNCP, with a capacity of 20,000 bbl/d., after the price tag rose to $980 million from $600 million (Reuters, Nov 24, 2011). Note: The same refinery with the same capacity in Chad cost only $60 million.
In July 2009, Namibian prosecutors began investigating allegations of bribery kickbacks on government contracts with China. One involved a contract to supply Namibia with scanners at security checkpoints. The Beijing-based Nuctech Companies Limited that makes the scanners, was headed until 2008 by the son of Hu Jintao, China’s president. Nuctech is accused of having paid $4.2 million in kickbacks to a Namibian front company (The New York Times, July 31, 2009; p.A4). Another investigation involved a Chinese contract to build a key railroad link as prosecutors burrowed through a web of corruption on deals with China.
The Economist highlighted how a Chinese syndicate – Queensway Syndicate – fleeces Africa In Angola, Queensway set up a joint venture with the government, called China Sonangol. The deal signed in 2005 gave the company the right to export Angolan oil and act as a middleman between Sonangol and Sinopec, one of China’s major oil companies. The terms under which China Sonangol buys oil from Angola have never been made public. The syndicate gets the oil from the Angolan state at a low price that was fixed in 2005 and sells it on to China at today’s market prices. The price at which the contract was fixed is confidential, but it was $55 a barrel in 2005; in 2013, it was trading above $80. The syndicate rakes in billions of dollars. The Angolan president’s son is a director of China Sonangol. According to the IMF and the World Bank, billions of dollars have disappeared from Sonangol’s accounts. A 2011 report commissioned by the United Nations Development Fund “says that between 1990 and 2008, $34 billion disappeared from Angola’s public coffers” (The Wall Street Journal, Oct 15-16, 2011; p.A10). Isabel dos Santos, the daughter of the president, is now Africa’s richest woman with the personal fortune of $3.3 billion. Naturally
In return for Angolan oil, the syndicate promised to build infrastructure, including low-cost housing, public water-mains, hydroelectric plants, cross-country roads and railways. In 2006 the head of the external intelligence service, General Fernando Miala, alleged that $2 billion of Chinese money intended for infrastructure projects had disappeared (The Economist, Aug 13, 2011). The general was swiftly sacked, tried and imprisoned. Some housing and railway lines and the projects were at first financed by the syndicate. Then in 2007, the syndicate stopped paying bills for more than eight months. All work stopped, 2,000 Angolan day laborers were fired on the Benguela railway project. This forced the government to issue treasury bonds to raise $3.5 billion to finance the projects. Meanwhile, more than 90% of the residents of the capital, Luanda, remain without running water as the syndicate continues to prosper.
In Guinea, the syndicate set up a joint venture, African Development Corporation, with 85% share and the government with the remaining 15%. Guinea has the world’s largest reserves of bauxite and its largest untapped reserves of high-grade iron ore. The venture won exclusive rights to new mineral concessions in Guinea, including the right to negotiate oil-production contracts in the Gulf of Guinea. In return, the syndicate promised to invest up to $7 billion in housing, transport and public utilities. Guinea’s GDP is about $4.5 billion. Queensway syndicate was so pleased that it gave Guinea’s then military ruler, Captain Moussa Dadis Camara, a helicopter as a gift.
In Zimbabwe, the syndicate created a new company, called Sino-Zimbabwe Development Limited, which received rights to extract oil and gas, and to mine gold, platinum and chromium. In return, the company publicly promised to build railways, airports and public housing. These pledges were valued at $8 billion by Mr Mugabe’s government. But Queensway syndicate failed to meet many of the obligations. Zimbabwe is still awaiting even a fraction of its promised infrastructure. Guinea never received the 100 public buses that were meant to arrive within 45 days of the 2009 deal. Textile industries in Kano, Lesotho, and South Africa have been destroyed by cheap Chinese textile imports. Hundreds of thousands of Africans have lost their jobs in northern Nigeria, Ghana, Lesotho, and South Africa.
The impact of the China-Africa relationship has been devastating on local economies. In Ghana, “there were more than 20 textile firms that employed more than 20,000 people in 1995. In 2012, the industry has only 4 textile factories, employing less than 3,000 Ghanaians. The country’s once thriving textile market is now flooded with Chinese substandard textile products, therefore surging the unemployment rate. The situation has further deteriorated with the textile companies currently in operation now employing some 2,961 people”(Daily Graphic, April 30, 2012; p.40).
Clothing manufacturers in Lesotho, Nigeria and Zambia complain bitterly of cheap Chinese goods destroying their markets and jobs. In Nigeria, the influx of Chinese products has devastated Kano’s manufacturing sector. In 1982, 500 factories churned out textile products in Kano, but fewer than 100 remain operational today, most at far less than full capacity. Kano’s Kwari textile market, the biggest in West Africa, has swelled with stall after stall of Chinese fabrics and clothing. A decade ago, 80 percent of the fabric sold at Kwari was made in Nigeria, compared with 5 percent now. There are more beggars and other visible signs of poverty in Kano than ever before.
In South Africa, the textile union says some 100,000 jobs have been lost as Chinese synthetic fabrics replace cotton prints in street markets across Africa. In 2007, the unions threatened to boycott anyone selling Chinese products.
Africans have derived little benefit from these trade deals with China. They offer scant employment opportunities, as China brings its own workers into Africa. The Chinese are also invading sectors traditionally reserved for locals. In August 2013, Ghana began arresting foreign nationals, mostly Chinese, illegally engaged in artisanal mining. Further, the Chinese deals enrich the corrupt ruling vampire elites. Angola, Nigeria, Sudan, and Zimbabwe are examples where the trade and oil deals with China have not benefited the poor. Chinese aid, disingenuously described as with no strings attached, is propping up hideously repressive regimes in Ethiopia, Guinea, Sudan, and Zimbabwe. This aid is also impeding both political and economic reform, as recipients have little incentive to reform their abominable systems
Chinese loans are not free of strings. Three are attached. First, the recipient or borrower should have no diplomatic relationship with Taiwan. Second, construction of infrastructure must be undertaken by Chinese firms. Third, all the materials and labor must be Chinese. In other words, China’s loans are 100 percent tied.
More troubling, China’s increased engagement with Africa impedes the continent’s halting steps toward democratic accountability and better governance. The West has made its aid conditional on progress toward reform in several areas, including the rule of law, human rights, reduction of graft and improved access to education. China has never required these challenging commitments. China asks only that countries recognize the People’s Republic of China, and not Taiwan, as the only China. Under the precedent that Beijing has set, countries that are not inclined to work to meet U.S. standards can be increasingly confident that if they turn their backs on the Western powers, China will still be a willing partner and source of investment. Indeed in 2003, when the IMF suspended $2 billion in aid to Angola, citing rampant corruption, China came to the rescue with a $2 billion oil deal.
The initial enthusiasm that greeted China in Africa has now cooled. “There is mounting objection to China’s deepening forays into Africa” said News Africa (March 2007). Former President Thabo Mbeki of South Africa warned against allowing China’s push for raw materials to become a “new form of neo-colonialist adventure” with African raw materials exchanged for shoddy manufactured imports and little attention to develop an impoverished continent. Rene N’Guetta Kouassi, the head of the African Union’s economic affairs department echoed this warning: “Africa must not jump blindly from one type of neo-colonialism into Chinese-style neo-colonialism” (AFP, Sept 30, 2009). Some African commentators are less charitable, denouncing what they saw as “chopsticks mercantilism,” alluding to the chopsticks dexterity with which China picked off at its leisure platinum from Zimbabwe, copper from Zambia, and oil from Angola, Nigeria and Sudan. The former Gov. of the Central Bank of Nigeria, Lamido Sanusi, has warned that“ Africa is opening itself up to a new form of imperialism from China.”
For more on Africa-China engagement, click HERE:
Richard Ivory is a former editor for Communities Digital News, an affiliate of the Washington Times. He has worked for the Republican National Committee and currently serves as a board member of Republicans for Black Empowerment. In 2008, he served as a consultant to the Youth for John McCain ’08 campaign. He has been featured in The New York Times, National Public Radio, CNN and US News & World Report. He is currently a student at Fordham University.