OECD attacks China-Africa trade ‘myths’
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Emerging Markets

OECD attacks China-Africa trade ‘myths’

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Chinese trade and investment with Africa has the potential to benefit the continent’s development and criticism of the growing trend is misplaced, leading development organizations have insisted

African governments must increase their bargaining power to make the most of new partnerships with emerging markets from outside Africa by boosting their planning capacity and strengthening their civil service, according to the African Development Bank and the OECD.

Both institutions have come out strongly in favour of countries developing ties with new partners and try to deconstruct “myths” about the impact of emerging markets in the region.

Their public position comes amid continuing controversy about the impact of Chinese and other emerging market countries’ trade policies, which are sometimes accused of being reminiscent of neo-colonial practices in the continent.

Jean-Philippe Stijns, an economist from the OECD’s development centre, played down fears that African countries were being forced specialize in sectors such as commodities at the expense of economic diversification.

“There is no evidence as of yet that Africa is being cornered towards overspecialization,” he said. While Africa’s total trade has more than doubled over the last decade, the share of emerging markets has increased from 23% to 39% of total trade, while the share of traditional partners declined from 77% to 62%.

China represented less than 5% of Africa’s trade at the beginning of the decade but tripled to over 15% by 2009 and will soon overtake the European Union’s, according to OECD projections. While China accounts for 38.5% of Africa’s total trade with emerging markets, India’s share rose to 14.1% in 2009, ahead of South Korea (7.2%), Brazil (7.1%) and Turkey (6.5%).

“China has the means to help African countries plan for economic diversification. They have adapted technologies that work well in developing economies that they could share with African countries,” Stijns said.

“But that should come with explicitly articulated negotiations between African countries and emerging partners. They will not be able to do so unless they pool their efforts together at regional level.”

African countries must also recover their planning capacity, said Mario Pezzini, director of the OECD’s development centre. “It’s very important that African economies define their strategies for economic development.

“You cannot work on all fronts if there are all defined as priorities. These new partners are many and the tools are many. It is time now to articulate them and to transform what are single instruments into an orchestra.”

Stijns argued the policy space increasingly lay in the hands of the local policymakers. “It would be unfair to say that African countries are where they should be at in terms of planning,” he said.

“Ironically, one reason may be that Western powers through the IMF and the World Bank have discouraged African countries from planning their economies... and probably went too far in doing so.”

Meanwhile, a former Malawi official of the UN’s Food and Agriculture Organization (FAO) told Emerging Markets that the controversy over land grabbing - foreigners buying land on a large scale in Africa - had to be put in perspective.

“I don’t think we should say it’s a problem. Africa needs investment, and this is a potential opportunity if it’s well managed,” said Mafa Chipeta. “We have to make sure that investors behave responsibly.”

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