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 Lim
ited 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.”
