Competition

Africa the next Great game between India & China?

The Diplomat has an interesting article the looks at the growing competition between India and China for Africa’s resources that drive both Asian economies.

From the southern tip of their own continent and across to Latin America, Asia’s two rising and aspiring powers are set to compete for supremacy and the mantle of superpower status. But it’s in between these two points that the biggest competition between China and India is set to unfold. Forget Central Asia—Africa is the scene of the next ‘great game.’

The reason why the two will zero in on Africa is simple—both have burgeoning, resource hungry populations and rapidly growing economies. If they are to have any chance of sustained competition with developed Western economies, they will need access to the rich natural resources that Africa can provide.

China already looks to have a significant edge on its rival, with two-way trade with Africa set to top $100 billion this year, compared to about a third of that between India and Africa last year.

Beijing has, after all, been actively courting allies through the Forum on China-Africa Cooperation, which since October 2000 has had regular summits attended by the Chinese premier and dozens of African heads of state.

And India’s response was a relative flop. It tried to follow in China’s footsteps by launching the India–Africa Forum Summit. However, at its first and only summit so far, in April 2008, only 14 African countries were represented out of a possible 53.

Part of the problem is that India’s External Affairs Ministry is still infused with what’s known in diplomatic circles as ‘Pakistani Syndrome’—an unhealthy focus among Indian diplomats at the highest echelons of government, including the national security advisor, on India’s western neighbour.

China’s African ambitions, in contrast, are not hamstrung by such regional concerns. Although the Chinese dragon is surrounded by what it sees as a sea of sharks wanting to curtail its influence in East Asia and the Pacific—namely India, Japan, Russia, the United States and Russia—it has a broad enough worldview and understanding of international relations to continue to focus on the valuable development of Africa.

Another Chinese advantage has been that many countries in Africa, including Angola, Ethiopia, Mozambique, Namibia and Sudan, feel a sense of obligation toward China after it helped them when they were confronted with the spectre of civil war following the demise of the Soviet Union.

After a surge of attention on the continent during the Cold War, the US and Russia lost interest in spending money in Africa, leaving instability—and space for China to step in. The gaps the two big powers left that China has sought to fill were big ones, with many African nations having depended heavily on their Cold War sponsors in the 1960s and 1970s for state-building assistance after securing independence from their colonial masters. Withdrawal pulled the rug from under any prospects for stability.

But China has not just lent financial support to secure goodwill. As parts of Africa were wracked by civil war in the 1990s, China used its leverage as a permanent member of the United Nations Security Council to ensure affected countries received funds and peacekeeping assistance.

The assistance was partly payback from China for the debt it owed many countries on the continent for backing the People’s Republic of China efforts to be recognized at the United Nations instead of the Republic of China (Taiwan), a shift that finally occurred in 1971. China received significant backing from African nations who themselves felt they had benefitted from the close, revolutionary ties that Mao had forged in the 1960s. China also, in many Africans’ eyes, acted as an even-handed player, accommodating either the Soviet or US position in a given African country depending on the ‘merits’ of their case.

Such ties have given China far better first-hand knowledge of African affairs than India, despite the latter’s closer proximity.

But India does have a crucial advantage—its political system is a lot more appealing than China’s. China may be awash with cash to invest, but numerous questions have already been raised about the effects of China’s investment in Africa, with some questioning whether the honeymoon is over.

India can capitalize on such reservations by ensuring it contributes robustly to peacekeeping forces in Africa, a move that would be smiled upon by the African Union. Indeed, the African Union shouldn’t be seen as the only worthwhile forum for India to court—the Economic Community for the West African States also has security capabilities that India could support.

With both nations competing for resources this should give African nations a better negotiating position, the chance to dictate terms that benefit their nations and also help to grow local economies and attract foreign investment.

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Where is African iphone?

One would think that Apple would try at least investing in growing emerging markets world-wide, especially in Africa.  Apparently it seems there isn’t an app for that.  One can argue that the reason why Apple hasn’t made the leap in various African  countries is lack of communication infrastructure even though Africa is rapidly investing in broadband and high speed connections, but still that aspect doesn’t fully answer the question.

The folks over at Foreign Policy ask and answer the question that i have been asking myself.

The best-kept secret about Africa in the last decade is the continent’s rapid and creative adoption of modern technology. African countries have for the most part leapfrogged the technologies of the late 20th century to adopt those of the early 21st en masse. There are now 10 times as many cell phones as land lines in sub-Saharan Africa, and since 2004, the region’s year-over-year growth has been the highest in the world. When Nokia’s billionth handset was sold in 2000, it was in Nigeria

Africa is a multimillion-dollar mobile market, and plenty of the major technology companies, Western and otherwise, are there already. Multinational telecoms like MTN, Safaricom, and Zain are competing to cover a continent of 500 million mobile consumers, improving connectivity and dropping prices. Low-tech Chinese imports and no-contract, prepaid plans have made the technology easily accessible; Belle-Vista alone sells 500 phones a month. Nokia, which established its first African research center in Nairobi in 2008, has just unveiled a telephone that will allow consumers used to toggling between two or three devices to use multiple SIM cards in the same phone. BlackBerry has likewise responded to explosive demand by opening an office in Nigeria this year. Google, whose Android operating system is the strongest competitor to the iPhone, has had a presence on the continent since 2007 and now operates in 45 African countries, hiring and training African developers to convert its well-known suite of Web applications (Maps, News, Finance) for local use — often over mobile devices.

These companies and their technologies are opening a line into the flattening world we’ve heard so much about, creating markets, enabling information access, and building relationships in ways that have changed poor countries from the bottom up. But it’s hardly philanthropic work — market leader Nokia’s regional revenues were 1 billion euros in 2009, and Research In Motion, named Fortune‘s fastest-growing global firm in 2010, sold 1 million BlackBerries last year in South Africa alone.

Why is Apple missing in this growing and expanding market even though they had an earlier iphone model?

The earlier-generation iPhones are, ostensibly, available on the continent — Vodacom, a subsidiary of British Vodafone, signed a 10-country distribution deal with Apple in 2008 that included South Africa and Egypt, and the phones do work on local networks. Vodacom has also announced that it will distribute and service the iPhone4 in Africa in the near future. But for the vast majority of Africans, Apple effectively doesn’t exist. The iTunes store’s music offerings have never been available on the continent; African IP addresses are blocked. The iPhone goes for $1,000 at local retailers — 10 times the current U.S. price for the same model, a big-enough markup that most iPhones on the continent are purchased  abroad instead — and because of limited bandwidth and apps availability, owning one is “like having a Maserati in traffic,” according to Tayo Oviosu, CEO of Pagatech, a mobile banking firm in Nigeria.

This is a shame, considering what even inexpensive, basic cell phones have done for Africa. In poor countries, cell-phone penetration has been linked to positive economic and developmental outcomes. A 2006 study of emerging markets suggests that a 10 percent increase in mobile penetration correlates with a 0.6 percentage point increase in economic growth rates. In Africa, the trend is lifting all boats: A fisherwoman without refrigeration in the Democratic Republic of the Congo can keep her catch on the line in the water, waiting for customers to call; selling access to a mobile phone in poor or rural areas of Uganda has become a viable business model. Professionals stuck in Johannesburg traffic make deals on their BlackBerries; demand for skilled labor in the information and communication technology sector has created 400,000 jobs in Nigeria since 2000.

There is so much potential that can happen once Apple decides to embrace and market the iphone  like in Asia and Europe. We have seen what itunes has done to the TV-Music-Movie industries and especially in software programming, creating a new and ever growing niche markets in apps.  The same growth and dynamism can happen in Africa. The iphone is the perfect vehicle to drive this change.

The iPhone4 may serve these developmental functions better than anything else on the market, if its features are as described. The new FaceTime feature, for instance, which allows videoconferencing directly from a mobile device, could do much to support the distance education projects being pioneered at the University of South Africa and Makerere University in Uganda. In addition to GPS and access to the mobile Web, geotargeted applications could help traders find market prices, businesses find customers, and make news delivery and political organizing easier. All-in-one video shooting and editing software makes the iPhone4 a powerful media tool that competing smartphones like the BlackBerry or Nokia Nseries just can’t duplicate. Even the longer battery life will add value in places where electricity is unreliable.Most importantly, the iPhone’s application development ecosystem would engage the talented, tech-savvy demographic on the planet’s youngest continent. According to a paper from the Institute for Development Policy and Management at the University of Manchester, software production is an industry “essential for the growth of the economies of developing countries”; the $1.43 billion iPhone application market, with its low barriers to entry and friendliness to entrepreneurs, is ideal for Africa’s burgeoning class of small-scale software programmers. In Kenya — a country where software tinkering is popular enough to warrant a prime-time cable TV show — some eager programmers created applications for the first iPhone well before it was even available in the country. “We’re going to see people developing applications that solve specific challenges in the African context,” says Oviosu. “If the iPhone comes here and catches on, of course we’ll build [one].”

It isn’t just Africans who are losing out from Apple’s disinterest in the continent. As mobile data usage comes to replace traditional computing in Africa, the new unit of engagement for business, government relations, and humanitarian work may be the smartphone — and it stands to reason that the company with the best local presence will reap the benefits of rising incomes and demand on a continent of nearly 1 billion.

Apple needs to fully embrace the growing and emerging markets of Africa. The upside of growth is staggering. Google seems to have taken notice of this while Apple hasn’t.

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A Look at China’s Presence in Africa

There has been a change in ideological sentiment on China’s involvement in Africa. The paradigm shift has been led by Zambian economist Dambisa Moyo’s bestseller, Dead Aid, which gave voice to the possibility of a development model defined by diligent business practices as opposed to the traditional Western model which is driven by foreign aid. If managed prudently the Sino- African relationship could prove to be an empowering change for several African governments and provide the foundation for the continent to take its place as a partner in the global economy. For China, Africa is an excellent complement to its resource and market-seeking global agenda. Since 2000 China-Africa trade has grown at an average annual rate of 33.5 per cent. Although still second to the United States (whose trade with Africa amounted to US$140 billion in 2008), trade rose from US$55 billion in 2006 to around US$107 billion in 2008, accounting for 4.5 per cent of China’s total trade and surpassing the US$100 billion trade target set for 2010 at the 2006 Forum on China- Africa Cooperation (FOCAC).

Trade exports-imports to-from Africa

China has also identified the value of Africa as a political ally in its quest for a greater role in international affairs. The benefits of China’s African diplomacy became clear in 1971 when China’s accession to the UN General Assembly and Security Council was assisted by 26 affirmative votes cast by African countries. Today China has diplomatic relations with 49 of 53 African nations and China’s deepening engagement means that the US, Europe and other emerging partners have little choice but to compete for access to the continent’s emerging markets and resources. In November 2009, Chinese Premier Wen Jiabao took the opportunity to declare China’s commitment to African development while challenging the established industrial powers to do the same:

In the global financial crisis, what people tend to easily ignore is the implementation of the Millennium Development Goals … Here I would like to once again appeal to the international community to work hard with firm determination and effective measures to reach the MDGs while tackling the global financial crisis.

This declaration was accompanied by the announcement of US$10 billion in preferential loans to support African countries over the next three years. In light of the OECD’s prediction that the G8 will fall US$23 billion short of its 2005 promise of US$50 billion in foreign aid to the poorest and most vulnerable by 2010 (Africa contains 33 of the 49 Least Developed Countries, as classified by the UN ), it is little wonder China’s diplomacy is gaining traction among African governments.

Although the China-induced resource boom is providing a shortterm fillip to African growth and Moyo’s ambitions for a business-driven model of growth, China alone will not be the continent’s saviour. To avoid destructive competition in the region, a cooperative framework on African issues is required between China, the US and Europe and emerging partners to the continent such as Brazil, India and Russia. This is increasingly important in the context of trade frictions that are present in the current global economic environment.

Legitimate concerns about human rights and exploitative practices surround China’s non-interference based involvement in African nations. The list includes arms dealing with repressive regimes, support for autocratic governments isolated by the West, plundering resources with little concern for environmental issues and importing unskilled Chinese labour who are culturally ignorant and unwilling to integrate.

Many of these issues highlight what seem to be self-serving political and strategic motives behind China’s activity in Africa. Many are fuelled by Western hypocrisy. The West’s involvement on the continent has been, and continues to be, littered with tales of mismanagement, exploitation and funding despots. Furthermore, China is hardly alone in marrying political and strategic considerations to its aid agenda. In December last year the US President, Barack Obama, signed off on a deal with Israel worth US$2.77 billion in 2010 (worth a total of US$30 billion over the next decade) with 75 per cent tied to the purchase of US-made military hardware.

Defending exploitative behaviour is not the issue. The business-driven model of development provides new opportunities to several African nations long overlooked as legitimate trading and investment partners. African countries and the African Union need coherent, longterm strategies to apply leverage to international commercial interests and to create opportunities for enduring economic competitiveness and growth. With the prediction by the International Energy Agency that China’s oil imports will increase four-fold by 2030, it is vital for Africa itself to respond strategically to the opportunity that China offers the continent. Although the FOCAC provides an effective forum to develop diplomatic and commercial relations, the issues cited above will continue to bedevil China’s involvement with the continent if strong institutional frameworks of governance and dispute resolution mechanisms are not properly implemented.

In the latest issue of The Atlantic magazine, China’s resource play in Africa and development pledges are discussed in vivid detail and questions are asked.

All across Africa, new tracks are being laid, highways built,ports deepened, commercial contracts signed—all on an unprecedented scale, and led by China, whose appetite for commodities seems insatiable. Do China’s grand designs promise the transformation,at last, of a star-crossed continent? Or merely its exploitation?

At some point, at sometime, Africans are going to have to take control of their own destinies. Howard is very descriptive in regards to what Chinese laborers and business men are doing in Africa. However, one ends up asking: “What are Africans doing to advance their own needs?”

Surely they can’t all be reading the paper and taking a nap?

All joking aside, the cold reality is that foreign attempts to develop Africa have spectacularly failed. No one disputes that developmental polices have traditionally been short sighted. Nevertheless, development projects are only as good as the repairman has money, skills, ambition, a society that encourages entrepreneurship, and the will to see the service they manage succeed.

The only people that can – and should – save Africa at the end of the day, are Africans.

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