Here’s your Daily Brief for August 7th:

An article in todays Business Daily newspaper caught my eye and has inspired me to begin my discussion on the role of China in Africa. This is a wildly important discussion and I promise there is more to come on this topic.

Anyways, this article suggests that the rise in US trade-related engagement with Africa is in direct response to China’s threatening stake-hold on the continent. I don’t entirely agree with the suggestion, but it raises a critical point: the US needs to take a serious look at the role of China in Africa and throughout the developing world, and then reevaluate our approach to these undervalued and underestimated developing regions of the world. Historically, the United States has taken a very ethnocentric and paternalistic stance when dealing with Africa — an approach that, from the receiving end, tends to be condescending and demoralizing. America’s long tradition of attaching conditionalities to all forms of foreign assistance (for better or for worse) further exacerbated nationalistic sentiments and resentment towards the US within the aid-receiving countries. So it was no surprise that when China invited 35 African Heads of State to Beijing in 2006, providing celebrations and red carpet treatment, to discuss China-Africa relations, Africans were thrilled to have a new partner in the world — one that treated them as equals.

Now there is a stark contrast between US and Chinese engagement with Africa. While the US does come off as paternalistic and restrictive (particularly with the large number of conditionalities attached to aid), it is trying to uphold certain standards of human rights and morality. Additionally, many conditions (particularly economic) on aid are intended to protect the investment and maximize its impact. But the US has, for the most part, dismissed Africa as a mutually beneficial trading partner. US engagement with Africa is out of a “moral imperative”.

China, on the other hand, has approached Africa as an “equal” and as an alternative to the US and the West. China’s investment in Africa has been less humanitarian and more economic. When an African country want to get a certain project complete an they are looking at two bids: one from the US government and one from the Chinese government, the Chinese offer a blank check with no political or economic conditions whatsoever. However the Chinese have a high propensity of making unfulfilled promises at the outset of a deal, importing their own labor to carry out a project, and mostly extracting natural resources. And the Chinese are ruthless business people, doing business with countries under the backdrop of genocide and dictatorship. They are adept to protecting corrupt leaders in exchange for access to local resources.

That being said, I don’t believe that America’s increase in trade-related engagement with Africa is a direct response to China’s growing stake over the continent — otherwise we would see a decline in conditions and political stipulations attached to trade policy like AGOA. Rather, I believe that this shift is a direct response to a rapidly changing global landscape whereby African markets are becoming more stable both politically and economically. Additionally, I see a dramatic shift coming in the future toward increased investment in Africa driven both by a moral imperative and an economic understanding. This, I believe, will grow as the younger generations begin to assume control of US policy and business.

For now, I’ll leave you with some video for the weekend! This is Riz Khan’s “China in Africa” series:
Part 1/2:

Part 2/2:

In Other News:

Standard Charter shocks rivals with 43 per cent profit growth (via Business Daily) – The banking sector in Kenya is one of the largest recipients of FDI, despite the fact that only about 10% of Kenyans potentially eligible for a bank account actually hold one. Despite the post-election violence in 2008, three out of four of Kenya’s major banks still experienced growth. It seems that still today the banking sector in Kenya continues to surprise!

Chinese and Indian Growth in Latin America: New Business Opportunities (via NextBillion.net) – This is a nice piece on the current and possibly future role of China in the Latin America / Caribbean (LAC) region. I disagree with the zero-sum suggestion in the second paragraph, but the rest of the article is great!