What Africa needs
Apparently, ‘caveat emptor’ means something completely different as far as the Guardian is concerned. Meera Selva seems to be very confused when it comes to what Africa’s major problem is when it comes to employing its mineral resources.
China has been quite rightly criticised for exploiting Africa, buying up mining concessions and primary goods in opaque deals that benefit African leaders but not necessarily their people.
And that’s the fault of the African governments, not of the Chinese companies. May this be a very timely warning to the lefties that populate the hills and vales of Guardiland: sometimes (read: “always”) government’s objectives aren’t the same objectives as their peoples. Maybe smaller government is the answer?
Elsewhere, Chinese self-interest is genuinely helping African economies. This week, the Industrial and Commercial Bank of China bought a 20% stake in the Standard Bank group, Africa’s largest bank. The deal helps China diversify its financial services and sends a signal that Africa’s nascent investment banking and insurance industries are worth investing in. The deal also treats Standard Bank as an equal, not an institution that needs to be lectured by a more powerful group.
That’s because Standard Bank, unlike the other investments the Chinese are making, is a private company. Chinese self-interest helps Africans in this case because the Africans are interested in helping themselves. The invisible hand only works to the benefit of all when there’s a profit motivation.
If the regulatory system is such that there is illegitimate profit to be made, as is the case with “l’État c’est moi” dictators siphoning off billions to their own bank accounts, the invisible hand leads to illegitimate profit. The only way one can avoid such illegitimate profit is by privatising industry and guaranteeing private property rights more effectively than is the case in most African countries.
Africa is still being lectured to by western institutions that offer aid with one hand and put up trade barriers with the other. China on the other hand, sweeps in offering to do business. Guess which side Africa would rather deal with?
They’d rather deal with the sanctimonious Western governments that feel they have to spend their taxpayers’ money to soothe their guilt over slavery. However, since we don’t ask for anything in return, the Africa governments can deal with the Chinese at the same time. It’s not either-or; because of our ineptitude in forcing institutional reform in Africa, the Africa leaders can give Western aid to their people, and funnel Chinese investment into their Swiss bank accounts.
On the plus side, at least she supports free trade, right? Actually, she probably doesn’t understand what it even means, because that implies just as much institutional reform in Africa as it does in Europe. There are more barriers to trade between African countries than between Africa and other continents, and trade between African countries is derisory 10.5% of the continent’s total trade. Another example of government failure in Africa.
The fact of the matter is that Africa is the poorest continent in the world, the continent hit by the most debilitating military conflicts, and the most afflicted by the health and social problems that afflict it because it is governed by bad people doing bad things. The way to combat all the ills of the continent is to combat its tinpot dictators. If Meera Selva is truly interested in helping the world’s neediest, she’ll help them, rather than help their oppressors.
Categories: trade, China PR, Africa, corruption, absolutism
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