The broad range of emerging partnerships

The China trade is important to Africa but all the other emerging players together outweigh China in importance. Figure 6.6 below shows the shares of Africa’s total trade, exports and imports, with different emerging partners. China only accounts for 38% of trade volume.

In foreign direct investment, the ranking of emerging economies differs markedly from the trade ranking. Referring to Table 6.3, within the emerging powers, China accounted for about 10% of FDI into the selected countries and this share even showed a slight decline. In contrast, India grew from about 7% to nearly 17% across the two periods. The Sudan country note in this report observes that India is the most important emerging partner after China and is helping to end key infrastructure bottlenecks.⁴ But it is FDI from the Middle East that is most striking, about 58% and growing. Direct investment is not, however, the favoured form of investment in Africa for emerging partners, particularly China. So focusing on FDI risks missing a hidden part of the African investment iceberg.

Overall, on top of its quantitative importance as a trading partner and the number of countries it engages with, China is unquestionably leading the way for emerging powers in Africa. Not only because it is at the heart of the shift in global wealth (OECD, 2010) but also because its behaviour and discourse in Africa have helped to change perceptions of the continent. China and most other emerging powers do not see Africa as the “hopeless” continent described by The Economist magazine in 2000, but as a continent of opportunities and an investment destination. This attitude is even having an effect on the traditional powers who are reviving their interest with vivid accounts of the “African economic lion” now ready to take its place beside the Chinese dragon and the Indian tiger, according to statements by the World Bank (Okonjo-Iweala, 2010) and a report by the McKinsey Global Institute entitled Lions on the Move (Roxburgh et al., 2010). Even The Economist revised its view with a feature in 2010 on “Uncaging the Lions”.

The number of African countries with which emerging partners conduct trade varies greatly. Table 6.5 tallies the number of African countries with which the emerging powers have total trade above 10 million constant USD.⁵ China, India, Korea, Brazil, Thailand, Turkey and Indonesia stand out as having the broadest scope of Africa trade. The smaller emerging nations have a much more limited number of trade links.

Similarly, the number of sectors in which emerging partners conduct trade varies widely. Table 6.6 tallies the number of sectors in Africa in which emerging partners have total trade above 53 million constant USD.⁶ Again, China, India, Korea, Brazil, Thailand, Turkey and Indonesia stand out as having the broadest scope of trade across the sectors of trade activity. The smaller emerging players tend to trade in a limited number of sectors.

As McCormick (forthcoming) emphasises, most attention on the economic changes in Africa is put on China, India and Brazil. But observers are increasingly recognising the contribution to Africa and the global economy of other emerging partners.

If there is consensus on the importance of the major nations there is little agreement on the next tier of emerging partners, maybe because only global giants have a very wide impact. Beyond them, most other partners are important in a limited number of countries and sectors. Scott et al. (2010) look for the emerging middle powers that also have significant links in Africa. Applying these criteria to the countries in Table 6.5., Korea and Turkey stand out as obvious candidates for the second tier of Africa’s emerging partners, which tend to concentrate on more specialist sectors in a few countries.

This diversity of partners is a tremendous opportunity for Africa. Each wave of countries engaging with Africa brings with it a new array of products, capital goods, technology, know-how and development experience. Each brings new opportunities to trade goods, knowledge and models.

China has a perceived comparative advantage in infrastructure development (Foster et al., 2008), India in learning, skill-intensive areas and services (Sidiropoulos, 2011; Kragelund, 2008), and Brazil in agriculture and agro-processing (White, 2010; Ejigu, 2008). Africa’s needs are perhaps most crying in infrastructure, so policy makers and analysts have focused on China. However, Africa’s development needs go further. As the 2009 African Economic Outlook (AfDB, OECD and UNECA, 2009) highlighted, Africa can use information technology to circumvent some infrastructure bottlenecks. Africa’s needs and potential in agriculture – especially in terms of food security and employment (Dorward et al., 2004; Diao et al., 2006; FAO, 2008) – mean new partners such as Brazil are well placed to help the continent move forward.