Chinese "investment" in Africa

[Christoff Eilerd]

China’s engagement with Africa today is less motivated by the ideological considerations of the 60s and 70s but based on a commercial agenda that aims to sustain rapid industrialisation and economic growth rates. China’s “socialist market economy” is driven by marketoriented State-Owned Enterprises and its interests in Africa are geared towards energy resources and minerals to feed its industrialisation programme. Chinese investments in and trade with Africa have increased significantly over the past few years, although Europe and the USA are still the predominant sources of foreign investments and the main markets for African exports. China is now Africa’s third largest commercial partner after the USA and France and – like the former colonial countries – backs its trading relations with aid, debt relief, scholarships, training and the provision of specialists. China also accounts for about 8% of Africa’s military hardware imports.
Overall, there are about 450 Chinese-owned investment projects in Africa: 46% in manufacturing, 40% in services and 9% in resource-related industries. The latter accounts for 28% of investment value. This scenario differs significantly between individual countries as Chinese investors focus on oil extraction or uranium in some countries and on construction and retail in others. China’s main export destinations inAfrica are South Africa, Egypt, Nigeria and Algeria while the main African exporters to China are Angola, South Africa, Congo and Equatorial Guinea. Africa’s main exports to China are minerals, petroleum and timber, involving very limited processing on the continent. Africa’s imports from China consist mainly of capital and consumer goods. Overall, the trade balance is slightly in Africa’s favour, although several countries like South Africa, Morocco and Ghana have substantial trade deficits.

China’s presence in Africa is welcomed by African governments due to the offer of trade, aid and investments without strings attached. China is also seen as a solution to the creation of local infrastructure where local capacity is lacking. In general, African leaders consider their engagement with China as a viable alternative to the often neo-colonial relations they have had with the West as exemplified by the neo-liberal policies of the “Washington Consensus”.

Labour relations in Chinese firms in Africa as well as working conditions in China are a bone of contention. China has a labour force of 770 million of which 193,5 million are urban workers. China has achieved a significant reduction of people living in poverty during the last 30 years but levels of inequality have increased and reached a level comparable to Latin America. A new middle class emerged in the cities while the earnings of farmers in rural areas declined. Rural farmers account for 47% of the population but earn only 19,9% of the national income.

One strategy used by China to address the problem of unemployment is to send workers overseas to work on projects carried out by state-owned companies or through labour brokers. This explains the relatively large number of Chinese workers at construction sites as well as in some manufacturing ventures in Africa. WithinChina, workers in SOEs earn significantly higher wages than migrants from the rural areas. Migrants are also excluded from benefits such as maternity and unemployment benefits and social assistance. The “household registration system” makes it very difficult for rural workers to change their status to urban workers.
The number of labour disputes in China has risen significantly in recent years as workers resorted to work stoppages, sabotage, go-slows and court action to defend their rights. The global economic crisis has affected Chinese workers directly as more than 10 million migrant workers had to return to their hometowns with little hope of finding jobs.

The All China Federation of Trade Unions (ACFTU) is the world’s biggest union and played a crucial role in the struggle against imperialism. Today it is closely linked to the Chinese Communist Party and plays the role of linking the party with workers.The ACFTU is widely regarded as an extension and “relief agency” of government as it does not support militant workers’ action. Most industrial actions in China are spontaneous and not supported by the ACFTU. Attempts to form independent trade unions in China did not succeed thus far.

Although working conditions at Chinese companies in Africa differ across countries and sectors, there are some common trends such as tense labour relations, hostile attitudes by Chinese employers towards trade unions, violations of workers rights, poor working conditions and unfair labour practices. There is a virtual absence of employment contracts and the Chinese employers unilaterally determine wages and benefits. African workers are often employed as “casual workers”, depriving them of benefits that they are legally entitled to.

Chinese employers tend to be amongst the lowest paying in Africa when compared with other companies in the same sector. In Zambia, for example, the Chinese copper mine paid its workers 30% less than other copper mines in the country. In general,Chinese companies do not grant African workers any meaningful benefits and in some instances ignore even those that are prescribed by law. Wages above the national average were only found at those Chinese companies with a strong trade union presence. Chinese staff members enjoy significantly higher wages and more benefits than their African counterparts.

Collective bargaining hardly takes place in Chinese companies. They resort to union bashing strategies to discourage their workers from joining a trade union. In many instances, Chinese businesses were supported by host governments who defended Chinese investments against the demands of labour. Trade unions see the practices ofChinese companies as a threat to the limited social protection that unions have achieved over the years through collective bargaining.

Chinese employers violate several of the core ILO conventions. These include the rights to join trade unions, to bargain collectively, to receive equal remuneration and to be protected against discrimination. Basic rights such as paid leave are often ignored and workers are forced to work overtime – at times without any additional remuneration. They feared that refusal to do so would result in their dismissal. A particularly grave case of workers’ rights violations is the “locking-in” of workers during working hours, which led to deaths during fires in Nigeria and Kenya. Health and safety issues receive very little attention at Chinese companies as precautionary measures are ignored and no training on health and safety issues is provided. In some countries, Chinese employers terminate the employment of female workers once they fall pregnant. Chinese companies tend to employ African workers for basic tasks at very low pay while importing Chinese managers and supervisors for higher paid positions.

Following the Structural Adjustment Programmes (SAPS) with privatisation policies and the resulting mass retrenchments of the 1980s and 1990s, Africa’s trade unions are relatively weak and face a host of challenges today. Union membership has declined as labour struggles to recruit and represent non-permanent workers and those in the informal economy. Employers, including the Chinese, take advantage of flexible labour markets and undermine collective bargaining. Trade unions expect government support for the enforcement of local labour laws and international labour standards but in many countries, host governments are reluctant to intervene for fear of losing foreign investments.

Organising workers and improving their working conditions through direct action and collective bargaining is undoubtedly the most effective way to redress the current problems at Chinese companies. The aggressive union organising strategy in Zambia, for example, has had some success. In many cases, however, this proves to be very difficult and thus supplementary strategies could be used. These include national minimum wages and basic conditions of employment that are enforced by trade unions and labour inspectors alike. Building alliances aimed at promoting Africawide and sub-regional framework agreements may also help to improve working conditions. Furthermore, African trade union bodies as well as the global union federations can take up the labour rights violations at continental level and also bring it to the attention of the All China Federation of Trade Union (ACFTU) in an effort to exert pressure on Chinese companies in Africa. Likewise, unions could use the political linkages to call on the Chinese government to pressurise companies through the Chinese Embassies in Africa.

Other steps that might strengthen trade unions’ ability to deal with Chinese companies include courses in the Chinese language (Mandarin) for African union organisers, improving the capacity for organising and negotiations amongst trade unions, translation of documents outlining labour laws and regulations for Chinese companies into Mandarin, broadening the decent work agenda through social dialogue at national and international level and ongoing campaigns for minimum wages and their enforcement.

There is a need to develop meaningful exchanges between African and Chinese workers beyond the high level visits of trade union leaders. Exchange programmes must target workers at grassroots level and must be driven by a will to develop joint strategies in the fight against exploitation. Understanding each other’s environments and struggles may not only counter racism and divisions but may also pave the way for co-ordinated actions at international level in future.The common trends found in most African countries point to the urgent need to develop coherent continental approaches to Chinese companies and foreign investment in general. The current practices of attracting investments “at all costs” has led to a downward spiral in terms of labour and environmental standards. Continental and sub-regional trade union bodies need to spearhead a campaign for a common approach towards foreign investment that is more selective and strategic than the current “open door policy”. A government policy of sacrificing labour issues for the sake of attracting foreign investment cannot lead to sustainable development. Currently, the relationship between African states and China is not equal and requires significant changes to become mutually beneficial. African governments must strengthen their bargaining position and ensure local processing. They must also improve monitoring to ensure that investors do not divert their focus away from manufacturing and that skills and technology transfer actually takes place.

Instruments like tender requirements, work permits, labour laws and investment conditions can be used to achieve the desired outcomes.A new economic relationshsip will have to be built around Africa’s own strategic development agenda. The Chinese cannot be blamed for pursuing their particular deveopment development objectives, including access to the raw materials and energy resources needed to sustain China’s industrialisation programmes. African governments will have to set their own agenda and then industiralisation negotiate the best possible deals with potential investors, including those from China.

In the absence of a strategic approach by African governments, Chinese investments in Africa will remain of limited benefit for Africa’s development.

[Vuyani Ndala]

Informative, insightful and interesting. Thank you for taking the time to share. We appreciate it