China is getting a relative benevolent judgement on the deals its closes in Africa, but too often China sets the terms. African countries should do their home work better, before signing a deal, argues Howard French, a former correspondent in Africa and China, in The Asian Investor.
The Asian Investor:
Howard French, a former New York Times correspondent and now associate professor at Columbia University, says African leaders are not used to the packages of aid and loans that China regularly presents to them, usually as a fait accompli. This means they don’t know how to calculate their market value.
For example, French cites cases where Chinese state-owned enterprises have demanded payment for building a dam in guaranteed supplies of cocoa over 20 years, rather than in cash. Such deals are hard for local governments to assess independently. What will be the price of cocoa in five, 10, 20 years?
French warns that African governments are underpricing their assets and will come to regret these deals – which poses a long-term risk of instability that Chinese leaders should also recognise.
By allowing Chinese companies or banks to present them with a deal, or a menu of packages, drawn up in Beijing, African leaders are automatically abrogating their duty to make sovereign decisions meant to address their countries’ needs, French adds.
Howard French is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers’ request form.