Is China sub-Saharan Africa's silver bullet?

Posted By Sam duPont Monday, June 11, 2007 - 5:02 PM Share

AFP

Fitch Ratings, a global credit rating agency, recently released (pdf) a sovereign credit report on sub-Saharan Africa that comes to some wildly optimistic conclusions about the effects of China's activities in the region. Sure, China deserves a good deal of the credit for recent expansion of the economies of the sub-Saharan states—the IMF predicts (pdf) a whopping 31.4 percent growth for Angola in 2007, and it wouldn't be happening without the infrastructure investment provided largely by China.

But it seems naive to suggest, as the report's authors do, that China's involvement in sub-Saharan Africa will do much to "reduce poverty and promote development and the region's global integration." The success of Chinese oil firms at securing investment contracts in the region is largely attributable to the "no-strings-attached" loans they provide to the governments. Considering the weak, authoritarian nature of many of these states, it should come as no surprise that this money is rarely spent to benefit the African poor.

The Fitch report puts the burden on these governments to ensure that their domestic policies are conducive to a good business environment. It ignores the fact that weak or authoritarian governments, newly rich off their natural resources, don't tend to do a good job taking care of their people. And in places like this, mobs of angry young men often crash the party.

Some unsolicited advice to the purchasers of this Fitch report: Be wary of loaning money where mobs of angry young men are likely to arrive soon.

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