By Moses K Gahigi
Experts at the Business for Africa forum in Egypt have warned that Africa can easily lose out on the 85 million jobs expected to come out of China to the continent if African economies do not act fast enough to create opportunities to absorb them.
“This huge move to get jobs can be elusive if we are not fast enough in creating opportunities the window is closing very fast. We need to move quickly and do so in a way that is commensurate with the interests of China’s strategy.” Said Carlos Lopes, Former Executive Secretary of UNECA, and Professor, Graduate School of Development Policy and Practice at the University of Cape Town in Guinea-Bissau.
He said it is not inevitable that the jobs would migrate to Africa.
This came out during a session on China-Africa economic relations where Helen Hai, CEO of Made in Africa initiative said China has a clear strategy for Africa but the continent needs to be in the driving seat.
She said the relations are moving on from resources to partnerships with African countries but they need to be clear about what they want from China, adding that as it stands Africa is well placed to attract these 85 million jobs in the coming few years.
She said these jobs are moving out of China due to the increase of labour costs in the country.
“If Africa can capture those jobs it can enjoy the same economic transformation China had.” Said Hai.
Lopes warned that many jobs that could move out of China could be replaced by robots and automation, not Africans, and that other regions would also compete for the kind of jobs that Africa seeks especially those at the lower end of the value chain.
“A few African countries will make it, but not all,” he noted.
The latest McKinsey report on China-Africa relations shows that over 10,000 Chinese firms are currently operating in Africa.
And that about 90 per cent of these are private firms of all sizes and operating in diverse sectors, with about a third in manufacturing bringing capital investment, management know-how and entrepreneurial energy to the continent, and in so doing, are helping to accelerate the progress of Africa’s economies.
In the same report McKinsey however says few African countries have a clear strategy and engagement plan for China, that governments should develop such strategies and link them to their national plans and priorities.
It further calls on governments to cultivate capabilities in their bureaucracies to support these strategies.
The China-Africa trade has been growing at a 20 per cent rate per annum over the past decade, FDI’s growing even faster at an annual rate of 40 per cent.
It has also been reported that Chinese firms already handle 12 per cent of Africa’s industrial production—valued at $500 billion a year in total.
Nearly 50 per cent market share of Africa’s international EPC (engineering, procurement and construction) market is handled by Chinese firms and making healthy profits in the process. A quarter of the 1000 firms surveyed by McKinsey this year said they covered their initial investment within a year or less, where a third recorded profit margins of over 20 per cent.
In the forum which was attended by five African heads of states and top business leaders from across the continent, the President of Egypt Abdel Fattah El Sisi pledged to do whatever he could to bring the continent together both politically and economically.
The Heads of State stressed on the need for self-reliance and domestic resource mobilisation.
The Forum had a strong focus on increasing intra-Africa trade, inclusive growth and stronger China-Africa cooperation, especially in terms of technology transfer.
Egypt also signed a deal with the World Bank for a $1.15 billion development policy loan to fund the government’s plan to boost economy, the loan was the last one in a series of three annual loans provided from 2015 to 2017 totalling USD 3.15 billion intended to support the country’s economic reform program aimed at creating jobs, ensuring energy security, strengthening public finances and enhancing business competitiveness.
The three-day event organised by Egypt’s Ministry of Investment and International Cooperation and the COMESA Regional Investment Agency (RIA), saw over 2,000 delegates from 75 countries attend the Forum.
Among the recommendations the forum highlighted the need to pump new investments in Africa to boost economic growth and development.
Countries were also called upon to establish joint projects particularly in infrastructure to support investment and trade among African states.