How does China want to take over Central Europe? Have a look at Africa — that’s their testing ground

Chinese and Sudanese employees of an Oil extraction company reading Chinese cartoons on an Oil rig in South Sudan (photo credit EAST NEWS)

This is a translation of an article written by polish Journalist Sylwia Czubkowska, who took her time and came to Nigeria to prepare her material. You can find the original here.

First it was cheap flip-flops, then payment apps. Having already taken over African trade and industry, China is now moving into telecommunications and new technology — and checking just how much they can get away with on the ‘Dark Continent’.

The greyish-brown houses of Lagos, Nigeria’s largest city, are shrouded in a mixture of fumes from the interminable traffic jams and the fog rolling in from the ocean. The blood-red fortress which suddenly emerges into view makes a shocking impression. Around it are dilapidated shacks, then a huge square — a cross between a car park and a market, while at the entrance is a colourful inscription both in Chinese and English: ‘Long live Nigeria-China friendship.’

Welcome to Nigeria’s Chinatown.

This isn’t just any old Chinese district. We are in the operational centre of Chinese-run foreign trade.

‘How much for that cloth? 1,500 naira. I don’t have any naira but I’ve got dollars. That works out at $4, right?’

Amanda, the Nigerian sales assistant, has made the deal and is taking the money when the Chinese boss turns up.

‘No dollars. Only naira.’

When I explain that I don’t have any local currency, the gentleman pulls out a smartphone and suggests WeChat — an app which, in the Middle Kingdom, is the official channel of communication and cashless transactions.

From rags to riches

Above Guo Ping Sun and Julius Salomon, his Nigerian right-hand-man, hang the portraits of Xi Jinping, the leader of the Chinese Communist Party, and Muhammad Buhari, the president of Nigeria. Around them the Nigerian and Chinese flags are displayed.

Although Sun has been living and doing business in Nigeria for the last 30 years, he still has trouble with using English. That’s what he needs Salomon for.

Sun was born in Zhejiang province, south of Shanghai. In the 1970s, following his studies, he was sent by the Communist Party to work in a factory at mid-management level. But that bored him to tears and he wanted something more. During the 1980s, he came to Nigeria and decided to stay on. Now he’s the head of the China Commercial Centre in Lagos. In fact, that’s the official name of Chinatown here.

Sun: ‘Nigeria is like China. It’s got a lot of people and the ambition to work and build.’

He assures me that the first time he came to Africa, he got no help whatsoever from China. Nobody gave him investment capital, he got it all together himself but even with the help of a translator he’s still not able to explain it. He’s also unable to explain how he bounced back after the collapse of his first business venture on the ‘Dark Continent’, namely factories producing salt. Nor can he tell us how later he developed trade with China, how he made a fortune in hundreds of shops dealing with China in everything from bags to tools. Nor how in 2004 he built Chinatown. In recognition of Sun’s achievements, the Nigerian government awarded him the title of ‘Chinese tribal leader.’

In her celebrated book The Next Factory of the World: How Chinese Investment is Reshaping Africa, Irene Yuan Sun, an American consultant for the consulting firm McKinsey, describes a rosy view of this cooperation. Thanks to her own roots, she managed to reach several Chinese entrepreneurs in Africa and describes in enthusiastic tones how they are transplanting their enterprise culture to Nigeria, Kenya, Ethiopia and Lesotho. She believes that the West’s pathway to development does not work in contrast to industrialisation according to the Chinese way of doing things.

She includes the story of the Tung family who started the first factory in Nigeria producing super-cheap flip-flops. A dollar a pair, even cheaper than in China. In the course of a year, these factories are capable of producing flip-flops for each and every Nigerian. Although the company controls 99% of the markets of Nigeria and its surrounding countries, it has not raised its prices. And it’s this which has prevented the rise of illegal competitors.

Neo-colonialism

Africa desirous of investment, with is fast-growing population, gets an injection of capital. Europe and the USA heave a sigh of relief. And here China can go ahead and invest and experiment just as it likes.

For Angola the export of oil to China has become its main source of income. Kenya has been revived thanks to the billions pouring in from Beijing strengthening its infrastructure. In the Zambian capital, Lusaka, the Chinese are building airports, roads, factories, police stations and lending money to the government hand over fist.

Just two years ago, Beijing held a Chinese-African summit which over 40 African leaders attended. They were welcomed with hedges shaped into African animals and the good news from Xi Jinping that the colossal sum of $60 billion in aid and loans awaited Africa. This was the same amount which China had announced at the previous summit in 2014. Chinese companies are also investing in Africa. Although just 15 years ago the value of this investment was close to zero, in 2019 this exceeded $72 billion, meaning almost the same as the amount invested by the USA, the UK and France combined. What’s more, nearly 140,000 jobs have been created thanks to Chinese capital investment in Africa.

China-Arica Partnership Forum. Chinese leader Xi Jinping in the middle. South Africa president Cyril Ramaphosa (left) shaking hands with Senegalese president Macky Salla, September 4th, 2018 r. photo credit Lintao Zhang / AP

The Chinese are basically building Africa: roads, railways, housing developments, fibre optics. For the continent of Africa, they are — due to over $200 billion in trade — its main trading partner, a position occupied by the European Union up to 2013.

‘“ChinAfrica” is a widely used term nowadays for how China has dominated these markets and how dependent they have become on it’ explains Dr Michał Bogusz, an expert on international relations at the Centre for Eastern Studies, Warsaw, and the author of the blog Beyond the Great Wall: ‘Of course, once there was a similar portmanteau word Francesinha, referring to French colonies. Insofar as this time we’re dealing with practically an entire continent, and this is without direct political or military involvement. This neo-colonialism has had a significantly milder course, at least for now. But once China has also started exporting new technologies to Africa, additionally making surveillance and control of citizens more effective, one may expect more serious expansion.’

Armies for debt

‘The airport in Addis Ababa, the capital of Ethiopia makes one hell of an impression. Half the shops are Chinese, the staff are Chinese, the information on signs and the messages broadcast over the public address system are in Chinese. You could get the impression that you are somewhere in the middle of China’, says Paweł Hansdorfer, director of international investment specialising in the African market at Asseco, which is the largest Polish investor in the field of IT in Africa.

But the hot breath of the Chinese dragon is not felt everywhere to the same degree. In Nigeria, the Chinese are almost invisible, even though exports to this country from China have surpassed $10 billion dollars and government debt incurred in the People’s Republic already in 2017 (the most recently available data) has reached at least $5 billion.

‘How many Chinese are here? We don’t know, there are no official figures. How much investment? We don’t know but every moment more is announced. On the one hand, this is good as investment means jobs and infrastructure. But we are aware that there’s a lack of control over who is coming here and why’, says Muda Yusuf, the director general of the Chamber of Commerce and Industry in Lagos.

‘Don’t you feel you are being used as a source of cheap labour and a huge market to be flooded with cheap goods?’, I ask.

‘We are a large flourishing market. It’s not surprising that they want to invest here. Of course, while it is worth taking care the terms are beneficial for Nigeria, we receive every investment with open arms’, retorts Mustafa.

Future tenants of a new housing estate in Djibouti holding Chinese flag and a photo of Djibouti president Ismail Omar Guellehas, the state project jest financed by Chinese “China Merchants”, July 4th, 2018 r. Photo Credit Yasuyoshi Chiba / AFP / East News

He’s not precise on what benefits China offers his country. African leaders and businessmen run for the hills when asked this question. This time neo-colonialism is ever more palpable while the indebtedness of African countries to China is rising at a rapid rate. The most drastic example is the tiny east African state of Djibouti which plays a key role in controlling the security of maritime transport from Asia to Europe through the Red Sea. This country’s debt to China has reached three-quarters of its entire foreign debt. In wanting to ‘facilitate’ its debtor’s repayment, China opened its first foreign naval base there in 2017.

Although the level of Zambia’s public debt incurred in China currently reaches $11 billion dollars, there are suspicions that its government is hiding its true amount. African countries in debt to China are handing it control of their natural resources, strategic industries and infrastructure. At the end of 2018, John Bolton, former US government national security advisor, warned that that, as part of Zambia repaying its debt, its national electrical power company, Zesco, was close to being taken over by Beijing. However, Zambia has given assurances that it will not come to this. So now China has begun taking over the state television company ZNBC.

Between the lines of Irene Yuan Sun’s book you come to understand that the cheap Chinese flip-flops are also poor quality, and that Nigerians have to replace them with new ones on a regular basis. In the process, they litter their own country with garbage while the factories provide the local community with nothing more than low-paid jobs.

Just how strongly China had bound Africa to itself was shown during the outbreak of the Coronavirus epidemic. Uganda –a quarter of whose imports come from China — has been suffering for weeks as its small local traders have nothing to sell. There’s no cloth, electronic or household goods. Nigeria has also ceased trade with China. The price of a barrel of Nigerian oil — a commodity destined for China to an enormous degree — fell from nearly $70 to $23.24 (May 5). Already in March, when the first case of the disease was announced in Lagos, the government admitted that the country’s economy was close to collapse.

A testing ground

Why should Africa’s dependence on China interest us in Poland?

‘Although that’s where China is experimenting, our region is of crucial importance to them’, believes Dr Bogusz.

A few months ago the Chinese embassy in Warsaw organised a meeting with its diplomats. Journalists were persuaded that the Middle Kingdom merely desired to do business and would not get interfere in local matters. When asked what was attracting Chinese business to Poland, one of the diplomats answered, without batting an eyelid: ‘You have cheaper workers than, say, Germany’.

China offers Africa similarly pragmatic deals. Financial aid and investment without interfering in internal affairs — and without any requirements to respect human rights or fight corruption: ‘The Chinese are smooth operators in the world of giving bribes and use them without restraint in contrast to western companies’, adds Dr Bogusz.

This suits African governments as democracy is still in a weak condition across the continent. Freedom House considers only ten African countries to be free, three of which are tiny islands. At the same time, it defines 23 African states as authoritarian regimes to a greater or lesser degree, while seven find themselves on the list of the twelve ‘worst of the worst’.

Bribery is not the only weapon — ‘Many times during various tenders and procedures our greatest competitors are companies from India and China. We try hard to submit really good offers — regarding quality they are often held up as a model by clients. Chinese companies, however, have the backing of the Bank of China which subsidises such investments or offers very favourable forms of financing projects denominated in yuan. So when it comes down to comparing financial issues, western companies which don’t offer an attractive financing model have a much lower chance of winning contracts’, Paweł Hansdorfer tells Wyborcza.

According to Bogusz, China is entering Africa at three levels, namely: at a Pan-African level, as part of the African Union; through local organisations, such as the Southern Africa Customs Union (SACU); as well as at a bilateral level with particular countries.

‘China needs the African Union as a counterweight in international relations which can be seen at the moment in the WHO, which became friendly to China following the outbreak of the Coronavirus epidemic. Regional organisations are helping the Chinese in playing off certain parts of the continent against each other regarding which will secure more investment. But particular countries have already become sources of natural resources, as well as export markets for its own products,’ this expert explains.

And he adds that China is trying to operate the same way in Europe.

Chinese elites

‘They’ve got the technology, they’ve got the money, they understand our needs and operate effectively’, says Prince Adeyinka Amosu, the head of Nigerian state radio, FRCN. We are sitting in his office which is the only air-conditioned room in the country’s largest radio station. The entire building looks as if it hasn’t been renovated in decades.

Amosu inquires at length as to why someone from Poland is interested in Nigeria and Chinese investment. He perks up when he hears that Poland is also trying to secure Chinese investment and has a lot of regional competition.

‘They simply see our potential. Not only because we have oil but also because we want to develop, we invest in learning. They themselves willingly help us in this learning. I have also studied journalism in Beijing’, the FRCN director bragged.

When I say that China is not the best place to learn free journalism, I hear back: ‘I myself learned about Chinese culture there so as to better understand them. And we say in Nigeria that ‘The Yoruba have no king over them’, meaning that we won’t allow ourselves to be directed.’

Half of those I spoke to in Nigeria had studied in China. The number of African students at Chinese universities has grown from 2,000 in 2003 to over 80,000 in 2018. This is significantly more than those attending universities in the USA or Britain. And last year Xi Jinping promised another 50,000 scholarships, mostly for engineers and programmers. So future African elites will be educated as to the proper attitude to hold towards to their Chinese partners.

Apps made in China

Nigeria doesn’t enjoy the best reputation in the field of new technology. More and more people still fall victim to the classic Nigerian scam by paying thousands of dollars towards non-existent inheritances, winnings or other massive cash injections to be claimed.

Significantly more cash flows into Nigeria thanks to start-ups operating in the financial sector.

‘Fintechs are firmly becoming our specialty’, says Muda Yusuf of the Chamber of Commerce and Industry in Lagos.

At the end of last year two Nigerian companies — OPay and PalmPay — received $220 million from China. Among the investors was Transsion, a large Chinese phone producer which European readers have probably never heard of. This company is based in Shenzhen, the Chinese ‘Silicon Valley’, and is one of the fastest developing telecommunications producers in China. It’s best known in Africa where it has been already selling its devices for over a decade. In 2008 it opened its first subsidiary in Nigeria and now has seven in the whole continent. Since 2017, it has been the largest smartphone producer there. It has been supported in investing in Nigerian fintechs by investment funds. For several years now, these funds have been closely observing the African market, while some of them have close links with the Communist Party. Such as Sequoia Capital whose partner, Neil Shen, is part of the National People’s Congress, or Chinese parliament in other words.

Such a group of investors has focused attention on Nigerian apps. OPay is the baby of Opera, the web browser which is currently occupies second place in terms of popularity in Africa. Although it’s based in Norway, since 2016 it has been owned by a Chinese consortium run by a company dealing in computer security. Since then, Opera has been concentrating on payment apps, including those operating in Kenya, such as OKash and OPesa.

With the apps available on the Google Play store, the Google corporation took a closer look at them this year and discovered that they are mainly used to provide payday loans, meaning short-term loans at very high interest rates. And which Africans are only too happy to use.

OPay has introduced other services: ORide, an app for hiring motorcycle transportation; OFood, a food delivery service; or OLeads, an advertising network. And from Nigeria, it intends to conquer Ghana, Kenya and South Africa.

In turn, PalmPay is an app for mobile payments which desires to become ‘the largest African financial services platform’.

I get in contact with both companies through Marek Zmysłowski who has worked in investment funds in Nigerian tech companies. Their initial contact is enthusiastic and the companies quickly respond to my emails. But when I start asking about links with China and user protection, silence ensues.

China also exports technology for citizen surveillance and control to Africa. ‘Many African consumers haven’t a clue that they’re using Chinese products and tech services’, says Iginio Gagliardone, a professor at the University of Witwatersrand in Johannesburg, South Africa. The Alliance for Affordable Internet estimates that currently the average African has to pay up to 8% of their monthly income to send a gigabyte of data through the net. That’s why price is the main factor when choosing which device to buy.

In 2016, South Africa joined the Huawei program ‘Seeds for the Future . photo credit Huawei

Huawei, ZTE and China Telecom are behind most of the investment in the main systems and most important telecommunications infrastructure of Africa. What looks like aid in modernising Africa raises lots of questions. ‘Regarding the close links of Chinese tech firms with the government, digital systems and infrastructure may be used in intelligence operations and electronic supervision’ say the authors of a report entitled Freedom of the Net: The Rise of Digital Authoritarianism, from the American think-tank Freedom House.

Just two years ago a scandal broke when it turned out that for five years Beijing had been listening in on conversations at the headquarters of the African Union in Addis Ababa. In the very same building which, along with kitting it out with modern fixtures and fittings, the Chinese government had built as a gift to the nations of Africa.

Wearing blinkers

‘Of course we realise that China is taking over Africa. For the moment, however, we need them. And if they go too far? If the worst comes to the worst, the problem will be solved like any other — with machetes’

This conversation with his father-in-law, a diplomat from a central African state, was passed on to me by a certain European expert in geopolitics. He asked me not to give away either his name or that of the particular country from which his wife comes. ‘Africa already has a poor enough reputation in the West. And this isn’t about frightening them. But indeed the inhabitants of this continent do imagine that if something happens they’ll just simply chase out Chinese business’, the expert says.

Ejiro Umukoro, more widely known as Lady E., strongly defends African independence. Inasmuch as she is a Nigerian TV and radio producer, has studied in the UK and works as a communications consultant. And she says: ‘Those who state that haven’t a clue what they are talking about. We’ve covered our eyes, covered our ears, and don’t want to admit to ourselves how much trouble we’re in. We’ve always been taken advantage of, they’ve always treated us as a cheap source of labor and a market for goods. But now the difference is that we are we are welcoming with open arms the means by which they will be able to direct and monitor us. And no-one has the courage to say this aloud.’

Written by Sylwia Czubkowska

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Entrepreneur, Investor, Advisor, Speaker. Bestselling Author of “Chasing Black Unicorns”. www.marekzmyslowski.com

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Marek Zmyslowski

Marek Zmyslowski

Entrepreneur, Investor, Advisor, Speaker. Bestselling Author of “Chasing Black Unicorns”. www.marekzmyslowski.com

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