Introduction

China Africa cooperation goes as far back as the days of trade in gold and other precious metals and most notably during the African continent’s fight against colonization. However, relations in the energy sector are much more recent, with more clearly defined patterns in the mid-1990s when China became a net energy importer on the back of a rapidly expanding economy. In the last decade, China’s engagement in the African energy sector has grown beyond what is often seen by the West as competition for oil resources to investment in infrastructure including energy generation projects for African states such as hydropower critical for the continent’s sustainable development.

Angola, Sudan and Nigeria the leading Oil exporters, new discoveries in southern Africa

Africa accounts for about a third of China’s overall oil imports with the largest African exporters being Angola, Sudan, the Republic of Congo, Equatorial Guinea, and Nigeria. From a global perspective, China’s share of total African production is still modest, at approximately 9 percent, compared with the U.S. share of 32 percent and Europe’s share of 33 percent with the rest being consumed locally or exported to other regions of the world.

At current production levels there are at least 40 years of reserves remaining in sub-Sahara Africa. The leading oil producers in sub-Saharan Africa – Angola and Nigeria – have a combined oil production of three million barrels per day (bpd). With production at 70,000 bpd, Ghana is gradually joining the mid-tier oil producers such as the Central African states of Cameroon and Congo-Brazzaville. Niger commenced 20,000 bpd production in October 2011 at the Chinese National Petroleum Company (CNPC)-operated Agadem oil field, adding to the rich oil endowments of the predominantly West African States of Nigeria, Ghana, Gabon, Equatorial Guinea, etc.

Although West Africa of course along with Angola (south) and Libya (north) have dominated oil production in recent history, new discoveries in East and Southern Africa have placed the sub-region in a position where it now “holds the treasure trove of opportunities for oil and gas sectors”. In fact the last half a decade or so has been quite crucial for Africa, with oil and gas discoveries coming one after the other. At least five countries in the Southern African Development Community (SADC) alone namely Madagascar, Mozambique, Namibia, Tanzania and Zambia have recently made oil and natural gas discoveries, making them new frontiers for exploration. Uganda in east Africa is expected to commence production this year following major discoveries in the Lake Albert region made in 2006.

In Mozambique, a string of significant gas and oil discoveries in the off shore north-east of the country has substantially increased prospecting in the country and exploration activity looks set to pick up. Namibia has discovered an estimated 11 billion barrels in oil reserves and could start drilling as early as 2015. Zambia has discovered oil and gas near its border with Angola. As of 2010, the country had issued prospecting licenses to a number of International Oil Companies (IOCs). As of 2011, Tanzania had licensed no less than 17 IOCs to explore for both offshore and onshore oil and gas deposits. These discoveries are coming at a time when global crude oil prices have risen steadily since mid-2010.

China’s resource-backed loans are a game changer

For many years, Western countries have been exploiting Africa’s natural resources including oil and other minerals, with little growth and development on the continent. Although the continent’s slow pace of development can be attributed to a number of factors, there is no denying the fact that years of natural resources exploitation has contributed significantly to not only underdevelopment and many resource-fueled conflicts on the continent.

Drawing from its long history of peaceful engagement with Africa, China has come up with an innovative concept of resource-backed loans that are sure to be a game changer as far as the continent’s development trajectory is concerned. President Abdoulaye Wade of Senegal captured the feeling among many Africans when he said:

“China’s approach to our needs is simply better adapted than the slow and sometimes patronizing post-colonial approach of European investors, donor organizations and nongovernmental organizations. In fact, the Chinese model for stimulating rapid economic development has much to teach Africa.

With direct aid, credit lines and reasonable contracts, China has helped African nations build infrastructure projects in record time—bridges, roads, schools, hospitals, dams, legislative buildings, stadiums and airports. In many African nations, including Senegal, improvements in infrastructure have played important roles in stimulating economic growth.

It is a telling sign of the post-colonial mindset that some donor organizations in the West dismiss the trade agreements between Chinese banks and African states that produce these vital improvements—as though Africa was naive enough to just offload its precious natural resources at bargain prices to obtain a commitment for another stadium or state house.”

Why China-Africa Energy Relations will stand the test of time

Although China may be seen as a “latecomer” to the oil game in Africa compared to the US and European countries, its role is set to rise during the next decade given oil discoveries in more African countries and the growing influence of the Forum on China-Africa Cooperation (FOCAC) as a diplomatic channel for socio-economic and political engagement. Launched in October 2000, FOCAC encompasses assistance, economic development, trade, investment, and political partnerships in an integrated manner that Africa has not seen in terms of relations with Europe and the U.S.A. There are several reasons why China has and shall continue to have a competitive edge over the West in securing energy deals with Africa.

• China offers integrated financial packages

China is providing loans and credit lines for construction of other infrastructure projects so badly needed by African countries for long term development such as railway lines, roads, schools, hospitals, and offices; etc. For example, in oil rich countries such as Angola, the Export-Import Bank of China extended a total of US$4 billion oil-backed loans in 2004 and 2007 for a series of projects including the construction of new schools and hospitals, as well as the development of the country's energy and water sectors.

The loans extended to Angola were at a critical phase in the country’s development, when it was emerging from a protracted civil war, and more telling, at a time when the likes of the IMF were taking advantage of Angola’s dire situation to press for democracy and governance reforms.

• China’s policy of non-interference, solidarity, sovereignty

China’s public diplomacy emphasizes the notion of solidarity and South-South cooperation.

This approach has a long history, from the time when Chinese merchants reached the East African coast in the fifteenth century, China unlike the West has never sought to subjugate, colonize, or enslave.

In fact, China’s record is one of support for African liberation movements and the common interest of the developing world in creating a just, equitable global economy.

China has always preferred to present itself as part of the developing world and as such as sought to protect the interests of African states in international forums, based on solidarity and reciprocity.

China has always emphasized the notion of “respect” for African countries, embodied in its policy of noninterference in the domestic affairs of sovereign countries in contrast with Western countries policies of confrontational interventions.

• The win-win approach, Africa sees China as an “equal” partner

China’s economic engagement in Africa is based on the principle of win-win. China comes to Africa as a business partner, and not to offer charity, that is often “sweetened” messages that seek to compel African states to adopt new political ideologies (western forms of democracy).

China’s approach is based on the notion that sustainable economic transactions have a better chance of building lasting relations rather than relations that are based on humanitarian impulses.

This approach also places African states in a better position to freely negotiate commercial terms with a partner that is willing to listen as opposed to a culture of dictating terms.

The DRC has also received similar loans amounting to US$9 billion in 2008 backed by the country’s mineral resources.

• China has an optimistic view of Africa’s future

Unlike the West that often has a disparaging and dismissive view of a continent that they always portray as ravaged by disease and conflict, China has a more optimistic view and this in effect is demonstrated by China’s willingness to not only expand trade and investment but also fund long-term infrastructure projects. On the other hand, the West is more preoccupied with provide humanitarian aid and thus maintain the status quo, at the very least.

It is therefore not surprising that many Africans see China’s approach as one that is pragmatic in putting the continent in good stead to take off economic and therefore conforming with their own development priorities and aspirations.

• FOCAC as a diplomatic channel for political and economic engagement

Since 2000, FOCAC has now provided the platform for China and Africa to regularly confer on issues of mutual interest, not least the question of energy relations.

Conclusion

In conclusion, China’s growing economic presence in Africa has provoked a range of reactions in both Africa and the West, not least in the energy sector. For many Africans, there are actually high hopes for what China can bring to the continent in terms of trade, investment, and alternative development partnerships targeting various forms of infrastructure. Accusations by the West that China's economic activities in Africa are of an exploitative nature are therefore not based on reality but border on malice if not driven by the motives of wanting Africa to remain unstable and underdeveloped so that they can continue to plunder its resources under conditions of non-functional government systems.

REFERENCES

Rolake Akinkugbe, Africa: Sub-Saharan Oil and Gas 2012 - a Business Africa Guide, Ecobank Capital, 2 February 2012

SARDC, SADC Today, various editions, SARDC-SADC, Vols 1-14, 1997-2012

SARDC, Southern African News Features, SARDC, various articles, 2012

Toivo Ndjebela, “Namibia: Nation 'Strikes' Liquid Gold” in New Era, 8 July 2011

David Adetona, “Namibia: Oil And Gas Exploration Moves to Drilling Stage” in Namibia Economist, 8 July 2011

Abdoulaye Wade, “Time for the west to practise what it preaches” in Financial Times, 24 January 2008.

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