Introduction According to Taylor (2006), a ship leaving Shanghai today will arrive in Lobito, one of the largest Angolan ports, after exactly six weeks. One then wonders, why the tight financial and commercial links between Angola and China? Despite the geographical distance between the two nations, their financial win-win relationship has been remarkably stable for over a decade now. The essence of the relationship is the crude oil in Angola. Currently Angola is the biggest competitor taking on Nigeria in the oil business in Africa. According to Naidu and Marks (2010), intelligence reports relating to the year 2009 indicated that unrefined oil accounted for more than 90% of Angola’s exports, and this crude oil went to China. Today, the Angola-China relationship is the perfect case study that can be used in explaining the Sino-African involvement. While both partners seem to be in favor of the commercial links, it is noteworthy that the relationship has both merits and disadvantages.
According to Alden (2007), the oil-related links between China and Angola can be traced back to 1984 when the two nations entered an agreement over the oil deal. During this time oil had already replaced diamonds as the key export. The trade links faded as the African country was rocked by political instability and social strife. The workable links between the two nations were rejuvenated in the year 2002 as the civil conflict subsided and peaceful co-existence became a possibility. During this time the agreements signed by the Chinese governments and the Angolan council of ministers, were related to banking and finance, oil as well as development projects. Most Angolans were indifferent on the initiation of the trade links as they lacked a clear understanding of the deals and remained doubtful of the intentions of the Chinese people in their economy.
According to Okoro and Oyewole (2006), Angola exported goods worth slightly more than one billion US dollars in 2002. Eight years down the line, the country’s exports to China amounted to an approximate twenty three billion US dollars. This indicates the effect that the Sino-Angolan partnership had yielded in that short period. The Africa research bulletin (2006) indicates that the partnership between China and Angola is one that is bound to remain sustainable for many coming decades. The relationship has yielded many mutual benefits and quite a number of challenges as well. In the year 2009, the ambassador of China to Angola observed that there were more than four hundred privately owned Chinese corporations operating in various sectors of the Angolan economy. He further stated that the number of state-run corporations in the Angolan economy stood at fifty three. The corporations were in active business and were making a significant contribution to the Angolan economy.
Taylor (2006) argues that much as China was concerned about the development of the Angolan economy, its key efforts were concentrated on improvement in telecommunications, transport facilities as well as the reconstruction of the agri-business sector. Taylor (2006) further observes that the low interest loans advanced by China to Angola were meant for countrywide modernization and renovation. The loans given in early 2004 were given in terms that the Angolan people found amicable. For instance, the loans were payable over a period of twelve years, and the interest rates were not at all punitive. The screening procedures that are adopted by international monetary institutions such as the international monetary fund were not employed. The Chinese people were less concerned about the past conduct of the Angolan government in relation to honoring of obligations. According to Eshelby (2007), the deal appeared ideal to the Angolan people. It prompted many questions from critics.
The loans were meant for various reconstructions in the economy and infrastructure. The funds were committed to such projects as the refurbishment of the road networks, the enhancement and expansion of provincial and district hospitals across the country, the upgrading of high schools and tertiary learning institutions, the acquisition of capital and machinery for the agricultural sector as well as the renovation of the expansive irrigation scheme at Caxitor and Luena. The sum effects of all the above projects would later yield tremendous economic growth and development as the reliable infrastructure made transport communication more reliable and efficient. The conveyance of good and transfer of ideas became effective, and this marked the beginning of intensive industrialization in the third world nation. Stability was achieved, and the government of Angola initiated the repayment of loans.
According to Okoro and Oyewole (2011), the latest development relating to the China-Angola partnership is the extension of the relationship into the sector of national security and defense. The Angolan defense minister initiated efforts of military collaboration and co-operation. This, according to Okoro and Oyewole was done in an attempt to strengthen the Angolan defense forces. The two international relations experts attribute this projected cooperation to the fact that China has the best military department in the world. The technologies employed by the Chinese army are above reproach, and if Angola acquires such advancements, it will arguably be the best equipped African country in terms of the armed forces.
Among the most prominent benefits that Angola has reaped from the partnership is an improved road and rail system. The Chinese corporations in the country in collaboration with the governments of both Angola and China have pooled resources in enhancing the highways and other feeder roads in a bid to make trade easier and effective. This has seen Angola move from the murky roads and vandalized railway systems to A-1 highways and railway connections. This has boosted the volume of trade and the rate at which foreign firms are investing in the country. Foreign direct investments are reliant on a peaceful environment and proper infrastructure. Naidu and Marks (2010) observe that this is the most visible positive impact of the China-Angola business connections.
Worth mentioning is the benefit of improved social amenities. Talking of social amenities, schools and hospitals come into the picture. The loans advanced by the Chinese government to the Angolan government have helped in the establishment of new health facilities and the renovation and improvement of the old hospitals. These have helped the Angolan people access better healthcare. Healthcare has been described by Alden (2010) as an essential human need in the contemporary world where lifestyle diseases are rampant. Healthcare determines the rate at which the economy is growing and developing since it ensures the availability of able human resources. The Chinese involvement in Angola has as well been associated with the construction and refurbishment of schools. The improvements have majorly been concentrated on the high school institutions and the tertiary level colleges and polytechnics. Taylor (2006) argues that the Chinese initiated the education upgrading program in order to provide the economy with the expertise necessary for economic development.
Naidu and Marks (2010) argue that one of the biggest ways in which the Angolan people have gained from the partnership is through achieving better technology from China. China is arguably among the top countries enjoying advance technology. The technology employed by the country in such sectors as Information and Technology (IT) as well as the telecommunication sector. Eshelby (2007) argues that being the second most developed economy after the United States, China has enough resources to invest in the advancement of technology. Currently Angola has the best developed technology in the sectors of agriculture and fishing in Africa. Fishing, being one of the most prominent sectors in the economy of Angola, is given much prominence.
The involvement of China in Africa, particularly in Angola, has led to the eradication of poverty. The development of infrastructure has led to many people establishing small and middle enterprises (SMEs) that have increased the income of the owners. As such, the living standards have risen, and this way, poverty has been kept on the low. After the civil war, most of the people in rural Angola lived below the poverty line. This was caused by ignorance and disease. Upon the signing and implementation of the China-Angola agreement, many natives secured employment positions in the Chinese corporations and the locally established agri-business sector. According to Alden (2007) one of the most notable benefits that the Angolan people have reaped from the partnership is the establishment of anti-malarial units. Malaria as a killer disease is a serious phenomenon in Africa. It claims lives of people especially children at exceptionally high rates in one year. Alden (2007) noted that the agreement between China and Angola covered the issue of malaria.
The benefits from the Chinese point of view include the fact that the corporations of china were capable of obtaining cheap resources from
Angola (Eshelby 2007). Such resources, mainly crude oil and diamond were exported to China where they were used in the manufacture of various valuable end products. Such products boost the Chinese economy a great deal through international trade. Additionally, the Chinese companies operating in Angola are capable of accessing human resources at affordable rates. The human resources especially the manual unskilled labor can be accessed at competitive rates in most African countries. As such, the Chinese corporations in Angola are capable of trimming down their costs of production.
Another way through which China has gained from the partnership is that it has widened its markets; china is now capable of selling its products in Africa. The Chinese products mainly telecommunication devices have found their way in Angola where they enjoy tremendous popularity (Okoro and Oyewole 2011). The commodities are within the reach of many Angolans. This is the major reason for the year round demand for the products. The elimination of trade restrictions has boosted the volume of trade between the two nations. The two countries do not impose heavy taxes and customs obligations on imports.
The downside of the partnership from the Angolan perspective includes the fact that the Chinese corporations in Angola pose a serious threat of unfair competition to the infant industries (Okoro and Oyewole 2011). This is because the Chinese corporation works with better technology and have better capital bases. Their presence in the economy limits the chances of the local industries that have little resources. The technology that the Chinese companies use cannot be compared to the elementary technology employed by the African companies.
Taylor (2006) noted that the Angolan people have as well pointed fingers at the Chinese people in the country for the high rates of moral decay. The cultural ways of the Angolan people are so different from the ways of the Chinese. The personal intimate relationships between the Chinese people and the natives have been the cause of concern among most social institutions. These institutions include the religious institutions which hold different ideas from the beliefs of the Chinese religions. Further to this point, most scholars have argued that the partnership between Angola and china does not take into consideration the moral aspects. This means that the deals are business and finance oriented. They do not focus on the betterment of the society.
Reference list
Africa Research Bulletin: Economic, Financial & Technical Series. Anglo-China. 2006, Vol. 43 Issue 6, P17001-17001.
Aguilar, R & Goldstein, A. 2009. The Chinisation of Africa: The Case of Angola. World Economy. Vol. 32 Issue 11, P1543-1562.
Alden, C. 2007. China in Africa: African Arguments. New York. The Free University Press
Eshelby, K. 2007. Angola's New Friends. New African. Issue 466, P52-55.
Naidu, S & Marks, S. 2010. Chinese and African Perspectives on China in Africa. Capetown: Pambazuka Press
Okoro, E. & Oyewole, P. 2011. A Cost-Benefit Analysis of China's Trade Relations with Sub-Saharan Africa. China Business Review. Vol. 10 Issue 9, P734-743.
Taylor, I. 2006. China and Africa: Engagement and Compromise. New York. Routledge
