Resource rich Africa has become a significant trading partner with China, whose bilateral trade stood at $210 billion in 2013, more than the U.S. And Chinese Premier Li Keqiang has announced plans to double bilateral trade with Africa to $400 billion a year by 2020, according to the Voice of America.
Except that there are growing concerns about the way the Chinese are doing business in Africa, using suitcases full of cash to help close their deals. They also gift their trade partners with grandiose public works projects.
At the recent summit on Africa hosted by the Obama Administration in August, corruption was high on the agenda, says the VOA. Many complained that the Chinese completely disregard international anti-corruption conventions.
American corporations, on the other hand, would like to play hard ball like the Chinese, but they can’t, because of the U.S. Foreign Corrupt Practices Act, and the UN Convention Against Corruption (UNCAC). It’s actually a crime for a U.S. citizen to bribe or gift or do anything else of that nature to win business overseas.
China has a fertile corruption field in Africa, says the VOA, because in much of Africa corruption is how things are dome.
At the Africa conference in August, Vice President Joseph Biden said bluntly: “It’s a cancer in Africa. It not only undermines but prevents the establishment of genuine democratic systems. It stifles economic growth and scares away investment. It siphons off resources that should be used to lift people out of poverty.”
Joseph Siegle, of the Africa Center for Research Studies at the National Defense University in Washington, said corruption causes Africans to lose out.
“In a competition involving corruption, ” he said, “there will always be actors willing to take the process one rung lower. This process would simply accelerate a race to the bottom…With these actors, however, there is a risk premium on the part of African governments and business partners. There is often a poorer standard of performance, lower reliability, and fewer avenues of recourse if there are disagreements over a contract.
“Business transactions with international partners upholding the rule of law, in contrast, are more apt to be sustainable and bring African businesses into other corporate networks, creating more opportunity over the short and long term, ” he said.
William Fanjoy, with the U.S. Commerce Department’s U.S. Export Assistance Center, said that “U.S. companies can never ‘sweeten’ a deal in Africa, but they do offer African partners quality, responsiveness, financing, training, and a long-term business relationship. After years of getting to know Chinese poor quality, we find that African companies are seeking out known American quality and reliability.”
The African Union, in 2003, forged its “Convention on Preventing and Combatting Corruption, ” which so far has been ratified by only 35 out of the AU’s 54 members. But Transparency International noted that many of those signatory states “have not taken action to implement the necessary legal frameworks” supporting the AU’s Convention.