China in Africa

During a trip that took me to East, Central and West Africa, the single most visible construction effort was road building. Kenya and DRC are badly in need of new and/or improved road infrastructure. Ghana, while ahead of the others in terms of existing road systems, still has a lot to do. So it was no surprise to see massive on-going projects everywhere across the continent.  What was surprising was that every project was managed by 'the Chinese', as my local guides proclaimed.

Regardless of location, the comments were the same. 'The Chinese' are building roads, railways, bridges and, yes, buildings throughout Africa. A quick review of recent activity shows that China's investment in africa is growing at a rapid pace, as the chart below, from the Economist (April 22, 2011) shows.

While the figures are impressive, it is the fact that almost all Chinese investment is in the form of tangible projects that makes the above graph so compelling. In contrast to those who provide cash investment or aid, China sends crews, materials and even labor (as one local said, 'they even send the chap who makes the tea'). In doing so, they stimulate their own economy, develop a very physical presence and leave a visible and lasting legacy of their investment. Thus they become more entrenched in the local markets.

Add to this the fact that western involvement in Africa is still  remembered as colonial in many places, and exploitive in many more (most investment being provided by energy and/or mining companies) and one can see that China stands to gain both economically and politically over the long term.

Not only that, but a recent report in the Financial Times BeyondBrics blog of Decemebr 13, 2012 notes that Chinese companies are using Africa to bypass import restrictions and duties.

http://blogs.ft.com/beyond-brics/2012/12/13/china-in-africa-taking-advantage/#ixzz2M1XV3H5l

In doing so, China is displaying a commercial acumen that belies the old notion of a rigid, communist and unimaginative entity. They are taking advantage of immediate financial benefits while planning for the long term.

Africa is the continent of the 21st century and beyond. After centuries of exploitation, the countries of Africa are on the cusp of tangible economic development that benefits the population at large and not just the select few.  The question is, will the west be an active partner in this development, as China is becoming, or leave the opportunities in the hands of conglomerates?

TW

This blog represents the opinions of the author and should not be interpreted as representing the opinions, or recommendations of Mobilitas or AGS Worldwide Movers. All data and information provided on this site is for informational purposes only. The author makes no representations as to accuracy, completeness, timeliness, or validity of any information on this site and will not be liable for any errors, omissions, or delays in this information or any losses, injuries, or damages arising from its display or use. The blog is the property of the author and should not be re-posted without express, written consent.

Why we go with the flow.

Last time, I spoke about facilitation payments and the fact that such payments are a normal part of doing business in Africa. Today I want to share a cautionary tale about how trying to work around the system can cause no end of trouble.

During a visit to Kinshasa airport, I visited a warehouse operated by a customs agent. I was there to witness the process whereby one needs six or more stamps on an AWB in order to clear a shipment. This, in itself, was remarkable to see and brought home the reality of the day to day routines of importers in the country. I heard stories of 'routine' inspections, where anyone visiting the warehouse to pick up packages was 'fined' for no reason other than literally being in the wrong place at the wrong time. I must have raised an inquiring eyebrow because I was taken into the warehouse and shown what looked like about 40-50 pallets of malaria medication labeled "President's Malaria Initiative" with the logos of USAID and CDC clearly stamped above and below that title.

I pretended to take a photo of our guide but managed to get the pallets in picture. (See photo). The one in the foreground is on the top of two tiers of pallets and there were more stacks to the right and left for about 10 rows.

I was informed that these medications had been sitting in place for TWO YEARS and were now out of date. Someone had tried to push for rapid clearance without the usual accommodations and a relatively low level official had blocked the import, presumably thinking that the leverage (see my last blog) on this shipment was high. No one relented, on either side, and the shipment will now be destroyed. Of course whether it is actually destroyed or finds its way onto the street is another story.

While we are adamantly against bribery in any form to gain business, we have no choice but to go with the flow in order to operate at any level of efficiency.

Attempts to curtail this sort of activity are in process and the newly appointed Director is attempting to work toward a system whereby one gets a single stamp in order to clear a shipment. He is also rotating staff to prevent individuals from getting too entrenched and thereby creating the sort of small fiefdom that has led to the current situation. I, for one, wish him all the very best in this endeavor. His country will greatly benefit if he gets it right.

TW

This blog represents the opinions of the author and should not be interpreted as representing the opinions, or recommendations of Mobilitas or AGS Worldwide Movers. All data and information provided on this site is for informational purposes only. The author makes no representations as to accuracy, completeness, timeliness, or validity of any information on this site and will not be liable for any errors, omissions, or delays in this information or any losses, injuries, or damages arising from its display or use. The blog is the property of the author and should not be re-posted without express, written consent.

Fines and Facilitations

From Bloomberg.com - reporting on stricter driving laws in Kenya:

"Under the new law, any motorist found driving on the sidewalk or using gas stations as a detour faces a year in prison and/or a fine of as much 300,000 shillings. The rules also stipulate vehicle operators who drink and drive may be fined at least 500,000 shillings and/or serve a minimum of 10 years in jail. A conviction for dangerous driving causing death can lead to life imprisonment, Midiwo said.

Drivers are concerned that creating tougher penalties for traffic offenses will enable corrupt police officers to demand bigger bribes, Simon Kimutai, head of the Matatu Owners Association, said by phone from Nairobi. Most matatus are privately owned.

“We don’t have properly trained officers who can enforce the law,” he said. “The fear is mostly that corruption is going to go triple-high.”"

That last sentence was the cause of a large scale strike by Matatu drivers who fear that police will simply want larger bribes to turn a blind eye on traffic offenses. Most Matatus, which are 14 person vans that regularly accomodate 20 or more people, simply ignore traffic laws; driving on sidewalks, the wrong side of the street etc. Apparently drivers also regularly have a few beers to keep their edge and police will accept small amounts of cash to let them off with a warning.

The drivers fear that larger fines equal larger cash contributions and their fears are probably well justified. Leverage plays a huge role in the African tradition of 'facilitation'.

In Kinshasa, DRC, police regularly stop drivers and find a reason to collect a 'fine'. During a recent visit I was twice involved with this practice, which usually means a 20-30 minute discussion at the roadside, followed by payment of the 'fine'. I was warned to 'never get out of the car' and 'never hand over your license or passport'. The reason for this is simple; once the police can get you to the station, whether you follow them to retrieve your ID or are taken there in their vehicle, they have more leverage and your 'fine' will be a lot more than the $5-10 it takes to settle matters on the roadside.

In the world of household goods moving, leverage has the opposite effect. Because HHG shipments are exempt from duty, there is little leverage for the customs officials to extract more than a few dollars per stamp or signature (as many as six stamps required in DRC). So HHG shipments endure much longer delays than commercial shipments, where high duty charges can be negotiated downward, subject, of course, to a facilitation fee to customs officials.

This practice is so rampant that even the US Foreign Corrupt Practices Act, which prohibits US companies or their agents from bribing anyone in order to get business, has a clause exempting the facilitation of minor officials in order to conduct business.

More on this subject in a later blog.

TW

This blog represents the opinions of the author and should not be interpreted as representing the opinions, or recommendations of Mobilitas or AGS Worldwide Movers. All data and information provided on this site is for informational purposes only. The author makes no representations as to accuracy, completeness, timeliness, or validity of any information on this site and will not be liable for any errors, omissions, or delays in this information or any losses, injuries, or damages arising from its display or use. The blog is the property of the author and should not be re-posted without express, written consent.