Africa is Standing still but going backwards

We have probably heard a lot in the news today saying that the African economy is on the right track and has dramatically improved for the past few decades. Certainly, the coordination of the African economy did improve mainly because of less social disputes or political turmoil and of course the effort from regional and international organizations such as African Union or the United Nations to improve the economic situation of the area. However, as recent studies shown that the poverty rate in Africa today has got a lot worse compare with its poverty rate back in 1993. This is a clear sign that the past effort to stimulate African economies have failed. But China, as a new rising superpower that just start to systematically making its entry to the African economies, might actually have a solution to the problem.

When it comes to stimulating an economy, we all understand that investment is the key factor. Without investment and trade, it is very hard to boost up the economic capacity. One of the example would be China, during Chairman Mao's time, the economy was never sufficient enough to provide what they people needed. But after China opened up its economy, with its affordable labor and subsidizing policy, the economy has drastically improved. However, that method does not seem to work in Africa. Africa certain has some obvious advantages for investment, such as cheap labor and abundant resources. But Africa also has its fatal disadvantages such as lack of political and social stability and lack of reliable infrastructure. Therefore because of that, it is hard for Africa to draw enough foreign investment. This is the part where state to state interaction is very important. China comes into Africa with the intention of investment that are quite different from the West. It is important to know that the United States is still currently the largest investor in Africa, and China only came up as second last year. The United States would simply buy the oil and other natural resources and bring them home. China, on the other hand, would have large economic pact with African nations. Normally on agreement that China would be allowed to extract natural resources from a certain area, in exchange for a number of money spent on the development of a specific field in Africa, usually infrastructure. The Chinese economy has a large public sector and composes many State Owned Enterprises (SOEs) under the disposal of the Chinese government. So that gives China the advantage that the government does not need to please the private business owners and beg them to invest in Africa individually. But the government can simply give orders to its SOEs and with the collaborations between the SOEs, the Chinese government can offer a very competitive infrastructure package to the African nations that none of the Western countries can do.

In conclusion, the African nations should continue to expand its economy to avoid further economic downfall, and China is the perfect partner for Africa. Not only because China is committed in investing the natural resources in Africa, but also it can provide economic packages in the most efficient way that no Western nations seem to be able to deliver.