Sunday, June 24, 2007

China: Developing Giant and Emerging Development Actor

I took time out of my busy management consulting schedule to attend an event about China development in Africa by Center for Global Development here in Washington, DC. I actually learned a few things about China's development, (some of you know I very passionate about China's investment in Africa). David Dollar, the country director for China and Mongolia for the World Bank, shared his thoughts and views about the Chinese approach to infrastructure development.

David mentioned that China uses full-cost recovery for most infrastructure projects, that's how the Chinese have been able to grow their infrastructure at break-neck pace. Full-cost recovery in public infrastructure works like this; when a highway is built there are tolls levied so that the costs of the highway project can be recouped and used to fund other public works projects. China is even selling some of it's infrastructure to the securities markets and getting a second return of their monies. David said, that this Chinese approach is a novel and interesting idea that the Chinese are not even initiating in Africa. In Africa, the Chinese ask governments what they want and they fund and build the projects according to that countries particular need.

Callisto Madavo a Zimbabwean, said that it's noble for the Chinese to invest in Africa and build projects. However, the Chinese are not allowing knowledge transfer to take place. For most projects in Africa they import their own Chinese workers and they do all the engineering and the design. The work the African natives do are mostly labor type of activities.

Africa is now at a interesting point in history: growth rates are high, turmoil and war are down, and Mobile handset penetration is high. We also have developing countries looking at our continent for resources and returns for their capital, mostly China, India, some Middle east countries. What I think is going to happen in Africa for the next 10-15 years in extreme growth fueled by natural resources (hard metals, and oil) and telecoms (Mobile phones and broadband). However, we will need to address the negatives of this growth; disposable income, public health reforms and sustainability.

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