Kampala — IN a bid to stimulate the debate on the newly discovered oil and the sharing of the oil wealth, Business Vision runs a series of articles by Professor Kasozi, the director of the National Council for Higher Education. This article focuses on the pros and cons of China's interest in African oil.

Traditional buyers (or exploiters) of African resources, some African academics and even politicians, became increasingly alarmed at China's energetic re-entry into the African market place, particularly in the African oil market.

However, as globalisation rolled on, and global power of production and consumption changed (whereby the gap between developed countries of the west and Asian giants narrowed), China, whose economy is probably the second largest in the world now, had to find resources to feed its industries and services.

China's entry into the African market, especially the oil market, is advantageous to the African continent as it increases demand for African resources and gives Africans more choices. The competition should positively reduce the traditionally unequal trading relations the continent has had with her former colonial masters-cum-trading partners.

This is not, however, to say that China will pursue African interests in the relationships. China will definitely pursue its own and its up to African leaders to protect the continents interests by not exchanging oil for trinkets like African chiefs of the 18-19th centuries did for land, gold and other resources.

For over four hundred years, Africa's terms of trade with the rest of the world have been adverse and the continent has received less value for her goods than what their real value on the international market place. That is why the people of Africa are the poorest amongst the five continents. Africans are poor not because they lack resources but because they lack skills, education and leadership to protect and use their resources for the good of their populations.

The fear of China's entry into the African market, particularly the oil market, picked momentum as the 20th century closed. From 2000 onwards, a number of studies and speeches by western academics and think-tanks addressed what they referred to as 'a twin problem' of Africa's growing energy strategic importance to the west and China's speedy entry in the scramble for African oil.

The Council on foreign relations, a US think-tank group produced a number of ideas on what it termed as the growing role of China in Africa particularly in the oil sector. The group felt that China's entry in Africa posed significant issues for US policy makers, business and analysts. Testifying before the US Congress sub-committee on Africa, human rights and operations, Ernest Wilson, an academic, referred to "China's forays into Africa" as major issues to address.

African academics and some politicians feared that the 21 century might see a new partition of Africa targeting African resources, where China, and Africa's traditional imperial powers apportion spheres of influence in the extraction of African resources without Africa's ability to stop them.

As the fifty-three odd African nations either individually or as a group have no capacity to resist such an eventuality, the fear has become real to thinking Africans. As more oil is being discovered on the continent, the temptation of the oil-thirsty strong nations to take African oil for peanuts hovered in the horizon.

The facts on the ground reinforce their fears. China's participation in the African oil market has been on the increase. By 2004, China was expected to be getting 28% of its oil needs from Africa. In the same year, China is reported to have paid some $10b to Africa for oil. Some 800 Chinese companies were said to be operating in Africa. Of the $15b foreign direct investment into Africa in 2001, some $900 (60%) are reported to have come from China.

The two way trade between China and Africa was expected to reach $30b in 2006. However, China's trade was concentrated in a few oil-producing countries particularly Angola, Sudan, Nigeria and Egypt though its trade and political missions were almost everywhere in Africa. But China's African trade represented only about 2% of the country's total (which is consistent with the continent's participation in world trade). Despite that, China was aggressively overtaking Africa's former colonial partners. By 2006, China's trade with Africa ranked third after the US and France, leaving the UK behind.

The entry of China in the African market place should be welcome. It brings competition for African goods and frees the continent from being tied to only her traditional partners whose terms of trade with the continent have been characterised by unequal relations, barriers against African value added goods and dumping of surplus goods, some of which receive state subsidies.

The rise of the Asian markets (mainly India, China and the other tigers) has increased the international thirst for oil at a time when Africa is discovering more hydrocarbon deposits. Africa is thus in position to partly quench Asia's thirst for oil. Asia's rise is therefore advantageous to African interests.

Further, China's relations with Africa have in the past have been cordial. These relations predate colonialism. For example, there is plenty of archaeological evidence that China traded with East Africa before 1500. Between 1950 and 2000, China identified with progressive African issues in international forums.

In the cold war period, the west supported dictatorial regimes such as that of Mobutu, apartheid South Africa and Portuguese colonialists. A prominent western leader once referred to Nelson Mandela as a terrorist. China was, however, on the progressive side of the African liberation struggles. For example, China built the Tanzania-Zambia railway to free that part of Africa from the jaws of apartheid South Africa.

Since 1963, some 1500 Chinese doctors and medical workers have worked in Africa and by 2003; there were still some 900 of them in the continent. Since 2000, China has cancelled some $10b bilateral debts with Africa. Finally, loans obtained from China do not impose stringent conditions as those from traditional lenders. For many Africans, therefore, China is not a stranger to the continent and has been a comrade-in-arms in the African struggle for political and economic independence for a long time.

However, it would be naïve, if not foolish, for Africans to sit back and think that China, or for that matter any other external nation or power will, unlike earlier surplus extractors from Africa, work for the interests of Africa. China will, and came to Africa to, work for, and advance its own national interests.

This is natural. There are a number of examples to certify that this is the case:

First, China, like the earlier seekers of value from Africa, is investing mainly in extractive industries. Minerals are taken out of Africa before they are fully processed. Oil, copper, cobalt and other minerals are mined and exported before value addition. In this way, China is just another importer of African primary goods-Africa's term of trade with Asia are unlikely to be different with those of the west. This is the crux of the matter.

Secondly, China's entry contributes to the de-industrialisation of Africa by flooding African markets with cheap mass produced goods.

Its projects are reported to contribute to the slowing of the training of an African skilled labour force and its trade policies are said to discourage the development of a local African middle and entrepreneur class that is the basis of the growth of democracy.

Many Chinese goods are everywhere in the African market and are distributed by non-Africans. Local industries and traders cannot compete with them as outsiders control the whole chain of distribution.

According to Wilson (referred to previously), the influx of Chinese cloth killed so many African textile factories that the incoming trade was referred to as "a textile tsunami." Many textile factories throughout Africa closed due to this stiff competition.

There were, of course, other factors that combined with the Chinese competition to weaken textile production in Africa:

The open door policies of the World Trade Organisation were the initial bullets. Up to January 1, 2005 African textile manufactures, operated under the "Multi-Fibre" arrangement including the US African Growth and Opportunity Act (AGOA).

This Act permitted duty free entry of African made textiles into the US market.

However, this ended on January 1, 2005 as the WTO (World Trade Organisation) provisions of free trade superseded the friendly US legislation.

Other forces that combined with the above in the undermining of African textile-manufacturing included the unrestricted entrance of second hand cloths from America and Europe which are far cheaper than new ones, agricultural subsidies in the US to cotton farmers which made African-grown cotton uncompetitive and dumping of textiles and goods as "aid" on the African market.

Lastly, it is reported by critics, that Chinese development projects, especially infrastructure, do not have skills-transfer components.

It is reported that workers are imported enmasse from China to do even the lowest of jobs and unlike western-funded projects, African workers are absent in the top personnel layers of Chinese-funded projects.

In trade, the whole chain of goods distribution from importer, wholesaler and dukawallas distributors are, often, all Chinese.

In Uganda, the case of Kibimba Rice Scheme presents a different picture. Before this Chinese project, the knowledge of paddy (wetland) rice growing was not practiced and, I think, well known.

But this changed after the Chinese project at Kibimba was implemented. Wetland rice growing knowledge gradually radiated from Kibimba to the surrounding districts and many Ugandans now grow rice.

The fear of Chinese entry into Africa by the continent's external traditional partners and the apprehension of a number of African politicians and academics, must have contributed to the initiative of a South African think-tank to discuss the issue.

South Africa, unlike many African states, values critical minds that discuss issues for the sake of general knowledge without expecting monetary or political gain. These minds are the foundation of nations because they refine issues for national policy formation.

Accordingly, the South African Brenthurst Foundation organised, together with the Chinese Academy of Social Sciences, the US Council on foreign relations and the Leon H. Sullivan Foundation, a series of meetings to discuss tri-lateral relations of China, the US and Africa.

The very act of meeting was good. For in 1884 when Africa was partitioned in the congress of Berlin, no African was heard.

A report of the three meetings in South Africa (August 2006), Beijing (March 2007) and Washington (September 2007), has recorded a number of issues that were discussed and clarified.

The meetings did not only generate knowledge but also helped in clarifying the many irrational views and assumptions of China's entry into the African market by Western and African scholars, academics, politicians and business interests. I will only highlight seven of them here.

First, it was concluded that Africa was "in play" or in the international market due to increased demand of her resources, particularly oil.

Secondly, the US, China and other nations have interests in getting these resources from Africa for their nations and the participation of China is a normal and expected development.

Thirdly, the US and Chinese interests in Africa are not contradictory and could actually reinforce each other to increase African advantage and development.

Fourthly, the US/China peaceful trade competition in Africa can be positive if it resulted in the creation of more African jobs, skills transfer and revenue generation on the African continent.

Fifthly, African nations must stabilise their state systems and use windfalls from the increased income from their oil and other resources for overall development.

Currently, most of the oil revenues go to foreign interests and the pockets of the leading elites while most of the people in oil producing African nations live below the poverty line.

Sixthly, to maximise market competition of African resources by China, the US and Europe, Africa must own its development agenda and design home-grown development strategies.

These should be based on locally generated theoretical concepts of state formation and development.

Lastly, the USA, China and other traders in Africa must exercise and enhance corporate social responsibility. In conclusion to the issue, I would like to inform readers of my observations.

First, China's increased role in Africa is a positive development for the African continent.

It should increase the competition, and therefore, demand for African resources.

Secondly, with the changing global power systems that are seeing the rise of Asia and China's economy becoming the second largest in the world, China's re-entry in the African market is unstoppable. Africans and their traditional partners (or exploiters) must live with this fact.

Thirdly, competition for African natural resources or other goods is expected. It is not inherently irreconcilable with the interest of each of the players, Chinese, African or Western.

All can benefit from the competition that is likely to increase the prices paid for African origin goods. To benefit, Africans must improves their governance especially in areas of transparency and accountability.

Corruption will undermine any gains international competition for African goods might bring.

Finally, Africa can only benefit from this competition for her resources if it solidifies its states.

The 53 odd states are too weak to compete individually with international giant states (the US, China, India or Brazil). That is one major reason why an East African Federation makes sense.

China's entry into the African oil market should not be allowed to set off a new scramble and partition of African resources by the rising powers of the 21st century. Africa lost the last four hundred years, it can only claim the 21st century if its politicians, academics and entrepreneurs take up their responsibilities (or Lubengos) appropriately.

Prof Kasozi is the Executive Director of the National Council for Higher Education