There are now 1 million Chinese living and working on the African continent, but while some are investing in employing and training locals, others have hauled most of their profits back to China, writes Henry Hall.
• A version of this post ran on the author's blog, China Africa News. The views expressed are the author's own.
An increasingly common complaint emanating from the African media is that Chinese immigrants in Africa are having a negative impact in their host economies.
Recent studies suggest that the population of Chinese in Africa now stands at close to 1 million. The chief concern is that Chinese small businesses, often run by Chinese families, are capitalizing on their better access to Chinese markets, more advanced techniques, or superior access to capital, to make profits in key industries in which Africans seek employment – namely petty trading, agriculture, mining, and building work.
Migration has long been a popular route for poorer Chinese workers and traders hoping to make their fortunes. This has resulted in the establishment of Chinese communities throughout Southeast Asia, who often set up industries with close connection to the Chinese economy. This model – which has been playing out for hundreds of years – has allowed the Chinese economy to vent excess labour out into the peripheries of its sphere of influence, creating durable linkages with other markets and, more recently, easing the political pressure created by rural poverty and urban unemployment.
This has been a catalyst in the growth of a number of economies in Southeast Asia while also garnering disquiet as local inhabitants complain that Chinese migrants take their opportunities.
Recently there have been moves in Malawi, Tanzania, Uganda, and Zambia to curtail which industries Chinese immigrants are allowed to work in – especially in the realm of market traders. Chinese market traders have a poor reputation in much of Africa because of widespread complaints over counterfeit and poor quality goods.
Their advantage over African traders stems from their superior access to Chinese markets and capital, sometimes earned through working on large Chinese building projects on the continent. In other industries such as building, agriculture, and mining, Chinese laborers and small businesses often bring with them skills and experience lacking in many African markets.
The question of whether these small scale Chinese businesses and labourers benefit African economies comes down to how far they integrate. Some Chinese entrepreneurs set up in Africa to make their fortune, but use the wealth they accrue to support their families in China or to build up sufficient capital to move home and set up a business there. This is akin to outsourcing industries like petty trading and agriculture to China, because in this case most of the wealth created leaves the country.
However, in other cases Chinese entrepreneurs build up successful pockets of industry, employing local people and transferring skills to the local economy. This is especially useful when considering industries which are not well developed in Africa such as manufacturing. If Chinese entrepreneurs using skills learned in China can successfully set up manufacturing for export in Africa, it could provide a huge boost to the African economy.
The problem for African governments in knowing which immigrants are going to be productive members of the economy, and which will take opportunities away from locals or transfer their wealth back to China. Considering the generally weak bureaucracies in many African countries this is a real challenge. In order to make progress here African governments will need to enlist the support of their Chinese counterparts to help limit the flow of unskilled immigrants, and to send home those who are not creating employment or investing in the local economy.
Henry Hall is the founder and editor of China Africa News, a website and blog covering China’s growing relationship with countries in Africa.