China currently sits at the top of Africa’s FDI league. Once a story of state-bartered trades of oil for infrastructure, China’s investment is now driving a campaign of urbanisation that is widely expected to deliver another economic miracle in “China’s Second Continent”.
The world has counted the billions being invested in Africa, watched the trades, and wondered whether China’s “development model” will float the continent or sink it. The narrative is familiar: China, the cynical rising power, has seen a forgotten Africa as an opportunity to meet domestic needs while cutting its own teeth in the global economy. China-in-Africa is a story we know already.
But is it the whole truth? By only focusing on what can be seen, the West has missed the advance of a less visible wave of investment aimed at Africa’s exploding demographics which is likely to have consequences well beyond Africa. It comes from the tech sector and a visible manifestation of it was the visit to East Africa, earlier this year, by Jack Ma, the founder of Alibiaba, the Chinese e-commerce giant.
Ma, also the UN’s Special Adviser on Youth Entrepreneurship and Small Business, made the trip this summer with a group of Chinese entrepreneurs. These businessmen have successfully navigated the treacherous waters of China’s developing economy. And can see Africa’s potential.
Ma was there to make three significant announcements. One was an invitation to 200 young African entrepreneurs to come and work at Alibaba’s Hangzhou headquarters where they would gain unparalleled insights into the internet, e-commerce and AI. Another was a partnership with African universities to provide vocational training in the same subjects. And the third was a Fund for African Entrepreneurs, seeded with USD 10 million and a confident expectation that more would follow.
His three announcements tell us three things about this China-in-Africa story.
The first is that the Chinese state is in Africa for the long-haul. In fact, its role in Africa’s development is already part of the Party-state’s plan. China will roll out its core development ideas of planning, infrastructure, urbanisation, production and education, with the overall goal of creating a continental economy.
Billions have already been invested (USD 60 billion for 2015 – 2018 alone). More is to come, with China arguably the greatest supporter of the African Union’s Agenda 2063 – the 50-year project whose overarching goals are increasingly described using the terms with which China would use to describe its own future: “A prosperous and united Africa based on shared values and a common destiny.”
The second is that China understands how underdeveloped economies can turn disadvantage into opportunity. A shortage of cities and roads can be advantageous when one can build from scratch.A vast, young population (Africa’s present population is 1.2 bn, expected to reach 2.5 bn by 2050; also the world’s youngest, average age 19) can be an asset if that population wants change.
Sometimes all it takes is a disruptive idea (think Deng Xiaoping’s planting of capitalist factories on Communist fields) and a dream (think the millions of Chinese who followed Deng despite the myriad practical barriers that stood in their way – or, indeed, the Aliren, those Alibaba users who flock to Alibaba’s annual meetings).
Meanwhile, light regulatory systems (natural for undeveloped bureaucracies) make it possible for small entrepreneurs to test new ideas and compete with global leviathans. Yes, there is a risk to all of this, but as China’s 30-year experiment has shown, mass rapid development is nothing if not risky.
The third is that China knows only too well how technology changes everything, fast. When I first went to live and work in China, in 1989, there were hardly any phones, let alone mobiles; fax machines were kept under political lock and key. Back then, China 2007 was unimaginable, let alone China 2017.
The state invested in infrastructure and projects, but it was the mobile and internet technologies which were the unexpected sparks that really ignited change. China’s entrepreneurs did not invent the technologies they built with – but they used them to turn disadvantage into advantage. From a land where there weren’t enough jobs, where infrastructure was either non-existent or over-burdened, the population was young and unevenly educated, came online platforms that gave hundreds of millions of hitherto unconnected Chinese, many without a university education, the opportunities to create micro enterprises on an unimaginable scale.
Masters of the deepest and most sophisticated mobile environment in the world, China’s tech entrepreneurs see mobile-everything as the greatest driver of growth, including urbanisation, production and consumption. And they look at Africa with envious eyes.
They and Jack Ma know that Africa is less of a ‘second continent’ and more of a continent in its own right. They know that come 2050, Africa could be leading the world. They see that the change is already gathering pace. In 2000, unique mobile subscriptions were at 2 per cent. Today, they are at 50 per cent and rising. Yes, current data is a little misleading (there are gaps in penetration and some doubling up of numbers), but the drivers of growth are strong: cheap (Chinese, naturally) smartphones; new technologies cutting the costs of mobile infrastructure (solar powered masts etc); mobile payment systems that give connected Africans the opportunity to access everything from an education to a market.
At 1.2 bn and rising to 4.4 bn by 2100, Africa’s demographics are captivating – but in and of themselves their economic value is linear. However, when you attach the numbers to smart phones, they become explosive. The vast amounts of data generated can help us understand and even anticipate human behaviour.
As Jack Ma observed at the World Entrepreneurs Conference in Zhejiang earlier this year, technology can make it possible for us to see the invisible hand of the market. With the help of artificial intelligence – and multiple intelligence – our perception of the world will be elevated to a new level. Big data will make the market – and the world – smarter.
Africa’s exponentially multiplying demographics provide a tremendous opportunity to harvest such data – information that will come to define what is produced, served and delivered, how, where and when. Information that will help us predict the future.
Yes, there are a lot of unconnected Africans but the same has been true for China too. Yes transformation is hard to imagine; but so was China’s rise. China-in-Africa? The story is surely going to be bigger than that.