Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Fundamental Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: NikhilJog who wrote (3337)	9/2/2013 6:26:12 AM
From: bruwin	4 Recommendations Recommended By gcrispin Spekulatius The Ox Truedarkblue Read Replies (1) \| Respond to of 4719

I don’t believe it’s a case of anyone "not being happy", either in South Africa or probably in many other countries in Africa. What has been happening with regard to China and African countries is that China has greatly increased its trade and presence in Africa. This has come about for several reasons. One of them is China’s voracious appetite for raw materials and oil. In that regard China has targeted certain countries who have what it wants in terms of specific metals and oil. It has then approached those countries and enquired as to what China can do to provide them with strategic infrastructures that those countries need, such as railways, roads, hydroelectric schemes, mining facilities, port facilities, etc.. etc.. China then offers to build and supply those facilities, in return, to a large extent, for long term supply to China of that country’s strategic resource(s) at very favourable rates. More often than not, many of those African countries do not have their own, in-house, capability or resources to build those strategic facilities for themselves. So China has sent over an “army” of its own labour force plus the necessary plant and equipment, to build the required facility for the country concerned. Examples of these are :- a) Nigeria: railway Lagos-Kano, US$ 8.3b, 11,000 Chinese workers; Mambilla plateau, 2.600 MW hydro-electric scheme. b) Angola and Zambia: the vital Benguela railway line, originally built by the British, and linking Zambia and RDC's copper mines to Angola's Atlantic port of Lobito, was to be rebuilt by the Chinese company CIF .China is the world largest consumer of copper. c) Guinea: 2006, a free of charge industrial 'package' including: one mine, one dam, one hydroelectric scheme, one railway, and one refinery was proposed to the Guinea bauxite/aluminum industry by China, funded by the EximBank, which will get repaid by purchasing alumina at a preferential price. d) Algeria: a 1,000 km freeway built by Chinese workers. e) Tanzania and Zambia: The 1860 km Tazara railway with 47 bridges and 18 tunnels constructed by 50,000 Chinese workers and their equipment. f) Sudan: pipeline and oilfields; Port Sudan completed within 2 years. g) Congo: The barrage d'Imboulou. With regard to South Africa, the connection with China has mainly been about trade between the two countries. South Africa has the in-house capability and resources to build what it needs without China’s input. However, the import of certain Chinese products into South Africa has decimated certain industries here, such as the textile and garment industry, due to the cheap prices of these Chinese products. That has caused many garment factories to close down and contributed to the local loss of jobs in that sector. In my opinion, many Western countries have gone about providing “aid” to African countries in the wrong way. Western “aid” has often been in the form of a large amount of cash presented to those “ruling” the country concerned. Unfortunately that cash has not always filtered down and found its way to providing benefits for the country’s population. Corruption has often gotten in the way. If Western countries want to improve and add to the necessary infrastructures of African states, then they should rather identify those facilities that will truly benefit the overall population and go about building those facilities for the country concerned. They could put the work out to tender in their own country, e.g. USA, Great Britain, Europe, etc.., use their own plant and labour resources, where necessary, plus local labour, if possible, and finance the project from the “aid” money that they would have paid to that country’s rulers. In that way the overall African population will all actually get what they need to improve their infrastructure and general life style. IMO that’s a far greater win-win situation for all concerned.