by Alec Russell
Acknowledgements
Many people helped in writing and researching this book. Pursuing Africa's Big Men would have been impossible without the help of journalists all over the continent. In South Africa I owe a particular debt to Lourens Ackermann, Abbey Makoe, Christopher Munnion, Joy and Ian Brady, Peter Nkomo, and Dorah Mafifi for her care and constant good cheer.
As a foreign correspondent I owe much to my colleagues and
editors in London. Max Hastings, the former editor of the Daily Telegraph, posted me to Johannesburg in the first place and Charles Moore, his successor, kept me there and then gave me four months off to write this book. Their foreign editors, Nigel Wade, Patrick Bishop and Stephen Robinson, and Will Ellsworth Jones of the Telegraph Magazine encouraged me to travel across Africa. On the foreign desk, Frank Taylor, Pat Prentice, Robin Gedye, Michael Kallenbach, Paul Hill, Patsy Dryden and Theresa Jeffrey offered stalwart support and advice. Thanks also to the switchboard for tracking me down so often in remote locations and the copy-takers for taking down my words usually on the most atrocious telephone lines. Michael Hill, the veteran Africa correspondents Sam Kiley and Chris McGreal, Hugh Dellios, John Balzar, Allan Little, George Alagiah, Steve Scott, Mary Braid, Inigo Gilmore and many other colleagues, enlivened the long days on the road.
Catherine Whitaker encouraged me to write the book and then offered invaluable advice on the manuscript. Peter Nkomo hunted down arcane references in Johannesburg as I sat writing in Shepherd's Bush, six thousand miles to the north. The Telegraph library filled in the gaps. Fred Bridgland, Justice Malala, Khaba Mkhize, Musa Ndlangamandla, Louise Tunbridge and David Nthengwe pointed out flaws in particular chapters. Christopher Munnion, Roger Matthews and Lourens Ackermann cast their critical eyes over early drafts. Sophie, my wife, whose work in remote parts of rural South Africa meant she understood life in Africa better than any correspondent could ever hope to, had the harder task of tackling chapters as they emerged even as Mungo burst into our life - if he hadn't learned to sleep through the night at three months, this would never have been written.
If you enjoyed reading Big Men Little People by Alec Russell you may be interested in Building BRICS: The New Scramble for Africa by Barbara Njau, also published by Endeavour Press.
Extract from Building BRICS by Barbara Njau
Chapter 1: Africa’s new partners – how the BRICs have looked to the continent as the next frontier for growth
The blare of car horns intensified and tempers flared, as drivers attempted to inch their way forward in the grid locked traffic on Thika Road. In the sweltering mid-December heat in Nairobi, the competition between gleaming black Land Rovers, old white Toyotas and over-loaded ‘Matatu’ buses intensified, as cars crawled forward in an attempt to circumnavigate the traffic on Thika Road, one of Kenya’s busiest highways.
The quiet and sombre exterior of Ian Kimani, who had driven me from Jomo Kenyatta International Airport, cracked with exasperation as he slammed the car horn, in a frustrated attempt to make the motorist that was ahead of us edge his car forward. “This traffic is something else,” he snapped. “They begun these road constructions all at once and placed so many roadblocks. They should have at least made some kind of diversion, to prevent this ridiculous jam.”
Traffic congested roads at the time of my visit to Kenya in December 2011 had become a typical feature of afternoons in Nairobi. The drive from the airport to my uncle’s residence in Garden Estate, just off Thika Road, should have been a forty-minute journey. Instead I found myself stuck in a slow-moving queue of cars, in a journey that lasted for over three-hours. The cacophony of cranes and bulldozers, which were repairing the city’s arterial highway, had sealed off several lanes and consigned the city’s drivers to narrow roads, causing long queues of cars that snaked along Nairobi’s roads during rush hour.
The Chinese labourers manning the tractors in the blocked lanes on either side of the highway appeared oblivious to the commotion, as they nonchalantly continued their work unabated. Despite appearing well accustomed to long hours of labour under the baking heat, the Chinese employees that repaired the road alongside their local Kenyan counterparts stood out. Their tanned skin, made browner by the swirling dust the passing tractors left in their wake, glistened as they set about constructing the highway.
The Chinese-owned heavy-equipment vehicles that dotted the entire 42-kilometre stretch of Thika Road were a testament to China’s ever-expanding presence in Kenya. To be sure, three Chinese companies - China Wu Yi Company, Synohydro Corporation Ltd and Shengli Engineering Construction Group – had won a government contract in 2009 worth $330 million, to repair and expand Thika Road. At the time of my visit, it was predicted that in just a few months, the road would develop from a four to an eight-lane ‘super highway’, that ran from Kenya’s capital, Nairobi, to Thika town, located in the outskirts of the city.
These large-scale infrastructure projects have become an emblem of a wider development that is underway across Kenya, and throughout Africa. Africa is experiencing a renaissance; however the new drivers behind its progression have a more southern hue. China has become the foremost example of this shift, coming from what has been termed as the ‘global south’. Whilst the dominant narrative tended to cast the ‘global north’ as the economically developed societies of Europe and North America, the rapid rise in recent years of the poorer, agrarian-based economies of the southern hemisphere has resulted in some of the fastest growth today being powered by the less economically advanced countries of Asia, Africa and Latin America.
At the centre of this shift has been the rise of the ‘BRICs’, a term coined by the Goldman Sachs economist, Jim O’Neill, which encompasses Brazil, Russia, India and China. Since the early 1990s, the BRICs have more than doubled their share of global output. The BRICs’ gross domestic product (GDP), based on market exchange rates, is now the third largest in the world after the United States and the Eurozone economies, according to the International Monetary Fund (IMF). In addition the IMF expects the BRICs’ collective GDP will surpass that of the Eurozone by 2015. Each of the countries in this economic grouping has been highly dynamic in their integration into the world economy, and over the past two decades, the BRICs’ shares of world exports have tripled.
A significant result of the BRIC’s growing economic prowess is that trade between each of the BRIC economies and Africa has bloomed, and China’s role on the continent best exemplifies this. At the time of my visit to Nairobi, the rehabilitation of the Moi International Sports Centre in Kasarani, also located along Thika Road, was underway. Initially built by the Chinese in 1987, the sports stadium had gradually fallen into disrepair. By 2010, it stood as a dilapidated relic, representing a bygone Cold War era of geopolitical alliances. As the Cold War neared its zenith in the 1980s, the Chinese government, under the leadership of Deng Xiaoping, had constructed the stadium as a symbol of friendship and unity with the then Kenyan president, Daniel Arap Moi, as communist China sought allies to balance the USA’s capitalist influence on the continent.
The renovation of the sports stadium in Kasarani, which begun in 2010 appeared to be re-igniting old ties that had diminished, following the end of the Cold War in 1991. Completed in 2012 with Chinese money, the stadium stood as a gift from the Chinese to the Kenyan government. Serving as an indicator that China today still looks to lessons from the past when seeking allies in Africa, these relations have also undergone something of a revival. Unlike the previous Chinese leadership, which largely saw African states as potential bulwarks against the influence of the USA, Chinese interest in Africa today stretches beyond politics. For China, Africa’s markets represent commercial opportunities. The Economist Intelligence Unit found that China’s rising trade and investment links on the continent have played a significant role in Africa’s growth and while the bulk of the investments have gone into Africa’s resources, China is also heavily involved in the continent’s infrastructure, services and manufacturing sectors.
The Chinese are keen to capture a larger share of the continent’s markets, and big-ticket infrastructure projects, completed at subsidised rates, have formed part of the country’s entry strategy. Their bids to construct glamorous presidential palaces and iconic sports stadiums have been one of the ways in which China has worked to establish strategic ties with African countries, and scenes like the Kasarani stadium in Kenya have been replicated across sub-Saharan Africa.
The Angondjé Stadium, which is located in the Gabonese capital of Libreville also bears the hallmarks of Chinese involvement. Also known as ‘le Stade de l’amitié Sino-Gabonaise’ - the Sino-Gabonese friendship stadium – the arena was constructed by the Shanghai Construction Company in just 20 months. Intended to host the final competition of the African Cup of Nations in 2012, the project was a bold statement by the Chinese of its close ties with the Gabonese government.
As I walked across the stadium on a visit to Gabon a few months before the African Cup of Nations tournaments had begun, the arena was a frenzied scene of activity. Tractors manned by Chinese drivers lay fresh tarmac around the running track that encircled the pitch, while the Gabonese workers lay rows of freshly cut grass across the football field. The stadium’s authorities accompanying me on the guided tour of the arena proudly maintained that the arena would be a draw for future international events, and it would play a key role in raising Gabon’s international profile. Yet I could not help but note that most of the site inspectors, who were overlooking the main aspects of the construction, were Chinese. I wondered whether the Gabonese staff would be sufficiently trained in the structural upkeep of the stadium, once the Chinese management left.
“Most of the managers that you see are Chinese guys,” Peter from the Nation Media Group later explained to me. “Most of the labour-intensive activities are done by the locals, but the engineers and the top guys doing the top end [operations] are Chinese.” While the presence of China is ubiquitous across Africa, the country’s fraught ties with its African hosts, encapsulates some of the complex challenges that the increased presence of the BRICs are posing to Africa. Whilst seen by many as a positive force in bringing about much needed developments, some critics have questioned whether the new forces from the ‘South’ are just superseding the old colonial forces of the developed world.
There is a growing presence of China, Brazil, Russia, and India across Africa, and one of the issues that will later be considered is whether these new players are levelling the playing field for Africa. Being the foremost player out of the BRICs, China has borne the brunt of much of this scrutiny, yet the criticism has been cited against the other countries as well. “China stands out for its truly aggressive embrace of the continent, and the reciprocity in terms of the continent’s embrace of China,” Goolam Ballim, a Chief Economist at Standard Bank explained to me. “But the BRIC nations collectively have shown very seismic changes in their trade and general commercial profile with Africa.” For Goolam, Africa’s growing trade ties with the BRICs will herald significant shifts in the continent’s investment landscape, and far from being the only player, China is among a new cadre of players that are driving these shifts.
Across the Gabonese border to the east, Russia’s Renaissance Group has been transforming the city of Lubumbashi in the Democratic Republic of the Congo (DRC). Located in the southern edge of the DRC, and ensconced around Zambia’s borders, Lubumbashi is the DRC’s second largest city. Nevertheless little, outside of its fractious politics and its internal instability, is known of the country, and less still of this emerging city. Being a country that, in 2010, was sensationalised by the United Nations (UN) as the world’s “rape capital”, the DRC has suffered from a negative reputation. Even as recently as November 2012, images of plundering soldiers were broadcast internationally as the Congolese “March 23” rebels seized control of the country’s eastern city of Goma for ten days.
Nonetheless, beneath the headlines, there has been a momentous shift occurring, as Renaissance Group, undeterred by the stereotypes, has moved to capture business opportunities in Lubumbashi. Positioned in the copper-rich Province of Katanga, Lubumbashi is the DRC’s south-eastern commercial hub, and it is among Africa’s fastest growing cities. Home to a rapidly expanding market of three million people, the UN Habitat estimated that the city’s population will increase by 50% in the coming decade. In a bid to capture the city’s commercial potential, Renaissance Group’s real estate arm, Renaissance Real Estate, has invested $50 million in the first phase of a luxury-housing property development.
Examining macroeconomic indicators, it is no small wonder that the Group is seeking to tap into the country’s latent potential. While the global economy will grow by a sluggish 3.6% in 2013, the DRC is set to become one of the world’s fastest growing countries, and the IMF predicted that its GDP will grow by 8.2% in 2013. As the country continues on its economic trajectory, hundreds of households are set to emerge from poverty and enter the ranks of the middle classes in coming years. With bold expectations that the DRC will maintain its above average growth, the Renaissance Group has moved to address the concurrent rise in demand for quality homes, as more people in the DRC’s second largest city move into the middle class category.
“The demand here is high - you have a city of three million people that are desperate for quality homes, [and] quality infrastructure for their businesses,” Mark Crandon, Project Head of Renaissance Partners said in an interview with the Globe and Mail.
“This is one of the rare occasions [where] international companies [are] investing in Lubumbashi. We see retail companies that were not here before, [and] we now see a number of new supermarkets.”
Having made its fortune in the Russian market following the collapse of the Soviet Union in 1991, Renaissance Group quickly amassed its wealth by engaging in a series of business ventures in Russia, at a time when several western firms deemed the country too unstructured to be worth taking a chance on. It is this experience in dealing with frontier economies that has led the group to seek opportunities in developing countries and with it, to secure the first mover advantages of operating in regions like sub-Saharan Africa. In addition, just outside of Kenya’s capital, Nairobi, construction is underway in Ruiru as the investment unit of Renaissance Capital Financial Holdings, Renaissance Partners, has begun building a 2,500-acre residential complex worth $5 billion. The first phase of its flagship project, known as ‘Tatu City’, is expected to be complete by the end of 2013. This stands as another example of how Russian firms have begun to look to Africa’s expanding urban middle classes as a real source of opportunity. Tatu City, situated about nine miles north of Nairobi, will eventually have 62,000 residents, according to Bloomberg, and the property development will include the construction of roads, water, electricity, sewerage and piped gas.
In May 2012, the remote town of Moatize in the north-western part of Mozambique emerged in the global minerals market when the Brazilian mining giant, Companhia Vale do Rio Doce, also known as Vale, began production in the first phase of its flagship coal mine. With investments made to the tune of $1.7 billion in what is now one of the largest coalmines in Africa, the Moatize concession has transformed this tiny town of just over 40,000 people into a hub of activity. The development of the project has led to the rehabilitation of the Sena Railway between Moatize and the port town of Beira in the central part of Mozambique. As almost all output will be transported eastwards to Indian Ocean ports for export, with much of it going to China a
nd other Asian markets, Equities.com reported that a new railway and at least two new coastal coal terminals have also been planned for construction near the town.
As the biggest Brazilian investor in Africa, and one of the biggest investors in the continent, Vale illustrates Brazil’s growing presence in Africa. The company has embarked on an ambitious strategy in Mozambique, as it plans to ramp up its current production capacity of 11 million tonnes of coal to 22 million tonnes annually, in the next few years. The company is also investigating the development of other mineral reserves elsewhere in Mozambique, and Equities.com found that it has already invested $20 million in phosphate exploration in the Monapo District, which is located in the north of the country. With investments totalling $7.7 billion in nine African countries, Vale plans to invest over $18 billion in Africa over the next five years.
The power company Centrais Elétricas Brasileiras SA, also known as Eletrobras, is yet another example of a Brazilian multinational that is stepping up its presence in the continent. The company, which is the tenth-largest power utility in the world and the biggest in South America, has targeted Africa as the next region where it will expand its overseas operations. Looking to tap into Africa’s hydropower potential, Equities.com found that Eletrobras is expected to take a 49% stake in the development of the Mphanda Nkuwa hydropower scheme in Mozambique, alongside the government-owned majority shareholder Electricidade de Moçambique. The hydropower project, expected to cost $2.3 billion, will generate electricity for parts of Mozambique, and the company also expects to sell its electricity to other markets in Southern Africa.
While the Brazilians are becoming increasingly influential within the southern part of Africa, India has made significant inroads in East Africa. In February 2012, India’s telecommunications company, Bharti Airtel, made public its intentions to invest over $100 million in Rwanda for the next three years. Two main operators currently dominate the telecommunications space in Rwanda, and the first time visitor to the country’s capital city, Kigali, will be confronted with ubiquitous blue and white billboards of the mobile phone network provider, Tigo, and blue and yellow posters of MTN which adorn shop walls and vending stalls around the city. The South Africa-based telecommunications company, MTN, is Rwanda’s leading mobile phone services provider by market share, as it controls 67% of the Rwandan market, while the Luxembourg-based company, Tigo, controls the remaining 33%. Yet India’s telecommunications giant, Bharti Airtel has been bullish in its expansion across Rwanda. Morgan Stanley reported that by 2015, the company could have 15% of the industry’s revenues. Bharti Airtel joined the foray when it was licensed by the Rwandan government to roll out its 2G and 3G GSM mobile services. The company already has operations in Kenya, Uganda and Tanzania in East Africa, as well as Ghana, Nigeria, and DRC in west and central Africa, and its investments are paying off. Its combined revenues in Africa in the three months to December 2011 rose by 16% to $1.06 billion, and its margins grew from 19.1% to 26.8% in 2012, according to the East African newspaper.
