While information about these four cases is still sparse, the next section applies the framework outlined above to see what preliminary answers we might obtain to the two sets of questions posed at the start of this paper: Were the Chinese investors driven to invest by commercial or political motives? What kind of costs and benefits do these investments provide to African political elites? Table 1 provides an initial overview of the framework, with a summary of the potential political impacts of these investments.
Chinese interests
In all four cases, the projects clearly seem to have been primarily of commercial in-terest for the Chinese investors, although some political benefits for the Chinese government were present in Mali and Mozambique. In the Mali sugar complex, which began in the 1960s as a foreign aid project with diplomatic and solidarity benefits for China, the commercial motive evolved over time. By the 1990s, however,
the commercial goals were clearly dominant. When the joint venture was founded in the 1990s using a debt–equity swap, it was a practical way for the Chinese to se-cure repayment of Mali’s unpaid debt for its construction. As noted below, import protections for the complex have enabled it to earn profits, a clear commercial ben-efit.
In Mali, Zambia and Mozambique, the existing farms all produce for the domestic market, while the Tanzania sisal farm sells its output in both domestic and foreign markets. The proposed jatropha project in Zambia was expecting to supply its bio-fuel as an input into Zambian gasoline mix, or to export it to Europe, where gasoline is mandated to contain a ten percent renewable component.
The Chinese government (central and provincial) has taken an interest in several of the projects as flagship examples of its relatively recent push to encourage outward investment by Chinese firms. Chinese policy banks provided preferential and com-mercial loans of some $132 million to the Mali sugar complex, at least $20 million in a China Development Bank loan to the Mozambique rice complex, and a preferential loan to the Tanzania sisal farm in 2000. In 2011, China provided an equity injection into the sisal complex from the new China Africa Agricultural Investment Corpora-tion (CAAIC), which became a majority shareholder in the farm. Zhongken Farm, one of the existing mixed farms in Zambia, has also been purchased by CAAIC, receiving a new equity injection. The biofuel project in Zambia never got far enough to apply for funding, and there is no indication that the other farms in Zambia have received Chinese government loans.
Indirectly, the sisal farm also benefits from a Chinese zero-tariff program for Africa’s least developed countries, enabling sisal exports to China to avoid a six percent tariff. Sisal exports from Kenya are not so advantaged. The Mali sugar and Mozam-bique rice projects do not export to China. Both sugar and rice are heavily protected in China as a food security measure and to provide benefits to Chinese farmers.
Finally, several of the projects have been criticized by civil societies in the host coun-tries. In Tanzania the Chinese purchased an existing sisal farm, and so there have been no concerns about ‘land grabbing.’ However, in Mali, Mozambique and Zambia, local civil-society groups and/or opposition politicians have raised concerns about the acquisition of large tracts of land without adequate safeguards for compensat-ing local residents and subsistence farmers. This opposition has had a negative impact on the Chinese image in Africa. At the same time, the Chinese media has emphasized China’s contribution to food security in Mozambique.
Table 1: Summary of benefits
Employment high low high expected
positive
Political benefits yes yes/mixed neutral mixed
Strategic location no no no no
Host-Chinese engagement Political benefits
from firm positive positive neutral mixed
Economic
benefits import import low rents
(up to 2013) under discussion
Host country interests
For the host countries, the projects have had mixed political and economic costs and benefits. Positive benefits include employment generation, profits and tax reve-nues, and (in Mozambique) expected political benefits for the host government’s commitment to enhance local food security. As noted above, in three of these coun-tries, the projects have also been criticized by local civil-society organizations con-cerned about land grabs. Even though land was technically state-owned, local peo-ple had been using these schemes: in Mali since the colonial period ended, and in Mozambique since the collapse of the state farms in the early 1990s. There is no evidence that these projects were deliberately sited in locations where the logic was
more political than commercial. In fact in Mozambique the host government was very keen to have Chinese agricultural investment in a possibly more strategic re-gion (the Zambezi valley), but the Chinese company chose to locate in a rere-gion with better infrastructure. Three of the host governments have been able to emphasize the positive role played by the Chinese investment (or proposed investment), em-phasizing the local employment that will be generated (Mali, Zambia), or the contri-bution to the country’s food security (Mozambique).
All of these investments received tax holidays for profits and imported inputs, but nothing in excess of the provisions provided to other foreign agricultural investors.
Over time, the older investments have paid tax revenues to the host governments.
For example, the sugar complex has reportedly provided a total of some US$42 million in profits and tax revenues to the Mali government between 1996 and 2007 (Ouattara 2014: 13). This is also a clear benefit to the host country, although it is not clear how these revenues were used.
Conclusion
China’s agricultural involvement in Africa is on the rise. This development might be expected to have political as well as economic impacts for both China and the host countries. This paper has used a political economy framework to examine this im-pact, derived from Bates (1983) and Whitfield and Therkildsen (2011). It has applied this framework to four country cases where as yet little information is available. In these four cases, Chinese strategies seem to have commercial rather than political motives, although in Mali and in Mozambique the Chinese media have emphasized the role that Chinese firms are playing in providing revenues and/or enabling the local production of an important imported food crop (sugar and rice). In Mali, there is indirect evidence that the Chinese investment provided support for the ruling elites in the 2012 election period, support that was ineffective, as the government was overthrown by a coup before elections could take place. In another case (Zam-bia), a proposed Chinese project was used against the government by an opposition politician who later won office.
Indirectly, the projects could have helped provide assistance to incumbent elites to enable them to maintain their ruling coalitions through their generation of tax reve-nues and (in one case, Mali) profits for a government joint-venture partner. Local employment is a political benefit, although this has been offset in several cases by contentious labour relations, which can reverberate negatively on the host govern-ment, as can accusations that the companies have ‘grabbed land’ without adequate consultation or compensation (despite this being the host government’s
responsi-bility). Finally, we saw no specific cases where the ruling elite provided unusual ben-efits to the Chinese company. In all four countries, for example, companies from other countries have secured larger agribusiness concessions than those afforded to the Chinese firms. Chinese companies have supplied most of their own infra-structure, building roads and electricity connections for their investments. Given the scarcity of information about Chinese agricultural investment, we stress that this paper is preliminary, and its findings should be seen as suggestive only.
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