Saturday, February 12, 2011

Go to Africa on an egg

Baobab

EVERY trend has its cliches. Africa's growing resource wealth (see this week's Economist) is invariably called a "scramble". Publishers seem to find it impossible to put out a book on growing oil wealth and burgeoning mineral extraction in the once colonised continent without prominent reference the tussle, scurry, dogfight—choose your synonym—for Africa by European nations (which followed the Conference of Berlin in 1884-1885, which regulated trade and colonisation in Africa, is proving another increasingly popular reference point in academic literature). So here is your choice of scrambles (add your own egg):

The New Scramble for Africa by Padraig Carmody

Untapped: The Scramble for Africa's Oil by John Ghazvinian

A New Scramble for Africa?: Imperialism, Investment and Development by Roger Southall and Henning Melber

The New Scramble for Africa by Guy Arnold

Scramble for Africa: Darfur—Intervention and the USA by Steven Fake and Kevin Funk

The Scramble for Africa in the 21st Century by Michael Power, Harry Stephan, Angus Fane Hervey, Raymond Steenkamp Fonseca

History of Africa: Fatimid Caliphate, History of the Mediterranean region, Historical African place names, Biffeche, Scramble for Africa by Books Group

 

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Stop the global land grab | Gisele Henriques

Global development news, comment and analysis | guardian.co.uk

Land is now one of the hottest commodities in the world market. Time to stand up for small farmers dismissed as 'inefficient'

"NGOs don't mobilise people, desperation mobilises people," said a Cambodian land activist as he related the experience of Boeung Kak villagers who were driven off their land by their own government to make way for corporate profiteering.

Such stories were abundant from all corners of the world this week at the World Social Forum in Dakar, Senegal. The forum, which celebrated its 10th anniversary this year, attracted representatives from civil society organisations, social movements and unions from more than 123 countries. Present among them were land rights activists and small farmers, who came to relate and decry the unfettered grabbing of their land.

Land grabbing emerged as the hot topic in this year's forum. The phenomenon is defined as taking possession of and/or controlling a scale of land for commercial or industrial agricultural production, which is disproportionate in size in comparison to the average land holding in the region. Stories from Madagascar, Democratic Republic of Congo, Mali, India, Brazil and Mozambique illustrate that the phenomenon is widespread and the consequences can be dire. Land investments from overseas to secure food supplies and biofuels, speculation and resource extraction are the major drivers of this phenomenon.

Speaking through a megaphone under a plastic tent, peasant leaders from Mali exposed the acquisition of plots in their village by the Libyan government, which built a 40-metre long canal through their community. The canal runs through their traditional pastoral grazing land, cultivated plots and even their cemetery. "Not even our dead could rest in peace," said the representative from Afrique Verte, a local NGO monitoring the issue.

In a world where the commoditisation of resources has become the norm, it is not surprising that communities are losing their most precious assets to the highest bidder. The spectre of a hungry world is being used to push the agenda for industrial agriculture, but in reality, the majority of the land is used for producing animal feed and agrofuels, as well as land speculation, rather than food crops. A World Bank report on land acquisitions shows that only 37% of this land is used to grow food.

Land has become one of the hottest commodities in the world market, particularly in Africa, where 70% of the global grabbing took place from 2006 to 2009, according to the International Food Policy Research Institute. Buyers prefer land that is easy to acquire and fairly fertile, with access to water resources. As most governments desire foreign direct investment in the elusive pursuit of a narrowly defined "economic growth", the optimal transaction almost always comes at the expense of small farmers. .

Small family farms are considered economically "inefficient" because their yields feed their communities and not the global market. But family farms actually have higher productivity per hectare than their larger counterparts. Nevertheless, investment in them has been reduced in the last 20 years in favour of industrial farming.

In my home country of Brazil, we have seen the disastrous effects of this large-scale agricultural development model, where half of agricultural production is going to soy and sugar cane, to feed animals and cars, not people. The 90% increase in soy production in the last decade in Brazil comes at the cost of deforestation of the Amazon, displacement of traditional communities, and a massive rural exodus to urban slums. Yet it is the small farmer that feeds Brazil, with 60% of the food consumed nationally coming from family farms, according to the 2006 Agricultural Census.

Inherent in this predicament is the commodification of land, which stems from the neoliberal development model that drives policymakers. The very architecture of this global governance and economic system must be challenged and reformed. The time has come to reinvest in the kind of agriculture that actually feeds people. The notion that small farmers are unproductive renders them invisible; their contributions to their communities and local development go unrecognised and with that they go on tightening their belts, one notch at a time.

Land rights activists here at the World Social Forum call for global agriculture to work for people, upholding the right to food, supporting land reform that recognises customary rights and invests in small-scale production. We demand that our governments assume their responsibility to us, their constituents. Our needs should drive their actions, not a quixotic quest for corporate investment returns that have little chance of feeding the world's poor.


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One Acre Fund in State of the World 2011

One Acre Fund Blog

SOW11_WebImageThe Worldwatch Institute recently published State of the World 2011: Innovations that Nourish the Planet. The book is the culmination of an ambitious research trip that covered twenty-five countries and more than two hundred projects in sub-Saharan Africa. It is a great resource for anyone who is interested in agriculture development in Africa, and One Acre Fund is proud to be included among the many innovations in the book.

Though the book is out, the researchers continue to highlight new findings and innovations on the Nourishing the Planet blog. A few of our favorite blog posts include:

- The grain teff, indigenous to Ethiopia, is a great source of fiber and minerals. The blog has a regular series highlighting African indigenous crops.

- The policy network FARNPAN, based in South Africa, is helping African women smallholder farmers learn about agriculture policy in their countries. They use theater to explain agriculture policy to rural women, and then bring feedback from those women back to policymakers.

- In Zambia, over 4,000 smallholder farmers are producing sorghum for Zambia Breweries. The farmers have a guaranteed market for their crop, and the brewery ensures it has a consistent supply of sorghum.

In the coming weeks, we'll take a closer look at some of the policy issues that are highlighted in State of the World 2011.

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Monday, February 7, 2011

The view from Seattle

Baobab

IN THE past five years, Bill and Melinda Gates have given more money and ideas to Africa than most European countries. They discovered early on that the problem with philanthropy in Africa was finding partners "on the ground" reliable enough to do the work and not just suckle on the milksome teat of Seattle. In response, they have sought to make the most of their giving by focusing on measurable technologies. In this guest post for Baobab, Mr Gates argues that the focus of the Gates Foundation should be health and agriculture. Medicine, especially, is the very hardware of development. He reports that since 1980 vaccines have cut polio in Africa by 99%, diptheria and measles by 93%, and measles by 85%. Even so, the "wise government investments" on health and agriculture Mr Gates points to have mostly been designed and paid for by donors. While giving all credit to unparalleled generosity of wallet and spirit, Baobab would argue that given the limited time Africa has to take advantage of its demographic dividend—10 years at most—imaginative philanthropists (and many others besides) should urgently work to come up with new thinking and opportunities on urbanisation and new media. Software matters too.

In 1993, Melinda and I took our first trip to Africa. I was working with Microsoft at the time, and I was convinced that the power of technology could change the world. But during our visit, I saw that many of the world's life-saving, life-enhancing discoveries were not available in Africa. That was deeply upsetting to me. It didn't fit my belief that innovation is for everyone. I became convinced that if science and technology were better applied to the challenges of Africa, the tremendous potential of the continent would be unleashed, and people could be healthier and fulfill their promise.

Since our first visit, many African countries have made striking advances, driven by wise government investments in health and education and agriculture. Incomes have risen.  Poverty has fallen. Trade and investment have doubled. Childhood deaths are down. Africa is on the rise. When a country has the skill and self-confidence to take action against its biggest problems, it makes outsiders eager to be a part of it. That is why Melinda and I are so optimistic about our work on the continent. We see the promise.

The principal focus of our foundation is on health. We believe that if children are healthy, they can learn, become educated, start businesses, improve their farms, and help their families prosper. In the area of vaccines—the biggest financial commitment of our foundation—there have been some striking successes. From 1980 to 2008, vaccines drove diphtheria cases down 93 percent, tetanus cases down 85 percent, and measles cases down 93 percent.

But if we don't keep moving forward, we quickly fall behind. In the last few years, we didn't do so well vaccinating for measles, and that led to outbreaks in 28 countries. This doesn't have to happen. Last year, Melinda went to Malawi and was inspired to see that frontline, well-trained health care workers helped the country reach at least 85 percent of all infants with standard vaccines. All countries should try to match that.

An immediate test is polio. Polio cases have dropped 99 percent. We are on the threshold of eradicating the disease. But the last few years have given us a humbling lesson in how difficult it is to eradicate a disease. The answer is a strong, society-wide partnership of people and their leaders to strengthen vaccine coverage. We can end polio. We are so close.

We have been especially impressed with Africa's progress on malaria. Ten countries have dropped cases and deaths by 50 percent. The effort has been a model of government-citizen action. I hope we can see this same kind of partnership in other crucial challenges, such as AIDS, vaccines, and agriculture.

In AIDS, treatment has expanded to 5 million people. That's an impressive accomplishment.  But there are 33 million people living with HIV. Treating every one of them would cost four times the money currently provided. The maths is harsh, but inescapable: we cannot defeat AIDS unless we dramatically cut the number of new cases through prevention.

To do that, we have to make new preventive tools widely available as soon as possible, especially male circumcision, microbicide gels, and an anti-HIV drug that blocks infection. The people of Africa and their leaders should demand these preventive tools now.

Finally, I believe that agriculture—our foundation's second-biggest commitment after health—offers one of the greatest opportunities in Africa. If African farmers can use improved seeds and better practices to grow more crops and get them to market, then millions of families can earn themselves a better living and a better life.

The Alliance for a Green Revolution in Africa, led by a former United Nations secretary-general, Kofi Annan, is working to develop and distribute new seeds that have higher yields and stronger resistance to pests, drought, and disease. If citizens and their governments ensure that African farmers can use these new seeds and have all the advantages of recent advances, the farmland of Africa can become the answer to hunger and poverty—and a trigger for wide economic growth.

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Africa will not put up with a colonialist China | Sanou Mbaye

Global development news, comment and analysis | guardian.co.uk

A strategy of striking deals with corrupt leaders and seizing control of African industries will ultimately backfire

China's sacred text is not a holy book like the Torah, the Bible, or the Qur'an. Instead, it is The Art of War by Sun Tzu. Sun's core belief is that the "ultimate excellence lies not in winning every battle but in defeating the enemy without ever fighting."

Nowadays, we are witnessing the application of Sun's ideas in Africa, where China's prime objectives are to secure energy and mineral supplies to fuel its breakneck economic expansion, open up new markets, curtail Taiwan's influence on the continent, consolidate its burgeoning global authority, and clinch for itself African-allocated export quotas. (The Chinese takeovers of South African and Nigerian textile industries are good examples of this strategy. The textiles exported the world over by these industries are deemed African exports when in reality they are now Chinese exports.)

Astutely, China has sought to place its African investments and diplomacy within the context of the old non-aligned movement and "Bandung spirit", an era when many Africans viewed China as a brotherly oppressed nation, and thus supported efforts by the People's Republic to gain a permanent seat on the United Nations security council, to replace Taiwan. And, of course, China offered firm backing for Africa's anticolonial struggles and efforts to end apartheid.

In trying to depict its current dealings with Africa as "win-win" co-operation, China deliberately seeks to portray Africa's current relations with the west as exploitative. Unlike China, its leaders claim, the west continues to hold African countries hostage through a combination of unequal trade deals, lack of access to capital markets, aid dependency, financial deregulation and economic liberalisation, budget austerity, crippling debt, political meddling and military intervention.

What the Chinese are silent about is that their country's growing engagement in Africa has created both opportunities and risks for African development. Although China's trade, foreign direct investment (FDI), and aid may broaden Africa's growth options, they also promote what can only be called a win-lose situation. For, excluding oil, Africa has a negative trade balance with China.

Making matters worse, African exports to China are even less technology-intensive than its exports to the world. China's share of Africa's unprocessed primary products was more than 80% of its total imports from Africa. Equally, imports consist of cheap Chinese products of appallingly poor quality.

The level of Chinese FDI flowing into Africa at present is staggering. But this Chinese FDI is bundled together with concessional loans, and there is much double-counting, with the same ventures being recorded both as aid flows and as inflows of FDI. Given the heavy volume of concessionary loans provided by China, concern about African countries' future debt burden is growing. And no matter how much China publicises its record in Africa, the greatest contributor of financial inflows to the continent is the African diaspora. Indeed, South Africa, not China, is the country making the largest investments in the rest of Africa.

China's credo of "non-interference in domestic affairs" and "separation of business and politics" is, not surprisingly, music to the ears of African leaders, who fall over each other to sing the praises of Chinese co-operation with their countries. These leaders' attitudes recall the worst behaviour of their predecessors, many of whom engaged centuries ago with the west's rising imperial powers to halt the growth of indigenous industry. Instead, these potentates of the past chose to import manufactured goods from Europe in exchange for their own subjects, whom they exported as slaves.

When slavery was abolished, the terms of partnership with western colonisers changed from trade in slaves to trade in commodities. After independence in the early 1960s, during the cold war, they played the west against the Soviet bloc for the same purpose.

Today, many African leaders pursue similar policies with China, which has struck bargains across Africa to secure crude oil, minerals, and metals in exchange for infrastructure built by Chinese companies. Hence, the import of Chinese labour into a continent not lacking in able-bodied workers. Indeed, within a mere decade, more Chinese have come to live in Africa than there are Europeans on the continent, even after many centuries of European colonial and neocolonial rule. With apartheid-style practices – including the gunning down of local workers by a Chinese manager in Zambia – Chinese managers impose appalling working conditions on their African employees.

Today, China has seized control of a huge swath of local African industries, in the process grabbing their allocated export quotas. As China's global economic role increases, its labour costs will rise and its currency will appreciate, eroding its competitiveness. Might Chinese manufacturers then look to Africa as a base for production, using the facilities they have built and the hordes of workers they have been steadily exporting there?

Chinese leaders pride themselves on a keen sense of history, and on taking a longterm view of China's development. Still, in perpetuating a partnership with the same breed of corrupt leaders that colluded with Africa's previous invaders and exploiters, the Chinese have forgotten that Africans, albeit often their own worst enemies, have nonetheless gained the upper hand over their foes in the end.

The descendants of slave traders and slave owners in the United States now have a black man as their president; Africa's colonisers have all been defeated and kicked out; and apartheid's proponents are now governed by those they despised and abused for generations. Unless the Chinese mend their ways, the same fate awaits them in Africa. Sun Tzu would understand that.

Copyright: Project Syndicate 1995–2011


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China's economic invasion of Africa

Global development news, comment and analysis | guardian.co.uk

A million Chinese people, from engineers to chefs, have moved to work in Africa in the past decade. How has the trade boom changed their lives?

In December 1999, a 24-year-old Chinese man called Zhang Hao left behind the freezing winter of his native Shenyang city to fly to Uganda. Zhang was nervous. He spoke no English. The journey was not even his idea, but that of his father, who had worked in Uganda a few years before on a fishing project involving the Chinese government.

"If you want to start something – and be the boss – Africa is the place to do it," Zhang's father had told him when he asked for business advice.

Zhang had quit university to travel to east Africa, but he did not need a degree to spot easy money-making opportunities as soon as he set foot in Kampala: goods that were available cheaply in every city in China were either expensive here, or unavailable. He started by importing shoes. Then schoolbags. Then fishing nets, nails and bicycles.

"I imported everything. At that time they needed everything!" recalls Zhang, an affable man with rimless glasses.

His business grew quickly; he made money and local friends. But after a few years he grew weary of the long buying trips to China. So he and his wife bought a large plot of land in Kampala. On it they constructed a spectacular Chinese-Korean restaurant, with private dining areas, karaoke rooms and a giant 500-seat dining hall. To the side of the restaurant they built a bedroom, which became their home. The business prospered, and soon he started additional enterprises including a bakery, a firm selling flat-screen televisions and a security company.

"Chinese don't think, they just try without studying the market too much. Otherwise, the chance is gone," he says.

At the site of each new enterprise, Zhang built a room for his family – he had a son in 2007 – to sleep in. They literally live at work.

It has paid off. Zhang says he is now the biggest Chinese employer in the country, with 1,200 local staff. He has even been offered a Ugandan passport, but has refused, just as he has declined to take an English first name.

"I am Chinese, and we need to build a Chinese name here – to let people know that our country is not like before. We are richer, catching up the world."

Few Ugandans need reminding of that. When Zhang arrived in 1999 there were only a few hundred Chinese in the country, including embassy staff. Today, the most conservative estimate is 7,000, from the petty traders who have taken over whole blocks of the central business district to the construction engineers changing Kampala's skyline and the sharp-suited oil executives who frequent Zhang's restaurant. It is a similar story across the continent. Figures are hard to come by, but a decade ago there were probably no more than 100,000 Chinese people working in Africa. Today, there are around a million.

The first Chinese reached Africa nearly 600 years ago during the Ming dynasty, when the armada of admiral Zheng He landed on the Kenyan coast. The next significant arrival was in the early 1900s, when 60,000 Chinese miners worked on the South African goldfields. Half a century on, Chairman Mao Zedong sent tens of thousands of agricultural and construction workers to Africa to enhance ties with countries emerging from colonialism.

But post-cold war migration concerns economics rather than politics. China-Africa trade grew from $6bn in 1999 to more than $90bn (£56bn) in 2009, roughly split equally between imports and exports: Africa's natural resources – oil, iron, platinum, copper, and timber – flowing east to feed China's factories, and finished goods, from flip-flops to trucks, travelling the other way. Last year, the trade is estimated to have topped $100bn. Chinese state involvement in the trade is crucial. Each year Beijing provides billions of pounds in grants and loans to African governments as a sweetener to secure raw material deals or to finance infrastructure projects that could benefit its companies.

That is what brought Liu Hui to Kenya. A slight, 41-year-old civil engineer, he was working for China Wuyi, a state-owned construction firm, in Fujian province in 2006 when he was called into his "leader's" office, and told he was needed on a project to upgrade Nairobi's main airport. Liu had never set foot outside China. He was reluctant to leave his wife and seven-year-old son. He knew as little about Kenya as Zheng He's sailors. "My image was: very poor, dry and hot," says Liu. "But if my company wanted to send me somewhere, what could I have done? You have to show your capacity for work."

On arrival, Liu found that Nairobi was neither dry nor too hot. When the airport contract finished, he was assigned to oversee the construction of a highway between Nairobi and Thika, a pineapple-growing district to the north-east.

Liu lives at China Wuyi's main site office, a four-storey building alongside the highway. Though the commute to work consists of a flight of stairs, the day is long – from 7.15am to 6pm. The pace of work is often frustrating, and can be complicated by language difficulties; Liu speaks in halting English, and knows a few phrases of Swahili. "Chinese work very hard, very quickly," he says. "But here we are training local people to do the work, and if someone does not understand, he works slowly. You have to watch."

Most evenings Liu and his Chinese colleagues – there are about 100 on the road project – watch DVDs on their laptops or chat to family and friends over the internet. But they do get out occasionally, for coffee or dinner in nearby malls. Liu says he intends to return to China for good – his bosses permitting – when the road project finishes, in order to spend more time with his family.

But for Wang Lina, seated in her shop in downtown Nairobi, a few miles away, family is the reason she is here. The child of "normal worker" parents, Wang grew up with few thoughts of leaving Benxi, an industrial town nearly 600 miles north-east of Beijing. But in 2003, when she was 21 and newly married, her husband's uncle approached them with a proposition. A few years before he had travelled to Kenya to set up a home furnishings company. Now his business was expanding fast, and he was looking for family members to help run it. Wang and her husband agreed to join him.

But she missed her friends. In Kenya she could not find any clothes to fit her. She was too shy to talk to local people. So, after a year, she and her husband quit and returned to Benxi. But soon his uncle came calling again, begging them to give it another try.

This time Wang found herself appreciating the upside of living in Nairobi. In Benxi, she had lived in a flat, but was now sharing a large house and garden with two other couples from the extended family. Instead of simply being a cashier in the store, Wang moved into design and sales. She works hard, often seven days a week, but has also found time to enjoy some of east Africa's best tourist attractions – a safari near Mount Kenya, a beach holiday in Zanzibar. She and her husband have saved enough to buy an apartment back home, which is the goal of many young Chinese who take jobs abroad, even though she has no intention of returning soon.

"My friends who now work in Beijing and Shanghai are so tired," she says. "There's no time to relax, it's always faster, faster! Things are slower here, and I like that. No hurry in Africa, that's what they say."

China's move into Africa has not all been driven from the east. Countries such as Uganda have actively courted Chinese companies, to good effect: in 2010 China replaced the UK as the biggest source of foreign direct investment. One of the largest firms to have set up in Uganda is ZTE, China's second-biggest telecommunications equipment company. Zhu Zhenxing, 32, is its MD in Uganda. Growing up in Jiangsu, along China's east coast, Zhu was certain about two things: he wanted to learn English, and wanted to be an international businessman. He was recruited by ZTE at a job fair, with the promise of a job abroad.

"I did not want to stay in my home area, or even in China," he says, puffing on a Dunhill cigarette. "I wanted to experience things, to grow. The further away the better."

So when he was asked to go to Abuja, the capital of Nigeria, Zhu did not hesitate. "Other people said: Africa is like this and like that. But I thought if other humans lived there, I could too."

He learned a lot. The corruption dismayed him. But Zhu liked Nigerians' optimism, "always talking and smiling, not worrying about tomorrow". He was so desperate to prove himself that he nearly burned out. He developed vitiligo, a disorder that causes loss of pigmentation. His face turned white "like Michael Jackson" and he was forced to return to China to recover.

He returned to Africa via Vietnam. In Uganda, he has grown ZTE's business exponentially – the company sold more than 500,000 handsets this year. Zhu looks the modern high-flyer – smart shoes, trousers with a Mont Blanc belt, a dress shirt and trendy black glasses. At weekends he plays golf with clients and Chinese embassy staff. But beyond that his lifestyle is far more modest than that of most expats. He and his staff all live in the same apartment block. A company vehicle takes them to and from work each day. His salary is good by Chinese standards but not comparable with those of his western competitors. Still, he has no complaints.

"We are still working towards being a world-class company," he says. "Our core competency is our low costs, so we must keep expenses down."

If there is one home comfort Chinese migrants in Africa can't do without it is their food. Most companies, including ZTE, bring over their own chefs. Xu Jianwen, 34, is one of them. Raised and trained in Sanhe, in northern China, he was working in a restaurant in Beijing when he heard that the China Road and Bridge Corporation, a state-owned construction giant, was hiring cooks. When he was offered a job in Uganda, his wife, with whom he has a young daughter, protested vehemently. But he won her over when he told her the salary – two and half times what he was earning in China. "Salaries in China are not enough," he says. "I had to come for the money."

His first job was to cook for 20 Chinese workers in Soroti, a small town in eastern Uganda. He had two local assistants but, lacking English, no way to communicate with them. At least the cooking was uncomplicated. Only five vegetables were available locally – aubergine, cabbage, potatoes, green peppers and tomatoes. "And there was no spicy sauce," he says. "I work every day, because people need to eat every day. I wake up at six in the morning and finish at seven. Every day is like that. I rest on Chinese public holidays."

Currently based at head office in Kampala, Xu plans to spend another two or three years overseas, saving all the while for "housing, education and food" for his family. He won't miss the mosquitoes, he says, but he will miss the people. "They are very nice. Friendly to Chinese."

That is not always the case. In parts of southern Africa there has been strong resentment towards Chinese traders, many of whom arrive on tourist visas and stay on illegally. In Zambia, the Chinese managers of a coal mine recently shot two Zambian employees who were protesting over pay, causing anger across the country. And in Sudan and Ethiopia, rebel groups have killed Chinese workers because they view them as proxies of the local government.

In Kenya, home to up to 15,000 Chinese, the main problem for some of the early migrants was a mistrust of their goods. Xu Hui gave up an editing position at the state news agency Xinhua to start a toy-import business in the mid-90s. But when he moved into computers, people did not trust the quality. He resorted to showing potential clients the labels on the computers they already owned that said: "Made in China".

Today Xu runs a successful business importing Great Wall-brand televisions and giant rolls of toilet paper that are repackaged locally. He regards Kenya as his home – he enjoys the "simple, healthy lifestyle", playing badminton at a sports club every week – and only reluctantly sent his family back to China for educational reasons. But though the attitude to Xu's products may have changed, he is aware that western attitudes to China's push into Africa remain largely negative – something he struggles to understand.

"Western countries also buy oil, and have mines around the world. People don't talk about 'grabbing', or 'new colonialism' there. So why is it different for Chinese? We are not sending our armies to places and saying: 'Now sell us this!'" Xu says. "If you can't compete with us, you find an excuse. It's like two children fighting, and the losing one crying to his parent about funny tricks."

In fact, there is competition now on lots of levels. Every month thousands of African merchants travel to cities such as Guangzhou and Yiwu to buy wholesale goods. And other Chinese firms, including state-owned companies, battle for local tenders.

This can be stressful for company managers. Just ask Dong Junxia, an earnest, smartly dressed woman. Since 2008 she has been in charge of the small Ugandan office of the China Railway Seventh Group Corporation, a subsidiary of CREC, one of the world's largest construction companies. She worked on road-building projects in difficult environments in Tanzania and Liberia, with some success. But in Uganda her company had yet to win a large tender. Dong seemed ashamed, and insisted that her name and that of her company stay out of this story.

"I have progressed professionally [in Africa], but suffered loss in being away from my family. In western culture it's different. Being with the family is the priority. Chinese sacrifice themselves for the family. It is hard to decide which is more important."

But a week later she called to say that her name could be used. She sounded exuberant: her company has been awarded a large contract to build a road. "After two years of hard work! You must understand how good that feels."

• This article was amended on 7 February 2011. The original said Shenyang was a province. It is a city. This has been corrected.


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“To Blame Wall Street For the Financial Meltdown Is Absurd”

The Baseline Scenario

By Simon Johnson

At the heart of the Treasury Department's strategy for refloating our largest financial institutions is an important assumption – decision-makers at our largest institutions have "learnt their lesson" and will be more careful going forward.

The latest string of pronouncements from the top of Wall Street suggests that this assumption is badly flawed.

In a column now running on Bloomberg, I review the recent statements of Robert Benmosche (AIG) and Bob Diamond (Barclays).  Their views are not encouraging.  They want to run bigger, more global and extremely complex financial institutions.  They also appear to favor a great deal of leverage (high debt relative to equity) wherever possible.

Steve Eckhaus – a top Wall Street compensation lawyer (he will get you your bonus) – articulated the underlying view with great clarity to Saturday's Wall Street Journal, "To blame Wall Street for the financial meltdown is absurd." (p.B13 of Feb.5-6 print edition).

The absurdity here is that we have created Too Big To Fail banks (and insurance companies) and that we are allowing them to become Too Big To Save – while our political elite blithely looks the other way.

Direct link to Bloomberg column: http://www.bloomberg.com/news/2011-02-07/wall-street-knows-meltdown-was-just-bad-dream-commentary-by-simon-johnson.html


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A Danish film offers a long-overdue reality check on microfinance | Madeleine Bunting

Global development news, comment and analysis | guardian.co.uk

A new film about the Grameen bank will fuel the current crisis of faith in microfinance. But it would be a disaster if the backlash swept away all microfinance projects

Having been hailed as a magic solution to poverty for more than a decade, the enemies and sceptics of microfinance are now having a field day. I blogged before Christmas about the crisis in the microfinance sector in Andhra Pradesh. That story of indebtedness and high rates of defaulting was extensively reported in the west and shook the reputation of the entire sector; my colleague in India filed a moving report of the fall-out on poor families earlier this week. Similar reports were on the BBC, bringing unusual attention to what has been, up until now, largely a passion of development policy wonks. But now it looks as if the crisis of faith in microfinance threatens the whole concept as a development tool – and even worse, its founding pioneer, the Nobel laureate Mohammed Yunus himself.

Alongside the crisis in India, another attack has been brewing; a Danish investigative journalist, Tom Heinemann, has made a film looking at microfinance and Yunus's Grameen bank in Bangladesh. In addition to the now well-known criticisms of heavy-handed debt collection and high rates of interest and indebtedness, Heinemann has uncovered a complex financial transaction in the early 1990s at Grameen bank. He says a significant sum of money is unaccounted for. He insists he has no evidence of any corruption, but he does have documentation that the donor, the Norwegian government aid agency, was very cross but agreed to keep quiet on the issue.

A version of the film was broadcast in Norway in late November and caused uproar in Bangladesh (when it appeared in Norwegian on YouTube). The Bangladeshi prime minister, Sheikh Hasina, weighed into the row in a press conference calling for an investigation into the Grameen bank – which received millions in aid from several western countries in the early 1990s. She declared that the Grameen bank had been "sucking money out of the people after giving them loans. There has been no improvement in the lifestyle of the poor so far. They were just used as pawns to get more aid."

Earlier this week, a longer version of the film was broadcast in Denmark, despite last-minute representations by the public relations company Burson-Marsteller, which had been hired by Grameen bank. Clearly Yunus is fighting hard to protect his reputation.

Meanwhile Heinemann's main aim is not to expose the feet of clay of this global icon of the struggle against poverty so much as to challenge the western donors' naive enthusiasm for microfinance.

"I admit, the film shows for the first time the dark side of microcredit," Heinemann told me from Denmark, where he is coping with the growing global row. "I went to a number of experts and asked them, does microfinance alleviate or eradicate poverty? None of them could give me a clear answer. Several say there is no real impact or that we need more research to know. At the same time, I could see loads of websites of aid agencies claiming huge success. I couldn't make these two things match. The more I talked to people, the more astonished I was at the mass hype."

A number of longstanding critics of microfinance, such as Milford Bateman, are interviewed in Heinemann's film as well as those who are more supportive, such as David Roodman at the Center of Global Development in the US. The latter has put up a series of really thoughtful blogs on the growing dispute and his own criticisms of Heinemann's film.

In the meantime, Heinemann is planning to get the film shown, finally, in Bangladesh later this month, and next month there will be the first viewing in London after the Overseas Development Institute cancelled one this week at short notice – because, rather oddly, it claimed it couldn't find anyone to put up against Heinemann.

The fact is that Heinemann's film offers some very inconvenient truths about microcredit at a time when it has become a widespread orthodoxy among donors that this was one of the best ways to help the poor help themselves. When aid is increasingly being criticised as a "handout" and scorned for generating dependency, microfinance had a powerful appeal as an alternative. The rhetoric of microfinance – and everyone has used similar stories of people pulling themselves out of poverty by setting up small businesses – ticked all the donors' boxes for self reliance and empowerment.

But it sidestepped the structural economic and political causes for people's poverty in the first place, putting all the emphasis on individual effort and resourcefulness to break out – an impossible expectation that has led to much further suffering.

Having said that, there is a place for well-designed, carefully managed microfinance projects and it would be a disaster if the growing backlash swept all away. This is a reality check, long overdue and a reminder of just how vulnerable donors are to fashionable orthodoxies.


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