Policy options for FOCAC 2018

By UKERTOR GABRIEL MOTI

As African leaders head to China for the forthcoming 7^th Forum for China-Africa Cooperation (FOCAC) in Beijing, 5-7 September, 2018, the following policy options for engagement towards FOCAC 2018 are proposed based on my research and shared knowledge on the subject area.

1. The political and diplomatic front- which is needed to strengthen the win-win relationship.

• China’s foreign policy on peace and security as well as its position on African domestic politics need to be revisited- it should be guided by norms jointly set by it and the AU together.
• The AU needs to initiate this discussion and FOCAC could serve as an excellent entry point to address this normative problem in the partnership.
• The AU should engage Chinese policy makers to consider focusing on establishing political will from both sides and a stronger political stance by China on the governance track record of African governments to be included in the governing principles of FOCAC.
• Through FOCAC, China could continue to support the efforts of the AU technically in the implementation of the African Peace and Security Architecture (APSA) through its involvement in troop deployment in African peacekeeping and the African Governance Architecture (AGA) towards peaceful, democratic and human rights protective regimes in Africa. Using the AU as an entry point as a multilateral platform for setting common standards and normative guidelines and supervision, China would be insulated from the accusation of interference in the domestic of affairs of African countries, while at the same time, this approach would also mitigate attacks on China’s reputation at the global level as a spoiler of opportunities for peace in Africa.

2. Bilateral cooperation toward development priorities and investment.

• While policies at the AU level will be important in setting the overall guiding normative framework for engagement, bilateral cooperation is still needed to be governed by national policies toward development priorities and investment.
• African countries should develop strong regulatory and enforcement mechanisms as well as policies determining how to negotiate with China in order to benefit more from China’s partnership. These policies should include:
• Labour issues- there should be clear policy on the type and number of expatriate and local personnel for all joint ventures.
• Research, Development and Transfer of technology-there should be 25 percent mandatory investment in R & D and practical training aimed at transfer of technology for sustainability of projects and programmes.
• Tax holidays
• The ultimate responsibility of designing the adequate legislative and regulatory policies and building effective enforcement mechanisms rests on the Africans. They are the final beneficiaries of reform of these kinds. Overhauling the legislative, regulatory and enforcement framework of African countries could be overwhelming. Incremental reform may offer the necessary time to reflect and effect changes.

3. Special Economic Zones (SEZs) to stimulate industrialisation- With regards to the very popular model of China’s industrialization strategy in Africa, the SEZs, there are several measures that policymakers in host countries can take to maximise the impact of the SEZs on industrial development.

• First, while African governments are providing an elaborate set of incentives to Chinese investors in the zones, few are actually subsidising local investors, and even fewer have put in place a regulatory framework to encourage local investors to set up in the zones, or local suppliers to provide inputs and services to SEZ firms.
• For the zones to succeed as a test case of industrialisation, it is crucial that the government fully ‘owns’ the SEZs, believes in their potential and shows the political commitment to make them work.
• This requires that the zones be fully integrated into the country’s development strategy and be seen as platforms for learning and technology transfer beyond their short-term impact on jobs.
• Second, local ownership will be fostered if the host-country government has an equity stake in the zones.

 

• This can be justified against the numerous concessions made to the Chinese developers, including leases of land, provision of offsite infrastructure and offers of a whole range of alluring fiscal incentives at high opportunity cost to the host-country government.
• The Nigerian government successfully negotiated a stake in the two zones; this experience should guide future zone development elsewhere in Africa. However, excessive participation by national governments – as in Egypt’s Suez zone – should be avoided, since this might lead to interference and inefficiencies in zone management.
• Third, since local participation in the zones is critical to realising productivity spill overs, African governments must set up an incentive scheme – complementary to the $ 1 billion (US dollars) SME fund proposed by the Chinese government – to support local firms’ investment in the zones. In addition, they must play a proactive role in selecting and promoting potential “winners” as was the case in East Asia.
• Fourth, the industry focus of the SEZs should be negotiated between the host-country government and the Chinese stakeholders, rather than being “imposed” by the latter.
• This will ensure that the zones’ activities are aligned with the country’s needs in terms of industrial development and that any resulting technology spill over is more readily absorbed. Industries that are highly capital- or skill-intensive might contribute little to industrial upgrading in economies that are endowed with low-skilled labour and have had little experience with industry.
• The systemic constraints to industrial development will take longer to tackle, but they must not be neglected. The SEZ host countries, both existing and potential, must invest in making local firms and the economy technology-ready.
• This calls for substantial investment in local universities and research institutions and the provision of incentives for firms to train their workers, adopt best management practices and to restructure and innovate.
• Finally, linkages need to be established between tariff and trade policies on the one side, and industrial policies on the other. In some cases (South Africa is the outstanding example), a combination of earlier unilateral liberalisation and bilateral, regional and multilateral agreements have limited the policy space to nurture industrial development.

 

About the author

Professor Ukertor Gabriel Moti holds a BSc in Political and Administrative Studies (University of Port Harcourt), a Master of Public Administration (MPA) (University of Lagos) and a Doctor of Philosophy (PhD) in Public Administration (University of Benin) – all obtained in Nigeria. Moti is Professor of Public Administration in the Department of Public Administration, University of Abuja, Nigeria, specialising in Public Sector Management and Governance. A former Deputy Dean of the Faculty of Management Sciences, he has held several administrative positions at the University. Prof. Moti is a Fellow of the Certified Public Administrators of England and Wales (FCPA), a Fellow of the Institute of Management Consultants (FIMC), and a member of the Committee for the International Conference on Management, Leadership and Governance (IMCLG), United Kingdom, in addition to holding membership in several other professional bodies, such as the African Association for Public Administration and Management (AAPAM). He has published over 40 articles in peer-reviewed local and international academic journals. Professor Moti was among the 25 African scholars who participated in the China-Africa Research Exchange Programme (2016), where he served as leader of the African Delegation. Moti is a co-chair with Dr Steve Troupin on the AAPAM-IIAS Taskforce for Public Administration Research Capacities in Africa. Prof. Moti is a notable public policy analyst in Nigeria. His research interests include public sector management and governance, public policy analysis, and development administration. He is a regular participant at various international conferences, where he has presented papers. He has contributed a chapter each in the following books on China-Africa Cooperation:

 

“China and Africa’s Industrialisation: The Current Situation, Challenges, Fears and Policy Options” in Funeka, Y. A.; Shelton, G,; Aiden, C.; and Hu, B. (eds), Forum on Africa-China Cooperation: Industrialisation and Agricultural Modernisation (Vol. 2). Africa Institute of South Africa (AISA), Pretoria, South Africa.“China and Africa’s Industrialisation: The Situation, The Challenges and the Fears from an African Perspective” in OniwideOyetola (Ed) Issues in China-Africa Relations, College of Humanities and Social Sciences, Kampala International University, Kampala, Uganda.