China in Africa: The Transparency Paradox

Publish-What-You-Fund-logoTransparency is a loaded word in the development business.  The idea that aid and investments in places like Africa should be subject to external audits and review is a sacrosanct principle within the industry.  Never mind the irony that organizations like USAID, the United Nations and the World Bank among others devote a majority of their time/effort with their aid programs to sorting through a byzantine bureaucracy that is anything but transparent — nonetheless, these very organizations maintain the “black box” that is China’s aid and investment agenda in Africa is alarming.   However, transparency can cut both ways and ultimately the West may regret its insistence that China pull back the curtain.The issue first came to my attention in Kinshasa at the posh athletic club “Cercle Elais” where I was enjoying an afternoon drink by the pool.  Sitting behind me were a pair of European construction executives who were seemingly drowning their sorrows in pint after pint of lager.  The two echoed a story detailed in the compelling book “China Safari” by complaining loudly over their inability to compete with Chinese construction firms who submitted bids 50-60% lower than everyone else.  “There’s just no way we can compete,” one declared, “yeah, we’re fucked,” the other slurred.  Now, the interesting part of this story is who these two accused of screwing up their business in the DRC.  It didn’t seem like they blamed the Chinese.  No.  Instead, it was the World Bank and MONUC (the United Nations operation in the DRC)!

Hopefully advocates of greater transparency will apply the same enthusiasm they do for criticizing Chinese aid and investment initiatives in Africa to the bloated, inefficient procurement system that protects an indefensible level of Western corruption.

Under intense pressure to increase “transparency,” construction firms bidding on major infrastructure projects in the region haveChinese construction worker increasingly been required to submit “open bids.”  Before “open bidding,” governments and international organizations evaluated proposals using various criteria beyond just price (e.g. quality of materials, labor sourcing, etc…).  Yet as the transparency drive forced open the bidding process, price naturally became the dominant issue.  And as we know, when it comes to price, the Chinese are hard to beat. While there is ample evidence in Chinese construction and manufacturing industries to illustrate how Chinese companies employ  substandard labor practices and production methods to keep their costs as low as possible, there is an important alternative perspective that should be considered as well.  The Chinese construction firms in places like the DRC work harder, longer and cheaper than their Western counterparts:

  • Do Chinese construction executives stay in five star accommodations like Kinshasa’s Hotel Memling at a cost to international taxpayers of $500-$600 per night?  No.
  • Do Chinese project managers live in expensive expatriate communities with security details, chauffeur driven cars and consume imported food as their Western counterparts do? No.
  • Do Chinese construction projects operate only five days a week, forcing the project to take longer to build and ultimately cost more? No.

Hopefully advocates of greater transparency will apply the same enthusiasm for criticizing Chinese aid and investment initiatives in Africa to the bloated, inefficient procurement system that protects an indefensible level of Western corruption.  After all, the UN and the World Bank’s funds are all of our tax money, so if Chinese companies can offer a comparable service at half the price, well, that’s capitalism, right?

Footnote: this is by no means a new issue.  The Chinese began under bidding projects in Africa as early as 2005, prompting louder calls for improved transparency in the infrastructure procurement process.

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