Forget about China, Africa is the Next Big Thing

Throughout the path of history sailors, traders, merchants and industrialists have searched the world looking for 2 things: resources and cheap production possibilities. And throughout that same path we all witnessed how the industrial revolution sailed off of European shores and became like a gypsy – relocating every once in a while to a new place until it has recently that is the last decade occupied the vast and big China. Ironically, this revolution has sailed around the African continent numerous times without ever landing on its shores despite the fact that it is the oldest known continent to humanity (Poor Columbus almost lost his life digging for resources in new found lands and ignored the richest continent in natural resources).

In the cartoon movie – Madagascar Escape 2 Africa, an interesting conversation takes place between Gloria and the Famous King Moto Moto, where she asks “any water?” and he replies in his funny voice “No, just more diamonds and gold” Of course we tend to laugh whenever Moto Moto says something and of course this is just an animation movie; but the message there is so strong and so striking with its truth. Africa has forever been the world’s mine for natural resources whether be it oil or precious stones and rare earth metals; even at the highest political and security risks oil and jewelry companies have been finding ways to have a presence in the troubled continent and maintain a constant and steady flow of these resources to the world. So the question is: “if those 2 industries have been able to perform well and even strive in Africa, why can’t other industries follow their lead? Creating work opportunities will decrease the number of fighters and cut the way for military recruiters who try to coerce men either by temptation or threats. And let’s be real for an instant, like I mentioned in my previous blog “War and Economy, the All-Time Best Friends” war will never end simply because it is simply the best engine to propel economies forward so the excuse of war and instability become invalid here.

It is true that the risks are high in Africa in general – Highest HIV rates in the world, civil wars plaguing most countries, lack of the proper infrastructure, and shortage of educated labor among other risks, but so are the rewards and the opportunities. Geographically speaking, the African continent is almost equidistant to all continents which makes its seaports the favorite target for all export oriented companies; an important factor for all companies that face logistics challenges and high transportation costs. Being one of the most densely populated continents, there will be no shortage of labor although most of it will be unskilled and uneducated but isn’t that the same case of most factory workers in China yet with an advantage, French and English are widely spoken on that continent which helps in eliminating the language barrier that is present in China – Even Portuguese is present! And the cherry on top of the pie would be Africa’s natural resources, almost every known and needed natural resource is present somewhere in the land of the Nile. One last thing to add; maybe if we go there we can finally figure out why Africa dominates all running sports!

“Everybody wants to go to China, but the Chinese are going to Africa”, in the last 15 years or so, China has dominated the global labor and industrial markets with manufacturers and companies flocking in from all over the world and this has helped in miraculously expanding, enlarging and enriching the Chinese economy, but when the Chinese themselves became big and experienced enough to spread their wings, they landed in Africa and started investing heavily in return for access to natural resources. Many African countries have made deals with China in which the latter invests heavily in the infrastructure of the country in which they are present. Does this model seem familiar? Well if you are having a déjà vu it is because almost the same strategy happened between USA and most Gulf countries in the early 90s at the wake of the fall of the Soviet Union. The problem is that USA didn’t take a similar approach in Africa and now the Chinese are doing it.

As a result, it was no surprise at all when China got all furious after the Japanese prime minister kick started his 2014 by visiting 3 African countries in the first visit for a Japanese prime minister to the forgotten continent in 8 years. That move, although not so significant, had many subtle and hidden messages in it and signaled the beginning of the race to Africa and an indirect confession that this is where the future is. Japan pledged more money to be invested in Africa and more investments in the troubled continent, the Chinese were so appalled by it that they went as far as accusing Japan of dreaming in reviving their colonization plans. It will be interesting to see how the fight between those 2 historic foes will unfold. Personally I think that the winner in all cases will be Africa since they will both be racing there to invest and to earn a bigger share. The rising yen is pinching Japan badly and for the first time ever they are in a serious need to find cheaper production alternatives. Although previously the countries of choice for the Japanese companies alternated between Indonesia, Thailand and Malaysia; this is no more the case as the competitor is now China and not the USA anymore.

Africa is known for its legend like success stories, and it will always be this mystical and magical place that will inspire for more legends from presidents who survived excruciating prison conditions to football players who overcame miseries and hardship and became sport icons all over the globe. Maybe – and as the song says – the time has finally come to “this time for Africa”

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