Chinese Investment in Africa – Where Do the Jobs Go?

By Ariel Gandolfo

Chinese official foreign direct investment (OFDI) stock in Africa reached $21.73 billion in 2012, and China’s Premier Li Keqiang stated that total investment will reach $100 billion by 2020. Over 2,000 Chinese companies have invested in sectors such as infrastructure, natural resource extraction, finance, and power generation.

Where the money went: Chinese investment in Africa from 200 to 2011. Source: World Resources Institue

Where the money went: Chinese investment in Africa from 200 to 2011. Source: World Resources Institute

In some cases, Chinese companies are involved in multi-million dollar contracts with multilateral finance institutions. The recent $300 million partnership between state-owned China International Trust and Investment Corporation (CITIC) and the International Finance Corporation to provide affordable homes in African cities is just one example. While few African companies possess the technical skills to build on such a massive scale, African workers can at least take advantage of the employment opportunities that these construction projects generate, right?

In reality, Chinese construction companies have been known to ship or fly in Chinese laborers rather than hiring local Africans. In Cameroon in 2013, locals complained that even the low-skilled jobs involved in the Chinese construction of the Kribi Seaport went to Chinese nationals rather than Cameroonians. In August of 2013, the 1,125 employees comprised 609 locals and 516 Chinese.

The table below, with data from John Hopkins University-SAIS Professor Deborah Brautigam’s blog “China in Africa: The Real Story”, depicts the ratio of local and Chinese laborers on a number of major Chinese construction projects in Africa during 2010 and 2011.

employment chart

The numbers are not as bad as one may expect. At worst, locals make up only half of a project’s total labor (as in the 2010 Angolan railway deal) while at best employees are predominantly local, with only a few Chinese individuals acting presumably as managers (most notably in the 2011 textile factory in Benin).

Perhaps the real problem is not the number of Chinese or African workers on a particular project, but the type of employment that the projects bring: low wage, with no benefits or job security and little chance for growth. In Kenya, according to data from the Ministry of Labor, Social Security and Service, labor disputes between Chinese companies and local workers usually involve salaries below the minimum wage; poor working conditions without holidays, housing, or medical care; and unfair termination. Many workers are not formally employed and are not represented by trade unions, so they have little recourse when fired unexpectedly. In February of this year, ten Kenyan employees of the Chinese company AVIC were fired without notice after requesting protective gear to use when removing sewage. Said one of the workers: “They threatened us that if we are dismissed we will be blacklisted, and we’ll never be able to work in the same company again. They are treating us like dogs.”

However, while African laborers complain of harsh working conditions and low pay, it is worthwhile to wonder whether the majority of the unskilled, low-wage Chinese laborers working on any given project fare much better. Of course, language and cultural barriers do not come in to play for them, and Chinese laborers flown in to work on a project in Kenya, for example, may have more job security than a local worker who can easily be replaced. Yet the unfavorable hours and pay are likely shared. That does not mean, though, that such conditions are inevitable.

In fact, several instances of community mobilization during 2014, reported by the New York Times, show that Chinese companies and their African counterparts can be swayed to benefit local populations. After 50,000 Chinese laborers arrived in Ghana to begin gold mining, for example, a popular outcry resulted in arrests and deportations of many of the Chinese miners. In Tanzania, labor unions criticized the government for opening the doors to Chinese merchants, while in Senegal, “neighborhood associations blocked a giant property deal that would have handed over a prime section of downtown real estate to a Chinese developer with a scant track record.” If applied to labor regulations and workers’ rights, perhaps such activism could at least make the presence of Chinese construction firms more beneficial for Africans seeking to earn a livelihood.

Ariel Gandolfo is a researcher with the Project on U.S. Leadership in Development.

3 thoughts on “Chinese Investment in Africa – Where Do the Jobs Go?

  1. Pingback: Summer Writing at CSIS | ARIEL GANDOLFO

  2. Pingback: Summer Writing at CSIS | From the Periphery

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