Middle East and Africa/China politics: China in Africa: help wanted

Content Type
Country Data and Maps
Institution
Economist Intelligence Unit
Abstract
No abstract is available.
Topic
Politics, News Analysis
Political Geography
Kenya, China, Sudan, South Africa, Algeria, Ethiopia, Egypt, Angola, Democratic Republic of Congo

China created the most jobs in Africa last year-according to a report released in May by a global consultancy, EY-as Chinese firms seek to develop local skills to help to manage over US$66bn of investments made on the continent since 2005. Technical and academic exchanges, as well as Chinese vocational centres in Africa, will help to meet rising demand. However, language barriers and difficulty retaining skilled workers threaten to complicate these efforts. Nonetheless, Chinese investment in Africa, boosted in part by China's Belt and Road Initiative (BRI) will continue to rise, making the need for skilled labour greater than ever.

China was the largest job creator in Africa in 2016, and has created over 130,000 jobs since 2005, according to the EY report. However, Chinese firms still struggle to shake off perceptions that they employ mainly Chinese workers to the detriment of African locals. Kenya's president, Uhuru Kenyatta, echoed such sentiments at the Belt and Road Forum in May, when he called on China to "transfer skills instead of using mostly Chinese workers" to undertake massive projects.

The Chinese population on the continent has expanded, in line with the country's engagement. The number of Chinese nationals working on contracted projects (mainly in infrastructure) in Africa stood at around an 68,000 at end-2015, up from less than 30,000 prior to 2010, according to China's Ministry of Commerce. There is no official data that cover flows of Chinese nationals outside of these projects, but the broader business population (many running small and medium-sized enterprises, including farming and agro-processing) is significant and concentrated in countries like Ethiopia, Zambia, Angola, Sudan, Cameroon and the Democratic Republic of the Congo.

However, the popular notion that Chinese companies only employ nationals from their own country does not appear to be correct. Chinese firms already employ mostly African workers, according to researchers at the Hong Kong University of Science and Technology. Based on their 2015 study, locals comprised more than four-fifths of employees at 400 Chinese companies surveyed across the continent. One reason is pragmatism; localisation is more cost effective. The bigger challenge for these firms, however, is less about perceptions and more about finding talent to grow their business.

Mind the gap

Chinese media have highlighted Africa's skills gap, noting that the continent's share of global engineers stands at 35 per million people, compared with 168 in Brazil, over 2,400 in the EU and more than 4,100 in the US. At company level, Chinese managers have complained about the length of time needed to train local workers, as well as the incompatibility of what local staff learned in technical schools and the actual equipment used on the job.

Chinese firms are not alone in grappling with capacity issues. Managers from US firms in Kenya said that local skilled labour was insufficient, according to interviews conducted in 2016 by the International Institute for Environment and Development. However, the managers' perspectives may be industry specific: US and Chinese executives working in the information computer technology and construction industries lamented the lack of relevant experience, whereas respondents from firms in the tourism and insurance sectors both spoke favourably about the availability of local talent.

Building capacity

Recognising the need to bridge the skills gap, Chinese officials have adopted two main approaches to building capacity in Africa. The first is through professional and academic exchanges as part of its broader engagement with African countries. At the inaugural triennial Forum on China-Africa Cooperation (FOCAC) in 2000, both sides established an African Human Resources Development Fund to train professionals on the continent. China's endeavours have since mushroomed: at the most recent FOCAC summit in 2015, China pledged to train 200,000 African personnel and offered over 30,000 scholarships for Africans to study in China. A specific timeline was not provided for the pledge, making it difficult to evaluate progress towards meeting it.

Educating African workers in Chinese universities and training centres gives Chinese firms an additional advantage, aside from providing new skills. African students may be less likely to stray to other regions of the world. Degrees from China are less marketable overseas, therefore making Chinese-educated Africans less prone to leave for the West (or for Western firms), according to Deborah Brautigam, a scholar conducting research on the China-Africa relationship. However, the quality and duration of education among Chinese universities can vary, making the effectiveness uncertain.

China's second approach to building capacity has been led by domestic firms, over 2,500 of which operate in Africa, according to China's commerce ministry. One of the largest, a telecoms provider, Huawei, has established five training centres in sub-Saharan Africa and claims to provide training to 12,000 Africans each year. Huawei's rival, ZTE, has similarly established training centres in Algeria, Egypt, Ethiopia and South Africa. One state-owned enterprise established a teaching programme at its project site, while other firms have approached training through apprenticeships-but this can be costly, since only a small number of students can be taken on at one time.

Language barriers

Despite these measures, the language barrier between Chinese technicians and local workers threatens to complicate capacity building efforts. Although Chinese managers at overseas branches of domestic firms will generally have reasonable English, there remain challenges in majority French, Portuguese or Arabic speaking African countries. English standards may also still fall short of the sometimes technical language required for business co-operation.

Technical manuals from plants owned by a Chinese firm, Sino Steel, were printed in Chinese with no translations available. At another firm, decision-making at senior levels were often discussed in Chinese, disadvantaging most of the local staff. Interpreters are available at larger Chinese companies, but are not a viable option for smaller enterprises. In a longer-term effort to help to overcome the language barrier, one Chinese company offers classes to teach local staff Chinese. However, Chinese managers that need to tackle short-term issues, especially those involving Chinese equipment, are more likely to send for technical teams from China than rely on locals, further hindering capacity building.

Staff retention

Chinese employers who successfully train local staff face the additional hurdle of keeping them. A Chinese plant manager at Baoyao Steel in Nigeria admitted that after learning on the job, many welders leave for better-paying employment, often poached by other companies in the area. Other Chinese employers have expressed similar concerns, noting that many African workers like to change jobs after having acquired skills. Chinese managers have sought to stem attrition rates by raising the salaries of local staff. In other cases, some managers have offered to sponsor African workers to study in China, contingent upon their returning to work at the same firm after graduation.

Will China's efforts to train African workers be sufficient? China's expansion in Africa, although significant, is still in a relatively early stage and has received only a modest share of China's total overseas direct investment (ODI). Much of that has focused on natural resource extraction (oil, gas and minerals) and associated infrastructure developments (including rail, road and power supplies). But over time Chinese consumer goods firms are also well placed to tap into growing demand from Africa's low income masses, as well as exploiting growing demand from parts of the urbanised upper-low to lower-middle income segments of Africa.

As such, even if Chinese ODI in African natural resources slows, other aspects of the Sino-African economic relationship are likely to grow and develop, creating further demand for skilled labour. The rapid increase in China's efforts to build capacity in Africa has been commendable. But, given the time needed to develop local talent and the wide scale of China's investment ambitions in the region, African workers with the right skills will still be in short supply.

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