‘China’s Investments Offer Little Value’

March 26th, 2009

Windhoek (Namibia) - China’s so-called investments in Namibia bring very little, if any, skill and technology transfers, neither do such investments play a significant role in developing the country’s value addition and manufacturing base.

This is according to a new report on Chinese Investments in Namibia. The report lays bare the murky Chinese investments and more importantly Government’s ineptitude to set strategic priorities on which to negotiate foreign direct investment based on enhancing a real value-addition and manufacturing economy, as often preached.

The report also found that tempers are flying high and patience is wearing thin in northern areas of the country, where local business people feel betrayed by Government’s apparent favourable treatment of Chinese business people.

In addition, the many Chinese retail shops hold little benefits for the country’s overall development, come with unacceptable and intolerable labour practices bordering on past colonial practices, and it seems, individual Chinese investors repatriate money illegally out of the country, instead of ploughing it back into the economy through legal means.

The report by the Labour Resources and Research Institute (LaRRI) found that often Government fails to enforce compliance of statutory laws and regulations, and turn a blind eye on such violations by Chinese companies.

Further, Government’s stance towards the violation of labour practices by Chinese businesses is seemingly rooted in political solidarity that has prevailed between the two countries since the struggle against apartheid. This prompted LaRRI to comment, “Political solidarity does not translate into good labour practices”.

Among the findings by the report is that:
• Individual Chinese business people are entering the country on false pretence of setting up manufacturing businesses, only to set up retail shops of cheap Chinese imported goods;
• Chinese employers pay the lowest wages even in industries where there are minimum wage agreements between the industry and unions;
• Competition between Chinese companies and other companies is unfair and unjust in favour of Chinese;
• There is lack of proper control and enforcement of laws by government authorities;
• The Ministry of Trade and Industry has a flexible approach regarding workers’ rights and working conditions, for the sake of developing a better Namibia;
• Commitment made by China to contribute towards the development of the country’s manufacturing sector has barely materialised with only small-scale projects in production of bricks, fabrics, detergents, mattresses, quilts, lighters, water processing, and assembling of diesel engines and power generators.

The report is part of the broader 10-country case study on Chinese investments in Africa and is coordinated and implemented by the African Labour Research Network (ALRN), with funding from the Finnish Trade Union Solidarity Centre and the Netherlands Trade Union Federation. In Namibia, the National Union of Namibian Workers passed a resolution in 2006, where they asked LaRRI to carry out a study on Chinese investments in Namibia with particular emphasis on working conditions. LaRRI said it decided to publish its study separately “for debate in Namibia and hope that it will provide a basis for a sober analysis of the costs and benefits associated with Chinese investments”.

Chinese investments in Namibia are mainly in construction, property development and retail, with mining and local processing occurring on a small scale.
Most of the investments, found the report, appear to be tied on Chinese government grants to the Namibian Government, with the Chinese state-owned company doing the construction or supplying of services. The report also found that Chinese retail shops operate independently with no formal support from the Chinese Embassy in Namibia. There are over 500 small Chinese shops registered with the Ministry of Trade and Industry.

There are more than 3 000 Chinese nationals living in Namibia. The report highlights retail and construction as the most prominent investment areas for Chinese, but construction takes the flag especially since it receives nearly 70 percent of Namibia’s largest construction projects.

“A matter of concern is the awarding of tenders to companies which do not adhere to national laws and regulations. Such practice undermines not only Namibia’s legal foundation but also erodes the country’s social fabric,” said the report.

The report further laments the two countries’ economic relations saying there is currently “little evidence of the envisaged expansion of manufacturing and value addition of Namibian mineral resources”, and called for this to become a priority if relations are to become “qualitatively different from those between Namibia and the former colonial powers”.

The report also suggests that Namibia sets its own strategic priorities and negotiates based on those priorities to achieve better investment and trade deals than those offered by Europe and the US. “This means paying particular attention to value addition and manufacturing activities that can create the much-needed jobs in the country. Furthermore, skills and technology transfer should be a central component of any investment deal,” said the report.

 

source.New Era (Namibia)