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Chinese businesses are at the forefront of environmental change in Africa


China became the largest source of construction financing for infrastructural development at the turn of the 21st century. While legal systems vary in content or interpretation, a company theoretically is bound by both laws of its home country and the host country and the growing body of international law.

In other words, a national firm must legally only be concerned by host country regulations but organizations operating in different countries must understand and comply with laws of both domestic and foreign countries where they operate.

An unintended consequence of more stringent regulations on pollution globally is how firms relocate production to places with looser environmental regulations – a phenomenon known as the pollution haven hypothesis. There is evidence that host countries with “more relaxed” environmental regulations attract FDI from polluting industries.

One study showed that stricter environmental regulations cause FDI in polluting industries to drop by 33%; another indicated that FDI does increase environmental degradation by increasing CO2 emissions.

Are African countries incentivized to have lax environmental regulations to attract FDI from China – a major funder of the region’s large scale infrastructure projects?

According to China Africa Research Institute—a Johns Hopkins University research body—in 2019, the gross annual revenues of Chinese companies’ engineering and construction projects in Africa totaled $46 billion accounting for ~27% of global revenues for these companies. The top five countries for investment in such projects in Africa were Algeria, Nigeria, Kenya, Egypt, and Angola.

Kenya as a case study for China’s role in environmental degradation

Nairobi, the most cosmopolitan city in east Africa, is generally considered the forerunner of technological and cultural developments – what happens in Kenya’s capital portends trends for the rest of the continent. Chinese presence has intensified in recent years – the most recent wave of migration to Kenya dates to the 1990s and early 2000s.

President Xi Jinping’s Belt and Road Initiative (BRI), which launched in 2013, is a global infrastructure development strategy that has secured more than $340 billion in construction contracts. Some call it a state-backed campaign for global dominance, others have dubbed it the Silk Road of the 21st century. Either way, BRI has resulted in an influx of state-owned enterprises (SOE) in Kenya and practically everywhere else on the continent (except for eSwatini,) which remains loyal to Taiwan.

In the case of Kenya, major infrastructural projects are transforming the country, from the Nairobi-Mombasa Standard Gauge Railway to the in-progress Nairobi Western Bypass, the topic of environmental degradation generally takes a backseat to more speculative geopolitical and economic impacts. Environmental impacts range from destructive levels of pollution to wildlife loss. As usual, the downsides of development disproportionately burdens impoverished communities.

There was only one Chinese restaurant in Nairobi in 1996 – today, there are an estimated 60 restaurants, nearly 9,000 registered Chinese workers in the country, and budding Chinese neighborhoods in the Kilimani and Hurlingham neighborhoods. Unofficial sources estimate the total Chinese population in Kenya to be much higher – between 36,000-70,000 people.

Cultural assimilation between Chinese and Kenyans has not always been smooth; the fact that high-level agreements are cryptic only fuels tensions on the ground. Kenyan suspicion of Chinese presence likely stems from a recent neocolonialist past and an unfamiliar culture.

Such massive development opportunities surely come with strings attached – a topic that has attracted much discourse. An inability to pay off massive debts to the Chinese could result in the handover of strategic concessions (e.g. the ‘takeover’ of ports to absolve unpaid debts) or even the expansion of military presence – but the only thing that anyone knows is that there are no definite answers yet, as China also has a track record of writing off significant loans – $78 million for Cameroon in 2019, $160 million for Sudan in 2017.

In Kenya, the lack of internal infrastructure makes it easy to bypass regulations. On the Chinese side, the cultural concept of guanxi (relationship forces between people and parties) and the venality of the Chinese administration is a long-running issue – one that the pandemic has exacerbated. Major scandals are not only embarrassing but (e.g. the Zhou Zhengyi scandal, the GlaxoSmithKline scandal, falsifying monitoring data in clean-up efforts) raise the interesting question of whether corruption itself can be “exported.”

What are some of the factors at play behind the environmental impact of China’s infrastructure projects in Africa?

In 2005, China established an environmental public interest litigation system as part of the greater advocacy effort from a policy viewpoint and to boost state capacity for environmental protection. But in navigating this more stringent territory, China’s economic growth and social stability—both at home and abroad—cannot be compromised.

With BRI’s focus on promoting high-level economic integration between countries, specifically at the industrial level, environmental protection has been a key area of concern. The Chinese government repeatedly emphasizes the importance of cooperating on climate change and promoting collaboration in clean and renewable energy industries in tandem with taking serious steps to curb corruption abroad.

From adopting a foreign bribery law in compliance with the UN Convention Against Corruption in 2011 to launching the Skynet 2019 operation, which repatriated 2041 fugitives (860 which were Communist Party of China members), some research shows that since the promotion of BRI, China’s preference for lax regulation destinations has weakened. The story that Chinese firms go “bribing everyone” has become outdated as other business strategies are tested.

Understanding the cultural backdrop of the ubiquitous narrative of Chinese corruption in Kenya will reveal how issues pertaining to Sino-Kenyan corruption are anything but monolithic. Zander Rounds, a former research manager at China House, a start-up NGO with the goal of integrating “the Chinese into Africa,” explains the definition of corruption itself must be established. It is a broad, elusive, and culturally specific concept.

The correlation between “shang fei” in Chinese and “kitu kidogo” in Kiswahili may be surprisingly similar – both referring to small fees which are part of quotidian life. While the western perspective may perceive such as moral issues, such small fees in many cases are unfortunately the only way of conducting some processes and transactions.

Yet causes for concern persist. A comprehensive report by McKinsey on Chinese investment in Africa found that 60 to 87% of Chinese firms said they paid a “tip” or bribe as part of obtaining licenses; some critics point to both China and recipient countries’ failure to prioritize the implementation of anti-bribery actions.

Environmental regulations slacken in the African race to the bottom for Chinese investment

Nevertheless, the Global South has responsibility in their own development even under the pressures of foreign influence. Environmental protection ranks behind issues such as poverty, civil conflict, disease, and poverty to African governments in general. When working with SOEs, Kenya must adhere to its own development goals and decide whether FDI aligns with sustainability goals, expensive decisions often left to the conscience of Chinese companies.

In November 2020, the Kenyan government canceled a project for the country’s first coal-fired power plant on Lamu Island after strong community pushback – one that three Chinese SOEs had backed in 2015. This incident prompted China to adopt more durable regulations in overseas investments to avoid such future pitfalls.

James Kamula, the County Director of the National Environment Management Authority (NEMA) based in Lamu, says that one of the greatest challenges of working with foreign contractors is the unfamiliarity intrinsic to working abroad.

“The Chinese may not be familiar with environmental regulations on the ground here even after compliance licenses are issued. If contractors do not meet environmental regulations, we issue improvement orders to ensure that standards are met.” Issues Kamula mentioned included sourcing construction materials from approved locations to proper waste disposal.

Clarifying the terms of environmental protection as foreign-invested development projects expand may provide clearer expectations on China’s environmental responsibilities. The Sino-Kenya trade is influenced by factors extending from politics and legalities to social-cultural and technological environments. While policies developed by both Kenya and China have encouraged partnerships, there is still a long journey to a truly reciprocal relationship.

Countries such as Kenya that bridge the Global North and South face high levels of pressure to develop sustainably concurrently with corporate pressures to bend the rules. Kenya passed a strict law against the use of plastic bags in 2017 and signed a global agreement in 2019 to stop the import of plastic waste.

Nevertheless, environmental groups in Kenya and beyond are still concerned about lobbying by petroleum companies to reverse this ban and become the recipient of plastic waste, given a general oversaturation of dumping grounds.

Evans Nyabuto, the Chief Corporate Communications Manager at NEMA, says that despite the Kenyan government’s sufficient initiatives at creating public awareness, monitoring disposal sites, and sensitizing stakeholders, enforcement of environmental regulations and standards can be difficult given noncompliance from foreign, neighboring countries.

“Despite the ban, some plastics are being smuggled into the country,” Evans commented. NEMA has been working to carrot out a serious crackdown in its adherence to its National Solid Waste Management Strategy, a flagship project part of Vision 2030.

A sense of urgency is a strong determinant of how Kenya and China prioritize environmental protection going forward.

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