China in Africa – The Case of Telecommunications

Posted: 1 Apr 2014

See all articles by Ewan Sutherland

Ewan Sutherland

University of the Witwatersrand, LINK Centre

Date Written: March 30, 2014

Abstract

Objectives and insights

The supply of Chinese network equipment to wireless carriers in Africa and of cellphones and smartphones to consumers are well known phenomena, but poorly explored. There has been more interest in the formation and reshaping of the major carrier groups (e.g., Etisalat, Orange and Vodafone) and in the adoption of m-banking, plus some concern about interconnection rates.

This paper examines the engagement of the Chinese government and manufacturers with African governments and carriers, which proved surprisingly diverse. Where there are competitive carriers, Huawei and ZTE offered low-priced equipment and won contracts, if necessary backed by China EXIM Bank. Where there are infrastructure projects (e.g., pipelines and railways), optical fibres are laid, which can become part of the national or regional backbone networks. Where there was an ineffective state monopoly, CITCC, a Chinese contractor, installed equipment from Huawei and ZTE and in some cases runs the network. Even in conflict and post-conflict states equipment was available to smaller carriers, regardless of any risks and the absence of governance. In addition to sales of handsets through the conventional channel of carriers, they are also sold through informal channels with traders buying from factories in China and bring them to retailers in Africa.

Analytical method

The approach taken has been to examine all the publicly available information about supply contracts in Africa and global production networks, especially those in China. This was informed by the substantial literature on Africa in China, plus the literatures on telecommunications in China and in Africa.

Description of the data

Information about contracts was collected from a wide range of public sources (e.g. press releases, newspaper stories and ministries), both concerning telecommunication and infrastructure projects. Additional sources included annual reports of manufacturers, carriers, regulators and banks.

Novelty

While the general engagement of China with Africa has been covered extensively, albeit sometimes polemically, this is the first account of the telecommunications sector. The support for African state-owned monopolies by Chinese manufacturers and a Chinese network construction firm, aided by development banks, was unexpected, since it bypasses the usual conditionality of good governance. The flexibility is surprising, though it has delivered growth in networks for which no other hope existed, it explains an uplift in mobile teledensities in countries where it would not be expected.

Full paper available on request

Keywords: Africa, China, Telecommunications, Governance, Regulation, Trade

JEL Classification: G38, L96, M20, N65, N67, N75, N77

Suggested Citation

Sutherland, Ewan, China in Africa – The Case of Telecommunications (March 30, 2014). 2014 TPRC Conference Paper, Available at SSRN: https://ssrn.com/abstract=2400620

Ewan Sutherland (Contact Author)

University of the Witwatersrand, LINK Centre ( email )

1 Jan Smuts Avenue
Wits
Johannesburg, Gauteng 2000
South Africa

HOME PAGE: http://link.wits.ac.za/

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