The Chinese in Cape Verde, Part 11

China increases foreign aid in 2012

Last year in July, the Chinese Premier Wen Jiabao announced that China will increase its financial aid to Cape Verde to USD21 million in donations and interest-free loans. China had earlier written off Cape Verde's bilateral loans. This new aid package consists of USD8.5 million in donations and USD12.5 million in interest free loans for projects in tourism, air transport, marine economy, information technology, energy.

The most prioritised is the transformation of the Cabnave shipyard into a support base for international shipping fleets, the national airline TACV and the power company Elektra. The Cape Verdean shipyard Cabnave or Estaleiros Navais de Cabo Verde has been struggling for years for modernisation. It is today near privatisation and the choice partner is the China Overseas Fisheries Company or CNFC. Sources close to the government said that the privatisation plan which begun in 2008 is taking time "because the Cape Verdean government is doing a lot of thinking on how much control it is prepared to give the Chinese in the management of the shipyard." One can say that, in Cape Verde - the "No stress" land, progress can wait.

The Chinese company CNFC operates some 250,000 fishing vessels off the west coast of Africa between Morocco and Sierra Leone. The servicing and repairs of these vessels would provide higher revenues. Alongside the Chinese partnership, the Cape Verdean government also wants to establish with Spain a partnership in the fishing sector by modernising the Interbase refrigeration unit for the storage of frozen fish and crustaceans for further export to other countries. The most important actor in the maritime sector is China Ocean Shipping Group or COSCO, which is working in partnership with state-owned port authority Enapor.

Cape Verde is also a candidate to host one of the five "economic cooperation zones" that China plans to establish in Africa, according to a report by Leo Horta. Sao Vicente is the likely candidate as a "special economic zone" primarily as a major fisheries processing center to service the Chinese fishing fleets opoerating in the Atlantic. Accordingly, China also plans to make the island a "transit point for replenishment and logistical support to thousands of Chinese ships crossing the South Atlantic for Europe." On the other side of South Atlantic, China is heavily investing in Brazilian ports such as Salvador in the state of Bahia.

An important lesson with the Chinese small shopkeepers arrival in Cape Verde is that, they have become the economic motor especially in the more interior islands less travelled by ships and planes. It was the small businesses that led the way for the larger companies to follow. Another lesson being underlined is that, some Chinese are not always after raw materials and fast profit from resource-rich African countries with despotic rulers. China has shown adapability to well-governed countries with little natural resources such as Cape Verde.

Chinese fishing group CNFC to build refrigerated warehouse

China National Fisheries Corp
 or CNFC announced its plan to build a refrigerated warehouse in Sao Vicente for its fish harvest in the Atlantic ocean, the Cape Verdean state port company announced last year. It will be a 2,000 sq.m. area located in the container area of the Mindelo port, based on an agreement started in 2008. According to CNCF, its vessels uploaded around 2,461 tons lof fish during the first half of 2012. The contract is for one year and is renewable with the condtion that the Chinese company " may not in this location carry out any other activities or services that are not compatible with those indicated in the contract.

This project is ongoing and it is hard to say at this point, how long it will take to complete it. As most other foreign investment projects offered to Cape Verde, the waiting time is long and tiring and in most cases, resource-draining, meaning that investment money has dried out before permits and licenses have been approved.#

The Chinese in Cape Verde-Part 1

China's impressive presence in Africa easily gives the picture of neo-colonialism, the former conquering the vast continent not militarily but economically in order to get access over Africa's natural resources and cheap labour. This would be the stereotype impression that is not necessarily far from truth because there have been instances of predatory behaviour of big Chinese businesses conspiring with despotic leaders in say, Sudan and Zimbabwe, to control mineral and oil resources.

This may not be the case of China in Cape Verde- a group of ten inhabited islands situated in the northern Atlantic, off the west coast of Africa. Its first contact with Europe and America was via the Atlantic slave trade from the later part of the 18th century - thousands of Cape Verdeans working as slaves in plantations in Santiago and Fogo island under the regime of white men. It was also a slave trading post for Europe and America. This ended around the 18th century.

China in Cape Verde

The Chinese in Cape Verde is not the stereotype "big business" makes an entry first. Quite the contrary, it was small entrepreneurs who started opening "Loja Chines" ( in Portuguese ) some 15 years ago, in mid-1990s. They first arrived with the head of family and later followed by other family members. They settled down in all the islands, preferring the more isolated ones like San Nicolau. Today, according to statistics made in 2008, they number around 3,000 Chinese with at least 200 stores dispersed in all Cape Verde.

The Chinese in Sta. Maria, Sal island

There are around eight Chinese stores or "Loja Chines" in Sta. Maria - one of the three towns of Sal island, and probably double to include those in Espargos and Palmeira. The Chinese stores are providers of cheap household goods and home accessories from appliances to house linens, clothes, toys, canned foods, cereals -rice, beans, flour, sugar, salt and fresh vegetables and fruits. They are competitors of Cape Verdean stores and small groceries offering the same commodities but the Chinese prices are lower and many prefer to walk a bit longer to get more for their escudos.

Why are the Chinese able to sell their goods at cheap prices? For one, the quality of most Chinese-made goods are inferior in comparison to those coming from say, Portugal or Spain both of which are big trading partners of Cape Verde. The main reason is of course the import tax exemption enjoyed by the Chinese small entrepreneurs. Chinese goods enter the country taxfree for a period of five years - an agreement between China and the Cape Verdean government, after which both residential and taxfree exemptions terminate. The Chinese may go back to China or choose to stay.

The Chinese immigrants
How did the Chinese find their way to Cape Verde? Tao Tao Holmes wrote in 2011 that the Chinese came via a package deal with a Chinese big boss who allegedly arranged the round-trip ticket, visa, food, housing and clothes. They would start businesses and stay for five years and decide if they wish to remain after termination of this period or go back to China. Because of the generosity of China's foreign aid to Cape Verde, the government has been supportive of the Chinese small shop owners even if the Cape Verdeans complain privately that the competition is unfair. Many Cape Verdeans are thankful for the availability of cheap things like clothes in the Chinese shops, so that many do not resent the presence of the Chinese, who as a community live a very separate group. As the number of Chinese shops increase, the tougher the competition it poses for Cape Verdean livelihood and the government will be forced to address the problem sooner or later.

The beginning of a "long friendship"


China established diplomatic relations with Cape Verde in 1976, the latter without any visible interest in this group of islands without natural resources. But China will stop Taiwan from gaining foothold in Africa and for this reason maintained a friendly and polite relations.

China intensified its presence via the arrival of small Chinese entrepreneurs in the 1990s. It is the small-scale businessmen that paved the way for the larger Chinese companies to come to Cape Verde.

Small Chinese entrepreneurs led the way

Now that the small Chinese investors have opened the business gates of Cape Verde, larger companies are reportedly attracted to establish themselves in the tourism business, notably Macau millionaire David Chaw who reportedly announced his intentions to invest USD100 million for a huge entertaiment park with casino, restaurant, hotel and marina on the islet of Santa Maria, off Praia in Santiago.

Another Macau tycoon, Stanley Ho - whose wealth comes from casino operations, visited Cape Verde to look at investment possibilities. He has reportedly established a casino in Guinea Bissau and bought a 60% stake in the Banco da Africa Occidental. How he fares in Cape Verde depends upon the other major actors with ties to powerful mafia families in Corsica and Sicily, which are known to operate extensively in Canary islands and Madeira.

Lately, China's large state-owned companies have started to arrive. In 2003, the China Building-Material Industrial Corporation for Foreign-Technical Cooperation signed a contract with the Cape Verdean government to build a cement plant at USD55 million cost. The facility is expected to produce 350,000 tons of cement per year, thus changing Cape Verde from a net importer to an exporter.

China has also pledged various human development projects such in education, health, as well as building infrastructures such as schools, government buildings, a 15,000-seat sports stadium and social housing projects. The aid package is said to be USD80 million.

A project idea becomes business

A graduate of the university of hard knocks becomes a multi-billionaire because he got a great idea on how to decorate and equip homes of all types and sizes, at the most affordable prices. The project idea became business translated into hundreds of practical and useful household goods sold today on a global scale. Another major actor in the business world begun with the idea of packaging liquids in cartons, specifically milk then, but which today includes even wine in cartons.

There are hundreds of successful people, inventors really who started toying with ideas on how to facilitate certain functions in daily living who have infact done exactly what they envisioned to do which is to contribute to making practical living easier in modern societies. There is a governmental entity in Sweden called ALMI - for entrepreneurs with creative visions, who may not have the resources to develop an idea into a business but for which certain people like the risk capitalists may find worthwhile investing in. Every second, every minute of hours in this world there are creative people with ideas wanting to become businesses.

For people with creative visions - big and small, the opportunity to find ways to make an idea into business is closer to reality in developed countries where there are financial institutions and investors looking for good ideas to become successful businesses. But in less developed countries the inventive entrepreneurs do not have easy access to financial helps to bring an idea into reality. The good thing that can happen is that a foreigner with good business intuition buys the idea and helps with providing the financial resources to turn it into reality.

Foreign investment and foreign investors are engines of growth in less-developed countries. However, as much as they are a necessity to transform many ideas into many businesses, the national laws are not always in harmony with the individual citizens's goal to seek happiness and fullfillment in their ideas for starting businesses especially with a foreign partner. Yes, some governments do not give anough appreciation to those who want to be self-employed. Some business rules and regulations - for instance in African countries like Cape Verde do not function as facilitators of good ideas that can attract foreign investments.

Why I am giving Cape Verde as a specific example in this first blog article I am writing is that, I have just returned after a six-month residence in this Atlantic group of small islands and during which time, came at close range with the business culture of the islands. There are many ideas that can become successful businesses if the government provides the necessary support and incentives. For instance, Sal island is the windiest place I have ever been to and this resource can be harnessed into windcraft to supply electricity for the whole island, a commodity it acutely needs. Electricity shortage is a very real problem. The other commodity is water - clean drinking water that has to be made through desalination.

Another important economic area that needs ideas becoming businesses is the ports and maritime services. Cape Verde is composed of ten islands - of which eight are populated, hence the need for inter-island transport not just for passengers but for marketing agricultural produce. Although this problem is known even to the newborns, the government just doesn't seem to spend serious thinking about solving this through laws and regulations that will seduce investors to put money into inter-island shipping. Consider bringing a cargo ship to Cape Verde and be ready to pay 33% in import tax.

I have a reason for using the picture of a woman fish vendor in Sta. Maria (capital of Sal island) wharf. I have in mind one great idea wanting to find ways to become a successful business. And that is, how to export the tremendous harvest of fishes like tuna,blue marlin and mackerel to an EU country. When I googled the requirements for going into this business, I was drowned in the requirements both from the national and European Union authorities.

I do not mean to address the issue of national economic proportion as far as a country like Cape Verde is concerned. I am more interested in dissecting ideas for workable businesses wherein an idea becomes a successful business, maybe not of the Facebook proportion because it is not everyday that someone comes up with the birth of social media, or invents a cheapest communication vehicle like Skype. What ever it is, an idea does not need to be just an idea.#