Monday, April 13, 2015

China and Africa's Informal Economy

In a 31 March 2015 blog post titled "China-Africa Trade and Investment: Benefiting Africa's Rural Informal Economy?" Xiaoxue Weng makes an important point about the significance of Africa's informal economy, which is estimated to include 50 percent of Africa's total economy.  The author then relates the informal economy to Chinese trade and investment.  

It is critical for Africans and outsiders alike to understand the working of Africa's informal economy.  It performs many useful functions.  But it also has downsides.  It is well known for ignoring even reasonable government regulations. 

I found one quote from a Cameroonian villager especially insightful and worrying: "The government could take away our land and trees any moment, so we'd rather sell all the trees to the Chinese as soon as we can."  It takes hundreds of years to grow some tropical hardwoods to maturity.  This approach by the Cameroonian villager will only devastate the environment for short-term monetary advantage of a few people.  This kind of practice is exactly what African governments and foreign importers need to avoid. 

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