Practical implications

With regard to understanding China–Africa engagement, this study finds that the economic ties are laden with expectations from both parties. China on its part seeks to promote its own economic interests on the continent by securing much needed resources to supports its industrialisation and secure markets to support its ‘Go Out strategy’ (Alessi

& Xu, 2015; Haroz, 2011). On the other hand, the African nations expect to make concrete economic gains in terms of influx of much needed capital into crucial sectors of their economy, infrastructural development, jobs creation and knowledge transfer (Adem, 2016).

China’s economic success and its principles of engagement with Africa lend it a unique level of credibility, allowing it to be viewed as a development partner for Africa (Adem, 2016).

The findings from the sub-studies indicate that there is room for these expectations to be met on both sides. In other words, this engagement could contribute towards fostering economic growth and development in Africa, if properly leveraged by African governments.

It is important to acknowledge the challenges within this engagement, such as striving for a balance in China–Africa trade, promoting responsible investment practices, especially

in vulnerable sectors, and addressing the financial burdens that could arise from Chinese loans to Africa.

In order to maximise opportunities and overcome challenges, African leaders need to assert more agency and ownership within the engagement (Corkin, 2013; Chen et al., 2016;

Mohan, 2016; Mohan & Lampert, 2013). This would enable them to steer the engagement in ways that catalyse growth and development in crucial sectors of the economy and foster socio-economic development on the continent as a whole. Evidence from this study and existing research on China–Africa relations (Eom, 2018; see Fei, 2018) has shown that in instances where certain African governments have taken a proactive stance towards Chinese investments, they have been able to direct Chinese investments to crucial sectors of their economy to address issues like job creation, skills development and knowledge transfer. Ethiopia is an example of a case where the government has managed to leverage Chinese investments to accelerate high-productivity manufacturing and a shift towards an export-based economy from a primarily agriculture-based economy (World Bank, 2012).

This move has led to an influx of Chinese investments to Ethiopia’s light manufacturing sectors such as garment manufacturing and footwear industry. These investments have resulted in the creation of jobs for locals, aided skills and technology transfer and fostered an exports-based economy in Ethiopia (Lin, 2016).

In addition to promoting industrialisation on the continent, this engagement has the potential to address the human capital gap in Africa. Human capital is one of the most important drivers of development, particularly on the African continent. This is because the high population growth rate in Africa will play an important role in shaping the size and distribution of the world’s population (UN, 2017) and the global workforce over the next few decades, yet the countries on the continent have a relatively weak institutional capacity for HCD. Apart from infrastructural deficit, which is considered a barrier to economic development (Arezki & Sy, 2016), low stock of human capital is a key deterrent to economic growth and development on the continent (Hall & Jones, 1999; Lynham &

Cunningham, 2006).

Interventions by international institutions and private sector participation have been instrumental in addressing this deficit (Business action for Africa, 2010; Harvey et al., 2002). Similarly, FDI plays a crucial role in human capital formation – the influx of capital can boost host country revenue, which can then be used to fund training and educational programmes. Further, human capital can be directly enhanced through MNCs operations (Majeed & Ahmad, 2008; Slaughter, 2002). While African governments have been successful to varying degrees in attracting Chinese investments and in some cases leveraging these investments for development (Eom, 2018; Fei, 2018), the scope for improvement cannot be denied. Governments need to focus simultaneously on attracting these investments and employing measures that encourage Chinese MNCs to offer more value-added processes and deepen linkages with local firms to ensure knowledge and technology diffusion.

This can be done by enacting and implementing policies like the local content policy, designed to encourage local value creation in MNC operations in the host country. Local content policies can promote workforce development (in terms of employment and training of local workforce) and supplier development (backward and forward linkages with the local suppliers in the industry) (Ramdoo, 2016; Stone, Messent, & Flaig, 2015;

Weiss, 2016). There has been a growing interest in local content policies around the world, particularly in countries with an active extractive industry (Weiss, 2016). Though the debate on the efficacy of such policies continues (Weiss, 2016), countries such as Norway, Chile and Brazil have been relatively successful at implementing the policy in their extractive industries, which benefit from their natural resources (Ramdoo, 2015). The adoption of such policies is, however, not limited to the extractive industry. For example, this study shows how Nigeria has adopted the local content policy in the ICT sector.

The local content policy in Nigeria’s ICT sector, similar to the one employed in its oil and gas sector, is focused on the creation of value additions. Specifically, the policy aims to ‘achieve the development of local skills, technology transfer, use of local manpower and local manufacturing’ (NITDA, 2013, p. 6). The local content guideline requires MNCs to provide a local content development plan for job creation, HCD and value creation in the local ecosystem. The implementation of the policy can help leverage FDI for local job creation and establish and strengthen linkages between MNCs and the local industry.

This in turn can promote skills enhancement and knowledge and technology diffusion in the local industry. Thus, African countries can leverage Chinese investments in crucial sectors of their economy for HCD through the use of local content requirements. The host country governments should work in collaboration with the local industries and MNCs to achieve their policy objectives.

Policies such as the local content policy can encourage local participation in the ICT value chain by requiring MNCs to use locally sourced material where available and local suppliers and sub-contractors to carry out services that might otherwise be outsourced to foreign firms. The local content policy in the Nigerian oil and gas sector has proven effective in creating linkages in the value chain and increasing local labour and industry participation in the sector (Adedeji, Sidique, Abd Rahman, & Law, 2016; Adewuyi &

Oyejide, 2012). In this study, findings show that Huawei is actively engaged with local suppliers and subcontractors in its operations in Nigeria, although it is unclear how much of an effect the local content policy in ICT has had on Huawei’s operations, as the policy is still in its early implementation stages.

In order for local content policies to have a significant effect on the recruitment of local workers into highly skilled positions, it is important that the skills supply matches the skills demand of the MNCs. Thus, this study recommends that African hosts governments should focus on training and education to upgrade the skills available locally and close existing skills gaps. Apart from investments in education systems, governments could encourage partnerships between MNCs and local educational institutes. Previous research

has shown that MNCs can and do contribute to educational development in their host countries (Blomström & Kokko, 2002; te Velde, 2002). This study has found that Huawei is involved in a couple of partnerships with educational institutes, providing scholarships and equipment to tertiary institutions in Nigeria. This level of partnership could be deepened to include partnerships on degree programmes, certifications, innovation labs, internships and co-creation labs, where the students can work directly with the MNCs. In the long run, such measures will ensure that the local educational institutes produce graduates whose skill levels match the labour market demands.

This study also highlighted that close partnerships between governments and MNCs on employment and training programmes could be instrumental in creating local employment and upgrading local skills. The case study bears testimony to the fact that MNCs are willing to collaborate with the host country on training programmes as they stand to benefit just as much as the local populace. In other words, such involvement allows the MNC to position itself as a responsible corporation in the host country. This is in line with previous research that shows that MNCs often engage in CSR activities to promote a positive image of their organisation (Vogel, 2005). This is also true in the case of Chinese companies who engage in developmental programmes in host African countries to earn useful political capital (Corkin, 2011). Such collaborations could be deepened for example by encouraging more public-private partnerships on training and skills building that are mutually beneficial.

Organisations can benefit from making their contributions sustainable, and the host government can help create a long-term positive impact on HCD.

This study reiterates that the institutional framework for HCD in most African countries is weak and thus interventions from the private sector play a crucial role in bridging skills gaps in important industrial sectors. It is imperative that the African governments employ effective policies and strategies like those discussed above to leverage CEE for HCD in their respective countries.