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South Korea Seeks Own Approach in African Investments

While China has gotten lots of recent attention for offering huge infrastructure projects in Africa in exchange for oil and other commodities, officials from another major Asian economic power, South Korea, are also busy trying to reach more deals on the continent.

Much like China, Young-Tae Kim, a diplomat from the Korean embassy in Washington, explains South Korea needs natural resources.

“We are in a lack of natural resources. 84.1 percent of the total energy consumed in 2010 in Korea was related to imported fossil fuels. Korea is also a big importer of minerals,” Kim said.

Much like China, South Korea is increasingly turning to Africa for these needs. Korean-Africa trade more than doubled over the last decade to nearly $14 billion.

Another speaker at a Washington conference called “The Korean Approach to Africa”, Philippe de Pontet, from the Eurasia Group, described Korea’s approach as in his words “China-light.”

“We are talking about mega investments with real government backing. You dangle badly needed infrastructure work and capabilities for access to resources that Korea’s economy needs. I think it is quite a similar model,” de Pontet said.

But he warned South Koreans not to imitate the Chinese model entirely, such as relying on its own workforce rather than an African workforce to build infrastructure projects, or focusing too much on elite-level relationships to the exclusion of civil society groups and opposition parties.

South Korean companies have also been looking to purchase African land. One example is in Madagascar where a recent 99-year lease by Daewoo Logistics to grow corn and make biofuels on a vast tract of land in exchange for infrastructure projects sparked political discontent and was later cancelled. Many farmers in Madagascar were angered they would be kicked off their land with no compensation.

The South Korean diplomat Kim said his country is now trying to make sure this does not happen. “We had some difficulty in clarifying the ownership and how we divide this land into several pieces, for public good and private goods. But Madagascar, like in other African nations, the relationship between landowners and land on which people are living is not so clear, so I think the first thing we have to do is to survey lands and clarify the ownership of the land first,” Kim said.

Panelists agreed an effective win-win approach for South Korea to tackle more African investments would be through public-private initiatives.

Raymond Gilpin, with the United States Institute of Peace, said this risk-mitigating model would be useful to, for example, build water and power utility projects for Africa’s growing population.

“Korea’s history with PPP over the last 15 years has a lot that could benefit the African continent,” Gilpin said.

PPP is the acronym for public-private partnerships.

South Korea rapidly developed from extreme widespread poverty in the 1960s to becoming the world’s 15th biggest economy with the help of not-for-profit government-backed companies such as Korea Expressway Corporation, Korea Land Development Corporation and Korail.

Visits by South Korean delegations in Africa are often accompanied by newspaper commentary from analysts and quotes from government officials, saying they would like to see the quick Korean expansion model duplicated in their own country. But the commentators often also mention the fact South Korea did not grow from selling its own resources, but rather through its manufacturing and more recently its high-tech sectors.