The China-Africa Business Council and the China-Africa Development Fund have chosen to set up 2 new funds – one for commercial ventures and the second for mining activities – sometime this year as a means to boost China’s investment in Africa.
Each fund is said to raise $1 billion in its first phase from member corporations and the CADFund, China’s largest private equity fund focusing on African investments. Later this month offices for the funds will be established in Beijing. Instead of only focusing on building infrastructure projects such as roads, bridges, ports, and stadiums throughout the continent, China has been seeking different ways to invest within the continent.
The changing global investment environment and the lingering debt crisis in the Eurozone have encouraged main economies such as the United States, the United Kingdom, France, India, and Japan to shift their investment focus from traditional markets in Europe and Asia to Africa.
African countries have good opportunities to capitalize on high international commodity prices, their young energetic labor forces ,and abundant resources. Africa also has the opportunity of taking advantage of the global investment trend to seek solutions to poor levels of infrastructure, high unemployment, and poverty by accelerating transformation through commodity-based industrialization. Did you know that during this transition that Africa is experiencing, more Chinese businesses will move their factories to Africa to help the continent upgrade its technological ability?
To further strengthen cooperation with Africa, the Chinese government has consistently encouraged capable State-owned and private companies to invest there. It has also supported the African Development Bank and the West African Development Bank by injecting funds, canceling debts, and establishing joint funds for a number of manufacturing and construction projects.
China-Africa trade stood at nearly $200 billion last year, while Chinese investment in Africa has reached $17 billion, according to the department of African affairs at China’s Ministry of Foreign Affairs. The 198 companies, including Chongqing-based automobile producer Lifan Group, Guangdong-based shoemaker Huajian Group and power supplier Shenzhen Energy Corporation, have so far invested $1.1 billion in the 32 African countries and have plans to invest an additional $5 billion over the next three years.
The latest China-Africa ventures to be created include a partnership between Chinese cement producer Tangshan Jidong Cement Co Ltd and household appliance manufacturer Hisense Group, who have created a cement plant with 1 million tons of annual production capacity, and a home appliance factory that will be operational in South Africa this month.
Elsewhere, a cotton spinning industrial park in Tanzania and an iron mine that produces 1 million tons per year in Liberia, will be launched in the second half of this year.