The nature of China's investment in Africa is changing, as the global economic crisis opens up new opportunities, writes Stephen Marks. Broad packages bundle infrastructure investment with aid and commodity purchase help Chinese firms enter African markets and gain a foothold. A US$5 billion China-Africa Development Fund will focus on infrastructure and mining, and target industrial parks and commercial agriculture. The Chinese government has said however that it has ruled out outsourcing of food production by investing in overseas farmland.
How will the global economic crisis impact on China’s African involvement? Till now discussion has focussed on whether the impact will be positive or negative. Claims that China’s involvement will continue or even grow have been countered with signs of a scaling down of previous commitments in a number of countries, especially DRC and Guinea.
But some pundits have been going beyond this debate to argue that the crisis is seeing a change in the nature of China’s involvement, in line with the more adventurous perspectives that the crisis is opening up for China globally.
Dr Martyn Davies of the Centre for Chinese Studies at Stellenbosch argues that the crisis will China-Africa Development Fund [CADF], set up to fund Chinese firms investing in Africa. As well as traditional sectors for Chinese investment such as infrastructure and mining, it is also targeting commercial agriculture and industrial parks.
‘There are now four “official” zones that have been endorsed by the PRC government – in Mauritius, Egypt, Nigeria and Zambia. There are many more examples of the emergence of Chinese commercial clusters on the continent in at least eight other African economies. All of these zones are focused on beneficiation and local assembly manufacturing.’ Davies reports.
Riaan Meyer of the China and Africa project at the in Africa. ‘Chinese banks currently focus on financing energy, resources and infrastructure projects in Africa, but I predict they will move into other areas. These banks, especially the Bank of China, are already involved in trade finance,’ he adds. ‘Given the growing Chinese investment and associated presence in Africa, it is the logical next step that they move into other areas of commercial banking.’
Bright Simons, from the Accra-based think-tank IMANI, also sees a
shift in the focus of Chinese financing. ‘Rather than focus on the infrastructure behemoths that earlier Chinese inflows helped to put up, the CADF will emphasise entrepreneurial opportunities in a wide range of sectors where private-sector African operators could engage with their Chinese counterparts under the eagle eye of the state-appointed fund managers’ he predicts.
A shift by the fund to a more hands-on strategy was predicted this week by the CADF’s general counsel Mark Fung. ‘ the potential of cross-border farmland deals in boosting global food supplies and food security – though the conference also approved the idea of a code of conduct for such deals.
The Minister’s statement also appears to be at odds with the finding by the Barcelona-based NGO GRAIN that ‘the Blackstone Group, one of the world’s largest private equity firms [email protected] or comment online at http://www.pambazuka.org/.