Investing in Africa's future

Fund explains the policies and projects that are helping to improve the prospects for continent through cooperation with China

China's trade investment in Africa totaled $85.3 billion (71 billion euros; ￡65.8 billion) in the first half of the year, an increase of 19 percent, says the China Africa Development Fund.

In 2015, Chinese investment in Africa amounted to $35 billion and is expected to reach $100 billion by 2020, the fund says.

Wang Yong, vice-president of the CADFund, said that since the fund's establishment, Africa has seen about $20 billion in foreign direct investment from China.

"All the projects we have invested in have generated about $2 billion of local exports, $10 billion in local tax revenue and have directly and indirectly benefited more than 1 million local people," he said.

Wang spoke at a meeting on August 22, discussing the fund that was created in 2007 to support Chinese investment in Africa. In attendance were 27 African journalists currently in China on a 10-month fellowship, as well as officials from the Chinese Foreign Ministry's information department and the fund itself.

According to Wang, African governments see the fund as a primary vehicle for investment cooperation between China and Africa.

Providing an overview of the fund, Wu Zheneng, the executive director of the fund's research and development department, said the decision to invest in Africa is premised on the confidence that China has in Africa's growing economy, the potential that the continent wields and the enormous potential for Sino-African cooperation, particularly in terms of investment.

"China is among the top five in trade, FDI stock and growth, and infrastructure financing. Our trade reached exactly $220 billion in 2014. Although it dropped in 2015 and 2016 due to the drop in commodity prices, the volume of cargo is not dropping significantly, and its recovery is underway, according to updated data.

"Africa is the most dynamic continent, second only to east and southern Asia. The size of the African economy is now more than $2.5 trillion. Moreover, Africa has a large young population and 60 percent are under 24. There are about 370 million middle class consumers" he said.

The CADFund is China's first equity fund with a focus on investment in Africa, serving as a platform that works with governments, other institutions and civil society organizations, such as the China Poverty Alleviation Center, to tackle poverty in Africa.

It has also been involved in HIV/AIDS campaigns, made donations during the Ebola epidemic in 2014, built platforms of communication for Chinese and African youth and promoted cultural exchanges between China and Africa.

Currently, there are more than 100 projects in 36 African countries receiving support from the market-driven fund. These have created more than 74,000 jobs that have benefited over 1 million people, according to Wu.

He said that as part of the social responsibility of projects, nine roads have been built, as well as four hospitals and four schools, while the fund has contributed more than $20 billion in exports and generated over $10 billion of tax revenue in Africa.

In response to a question on how much investment the fund had made in Ghana since its office opened in Accra in 2011, Jiang Lin, the executive director of the CADFund's operating management department, said the regional office has supervised more than $100 million in Chinese investments in Ghana and West and Central Africa.

Jiang indicated that Ghana's benefit from the fund was mainly through the Sunon Asogli Power Plant, which currently supplies 560 megawatts (its full capacity) of the country's power needs, and an investment in Africa World Airlines, both of which are privately owned and were initiated by Togbe Afede XIV, the president of the Asogli traditional council in Ghana's Volta region.

"The power plant project is our biggest cooperation project with Ghana," Jiang said. "It contributes 20 percent of the power consumption of Ghana and has alleviated the power shortage of the whole of western Africa.

"Second, we are also cooperating with a Chinese company to develop an AWA regional aviation project that also serves to solve the bottleneck of aviation in the region. For CADFund, our mission is to have Chinese enterprises go to Africa and help them to develop there.

"But we are also serving as a bridge so that, if there are some African countries that have the intention and funds to come to China to work with Chinese companies, we can also help to connect them," Jiang said.

The writer is a staff writer for the Ghanaian Daily Graphic and is currently visiting China Daily as part of a fellowship program of the China-Africa Press Centre.

For China Daily

(China Daily European Weekly 09/01/2017 page29)