Chinese factories to be blueprints of future African deals

Paul Jourdan, a mineral policy analyst, said that "Chinese factory-relocation is the way to go for Africa." LUCIE MORANGI / FOR CHINA DAILY

A paradigm shift is set to take place with the planned relocation of Chinese factories to Africa.

Paul Jourdan, a mineral policy analyst from South Africa, said the transfer highlights the need for Africa to steer away from deals focusing on the extractive industries.

By developing value-addition, future treaties should instead drive industrial development, which is behind China's economic success.

"China entered into deals that directed foreign investments into powering existing factories while allowing new ones to be set up," he said. "Technology transfer led to increased job opportunities that is key in reduction."

For Africa to realize it Agenda 2063 and its Sustainable Development Goals, "this is the way to go", said Jourdan, former president and CEO of Mintek, a South African mining, processing and minerals beneficiation science council.

He was speaking on the sidelines of an experts meeting during the African Development Week in Addis Ababa, Ethiopia, where the topic was the need for due diligence by African states before they sign bilateral treaties.

Several countries are facing litigation over the cancellation of contracts that have been deemed unresponsive to prevailing economic challenges.

"What the Chinese are proposing by setting up industries under the Special Economic Zones (SEZ) concept is helping Africa overcome the aid dependency syndrome and own the process of industrialization," Jourdan said.

"This will see investments translated into long-term benefits, unlike when resources are exported," he said. "Africa needs to industrialize. We need to start beneficiation and product differentiation to enable us to enter the global value chain."

A report prepared by the United Nations Economic Commission for Africa (UNECA), titled Investment Policies and Bilateral Investment Treaties in Africa, states that there are more than 2,750 bilateral investment treaties and 2,894 double-taxation treaties globally. Africa claims more than 1,000 deals.

"Sixty-nine percent are agreements with countries located outside the continent, while 31 percent are within the continent," the report stated.

An uptick was recorded in the early 1990s, when Africa pushed for foreign investments to fund economic and social projects.