Chinese investment is reshaping Africa and driving economic growth in the region, with many academics now predicting a future of mass industrialization on the continent. China has been investing in Africa for the best part of a decade now, which has largely remained invisible to the naked eye. However, China is playing an increasingly transformative role in Africa, and strong diplomatic relationships have now been formed between China and Africa due to its continuous investment in the region.
Experts are claiming that China does not see Africa for its poverty, but instead for its massive potential wealth. Chinese businesses firmly believe that Africa can industrialize in the coming generation, hence more and more Chinese conglomerates, enterprises and entrepreneurs are moving their manufacturing operations to Africa in order to exploit the opportunities represented in the region.
China has now become the undisputable largest foreign player in Africa. China is Africa’s biggest trading partner and infrastructure financier, whilst it is also the fastest growing source of foreign direct investment. This has subsequently led to Chinese investors and entrepreneurs to flood into Africa to invest in factories, heavy machinery and equipment. Many cynics could be forgiven for thinking that given Africa’s checkered history of colonialism the region could be once again victim to a foreign power exploiting its resources for profit.
However, in a book written by Irene Yuan Sun entitled The Next Factory of the World – How Chinese Investment is reshaping Africa - Sun argues that China wants to build a global manufacturing powerhouse like it did in its own country. She describes the difference in attitudes between China and the US, the two biggest economies in the world, as ‘striking’. Africa has more people living in abject poverty than any other region in the world despite Western-funded aid program for the last fifty years.
It has long been conceded that a different approach is required for Africa, and there is now genuine hope that Chinese investment in manufacturing and factories in the region will pave the way for the tantalizing possibility of large-scale industrialization for the forthcoming generation of Africans that would completely transform the region as we know it.
In this context, the Forum on China-Africa Cooperation (FOCAC) was established in 2001 and has facilitated trade, political and cultural ties between China and 48 African countries. It is viewed by many as the fundamental component in the continuing development of relations between China and Africa. Commitments to human development, technical assistance, information sharing, increase of trade and infrastructure investments have all been borne out of FOCAC’s meeting.
China has conducted extensive work into forming social and political ties that represent the country’s strategic initiative and objective which is to leave a legacy in Africa that goes far beyond capital investment. China wants to make a lasting, positive and meaningful contribution to the lives of ordinary Africans.
As aforementioned above this presents an opportunity for China to avoid the mistakes of the past. Africa has been victim to many ruthless multinationals that have expanded into the region to plunder its natural resources. Its decision to plunder Africa’s resources combined with its reluctance to invest in its people had a devastating impact on its citizens.
China has been involved in a series of high-profile and groundbreaking developments in Africa over the last number of years. One particularly progressive initiative was the construction of a technology transfer and training center designed to promote the development of solar lighting systems in order to meet the accelerated demand for solar energy in Kenya.
Industry analysts claimed that this clearly demonstrated China’s commitment to Africa suggesting that this project represented much more than just another ‘investment’ for China. The facility provides an environment that enables Kenyan technicians to learn all about the latest solar technology and solutions. The facility helps the technicians learn how to assemble affordable and efficient solar energy systems that can be easily set-up in rural areas and slums.
This sort of social enterprise doesn’t just include the transferring of skills and knowledge, but it also results in higher living standards for some of the poorest in society, whilst in addition to this it helps innovators build a viable business. It is through sustainable long-term investments that China can really create significant economic opportunities.
Another example of China making a long-term sustainable investment that will have long-term societal and economic benefits in Africa is the investment of $600M by Export-Import Bank of China in Angola. Angola, like many other major African economies is reliant on oil. However, the investment will help Angola construct its first deep-sea port in the province, which is strategically important due to its proximity to the Republic of Congo and the Democratic Republic of Congo.
It’s a major infrastructure development which will be located 9km north of the City of Cabinda which is one of the poorest provinces in Angola. However, the project is a public-private partnership, the first in the country’s history and it is set to reshape local, national and regional trade. Some fiscal experts have described the new gateway of global trade between China and Africa as a ‘game-changer’.
Companies such as the Bank of China, Huawei Technologies, the China Road and Bridge Corp and Chuanshan International Mining Co are some of the companies on an extensive list operating in Africa. Major Chinese companies have an increasing brand presence in the region, which provides growth for Chinese products while also creating local jobs and contributing to the local supply chain.
The Porto de Caio project in Angola for example will create more than 30,000 indirect jobs and it has already created approximately 1,800 direct jobs which has subsequently reduced the unemployment rate exponentially, and has contributed to the nation’s GDP through expanded exports and increased tax revenue.
Major public works supported by China will make a great long-term impact as well, with history showing us that it has already done so. Clever independent investors like China’s Eximbank have proven to policymakers and wider stakeholders that the country is in Africa for the long term. China’s faith in Africa as a long-term interest is also borne out in the country’s approach to investments – an approach that is having immediate social impact on the lives of Africans while offering a future of solid investment returns and increased economic development.