Capital FM (Nairobi)

26 April 2012

Africa: China Urged to Increase Investment in the Continent

Johannesburg — The Center for Chinese Studies (CCS) in South Africa on Wednesday said China and Africa should create enabling investing environments to promote trade balance.

Chinese exports to Africa are mainly manufactured goods and Chinese imports from Africa consist of mineral resources and raw materials, CCS senior research fellow Daouda Cisse said in an interview with Xinhua.

"In terms of trade we can see imbalances between China and Africa. African policymakers should address these issues by setting up policies to develop the manufacturing sector in Africa, " Cisse told Xinhua.

Based at South Africa's Stellenbosch University, the CCS is the leading African research institution for innovative and policy- relevant analysis of the relations between China and Africa. The centre research activities look on political partnership, economic cooperation and sustainable engagement.

According to the CCS, in recent years, China has contributed to African economic growth, making some African countries the world's fastest growing economies.

The centre says Chinese investments in resources in Africa have been very prominent, but China is not the major investor in heavy industries, such as mining and oil. For oil, for instance, in 2009 China benefited 8.7 percent of Africa's oil exports while the United States and the European Union benefited 33 percent.

Calling for more Chinese investment in Africa infrastructure, Cisse said Africa is still lagging behind for infrastructure development, which is a bottleneck for its economic growth. Foreign investments in different sectors will help improve Africa' s business environment and attract more investors.

Africa's indispensable need for development cannot do without foreign investments, and investment in the infrastructure sector is somehow bridging a gap in Africa, he said.

Cisse said China's Outward Foreign Direct Investments stock to Africa in 2010 reached 13 billion U.S. dollars, and South Africa accounts for 4.15 billion dollars and is the largest recipient of China's FDI in Africa, followed by Angola which is one of the booming economies due to the major contributions that Chinese investments have made in infrastructure, construction, agriculture and energy.

"Infrastructure development, political and economic stability, regional trade and economic integration among different African countries can boost investments in Africa," Cisse told Xinhua.

"Investment is only possible if the receiving country has established political and economic stability and developed basic infrastructure to welcome investors," he added.

"China prefers to target politically and economically stable countries with advanced infrastructure for investments," Cisse said.

The CCS called on African policymakers through regional organizations such as the African Union (AU), the Southern African Development Community (SADC), the Common Market for Eastern and Southern Africa (COMESA) and other regional institutions to set the priorities while dealing with Chinese investments in the continent.

The senior researcher said investments in agriculture can be a way for Africa to diversify its exports to China, which is currently relying heavily on mineral resources.

"Agriculture, services, banking, finance and insurance are part of the new sectors where China invests in the continent. Africa has a huge land potential to develop its agriculture sector.

However, the lack of adequate agricultural techniques and machinery has been barriers for Africa's agriculture sector," Cisse told Xinhua.

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