Dialogue on investing in Africa attracts Chinese enterprises

Chinese investment in Ethiopia, Kenya, Mozambique and Zambia was the subject of a dialogue organized by the International Trade Centre (ITC) at the first China-Africa Economic and Trade Expo (CAETE), held in Changsha, China, on 28 June 2019.

More than 10,000 participants, comprising 3,000 international participants, more than 850 Chinese enterprises and representatives from 53 African countries attended the expo, which took the theme ‘Win-Win Cooperation for Closer China-Africa Economic Partnership’. Held for the first time in Changsha, capital of central China’s Hunan Province, CAETE is set to become a biennial event.

The ITC dialogue, run by its Partnership for Investment and Growth in Africa (PIGA) project, attracted representatives of more than 400 Chinese enterprises interested in investing in Ethiopia, Kenya, Mozambique and Zambia. Representatives of African investment promotion agencies (IPAs), experienced Chinese investors in Africa, and Chinese and United Kingdom risk control and sustainability experts were on hand to contribute to the conversation.

The event began with the international launch of Chinese investment promotion platforms developed by ITC for Ethiopia, Kenya, Mozambique and Zambia. These platforms are one-stop shops for investors willing to invest in these countries and provide all the necessary information to do so successfully.

These launches were followed by three sessions in where participants discussed on the rationale for investing in Africa, the decision-making process, problems and approaches to overcoming them, and how to achieve sustainable investment. Ms. Liu Xin moderated the first discussion, which was broadcast on China Global Television Network (CGTN).

Advice for investors

‘Countries like Ethiopia or Mozambique are an ideal destination for agricultural and agroprocessing projects, with a very favourable climatology, good soil, organic fertilizers and land resources in abundance,’ said Mr. Zhao Yunlong, general manager of Aipu Agriculture Technology Co. Ltd., explaining his reasons for choosing Africa as an investment destination.

He added: ‘As an investment enterprise, the most important concern is political stability and security, and the other one is labour issues. We should never take the mentality of making a profit and go away, but should invest with a long-term perspective. We must give back, try to understand local culture and people, and contribute to the local society. Doing so, issues will be solved.’

Mr. Li Fengfei, deputy general manager of Chenguang Biotech Group Co. Ltd., gave his perspective on dealing with potential difficulties when deciding to invest in Zambia.

‘The first and most important thing is to do adequate research, by yourself and through some third-party professional organizations, like PIGA, which is a very good platform,’ he said. ‘The second is to do field visits to have a deep understanding of local policies. These have to be well prepared with a clear purpose in mind. Finally, allocate and train local and Chinese talents as early as possible.’

Mr. Gu Yan, senior manager of SUMEC Textile Corporation, said: ‘Investment promotion agencies play a very important role in supporting Chinese enterprises in the decision-making process. Chinese enterprises obviously need their support when they visit the country. Go and meet them.’

He then gave the following advice on the approach to take: ‘You can choose to cooperate with local enterprises first, so that you can have a clear understanding of customs, tax law, maritime relations and human resources before starting your own project. To enterprises that have never been to Africa: don’t just listen to what is on the internet; go and look with your own eyes!’

Mr. Andrew Cox, chief of staff and strategy for the Alliance for a Green Revolution in Africa (AGRA), said: ‘Sustainable investment is not just short term, but long term. It has to be aligned with national and sector priorities and be aware of environmental and social standards in the countries.’

Investment leads

After the dialogue, 24 one-on-one meetings took place between IPA representatives and 17 Chinese enterprises looking to pursue greenfield investment projects in the agroprocessing, light manufacturing and pharmaceutical sectors in the four PIGA countries. As a result, new investment leads were identified and decisive progress was made on several investment leads previously generated thanks to PIGA support.

‘We have made huge progress in the development of this deal; every second of this trip is worth it,’ Dr. Roberto Mito Albino from the Zambeze Valley Development Agency said.

‘A Memorandum of Understanding will be signed very soon and will be followed by the visit of the Chinese enterprise in Mozambique. This project has a great development potential and is really embedded in the local population, as 50% of the production will be provided by local producers.’

Chinese President Xi Jinping established CAETE to provide a platform for deepening economic and trade cooperation between China and the African continent and announced its founding at the Beijing Summit of the Forum on China-Africa Cooperation (FOCAC) in September 2018.

The United Kingdom’s Department for International Development (DfID) funded ITC’s PIGA activities at CAETE, which were implemented in partnership with the China-Africa Development Fund (CADFund) and the China Council for the Promotion of International Trade (CCPIT).

CCPIT, CADFund and ITC work together to increase investments in the manufacturing and agro-processing sectors to maximize local development benefits and job creation in Ethiopia, Kenya, Mozambique and Zambia.