As China Prepares To Ramp Up African Investment By $2.4B, Obama Shrugs Off Competition
July 2, 2013 5:26 AM EST
An investment vehicle called the China-Africa Development Fund is cementing the partnership between a fast-developing continent and the world’s second largest economy by infusing $2.4 billion into African projects, according to fund president Chi Jianxin.
The China-Africa Development, or CAD, Fund “operates independently through market-based mechanisms and bears risks on its own,” Chi said to China Daily. “In comparison with funds managed by Western companies or governments in Africa, we are more inclined to pay attention to medium-term and long-term investment, because African countries are at a different stage of development, industrialization and urbanization.”
China became Africa’s largest bilateral trade partner in 2009; the total volume was valued at $198.5 billion in 2012 and is expected to surpass $380 billion by 2015. This strengthening relationship is principally fueled by China’s need for energy resources to fuel its own growth, but resource extraction is not Beijing’s only goal. Africa has great potential as a consumer market, something China could help to develop with smart investments across a range of sectors – and that’s just what CAD Fund is there for.
CAD Fund is China’s largest private equity fund to deal exclusively with Africa. It was founded in 2007 and got its initial funding from the China Development Bank. Its purpose is to improve the African business environment by spurring development on the continent, which will decrease risk for Chinese investors and building a lucrative market for Chinese producers.
The total level of Chinese investment in Africa is notoriously difficult to track; Beijing officials have said that foreign direct investment (FDI) into Africa was worth $14.7 billion in 2011, but those estimates are generally agreed to be rather on the low side. The value of the total inflow of funds -- including FDI, developmental aid and export credits -- have reportedly exceeded $30 billion each year for the past five years. The CAD Fund alone has already invested about $1.6 billion in dozens of projects across the continent.
As Chinese funds flow into Africa, other big economies might be falling behind. U.S. President Barack Obama is visiting Africa this week, but has been criticized for failing to pursue investment and trade opportunities with African countries.
At a press conference in South Africa this weekend, Obama responded with equanimity to a question about China’s growing influence on the continent. “I don't feel threatened by it. I feel it's a good thing," he said, according to Reuters. "I want everybody playing in Africa. The more the merrier."
Africa does indeed stand to benefit from Chinese investments, as long as they are distributed in a fair, inclusive and transparent manner. But that may leave superpowers like the United States in the dust as entities like CAD Fund continue to drive mutual growth for China and the African continent, home to six of the top-ten fastest growing economies on earth.
"Even though strong growth in Africa can be gauged from its growing demand for resource and agriculture development, its huge potential for agricultural products processing, electronic products, garments, construction materials, tourism, automobile and aviation industries are all offering new market growth points to Chinese investors," said Chi.
To contact the editor, e-mail:
Most Popular Slideshows
- Kristen Stewart Moving On With Nicholas Hoult, Jennifer Lawrence Dating Chris Martin – Reports [PHOTOS]
- Kate Middleton Suffocated in Kensington Palace, Queen Elizabeth Reported War With The Duchess [PHOTOS]
- 2014 MTV Video Music Awards: Everything To Know [PHOTOS]
- Chris Martin Dating Reports: Jennifer Lawrence Vs Gwyneth Paltrow [PHOTOS]
Join the Conversation
- Russia Demands Ukraine Release Communications With Doomed Malaysia Airlines MH17, Preliminary Report On Investigations Out This Month
- Ebola Update: Liberian Forces Receive Shoot Orders Against People Trying to Cross from Sierra Leone Border
- Historic First Time: Catholic Pontiff Pope Francis Supports Military Intervention Against ISIS In Iraq
- Chinese Airlines Receives Lawsuit for Rejecting HIV-Positive Passengers
- Travel Alert: Canada Issues Warning Against Chikungunya Disease in Caribbean
- Robin Williams Goodbye Video Hoax: Facebook Users Warned of Celebrity Suicide Exploitation
- US, Canada Labour Activists ‘Block the Boat for Gaza’ Succeed in Blocking Docking of Israeli Ship in California Port
- 4 Killer Android Features Apple Fans Would Love to Get Come the iPhone 6 Release Date
- ISIS Posts Graphic Beheading Video of US Journalist James Foley
- Larger 5.5inch iPhone 6 Variant Will Roll Out in the Market as ‘iPhone 6L’
- Nexus 6 Release Date Dilemma with Motorola Shamu Details Pointing to Better Smartphone and Killer Features
- After James Foley, ISIL Threatens to Behead Another American Journalist Steven Sotloff