|Now is the best time to invest in Africa|
2010/06/29, FOCAC website, Source: China Economic Herald
Reporting from the 1st Conference of 21st Century China-Africa Investment and Cooperation Forum
As a new travel destination, Africa is attracting more and more Chinese tourists. According to statistics, in 2009, 380,000 Chinese tourists visited Africa, growing 18.6% compared to a year ago. And in the first quarter of 2010alone, 126,000 Chinese tourists visited Africa, growing 42% compared to the same period a year ago. Above is city scene of Cape Town, South Africa.
In recent years, the rapidly developing China-Africa relations and increasingly closer China-Africa cooperation have attracted worldwide attention. China-Africa relations have stood the test of many changes sweeping through the world, and continued the strong development momentum. This enduring relationship is based on mutual support, particularly during times of adversity; and has its core in mutual respect and equality; its key being cooperation for mutual benefit and joint development.
Today, the world is undergoing a round of profound transformation and adjustments. China and African countries are all developing countries, facing rare and historic opportunities for rapid development as well as diverse and complicated challenges. Further strengthening China-Africa cooperation for mutual benefit helps both sides to utilize their advantages to achieve joint development.
By: Zhang Zilin, China Economic Herald
Currently, the 2010 World Cup in South Africa is attracting worldwide attention. During this event, as the first Chinese sponsor in World Cup history, Yingli Group is riding a wave of publicity. The Yingli Group chief strategist Ma Xuelu stated at the 1st Conference of 21st Century China-Africa Investment and Cooperation Forum, "The low carbon Photovoltaic technology has huge development potential in Africa; therefore Yingli Group has always given high priority to the African market. Several years ago, we already partnered with other companies and built many Solar Photovoltaic powered telecommunications stations, contributing to telecommunications industry development in Africa. During this World Cup event, we will build solar powered soccer training centers in 20 African countries, to show our support for our African friends".
In fact, along with the rapidly developing China-Africa relations and increasingly closer China-Africa cooperation, there are more and more people focusing on and valuing Africa as a market just like Ma Xuelu. Perhaps for this reason, Wei Jianguo, former Vice Minister of Commerce and Secretary General of China Center for International Economic Exchanges, remarked thoughtfully, "Now is the best time to invest in Africa. If we do not start to invest in and research on Africa in earnest, we will lose out on the rare and historic opportunities coming from the next round of global industry transfer and African cooperation". His view is widely shared by many members of the audience.
Awakening of the "Dark Continent"
One of the themes of this Forum is Awakening of Africa. Yang Guang, president of Institute of Western Asian and African Studies at Chinese Academy of Social Sciences, pointed out that with political stabilization and steady economic development, Africa is becoming a global investment hot spot. Many multinational investment groups are calling it "the last investment frontier in the world".
Lu Shaye, director-general of the Department of African Affairs at Foreign Ministry and secretary-general of the Secretariat of the Chinese Follow-up Committee of Forum on China-Africa Cooperation, also pointed out that the African economy has been keeping its positive development momentum in recent years. Before the outbreak of global financial crisis, African economy had been growing at more than 5% for 5 straight years. Despite the impact of global financial crisis last year, African economic growth slowed down somewhat but still reached 4.6%. It is especially noteworthy that along with rapid economic growth, African countries are paying more and more attention to attracting foreign investment. Many countries have released policy measures to simplify investment approval procedures, provide preferential tax treatment and strengthen infrastructure development, yielding good results. According to statistics, African continent attracted total foreign investment of 57 billion U.S. dollars in 2006, 79.1 billion U.S. dollars in 2007, 86 billion U.S. dollars in 2008, showing a steady growth trend.
Lu Shaye stated that currently the trend of political unity and economic integration in Africa is gaining momentum, especially with the economic integration process in some regions continually moving forward. Hence, the international community is paying more attention to Africa. All valuing Africa's strategic position, natural resources and market potential, the major world powers are thus intensifying their competition there. Lu Shaye said, "Therefore, I personally believe Africa is a continent yet to be fully developed and thus boasting huge potential and offering unlimited business opportunities".
China-Africa Friendship a Precious Asset
Xie Boming, Vice President of China-Africa Business Council, Vice President of All-China Federation of Industry and Business and President of China Foundation for Guangcai Program, pointed out since the founding of People's Republic of China, China-Africa trade continued to grow. The trade growth accelerated dramatically during the two 8-year periods, namely during the 8 years from 1992 to 2000, when China-Africa trade grew from 1 billion U.S. dollars to 10 billion U.S. dollars; then during the 8 years from 2000 to 2008, in which China-Africa trade grew from 10 billion U.S. dollars to 106.8 billion U.S. dollars.
In the meantime, Chinese investment in Africa also continued its steady growth. Even after the outbreak of global financial crisis, the first three quarters of 2009 saw Chinese non-financial investment to Africa reaching 875 million U.S. dollars, growing 77.5% compared to the same period a year ago. Liang Guining, Vice Director of Overseas Investment Research Center at Chinese Academy of International Trade and Economic Cooperation, stated that in China's overseas investment destinations, Africa enjoys the highest investment growth rate, around 30%. "And China's investment to Africa will continue to grow, perhaps adding another investment of 30 million U.S. dollars in the near term to help African development", according to analysis by NaHua, Vice Director of United Nations Development Programme's China mission.
The speedy and in-depth development of China-Africa cooperation has attracted more and more attention from the international community. In addition to the widespread approval of China-Africa cooperation, there is also some chatter on China-Africa cooperation from the Western media. Lu Shaye emphasized, "China-Africa cooperation did not start only in the last a few years. Rather it has gone through a journey of more than half a century, and become an exemplary model for South-South cooperation. By now, China has provided more than 1,000 aid projects to more than 50 African countries, in various fields related to Africa's economic development and social well-being. It is particularly noteworthy that at Forum on China-Africa Cooperation Beijing Summit 2006 and the 4th Ministerial Conference last year, China announced two series of measures to support African development and facilitate China-Africa practical cooperation, and has thus won acclaim from African countries".
Lin Yi, secretary general of The Chinese-African People's Friendship Association, told a very popular "story" in Africa. An African child asked mom, "Where does God live?" Mom replied, "What do you think?" The child said, "God created all things in the world, and there are so many things in our home that are made in China, so I think God must live in China".
Lin Yi believed that since the founding of People's Republic of China, generations of Chinese leaders had always valued China-Africa cooperation on the basis of mutual benefit. These efforts have cultivated a deep friendship. "Today throughout Africa, Chinese people are treated with respect and welcome, much more so than in Europe and America. It is possible to say the 50 years of China-Africa friendship is the most precious asset. How to best leverage this asset is something worthwhile for our enterprises and investors to think about and study on.
She called on Chinese enterprises investing or doing business in Africa to have a longer-term view, and exercise more social responsibility. "This is not just to win a good reputation for the enterprise, but also for China. And from a long-term perspective, this is also very good for our development in Africa".
Investment Should Go Beyond Energy and Resources
Another theme of this Forum is Investment Innovation. Compared to innovations in specific investment techniques and methods, innovation in investment destinations is receiving more attention from many experts and scholars.
As pointed out by Liang Guining, when speaking of investment in Africa, the first thing many people think of is the rich mineral resources in Africa. Indeed, this has been the consistent priority area of Chinese investment in Africa. However, it is worthwhile to note that with changes in global economic landscape, developed countries are also paying increasing attention to this area, showing more and more interest in investment participation. We can expect to see the competition in this area to increasingly intensify in the future.
Liang Guining once participated in compiling Overseas Investment Guide by Country or Territory, and is very familiar with situations in African countries. He noted the development plans of African countries for the next one or two years, or even up to five years, would focus on infrastructure improvements through building roads and hydro power plants, in order to improve these countries' economic structure. This implies enormous business opportunities. In addition to infrastructure development, Africa consists of mostly agricultural countries, especially along the coast. Hence African countries also hope to develop their agriculture including animal husbandry and have issued some supportive policies in these areas. "Therefore, I personally believe agriculture development should be a focus area for Chinese enterprises going to Africa, plus this is also something relatively easy to work on".
Regarding agricultural development in Africa, Yang Haomin, chairman of Shaanxi Agriculture Group (SAG), has first hand experience. Yang Haomin said upon the invitation of the Ministry of Agriculture of Cameroon, he visited Cameroon in 2009 on a tour of observation, which opened the chapter of cooperation between SAG and Cameroon. "My greatest impression from this trip was that African continent is so rich in resources, with enormous development potential. The rich resources include the local solar resources, heat resources, water resources, land resources and human resources etc. Yet these resources have not been developed or utilized, and the locals still spend hundreds of millions of U.S. dollars importing rice. It is like begging for food with a gold bowl".
Yang Haomin said SAG has been conducting development research in Cameroon for 4 plus years. Just with rice research, SAG has tested 100 species, with the highest per mu yield of 700 kilograms (mu is a unit of area equivalent to 0.0667 hectares). Due to local climate and other conditions, it is very easy to grow two crops ofrice a year there. The SAG also tested cassava, with per mu yield of 2.5 to 3 tons and starch content reaching 25% to 30%. Basically, growing one mu of cassava can yield about 1 ton of alcohol each year. "With widespread dissemination, this will have significant implications for China, which needs more and more resources".
Ma Xuelu also noted Yingli Group not only has solid strength in low carbon Photovoltaic technology, but also has rich application experiences. For example in China, Yingli Goup has successfully provided electricity for lighting for farmers and herders in remote areas not yet reached by the electricity grid. This solar application won acclaim from the local people, and was called Sun on Cattle's Back. There are many such areas in Africa, so this successful model can certainly be "cloned". In addition, Yingli Group can also provide outdoor solar lighting system, indoor energy-efficient LED system and other technologies and products, helping Africa to better take advantage of solar power. "I believe we will have very bright prospect for cooperation in this area".