WATCH: China celebrates its 70th anniversary, so does Africa through investments
CAPE TOWN – With the rapid increase in Chinese investments in Africa, the 22nd century may just see the dawn of the African century. China’s investment in Africa can ultimately create an acceleration in infrastructure as well as African culture. Investment is at the core of Africa’s needs however, Africa receives less Foreign Direct Investment (FDI) than any other region.
Amid a salvo of gun salutes, the People's Republic of China celebrated on Tuesday its 70th birthday with a grand military parade and a 100,000-people mass pageantry, manifesting to the world its full confidence as a socialist country to achieve modernization the Chinese way.
In just several decades, China has done what took developed countries several hundred years to complete. The Chinese people, once mocked as "the sick man of East Asia" and tortured by aggression and turmoil more than a century ago, now see their motherland rising with dignity and ever-growing clout on the global arena.
According to China Investment Global Tracker, between 2005 to 2018, Chinese investments and contrasts within Sub-Saharan Africa reached $299 billion. Investments in Africa have therefore resulted in Chinese President, Xi Jinping vowing to further invest a total of $60 billion into other Africa countries. With further investments taking place, it makes it possible for Africa to ascend into a global power if the continent can successfully navigate issues that are raised by Chinese neo-colonial ambitions.
The most recent white paper on China-Africa Trade and Economic Cooperation stated that between the years 2009 and 2012, China’s direct investment in Africa grew by 20.5%. annually.
Flows climaxed in the year 2008 at US$5.5 billion. The year 2008 was the only year in the past 10 years where Chinese FDI flows to Africa surpassed those from the U.S. The top 5 African destinations of Chinese FDI in the year 2014 were Algeria, Zambia, Kenya, Republic of Congo, and Nigeria. Algeria accounted for more than 20% of all Chinese FDI flows to Africa in the year 2014.
Furthermore, another crucial facet of Chinese investments in Africa is its sectoral concentration. Except for a relatively small part of greenfield investment in manufacturing, most of China’s investment or lending is aimed towards China’s calculated objectives, namely fastening access to resources and using China’s excess scope in construction and transportation.
Along with China’s Belt and Road Initiative, it results in waves of road, rail, ports and energy investments being made in Africa. This, in turn, results in Africa not only connecting internally but externally with the world.
Large companies such as Huawei and China Bridge and Road are not the only Chinese companies reshaping the continent. Associate partner of Mckinsey and author of Chines Investment in Africa further emphasized that“Chinese manufacturing investment in Africa is the best hope that Africa has to industrialise in this generation.”
While China is Africa’s number one trading partner, instead of bringing development assistance, the country has opted to instead provide employment opportunities, training, new technology, and financing assistance.
Africa is the region with the fastest-growing population, however China’s FDI into Africa is not creating as many jobs per unit of investment, on a regular. For such inbound FDI to be satisfying, and consequently continuous, its essence will need to change to create more jobs. That is to say, for Chinese investments to be successful in Africa, it will need to withdraw from concentrating on its investment in natural resources and infrastructure to manufacturing, which is more labour-intensive.