Many foreign firms eyeing potential investment in Africa are cognizant of the enormous advantages the continent has – particularly the diversity in natural resources and ravenous quest for affordable commodities.
Report by Alpha Daffae Senkpeni,[email protected]
China’s has grown massive interests in the continent, prompting state-owned and private firms to tap into investment opportunities despite some risks and challenges across African countries.
Already, there are many Chinese companies in Africa, but several more are still looking to expand their presence and with the support of their government’s policy captured in the ‘Go Global’ strategy pushing for globalization, identifying emerging and ideal marketplaces is a prudent move.
In Jiangsu Province, located in the eastern-central coastal region of China, the municipalities of Xuzhou and Nanjing appear ready to enhance trade and sister-city relations with African countries and cities.
About 400 companies from the region have already invested over US$40 billion in Africa, and the province is confident that promoting international trade strengthens cultural relationship between them and African countries.
With a population of almost 80 million people, Jiangsu and several African countries enjoyed staggering trade deals in 2016 with foreign direct investment (FDI) amounting to US$30.2 billion out of which US$5.9 billion was a result of bilateral trade and economic cooperation with African countries.
“We are very confident and looking forward to improving corporations with African countries,” said Fan Zhi Geng, an official of Jiangsu Department of Commerce.
Just last year, deals with Ethiopia resulted to a whooping US$1.2 billion, as 70 companies were setup in two economic free zones, providing jobs for nine million people.
At the same time, a human resource development program for Ethiopians in China is going through its second phase after eight persons were trained in 2016.
In Tanzania, an industrial hub worth US$200 million is now providing jobs for over 2,000 people and contributing over US$100 million to the country’s revenue.
On the other side, imports from Africa are increasing, amounting to US$1.9 billion in 2016 despite turbulent global economic conditions.
Wood products and mineral are amongst some of the resources Jiangsu imports from Africa.
Despite the Chinese massive interest, it is improbable to ignore the disparity in the size of African markets or the disadvantages that come along.
Liberia, for example, is challenged with energy, infrastructure and low skilled manpower, but it still has massive potential of attracting investors due to the country’s increasing need for infrastructure.
A bigger economy like Nigeria is enjoying a US$1.2 million investment from Jiangsu.
Africa: An Investment Destination
Jiangsu Department of Commerce insists the whole of Africa is an investment destination but clarifies that companies make judgment based on the risks, rules and regulations of the targeted market.
Companies like Xuzhou Construction Machinery Group (XCGM), the fifth largest manufacturer of yellow machines in the world, wants to setup plants in Africa but wary of unstable policies and low skilled manpower.
XCGM is hoping that policies makers in African countries can exert more efforts to make their economy favorable for FDI.
However, other firms are still willing to collaborate and formed strong partner on the African soil.
“We are keen to expand our copy rights with local publishers in African countries,” assured Jiangtao She, Vice President of Phoenix Printing Group.
Established in 1954, Phoenix is the largest publishing company in China and the fifth largest in the world – producing over 300 million pieces of books per year.
The company is also into filming and publishes newspapers, magazines and varieties of other materials.
It already has branches and subsidiaries in the United States, Canada, United Kingdom, Russia, Mexico, Chile and several other countries.
For Africa, the company has invested millions in Namibia with a forecast of expanding into multiple media and publishing businesses.
“The Factory in Namibia is only a start; we hope to do more in other African countries,” Jiangtao added.
“We are keenly interested in a (business) module – which is (by) having local partners in the country in order to start a business.”
Phoenix says expanding cultural relations and interests with African countries by printing and communicating values through literature is their core value, and Jiangtao avowed that “Long term exchanges can add to cementing cultural exchanges”.
The company says it is looking for African partners willing to gradually grow from one level to another and subsequently become joint partners.
Construction Company Eyes More Partners
Like the printing house, a giant company also based in the Province has its two eyes on the continent.
As a state-owned firm, China Jiangsu International Economic and Technical Group, LTD (CJI), is firmly amongst the top 225 construction companies in the world.
CJI describes Africa as the “most important market for their company,” looking to continue its 30 years presence on the continent, and increase its existing 22 branches beyond Ethiopia, Botswana, Ghana, Kenya, Malawi, Sierra Leone, Sudan, and Uganda amongst others.
The firm says it enters Africa’s construction industry through international competitive bidding and also gained foreign aid projects from the World Bank and Chinese government. But it has also felt the pinch of unfavorable economic conditions over the past three decades.
“Instability of market conditions affected some of our investment,” said Gu Yuesheng, Vice President of the company.
However, he said “improving cooperation to contribute to Africans’ socio-economic lives drives their movement in the market.”
Sister-City Relations to Strengthen Trade
There’s always leverage when ties are established, and in the case of Nanjing, the capital of Jiangsu Province, trade has being pivotal to strengthening sister-city relations with 17 cities across Namibia, Egypt, Tanzania, Madagascar, Botswana, South Africa, Mauritius, and Congo–Brazzaville.
Medical assistances to these cities have continued for the past four decades, the firm says.
“It is not also the economic trade, but for the cultural exchange and to improve relationship between the two peoples,” said Gao Yan, Director of the Foreign Affairs Office of Jiangsu Provincial People’s Government.
As the former capital city of China before the infamous Chinese civil war which aftermath lead to the leadership of the Communist Party and subsequent preference of Beijing as the country’s new capital, Nanjing is still thriving.
The city wall, build over 600 years ago, still stands firm and on weekends it attracts thousands of tourists from home and abroad.
Also in Jiangsu, there’s Xuzhou City – situated in the northwest of the province with a population of 9.7 million people.
It is a historic cultural city with a stunning manmade wetland park and museums showcasing cultural relics and the king’s mausoleum of the Han Dynastic.
Preserving these antiquities is pretty expensive, but the city has done it meticulously. Xuzhou is also home of the fifth largest yellow machine maker in the world.
The China’s largest in China, and with the company hoping to expand in Africa, this makes relations with African cities probable.
These cities are optimistic of sharing experience with African countries and cities ad hope this can cement a bond between their respective peoples.
“The friendship between Africa and China in recent years has enhance cooperation…, hope the understanding of Xuzhou will enhance the friendship and expand the cooperation,” Feng Qipu, the director general of the city’s information department told reporters.
It is the investment that sets the pace for the relationship with these cities, and when private company invests in an area, the province strengthens the relationship with the host city, Gao added.
He said the media is obligated to help build ties, while suggesting that African entrepreneurs or firms can learn a lot from their Chinese counterpart for the benefit of their respective peoples.
Emphasizing that enterprises on both sides should take the first steps, he also encouraged African countries to present themselves to the Jiangsu people to pave the foundation for potential investment.
Despite these investment moves and China’s “Go Global” or “Belt and Road” policies, some critics say Chinese firms are exploiting Africa, while ignoring socio-political and environmental concerns of people on the ground.
But the Asian economic powerhouse insists that its interest is squarely business-oriented, and optimistic of creating economic growth instead of dependency on aid – an alleged preference of Western countries.
The China’s Ministry of Commerce recently reechoed that it is ensuring Chinese investors in Africa follow a social corporate responsibility module which considers a people to people approach through cultural exchange to accelerate further development.