An economic downturn might mean less investment in developed countries with those same countries looking to expand in developing countries – particularly those countries located in Africa. With the China-Africa Development Fund (CADF), China’s large state-owned enterprises (SOEs) are attaining an even stronger hold by placing stakes in South Africa.
The beginning of 2009 saw China launching a three-year investment plan worth an estimated R787 billion focusing on sectors such as energy, transportation, information, telecommunications, infrastructure, mining, agriculture, and manufacturing.
The CADF, established in 2007, was to encourage Chinese enterprises to invest in Africa with an initial investment of $1 billion to establish three to five trade and economic cooperation zones. In March, China and South Africa signed a framework agreement in which the South African branch of CADF is providing assessment for Chinese companies looking to finance power and alternative energy-related projects.
It is expected that by the end of this year the total investment CADF will have committed should reach $700 million, and the actual investment will total about $300 million. Li Jiping, vice-president of China Development Bank, said that CADF has plans to raise $2 billion for expanding business links in China and Africa.
According to the Ministry of Commerce, China’s 2009 direct investment in Africa totals $552 million, up 81%, year-on-year. By the end of 2008, China’s direct investment had reached nearly $50 billion. Currently, there are over 1000 Chinese enterprises approved or filed with the Ministry of Commerce operating in Africa in many fields such as trade, production and processing, resource development, transportation, agriculture, and comprehensive agricultural development.