PIGA project aims to spur African job creation, income growth through increased Chinese trade and investment

Representatives from 90 Chinese companies last week expressed strong interest in investing in Africa, following a seminar on promoting investment in Ethiopia, Kenya, Mozambique, and Zambia. More than 190 businesspeople joined government officials from China and the four African countries at the 25-26 February event in Tangshan, Hebei Province, China.

Organized by ITC, the China-Africa Development Fund (CADFund) and the China Council for the Promotion of International Trade (CCPIT), the seminar was held under the Partnership for Investment and Growth in Africa (PIGA), which aims to promote growth and job creation in Africa by deepening trade and investment ties with China. Funded by the United Kingdom’s Department for International Development (DFID), PIGA seeks to sustainably boost incomes for people living in poverty in Africa through greater integration of small and medium-sized enterprises into global value chains.

The seminar aimed to increase Chinese investors’ awareness about opportunities in the four African countries, and initiate discussions on potential investment projects.

In his remarks to the seminar, Xuejun Jiang, chief of ITC’s Office for Asia and the Pacific, argued that trade and investment with China offered a major opportunity to support Africa’s structural shift from low- to high-productivity activities. “In order to achieve this transition and inclusive growth, Africa needs manufacturing and agricultural investments anchored in export markets,” he said. “This seminar will provide information on investment opportunities in manufacturing and agro-processing sectors in four African countries which will be useful for Chinese companies to make investment decisions in the future.”

Investment promotion officers from the Ethiopia Investment Commission, the Kenya Investment Authority, the Mozambique Investment Promotion Centre (CPI) and the Zambia Development Agency presented opportunities in their countries’ light-manufacturing and agro-processing sectors. Senior government officials from the four countries had earlier sketched out their national investment climates, complemented by presentations from four Chinese companies on their experiences investing in those countries.

Participants from China and the four African countries said the seminar was useful both to build awareness and to establish direct contacts with each other.

Seyoum Mesfin, Ethiopia’s former foreign minister and current ambassador to China, said that “with political commitment on the part of state actors and expert support from such organizations as ITC, DFID, CADFund, as well as CCPIT, this noble initiative of PIGA has the potential to truly assist [Africa] to become the next growth pole for the global economy.”

“Under PIGA’s cooperation framework, CADFund, ITC and DFID will jointly promote the industrialization process in Africa and contribute to the poverty reduction,” added Li Dongwei, who heads CADFund’s Representative Office in Ethiopia.

After the seminar, the investment promotion officers and officials from the four African countries visited one of the largest steel companies in Tangshan, Tangsteel, and discussed potential investments in Africa.

PIGA was officially launched on 22 October 2015 in London. PIGA is a partnership among DFID, CADFund and ITC. Its goal is to leverage Chinese trade and investment ties to develop export-oriented manufacturing in Africa, contributing to growth and poverty reduction. Ethiopia, Kenya, Mozambique and Zambia are the pilot countries for the project’s one-year introductory scoping and design phase. The seminar in Tangshan was sponsored by DFID, the Tangshan Municipal People’s Government, and the CCPIT Hebei Provincial Committee.

---

Background

ITC to support joint China and UK effort to create jobs and growth in Africa

Launched on the sidelines of Chinese President Xi Jinping’s state visit to the UK in October 2015, the Partnership for Investment and Growth in Africa (PIGA) aims at developing export-oriented manufacturing on the continent by helping companies overcome constraints on export success.

Selected to implement the project, ITC will work with the UK Department for International Development (DFID) and the China-Africa Development Fund (CADFund), an independently operated fund that seeks to stimulate investment in Africa by Chinese companies, to spur export-oriented manufacturing.

Among ITC’s key tasks will be to identify and tackle constraints facing exporters such as inadequate market information, weak supply-side capacity, trouble overcoming regulatory barriers within the region and overseas, and obtaining access to finance, both for investment capital and to underwrite trade.

Speaking at the Geneva launch of the PIGA project, ITC Executive Director Arancha González said: “Africa is the new growth frontier. We have all said it. We all know it. We have to continue to ensure that growth delivers for the global good and for Africa itself.”

“Our approach will be market and business driven, focusing on creating more and better jobs in Africa. ITC will work with African, Chinese and British entrepreneurs to increase sustainable investments in productive sectors with high potential for export promotion and job creation in Africa,” she said.

The PIGA project seeks to increase exports and sustainable incomes for people living in poverty in Africa through greater integration into international value chains in agro-processing and manufacturing. For China and the UK, the underlying idea is that enabling sub-Saharan African countries to capture more than their current sliver of global manufacturing would reduce poverty by creating productive jobs and stable growth. As a by-product of the project, the China and the UK hope to strengthen bilateral cooperation and generate useful learning on trade-related investment and development assistance, with a particular focus on SMEs.

Zhou Xiaoming, Deputy Permanent Representative and Minister Counsellor of the Permanent Mission of the People’s Republic of China to the United Nations Office at Geneva and other international organizations, said: “This is an important initiative in addressing some of the critical issues that African countries face. With ITC on board, it adds a new dimension to the joint efforts of China and the UK in helping African countries achieve substantial development.”

Julian Braithwaite, Ambassador and Permanent Representative of the United Kingdom to the United Nations Office at Geneva and other international organizations, said: “This new partnership demonstrates how two donors, the UK and China, can work together with efficient multilateral agencies such as ITC, as catalysts for economic growth and poverty reduction in Africa.”

A preliminary ‘scoping’ phase of the project will focus on Ethiopia, Kenya, Mozambique and Zambia, for a year from November 2015. This work will serve to identify high-impact project activities that will subsequently be implemented and expanded across the rest of the region. Interventions will focus on SMEs in the four countries, with the aim of increasing employment and incomes through enhanced trade and investment.

“The UK and China are both are major providers of foreign direct investment to Africa. And both agree that the private sector must ultimately drive growth. I know this is also the case for Ethiopia, Kenya, Mozambique and Zambia who have all placed SME growth at the heart of their development strategies,” González said.