Chinese companies are set to scale up their investments on the African continent and play a bigger part in helping Africa achieve higher and more sustained economic growth.

This was the message from participants at the ‘Forum on Chinese Investment for Sustainable Trade and Economic Growth in Africa’, which explored opportunities for Chinese companies to invest in Africa’s productive sectors as a means to drive export development, economic growth and job creation.

Held in Beijing on 31 May, the Forum was organized in the framework of the Partnership for Investment and Growth in Africa (PIGA), a joint UK-China effort to increase exports and sustainable economic growth in African countries. The Forum brought together more than 200 representatives from business, government, and trade and investment support institutions from Ethiopia, Kenya, Mozambique, Zambia, as well as China and the United Kingdom.

The Forum comprised of a range of high-level speakers, including ITC Executive Director Arancha González, Ms. Xiong Jiuling, Chairwoman, Beijing Sub-council of the China Council for the Promotion of International Trade (CCPIT), Mr. Shi Jiyang, Chief Executive Officer, China-Africa Development Fund (CADFund), and Mr. David Kennedy, Director-General for Economic Development, the United Kingdom’s Department for International Development (DFID).

Pointing out that Africa offers untapped and growing opportunities for businesses and investors, Ms. González said: ‘African small and medium size enterprises (SMEs) are the growth levers to ensure local value addition and job creation. Increased Chinese investment support for African SMEs in the light manufacturing and agro-processing sectors will unlock opportunities to increase exports to regional and global markets. This is what we aim to achieve through PIGA.’

Mr. Yin Zonghua, Vice Chairman of CCPIT, said that China-Africa relations had reached a stage unmatched in history. ‘Mutual and political trust, trade, and economic cooperation between China and Africa have achieved fruitful results and enjoy broader prospects,’ he said. ‘China is Africa’s largest trading partner and Africa has become one of the most important investment destinations for Chinese enterprises. Through practical exchanges, this Forum will create more business opportunities by building a platform for Chinese investments in Africa and deepening pragmatic cooperation between China and Africa’

Mr. Jiyang referred to Africa as ‘a continent of hope’, pointing to its rapid economic growth and the unprecedented opportunities in industrialization. He said: ‘Over the past nine years, CADFund has successfully promoted a number of Chinese enterprises to invest in Africa. Under PIGA, CADFund will continue to play its role as a bridge for China-Africa cooperation, and contribute to work for industrialization and sustainable growth in Africa.’

Mr. Kennedy said: ‘I am delighted to be in Beijing and particularly to see the level of interest and energy generated by this event. It shows the great potential of this kind of triangular cooperation to make a real difference in terms of investment and jobs in Africa’.

‘The audience heard that there is an increasing potential for structural transformation in Africa, to shift from low to high-productivity activities. Manufacturing and agricultural investments anchored in export markets offer great opportunities to make this transition happen. China’s large and growing importance as a trading partner and investor in Africa can help grasp these opportunities,’ he said.

Through the PIGA project, DFID, CCPIT, CADFund and ITC work together to increase sustainable investment for greater integration of SMEs into global value chains in the manufacturing and agro-processing sectors. PIGA aims to maximise local development benefits, including the creation of more, better and inclusive jobs in Ethiopia, Kenya, Mozambique and Zambia.

During the Forum, Ms. González and Mr. Zonghua signed a Memorandum of Understanding (MoU) to strengthen collaboration and to promote trade and investment between China and other developing countries.

‘ITC has been working with CCPIT for many years to support the internationalization of Chinese companies,’ Ms. González said. ‘Today ITC and CCPIT will bring our partnership to the next level and step up support for Chinese companies investing in Africa and for Asian least developed countries to increase their exports China.’

Mr. Zonghua said that CCPIT had always attached great importance to the cooperation and exchange with ITC. ‘As the most important and largest institution for trade and investment promotion in China, CCPIT will work together with ITC under the framework of this MoU to strengthen trade capacities and the internationalization of SMEs, and expand trade and investment between China and other developing countries,’ he said.

---

Opening address by ITC Executive Director Arancha González

Forum on Chinese investment for sustainable trade and economic growth in Africa, 31 May 2016

In 2015, the United Nations agreed to the new Sustainable Development Goals (SDGs), which pay special attention to sustainable economic and inclusive growth as means to promoting development. The achievement of these goals is a shared responsibility between government, private sector including investors and civil society. In addition, most of the 17 goals relate to economic activities as they require significant investment in production, services and infrastructure.

According to World Investment Report by United Nations Conference on Trade and Development (UNCTAD), Foreign Direct Investment (FDI) inflows is expected to rise to USD 1.5 trillion in 2016 and to USD 1.7 trillion in 2017. South-South FDI flows have intensified in recent years. FDI from developing economies has grown significantly over the last decade and now constitutes over a third of global flows.

China is part of the largest outward investing economies. China has doubled its level of foreign direct investment to Africa from 2005-2009 to 2010-2014. Energy, transport and mining however account for over 90% of Chinese investment in Africa. While the light manufacturing and agro-processing sectors offer great opportunities for economic and export growth, they remain largely untapped by Chinese investors.

Africa is the world's second fastest-growing continent in economic terms. Its demographics are also promising. Technology and innovation are on the rise. Africa has become the 2nd most attractive investment destination in the world. Moreover, Africa’s rapid urbanization, expanding middle class and increasing household expenditures are creating millions of consumers. Opportunities for investment are huge.

But investment alone does not automatically guarantee sustainable development. It requires inclusiveness and partnership. Investors have an opportunity and responsibility to go beyond capital investment and make a positive, meaningful impact on the lives of local communities.

Let me start with Inclusiveness: It is about turning investment into local value addition and more jobs, especially for women and youth. It is about anchoring investments into productive sectors, support compliance with international standards and trading these products in international markets. It is about SMEs.

Small and medium size enterprises (SMEs) are the growth levers to ensure investments result in local value addition and job creation. SMEs are the missing link for this growth to be inclusive. When SMEs are able to access new investments, build trade capacity and skills, and when they are empowered to become more competitive and connect to international markets – in a nutshell, when SMEs trade – they generate more and better jobs.

This is what the Partnership for Investment and Growth for Africa (PIGA) aims at: bringing investment into productive sectors in Africa for increasing the competitiveness of African exports in world markets and contribute to employment.Increased Chinese investments supporting African SMEs in the light manufacturing and agro-processing sectors will leverage opportunities to increase exports to the regional and global markets.

Let me now turn to Partnership: investment is all about constant dialogue between investors and SMEs, between the private and the public sector.

PIGA is a strong Partnership between the International Trade Centre, the governments of the United Kingdom (UK), China, Ethiopia, Kenya, Mozambique and Zambia.

I am pleased that these partners, the UK Department for International Development and the China-Africa Development Fund (CADFund), have chosen the International Trade Centre to be their implementing partner for PIGA. PIGA can leverage on ITC’s more than fifty years of experience in delivering trade-related technical assistance, capacity building and trade and investment market intelligence to benefit SMEs, trade and investment support institutions and policymakers.

Since its launch in October 2015, PIGA scoping phase is progressing well. Key results achieved so far: strong ownership from the 4 partner countries and China; Strong partnership established with DFID-China, CADFund and CCPIT; an analysis of the investment opportunities in the four African countries and a second one on their export potential which we will discuss in today's panels; a Network of more than 60 Chinese companies interested in investing in Africa; Business investment linkages initiated with 20 Chinese companies which have already commenced investment discussions in the 4 countries.

The presence of more than 300 companies today demonstrates strong interest and buy-in. My hope is that by the end of the year we can have concrete, even if modest, results to open the door for greater investment deals in the future.

I warmly welcome all participants and wish us all productive and fruitful discussions.