Partners in a new chapter for Africa
It was crystal clear as the second China-Africa Investment Forum wrapped up in late November at the Four Seasons Resort in Marrakech, Morocco, that the economic partnership between China and Africa was about to begin a new chapter that will be equitable and beneficial for both sides.
This followed expression of keen interest, by the more than 500 highprofile delegates who attended the two-day event, in improving bilateral trade and business relations between the two partners. The delegates from Africa and China were drawn from various fields, including politics, business and academics.
From the discussions, it was evident that, despite Chinese investors being present in every sector in Africa, either traditional or innovative, the relationship between the two partners has not reached its full potential.
According to McKinsey & Co, a worldwide management consulting company, revenues generated in Africa by Chinese companies could increase by 144 percent by 2025, an indication that the time is ripe to start the new chapter of partnership.
Additionally, with more than 1 billion people and competitive labor costs, Africa is seen as epitomizing the future of industry and the perfect place for welcoming the Chinese industry, at a time when global value chains are evolving.
“African states should support their private sector in terms of structure and financing.” PAUL OBAMBI founder and CEO of Sapro Group
The rise of global value chains — the people and processes that are part of production of goods or service as well as the international supply and distribution processes — enables developing countries to become part of the production chain without having to produce a final product. As a result, developing countries can export value-added manufacturing.
To fully exploit Africa’s growth potential in the framework of China-Africa relations, the delegates agreed that there is a need to promote partnerships in new growth-enhancing sectors and to encourage coproduction and local industrial sourcing. This is in addition to creating financial and legal frameworks that promote trade and industrial success, they agreed.
Moulay Elalamy, the Moroccan minister of industry, investment, trade and digital economy, says Chinese and Africans share the same quest for development, and their strategic interests seem to converge. Africa is looking to China in order to realize economic development and job creation, while China needs Africa in order to improve its competitiveness as well as gain access to the market of more than 1 billion people, Elalamy says.
The African population is expected to double by 2025, with one in every five people globally expected to be an African. Urbanization, a growth engine, is also expected to grow significantly. It has been estimated that 50 percent of Africans will be living in cities by 2030.
“Because of its potential and the multiplicity of its needs, Africa is undoubtedly a development force for China,” Elalamy says.
As an economic powerhouse and a strategic global player, China is undergoing economic structural changes, including increased emphasis on domestic consumption.
Additionally, the relocation of part of Chinese industry is seen as becoming increasingly necessary, in efforts to conserve the country’s competitiveness. The growth of the technology sectors and those related to the emergence of the country’s middle class is also booming.
During the 19th National Congress of the Communist Party of China in October, General Secretary Xi Jinping said China was committed to the coordinated development of new types of industrialization, computerization, urbanization and agricultural modernization.
This is in addition to promoting economic globalization, with the aim of participating in it, and developing a highlevel open economy. These structural changes are seen as presenting great opportunities for Africa.
To take full advantage of the opportunities, Elalamy says, Africa should work on industrializing and restructuring its exports, in order to reduce the prevalence of raw materials, which accounts for 80 percent of its exports.
“The China-Africa partnership has reached a maturity stage that allows it to migrate to a more strategic stage, in line with the opportunities and prevailing challenges,” Elalamy says.
Paul Obambi, the founder and CEO of Sapro Group, an advertising company based in the Republic of Congo, says Africa is undoubtedly the next frontier and there is a need to open up the continent to partnerships with China, among other global partnerships.
He says the African partnership with China should focus on the private sector, which he sees as essential for economic growth. The African private sector should also take full advantage of the opportunities in the Chinese market, he adds.
Obambi says policymakers should establish a framework for the partnership that ensures that investments are mutually supported by government policy. Policymakers should also support Africa’s private sector, he says.
“Similarly to the Chinese government, which fully supports its private sector investors venturing into Africa, African states should support its private sector in terms of structure and financing,” Obambi says.
Mustapha Bakkoury, the council president of the Casablanca-Settat region in Morocco, says China is an ideal partner for Africa because the country has a positive trade balance with Africa and has developed technological know-how. This will ensure that the two partners will work toward a win-win situation and greater shared prosperity, Bakkoury says.
Despite the fact that China can serve as an industrial accelerator on the African continent, Bakkoury says there are certain principles that are central to development of any country, including having and valuing resources, human capital and financing. If a country lacks any of these, it must bring a partner like China on board to fill the gap, he adds.
Nevertheless, Bakkoury says, Africa should raise its game and bring itself closer to the development level across the world, which will be facilitated by new technology.
“If Africa is to realize its development potential, it has to provide a more comprehensive industrial policy that allows better evaluation of its natural resources and also capture part of the value-added by-processing, in order to finance its other needs like health, education and infrastructure,” he says.
He says that since Africa consists of a rich variety of countries, Chinese investors should not approach the continent as one territory.
Bakkoury says African diversity should be addressed and t th formed into a sourc c comprehensiveness, exceptional demogra a near future.
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Moulay Elalamy (fourth from left), Moroccan minister of Industry, Investment, Trade and Digital Economy, with Chinese investors at the Second China-Africa Investment Forum in Marrakech, Morocco on Nov 28.