A New Era of Industrialisation
CAIF acts as a bridge in promoting China-Africa industrial cooperation and trade relations
This year marks the 15th anniversary of the establishment of the China Africa Industrial Forum (CAIF). An outcome of the Forum on China-Africa Cooperation (FOCAC), the mechanism has facilitated China-Africa exchanges and engagement in diverse fields. In the past 15 years, CAIF has helped hundreds of Chinese enterprises to invest in Africa, which has speeded up the continent’s industrialisation in terms of manufacturing, technological training and managerial expertise. ChinAfrica spoke to CAIF Secretary General Cheng Zhigang to learn more about how CAIF facilitates China-Africa trade cooperation to support African countries’ industrialisation. Edited excerpts of the interview follow:
ChinAfrica: In the past 15 years, what role has CAIF played in promoting China-Africa industrial and trade relations? What are the major achievements? Cheng Zhigang: CAIF has been committed to the development of China-Africa industrial cooperation and trade relations, integrating the production capacity of industrial parks and promoting the development of industrial chains between China and Africa.
Over the past 15 years, we have promoted ChinaAfrica cooperation in roughly three phases. In the first phase, through various conferences and media coverage, we made efforts in publicity, so that Chinese companies could have a more objective understanding of Africa, and African companies could understand China better, and helped both sides to have a deeper understanding of each other’s politics, economy and culture. In the second phase, we led Chinese companies to visit Africa for on-the-spot inspections and negotiations, and at the same time, invited more African friends to visit China to learn about China’s economic and social development. The third phase involves implementation of projects and industrial cooperation between the two sides.
Over the past 15 years, the forum has held its biennial meetings seven times and Africa Theme Days on the sideline of the China International Fair for Trade in Services six times, and facilitated the signing of contracts for more than 500 projects between Chinese and African enterprises, worth nearly 30 billion yuan ($4.2 billion). We have organised over 100 seminars on investment in Africa, China-Africa financial cooperation and so on. We have released the African Industrialisation Prospects Index Report and the African Business Environment Report every year, and compiled lists such as the Top 100 Recommended Chinese Enterprises in Africa.
Since 2018, CAIF has gradually shifted its focus from holding conferences and consulting services to promoting industrial development and working with African local governments and enterprises on jointly setting up African industrial parks and other entities.
China-Africa industrial parks have created opportunities for the development of the Chinese and African economies. How do you think these parks should be built and operated?
Africa’s industrialisation is inseparable from the industrial parks. At the 2006 FOCAC Beijing Summit, the Chinese government announced measures to strengthen practical cooperation between China and Africa and support the development of African countries, with the construction of the China-Africa economic and trade parks being officially incorporated into the scope of China-Africa economic and trade cooperation. In recent years, Chinese companies have successively invested in, built and begun operating industrial parks in Africa. After more than 10 years of hard work, the parks have entered the “spring” of development.
Insufficient infrastructure is a common problem encountered in the development process of industrial parks in Africa, so the coordinated development of infrastructure and industrial parks is particularly important. The parks should be located in areas with good transportation. They should have clear industrial focus, effective alignment with the host country’s resource endowment and industrialisation strategy and avoid homogeneous competition. When building an industrial park, we must avoid making rash investments. We need to adopt a targeted development strategy of “overall planning and attracting investment first” and should target international investors.
In addition, Chinese financial institutions should boost their presence in Africa to provide enterprises with localised financial services, while strengthening the construction of financial service systems related to exchange rate risks and enriching corresponding hedging products.
With the construction and development of various parks in Africa, the comprehensive services of the parks will become the biggest factor in their competitiveness, and parks with such services will be favoured by more and more enterprises. Currently, CAIF is planning and building the China-Zambia Great Plan Comprehensive Industrial Park, which will be Africa’s first such park.
The development of industrial parks is inseparable from talent cultivation. The parks should strengthen cooperation with local vocational and technical colleges to provide vocational skills training to African youths. This will not only cultivate a large number of outstanding skilled talents for African countries, but also promote people-to-people bonds.
We noticed that you have visited Africa many times, attaching great importance to people-to-people exchanges. Can you share your experience in making friends with Africans?
I have travelled through most of Africa in the past 15 years, and every step I took has been deeply imprinted in my mind. From the initial anxiety about Africa and lack of understanding, I have grown to love the region and have developed unbreakable friendships.
To develop good bonds with African people, it is important to respect their customs and habits, remember their names and favourite foods, and bring them commemorative gifts every time.
Chinese companies have made investments in various sectors, which have improved the livelihoods of African people. However, in Western media, the image of some Chinese companies in Africa is complex and multifaceted. How do you think Chinese companies can better improve their image in Africa?
China has aided and invested in many projects in Africa in the past 20 years. Most of them are public infrastructure projects and have helped to improve African people’s livelihoods, such as transportation, electricity, communications, power stations, etc. Industries and industrial parks have played a definite role in promoting Africa’s industrialisation.
A few Chinese companies investing in Africa may ignore local laws and customs, which has a negative impact on their reputation. However, the vast majority of them invest and operate in accordance with laws and regulations, and many companies have done a lot of welfare work for the local areas, such as building roads and schools.
In terms of making investment in Africa, I stress the importance of the following three points. First of all, companies investing in Africa must carefully understand local laws and regulations and respect local religion and customs. They should try to have a good habit of talking about something they have done, rather than talking about something and not doing it. Secondly, project implementation must follow formal legal procedures, and not rely on personal relationships. Finally, Chinese companies should do due diligence about the investment destination countries and select projects that are aligned with national development priorities.
What are the prospects of economic and trade cooperation between China and Africa? What opportunities and challenges are currently faced by Chinese companies with investment in Africa?
With the rapid growth of Africa’s population and the entry into force of the African Continental Free Trade Agreement, Africa’s consumer market will significantly expand in the future, which will push trade growth. Industrial manufacturing, agricultural processing, housing construction, cultural tourism development, among others, have huge potential. A new wave of investment and factory building in Africa is expected to start within three years. At present, the main challenge of building factories in Africa is the high cost of raw materials and lack of robust supply chains. The solution is to invest in areas with local raw materials, and be connected to industrial parks to solve the problem of supply chains.