China-Africa De­vel­op­ment Fund celebrates its 10th an­niver­sary

The Star Early Edition - - BUSINESS REPORT -

Con­tent supplied by the China-Africa De­vel­op­ment Fund In­ter­view with Hu Huaibang, who is the chair­per­son of the China De­vel­op­ment Bank.

THE China-Africa De­vel­op­ment Fund, spon­sored by China De­vel­op­ment Bank, en­coun­ters its 10th an­niver­sary on June 26th, 2017. This fund, the first nonequity in­vest­ment fund in China, is an im­por­tant mea­sure within the frame­work of the Fo­rum on China-Africa Co­op­er­a­tion. For a decade, the China-Africa De­vel­op­ment Fund, guided by de­vel­op­ment fi­nanc­ing, has made use of ad­van­tages in com­pre­hen­sive in­vest­ment and fi­nanc­ing. It has con­trib­uted to China-Africa eco­nomic and trade co­op­er­a­tion in a mar­ket-ori­ented way and in­vested more than $4.4 bil­lion in 36 African coun­tries. This fund may en­cour­age Chi­nese en­ter­prises to in­vest over $20 bil­lion and be­come the main plat­form for Chi­nese in­vest­ment in Africa. It also has gained valu­able ex­pe­ri­ence in ac­cel­er­at­ing Africa’s in­dus­tri­al­iza­tion process by in­vest­ment and pro­mot­ing the Belt and Road Ini­tia­tive.

Re­porter: Africa plays an im­por­tant role in the Belt and Road Ini­tia­tive, what do you think of the re­la­tion­ship be­tween them?

Hu Huaibang: The Belt and Road Ini­tia­tive is a “China So­lu­tion” for pur­pose of pro­mot­ing the long-term de­vel­op­ment of the world and eco­nomic glob­al­iza­tion. Coun­tries along the Belt and Road will gather to build an open, in­clu­sive, bal­anced and mu­tual-ben­e­fit eco­nomic co­op­er­a­tion frame­work.

It is con­ducive to pro­mote or­derly flow of fac­tors, al­lo­cate re­sources ef­fi­ciently and deepen mar­ket in­te­gra­tion. This will, hence, cre­ate pos­i­tive fi­nanc­ing out­comes and bring new im­pe­tus into world’s eco­nomic growth and also con­trib­ute to a more bal­anced global econ­omy. The Belt and Road runs through Europe,

Asia and Africa. Africa is a his­tory and nat­u­ral ex­ten­sion of the Mar­itime Silk Road, and new con­no­ta­tions and op­por­tu­ni­ties has been in­jected into its co­op­er­a­tion with China through the Belt and Road Ini­tia­tive. Within the frame­work of the Belt and Road Ini­tia­tive, China mainly fo­cuses on in­fra­struc­ture con­nec­tiv­ity and pro­duc­tive ca­pac­ity co­op­er­a­tion, and also pushes for­ward the de­vel­op­ment of coun­tries in­volved.

Mean­while, it strength­ens the ca­pac­ity of those na­tions to de­velop on their own by di­rect in­vest­ment. These mea­sures cre­ate job op­por­tu­ni­ties and tax rev­enue, which is ur­gently needed by Africa to­day. In ad­di­tion, this is where the Belt and Road Ini­tia­tive fits well with the de­mands of African coun­tries to ac­cel­er­ate in­dus­tri­al­iza­tion and achieve sus­tain­able de­vel­op­ment.

Re­porter: As China’s big­gest for­eign in­vest­ment and fi­nanc­ing co-op­er­a­tion bank and the world’s largest de­vel­op­ment fi­nan­cial in­sti­tu­tion, what role did China De­vel­op­ment Bank play in sup­port­ing China-Africa eco­nomic and trade co-op­er­a­tion, as well as im­ple­ment­ing the Belt and Road Ini­tia­tive in Africa?

Hu Huaibang: Fi­nanc­ing is of great im­por­tance for the Belt and Road Ini­tia­tive, es­pe­cially in some key projects. Many ma­jor projects re­quire a large num­ber of funds, long in­vest­ment cy­cles but their re­turns on in­vest­ments are low. Thus, we should pro­vide them with long-term, suf­fi­cient, sta­ble and low-cost funds for sup­port­ing.

Mean­while, the coun­tries along the Belt and Road, par­tic­u­larly in Africa, are mostly emerg­ing economies and de­vel­op­ing coun­tries. These na­tions have been suf­fered with in­suf­fi­cient de­vel­op­ment ex­pe­ri­ence and in­ad­e­quate fis­cal ca­pac­ity. Sim­i­larly, their mar­ket mech­a­nism and credit en­vi­ron­ment has yet to be per­fected. As a re­sult, the en­try of fi­nan­cial cap­i­tal was re­stricted and fi­nanc­ing meth­ods are needed for mar­ket and credit sys­tem construction.

More­over, we will fo­cus on solv­ing bot­tle­necks that Africa faces in its course of de­vel­op­ment to pro­mote the es­tab­lish­ment of ef­fec­tive and sus­tain­able fi­nanc­ing mech­a­nisms. Over years, China De­vel­op­ment Bank has been ad­her­ing to the prin­ci­ples of com­ple­men­tary ad­van­tages, mu­tual ben­e­fit and com­mon de­vel­op­ment. To pro­mote bi­lat­eral and mul­ti­lat­eral eco­nomic and trade co­op­er­a­tion, we took ad­van­tages of com­pre­hen­sive fi­nanc­ing to proac­tively ex­pand in­ter­na­tional co­op­er­a­tion, en­cour­aged and sup­ported Chi­nese en­ter­prises to “go global”. Africa is one of the key ar­eas in in­ter­na­tional busi­ness of China De­vel­op­ment Bank.

By the end of 2016, China De­vel­op­ment Bank has al­ready in­vested and fi­nanced more than $55 bil­lion in 43 African coun­tries, in ar­eas such as agri­cul­ture, elec­tric­ity, man­u­fac­tur­ing, re­source ex­ploita­tion, com­mu­ni­ca­tion, roads, avi­a­tion, ports, ur­ban pub­lic fa­cil­i­ties and peo­ple’s liveli­hood, etc. We pledged an in­vest­ment of $4.4 bil­lion to en­cour­age Chi­nese firms to in­vest over $20 bil­lion in Africa. Be­sides, we ded­i­cated to boost eco­nomic growth and so­cial de­vel­op­ment of African coun­tries, and also con­trib­uted to ex­pand the Belt and Road Ini­tia­tive and deepen China-Africa prag­matic co-op­er­a­tion.

Re­porter: As the prac­tice of de­vel­op­ment-ori­ented fi­nance, China-Africa De­vel­op­ment Fund is our first fund co­op­er­ated with Africa and has been op­er­at­ing for 10 years. How do you eval­u­ate the role China-Africa De­vel­op­ment Fund plays in construction of the Belt and Road Ini­tia­tive?

Hu Huaibang: China-Africa De­vel­op­ment Fund is one of the “Eight Mea­sures” an­nounced by Chi­nese gov­ern­ment on the Bei­jing Sum­mit of the Fo­rum on China-Africa Co­op­er­a­tion. It aims to en­cour­age and sup­port Chi­nese en­ter­prises to in­vest in Africa. The China-Africa De­vel­op­ment Fund in­au­gu­rated as a sub­sidiary of China De­vel­op­ment Bank in June 2007.

For past 10 years, China-Africa De­vel­op­ment Fund has been pro­vid­ing cap­i­tal fi­nanc­ing for in­vest­ment projects in Africa, shar­ing risks with part­ners.

It re­al­ized sus­tain­able op­er­a­tion of those projects and formed a two-wheel drive ad­van­tage in loan busi­ness of China De­vel­op­ment Bank. China-Africa De­vel­op­ment Fund has be­come the main plat­form for Chi­nese en­ter­prises to in­vest in Africa and gained valu­able ex­pe­ri­ence for the Belt and Road Ini­tia­tive. The in­flu­ences ex­erted by China-Africa De­vel­op­ment Fund on the construction of the Belt and Road Ini­tia­tive is il­lus­trated as fol­lows.

First, cre­at­ing new in­no­va­tive mod­els, set­ting good ex­am­ples and strength­en­ing pol­icy com­mu­ni­ca­tion. As the first mul­ti­lat­eral for­eign in­vest­ment co­op­er­a­tion fund es­tab­lished be­tween gov­ern­ments China-Africa De­vel­op­ment Fund up­holds the philoso­phies of “strate­gi­cally re­quired, fi­nan­cially bal­anced, and de­vel­op­men­tally sus­tained” hence it links the in­vest­ment and fi­nanc­ing model to eco­nomic and so­cial de­vel­op­ment plan of African coun­tries in a pos­i­tive way. It ex­plores and forms an ef­fec­tive model for China-Africa strate­gies in a mar­ket-ori­ented way. This sets a stan­dard for estab­lish­ing sim­i­lar for­eign co­op­er­a­tive in­sti­tu­tions un­der the the Belt and Road strat­egy.

Sec­ond, solv­ing bot­tle­necks that Africa faces in its course of de­vel­op­ment and en­hance fa­cil­i­ties con­nec­tiv­ity. China-Africa De­vel­op­ment Fund has in­vested in fields of ports, avi­a­tion, elec­tric­ity un­der the Three Net­works and In­dus­tri­al­iza­tion strat­egy. The to­tal in­stalled ca­pac­ity of Ghana power plant project, for ex­am­ple, ac­counts for over 20% of na­tional elec­tric­ity in Ghana. This has al­le­vi­ated the power short­age of the coun­try and won high praise from the Pres­i­dent of Ghana. Africa World Air­lines project, the first pas­sen­ger air project in­vested by Chi­nese en­ter­prises in Arica, has also fos­tered the con­nec­tiv­ity be­tween west­ern African coun­tries. We jointly es­tab­lished China Over­seas In­fra­struc­ture De­vel­op­ment and In­vest­ment Cor­po­ra­tion with do­mes­tic en­gi­neer­ing giants to pro­mote in­fra­struc­ture construction in Africa.

Third, im­ple­ment­ing pro­duc­tive ca­pac­ity co-op­er­a­tion first to en­sure a free flow of trade. Based on de­mands of in­dus­tri­al­iza­tion in Africa, China-Africa De­vel­op­ment Fund en­cour­ages do­mes­tic high-qual­ity pro­duc­tion ca­pac­ity - rang­ing from au­to­mo­bile, elec­tron­ics, ma­chin­ery, ce­ment to glass in­dus­try to in­vest there. Every year, we pro­vide African mar­ket with 11 thou­sand mid­dle-heavy trucks, 300 thou­sand air con­di­tion­ers, 450 thou­sand re­frig­er­a­tors, 560 thou­sand tele­vi­sions and 1.6 mil­lion tons of ce­ment to con­tin­u­ously boost eco­nomic growth in Africa. So as to gather pre­cious ex­pe­ri­ence in in­ter­na­tional ca­pac­ity co­op­er­a­tion.

Fourth, sup­port­ing de­vel­op­ment of Africa by fi­nanc­ing and in­tel­lect rais­ing and pro­mot­ing its cap­i­tal fi­nanc­ing. Up to now, China-Africa De­vel­op­ment Fund has de­cided to in­vest 90 projects in 36 African coun­tries at a price of $4.4 bil­lion and $3.2 bil­lion were ac­tu­ally in­vested in ar­eas such as equip­ment ca­pac­ity, in­fra­struc­ture, en­ergy min­er­als, in­dus­trial park and agri­cul­ture. This will bring Africa more than $20 bil­lion in in­vest­ment. Over the past 10 years, China’s di­rect in­vest­ment stock in Africa surged from $2.56 bil­lion in 2006 to $34.69 bil­lion in 2015.

Fifth, stim­u­lat­ing de­vel­op­ment of peo­ple’s liveli­hood and strength­en­ing peo­ple-to-peo­ple con­nec­tiv­ity. Based on the ac­tual de­vel­op­ment of African coun­tries, China-Africa De­vel­op­ment Fund plays an ac­tive role in sup­port­ing the de­vel­op­ment of lo­cal in­dus­trial projects, es­pe­cially in some weak ar­eas such as agri­cul­ture, forestry and small and medium en­ter­prises. This ef­fec­tively ac­ti­vates the vi­tal­ity of sub­stan­tial econ­omy, cre­ates job op­por­tu­ni­ties and im­proves peo­ple’s liveli­hood. Cot­ton Plant­ing projects in Malawi, Mozam­bique and Zam­bia, for in­stance, al­lowed 20 thou­sand farm­ers to in­crease their in­come by adopt­ing “com­pany + farmer” pat­tern. Sim­i­larly, the Suez project in Egypt has at­tracted a to­tal of $950 mil­lion in in­vest­ment and cre­ated nearly 2000 job op­por­tu­ni­ties lo­cally.

Re­porter: In the process of China-Africa in­vest­ment, how did China-Africa De­vel­op­ment Fund pur­sue both right­eous­ness and ben­e­fits and ful­fil its so­cial re­spon­si­bil­i­ties?

Hu Huaibang: Since founded, China-Africa De­vel­op­ment Fund has been ad­her­ing to the co­op­er­a­tive prin­ci­ples of sin­cer­ity, real re­sults, affin­ity and good faith and im­ple­ment­ing proac­tively the brand-new co­op­er­a­tive con­cept of right­eous­ness and ben­e­fits. We have been em­pha­siz­ing on so­cial ben­e­fits gen­er­ated by in­vest­ment in Africa. Mean­while, to pro­mote mu­tual-ben­e­fit part­ner­ship with Africa, we also de­voted to re­in­force cul­tural ex­changes with African coun­tries and guide the lo­cals to form a ra­tio­nal cog­ni­tion to­wards in­vest­ment com­ing from China.

First, im­prove eco­nomic “blood-mak­ing” ca­pa­bil­ity of African coun­tries through in­vest­ment and fi­nanc­ing. For a decade, con­bin­ing the devel­op­men­tal de­mands of African coun­tries, China-Africa De­vel­op­ment Fund has en­cour­aged Chi­nese en­ter­prises to in­vest in Africa and helped to solve the three bot­tle­necks - in­ad­e­quate in­fra­struc­ture, lack of pro­fes­sional and skilled per­son­nel, and fund­ing short­age. This speeded up the process of in­dus­tri­al­iza­tion and agri­cul­tural mod­ern­iza­tion, and sup­ported the re­al­iza­tion of a sus­tain­able de­vel­op­ment in Africa.

Sec­ond, in­sist on re­spon­si­bil­ity-ori­ented in­vest­ment and ful­fil so­cial re­spon­si­bil­i­ties by in­vest­ing projects in Africa. Hav­ing been putting into op­er­a­tion, all in­vest­ment projects will cre­ate ad­di­tional in­come of 2 bil­lion dol­lars in ex­port and 1 bil­lion dol­lars in tax rev­enue. This will ben­e­fit the lo­cals di­rectly. Ac­cord­ing to in­com­plete sta­tis­tics, in ad­di­tion, projects in­volved has pro­vided lo­cal com­mu­ni­ties with a grow­ing body of pub­lic fa­cil­i­ties in­clud­ing 9 high­ways (ap­prox­i­mately 500 miles), 4 hos­pi­tals and 9 schools. These achieve­ments have re­ceived wide­spread praise from the se­nior gov­ern­ment of­fi­cials and all walks of life in Africa. Third, make joint ef­forts with gov­ern­ment agen­cies, part­ners and so­cial forces to ful­fil so­cial re­spon­si­bil­i­ties. For ex­am­ple, China-Africa De­vel­op­ment Fund co­op­er­ated with or­ga­ni­za­tions in­clud­ing China In­ter­na­tional Poverty Re­duc­tion Cen­ter to al­le­vi­ate poverty in Africa. And it also or­ga­nized pub­lic ben­e­fit ac­tiv­i­ties such as “In­creas­ing Love for De­creas­ing AIDS” to build a plat­form for cul­tural ex­changes be­tween young peo­ple of two coun­tries. In 2014, it do­nated 450 thou­sand dol­lars, on be­half of China De­vel­op­ment Bank, to Liberia, Guinea and Sierra Leone the worst-af­fected ar­eas of the Ebola cri­sis, so as to meet their emer­gency needs and sup­port their ef­forts to over­come the epi­demic and re­build their homes as early as pos­si­ble.

Re­porter: As an im­por­tant fi­nan­cial force in China-Africa co­op­er­a­tion, what new mea­sures and plans will China De­vel­op­ment Bank and China-Africa De­vel­op­ment Fund take to en­hance the China-Africa eco­nomic and trade co­op­er­a­tion?

Hu Huaibang: The Africa con­ti­nent en­com­passes now the largest num­ber of de­vel­op­ing coun­tries in the world, China is the world’s largest de­vel­op­ing coun­try and the two coun­tries have al­ways be­longed to a mu­tu­ally ben­e­fi­cial com­mu­nity of shared fu­ture. Next, we will make use of our com­par­a­tive ad­van­tages in plan­ning and coun­sel­ing and serve as a fi­nan­cial bridge to ad­vance construction of the Belt and Road Ini­tia­tive.

First, we will ac­tively im­ple­ment China-Africa “Ten Co-op­er­a­tion” plans and ef­fec­tively al­lo­cate 60 mil­lion dol­lars, an­nounced by Pres­i­dent Xi Jin­ping at the Fo­rum on China-Africa Co-op­er­a­tion (FOCAC) in 2015. We will take ad­van­tage of China-Africa De­vel­op­ment Fund and other small and medium en­ter­prises lend­ing plat­forms to fos­ter co­op­er­a­tion with Africa in in­vest­ment and fi­nance. Sec­ond, we will fo­cus on projects that im­prove the peo­ple’s liveli­hood in Africa and sup­port the projects con­tribut­ing to med­i­cal fa­cil­i­ties, ed­u­ca­tional train­ing and lo­cal liv­ing en­vi­ron­ment. Third, cre­at­ing new in­vest­ment and fi­nanc­ing mod­els, strength­en­ing con­nec­tions with in­ter­na­tional cap­i­tal mar­ket and boost­ing co­op­er­a­tion with third par­ties are also con­sid­ered to be un­der­taken to im­prove African eco­nomic de­vel­op­ment with other in­vestors all around the world.

Hu Huaibang, the chair­per­son of the China De­vel­op­ment Bank, says the China-Africa De­vel­op­ment Fund has be­come the main plat­form for Chi­nese En­ter­prises to in­vest in Africa and gained valu­able ex­pe­ri­ence for the Belt and Road Ini­tia­tive.

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