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China in Africa: A Win-Win Relationship?

Insights Column, 见地

ROGER NORD

Roger Nord is the Deputy Director of the African Department at the International Monetary Fund. Nord is responsible for the IMF’s relations with China regarding Africa and specialises in public finance issues. Nord oversees country operations in East Africa and francophone West Africa and has headed missions to Tanzania, Uganda, Cameroon, and Gabon.
 

1. There has been a decrease in foreign direct investments from China to Africa, could you briefly explain what has lead to a such a decrease?

RN: The main reason is the change in the economic environment due to commodity price shocks. That has affected, of course, a lot of investments, including from China, in the oil, gas, iron and copper industry. With a fall in prices, some of these projects are just no longer economic valuable. This has not only lead to some slowdown in economic trade, but also in investments.

2. Quite a lot of American and European companies have invested in Africa long before China has, do you think these businesses still have significant influences in Africa?

RN: I think from an African perspective, every investor is a good investor. Overtime, one will see more and more investments in Africa because it is the continent with the fastest growth rate after Asia. One will see more and more foreign investments from the Chinese government, as well as companies done by the rest of the world. If you are an African country, you care about investments and not the nationalities of the investors.

3. What about from the perspective of Chinese government?

RN: I think many Chinese investors are quite competitive. For example, the construction industry. Chinese companies are doing a lot of work in Africa, not just for contracts from Chinese companies, but also World Bank and African Development Bank projects. Chinese companies have a competitive advantage areas such as road constructions, rail roads, hydroelectric dam.

4. What do you think are the best sectors to invest in Africa?

RN: This varies all the time. Right now, infrastructure is very important, and in particular, energy infrastructure because without renewable and cheap energy, it will be very difficult for African countries to develop their manufacturing sectors. You need electricity, not just for five hours per day, but 24 hours. So at the moment, you will see a lot of investments in the energy sectors, in Kenya, in Tanzania, in Uganda. I think that is a good thing, but for economic development in Africa you also need development of other sectors. For example, development of the financial sector. That is why basic banking services is one of China's largest area of investment in Africa.