‘Africa needs China’s positive investment’

17 january 2013

GABORONE — China is an important source of investment and finance, and African countries need the positive investment to develop their natural resources and infrastructure, said a former deputy chief of Botswana’s central bank.

In a recent interview with Xinhua, Keith Jefferis, former deputy governor of the Bank of Botswana and managing director of Econsult Botswana (Pty) Ltd, said it is quite normal for Chinese companies to seek chances of investment abroad as they grow together with the booming economy.

“I don’t agree that China’s investment in Africa is something to do with ‘new colonialism’ or ‘pillage of natural resources’. It is more economic rather than political,” Jefferis said.

It is a natural response of capital to the chances of market, he said.

Recent years saw rapidly growing economic activities between China and Africa, and statistics show trade volume between China and Africa stood at $166.3 billion in 2011, up 83 percent from 2009.

And in 2011 China’s direct investment in Africa jumped 60 percent to $14.7 billion from 2009.

Jefferis said African countries need investment to improve their infrastructure and markets for their natural resources.

“China’s demand for commodities has reversed the long-term decline in global commodity prices – to Africa’s enormous benefit. Export volumes are up – but export values are up even more,” he said.

Jefferis said Africa has benefited from Chinese-led commodity “super-cycle” by exporting expensive commodities and importing cheap goods.

China has assisted African countries in their efforts to improve infrastructure through grants, interest-free and low-interest loans. And by running quality projects at lower prices, Chinese construction companies grow fast in African markets.

According to Jefferis, Chinese construction companies in Botswana, for example, dominate the construction sector, because “the government will probably pay twice or more” for projects carried out by a Western or South African construction company.

He said China and Africa are complementary in their needs. In the near future, there is enough scope for their cooperation in various areas such as agriculture.

“About 60 percent of the world’s uncultivated farmland is in Africa, which is known for its low population densities. Opportunities for increased productivity and output, by using modern irrigation and improved farming techniques, are big,” Jefferis said.

He said that promoting the development of agriculture is key to poverty alleviation in many African countries.