Opinion | After state loans, China wants private investment to play a greater role in Africa’s next stage of growth

Beijing is looking to Africa to realise its vast potential by moving away from state loans and embracing economic reforms and entrepreneurship — like China did 40 years ago

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Chinese companies built Africa’s first modern electrified railway, the Ethiopia-Djibouti railway. Photo: Xinhua

Published: 5:00am, 3 Jun 2019Updated: 5:00am, 3 Jun 2019

The past decade has seen the world’s leading economies race to increase their ties with Africa, a continent brimming with potential. And none more so than China. Its sustained courtship of the continent has seen their bilateral trade and investment reach astronomical levels. According to official Chinese figures, trade with Africa grew to just over US$204 billion in 2018. And a recent tweak to their approach promises to enshrine Africa as the continent of opportunity for Chinese companies.

While Beijing used the recent Forum on China-Africa Cooperation to commit a further US$60 billion to Africa, emphasis was also placed on the greater role that private Chinese companies have to play. China is now hoping that investment from a diverse group of private investors can take African sustainable growth to the next level.

Instead of offering a blank cheque, China hopes to give Africa the ability to accelerate its economic progress even further by utilising the infrastructure that Chinese companies develop. The technology, employment and opportunities created are expected to stimulate growth through a market-based, rather than assistance-based, approach.

This is not a sign of China truly stepping away from Africa. It is a realisation that if Africa is to truly flourish, then the bulk of the continent’s development must be internally sourced. It cannot be artificial. So, instead of maintaining the dizzying levels of state investment, China is encouraging private companies to play their part.

And they should need no convincing. Africa is becoming a hugely powerful market for goods and services. With 1.2 billion people, 60 per cent of whom are under 30, Africa’s population is expected to exceed China’s by 2025. Meanwhile, at least 44 countries have signed up to the African Continental Free Trade Area, and six of the world’s 10 fastest-growing economies are African, according to the International Monetary Fund.

The untapped growth potential in Africa is similar to China’s 30 to 40 years ago. China achieved its phenomenal growth through economic reforms, by opening up to international investment and embracing entrepreneurship. Africa now has the chance to replicate China’s success.