Building bridges to growth

Chinese enterprises have played a key role in transformation, development of Africa

Though Chinese companies have been making overseas strides for some time now, during the past few years they have been focusing more on Africa. Nearly 2,000 Chinese companies from sectors such as construction, infrastructure, mining, manufacturing and transportation have established a presence in Africa and paved the way for more companies to follow suit.

Aside of trade, the biggest contribution of Chinese enterprises has been in education. The China Europe International Business School through its campus in Accra, Ghana, played a key role from 2008 onwards in training the next generation of African entrepreneurs.

The decade 2010 to 2020 has been dubbed as the "Decade of Africa", which may explain why Chinese companies want to be the key players in Africa and part of its rapid development.

But, the real story of Chinese companies in Africa is about infrastructure construction.

An interesting aspect of the Africa growth story is that it is progressing in tandem with rapid urbanization. This in turn has also triggered the need for quality infrastructure. Electricity and water must be transported to the cities, while hospitals and universities will need bigger and better facilities.

Cities also need to be interconnected and this means railways, roads, highways, bridges and airports. Abundant raw materials and natural resources (wood, fish, bio-fuels) must be moved and in many cases exported. This means more pipelines, ports and energy plants.

The infrastructure boom has also been a key agenda for African policymakers, as better infrastructure helps facilitate development and portray a better image to the rest of the world.

Infrastructure and government policies have always been a sensitive issue, and perceptions on the subject differ.

During a recent CEIBS conference on "China Meets Africa", a Ghanaian delegate raised the issue of bureaucratic interference in the construction sector. Though the government officials present at the conference agreed that it was a cause for concern, the last word on the subject came from a Chinese company executive who maintained he had never faced such a situation in Ghana.

"I have been here for the past 10 years, I have built 100 special buildings in Ghana and I have not perceived this bureaucracy," he said.

Multilateral financial institutions like the Word Bank have played a key role in funding several key African infrastructure projects. China has also made significant contributions to infrastructure construction in Africa through the China Development Bank.

One of the main characteristics of Africa is its tremendous diversity. There is little in common between nations like Morocco, Ghana and South Africa. When we think about countries like China, India, Russia, or even regions such as Latin America, that are in fast development mode, we can see several things they have in common.

But Africa paints a totally different picture. There is a mosaic of languages, cultures, religions and political systems, making it difficult to talk about a common policy for Africa. However, there is no doubt that investment opportunities in Africa are now more attractive than ever.

Morocco is growing at 9 percent, while Ghana is the fastest-growing country in the world and forms an ideal investment hub with its close neighbors such as Nigeria and Cameroon.

When we think about infrastructure, it is also important to think about technological innovation, ranging from high-speed trains and wind power plants to digital applications.

Africa has the fastest personal growth rate in the world for mobile phone usage. There are many areas in the continent where banking is done entirely over the mobile phone. Medical and pharmaceutical services are also provided through mobile phone. All these services require a digital infrastructure of fiber optics, antennas and digital equipment. China has provided funding for such projects through the China Development Bank.

The key to success in Africa is no different from that in any other international market. Most of the current market trends in Africa are similar to those that existed in China when it opened up to US and European investment. The key traits are undoubtedly the solid commitment, adequate personnel, and the opportunities for professional studies.

Recently there have been several articles that have criticized the Chinese companies in Africa and their investment motives. Some of the accusations include mistreatment of workers, over-exploitation of resources and blatant disregard for the environment.

These charges are unfair and several events hosted by CEIBS in Africa have proved otherwise. The feedback from these meetings has been positive and there has been all-round appreciation of the role played by Chinese companies in Africa. All these actions undoubtedly convey that "China has been doing a great job in Africa".

The author is president and Chengwei Ventures chair professor of entrepreneurship at CEIBS in Shanghai. The views do not necessarily reflect those of China Daily.

(China Daily 01/11/2013 page7)