A Chinese private equity fund set up a year ago for ventures in Africa plans to spend about $300 million on projects in 2008, its vice-president said on June 27.
The China-Africa Development Fund (CADFund) was launched in June 2007 with an initial $1 billion provided by the China Development Bank and plans to eventually grow to $5 billion, the fund's vice-president Hu Zhirong said.
It has invested $60 million in the first glass factory in Ethiopia, a power station in Ghana and a chrome plant in Zimbabwe. It is also working with several Chinese firms to form a holding company that will manufacture construction materials in all African countries.
"The fund is very young...in our plan we are willing to invest about $300 million in Africa by the end of this year," Hu said. Hu spoke to Reuters on the sidelines of a conference held by the five-nation East African Community.
Bilateral trade between China and Africa has soared this decade to $73.8 billion in 2007 from $10.8 billion in 2000, while foreign direct investments grew from $500 million to $13.7 billion during the same period, he said. Hu said China was intervening in Africa through government aid and concessionary loans, but that direct investment was the best way to aid the continent in creating wealth.
"Pure economic aid is something like a blood transfusion. It is necessary and effective during a certain stage of development," he told a conference in Rwanda to promote investment in the east African region. "However, the ability of blood generation is what will deliver vibrant, sustainable growth," he added.
He said that in the fund's experience the continent was not homogenous. "Every country has a different regime, different laws, different investment environment. China has a very good relationship with African countries but we have to learn a lot of things about them," he said.
"We want to know what they really need. So we always talk with African governments to know what they want to do and what they need from China." Although the idea to set up the fund was mooted at a China-Africa co-operation summit in Beijing at the end of 2006, the fund finances private sector projects, he said.
CADFund's priorities are in agriculture and manufacturing industries, infrastructure development, natural resources and industrial parks. Critics say China's investment in Africa has been unfeeling to citizens of countries with despotic regimes. The 120 million people trade bloc wants to sell itself as a single investment destination.