By Shaodan Wang
In 2013, President Xi Jinping proposed for the first time China’s Africa policy of sincerity, real results, affinity and good faith. and the principle of pursuing the greater good and shared interests. Guided by this policy and principle, China-Africa relations have scaled new heights over the past decade and yielded bountiful results in China-Africa economic cooperation, becoming a model for South-South cooperation.
As China’s first fund for investment in Africa unveiled at the Forum on China–Africa Cooperation (FOCAC}, the China-Africa Development Fund (CADFund) has aligned its business with the outcomes of each edition of FOCAC. Through high-quality investment, it has delivered a strong boost to Africa’s industrialisation and modernisation, playing a pilot role in China-Africa Belt and Road Cooperation. At a new historical starting point, CADFund will act on the spirit of the upcoming FOCAC summit and continue to leverage its advantage as an investment platform to support Chinese companies in increasing investment in Africa and contribute more to a high-level China-Africa community with a shared future.
Fruitful achievements in China-Africa economic cooperation in the new era
After Xi Jinping became President of China in 2013, he made his first state visit to Africa, where he introduced the Africa policy of sincerity, real results, affinity, and good faith and the principle of pursuing the greater good and shared interests, providing a clear direction and fundamental guidance for China-Africa cooperation in the new era. Over the past decade, as the “ballast stone” and “propeller” of China-Africa relations, economic cooperation between China and Africa has made fast and remarkable progress.
Cooperation mechanisms have been improved
Over the past 20 years since its establishment, FOCAC has become a major platform for collective dialogue and an effective mechanism for pragmatic cooperation between China and Africa. It has produced a series of strategic documents and rolled out major initiatives, giving strong boosts to friendly and mutually beneficial cooperation in the economic and trade sectors between China and Africa. China’s Belt and Road Initiative, proposed in 2013, has been widely applauded across Africa, with the African Union and 52 African countries signing Belt and Road cooperation agreements with China. New mechanisms such as the China-Africa Economic and Trade Expo and the Pilot Zone for In-depth China-Africa Economic and Trade Cooperation have grown into platforms with international influence for economic cooperation with Africa.
China-Africa cooperation at the sub-national level is also flourishing, with provinces such as Hunan, Zhejiang and Shandong leveraging their advantages to establish long-term mechanisms for economic exchanges with Africa, encouraging provincial enterprises to invest and do business in Africa. Additionally, China and African countries have strengthened policy coordination and communication in such areas as the African Continental Free Trade Area, e-commerce, and trade and investment facilitation, establishing a series of specialised cooperation mechanisms that have delivered projects on the ground.
Cooperation continues to expand and grow at a faster pace
Over the past decade, despite multiple challenges such as the global economic downturn and the impact of Covid-19, China-Africa economic cooperation has consistently maintained its growth momentum, with expanding trade, enhanced infrastructure connectivity, and upgrading industrial cooperation. In 2023, China-Africa trade reached $282.1 billion, setting a new historical record, with China maintaining its position as Africa’s largest trading partner for 15 consecutive years. The cumulative trade volume between China and Africa has surpassed $2 trillion, with the trade structure continuously optimising.
From 2013 to 2023, Chinese companies signed construction contracts in Africa worth over $800bn, with completed business revenue exceeding $500bn. A number of landmark and “small and smart” projects in public health, transportation and housing, including the Africa Centres for Disease Control and Prevention, have been implemented across Africa. The stock of China’s direct investment in Africa has grown from $21.68bn in 2013 to $40.9bn in 2022. Currently, over 3000 Chinese enterprises have invested in more than 50 African countries and regions.
Cooperation models are more open and diverse
To further deepen China-Africa economic cooperation, the Chinese government has established investment funds such as CADFund, providing patient capital for Africa’s development. Investment cooperation has gradually become a new leading force, channelling more private capital into Africa’s industrialisation and modernisation, and providing supplementary funding sources alongside loans and aids. Meanwhile, infrastructure cooperation has been upgraded and transformed. Increasingly, Chinese companies are adopting such models as BOT and PPP to undertake infrastructure projects, integrating investment, construction and operation in China-Africa infrastructure cooperation, thereby fostering sustainable infrastructure projects. Beyond traditional sectors such as infrastructure, manufacturing and agriculture, China-Africa economic cooperation has also expanded into new areas such as digital economy and green development. Since the establishment of FOCAC, Chinese companies have helped African countries build and upgrade about 150 000 kilometres of backbone telecommunications networks, providing Internet services to about 700 million users. China has become a major partner in Africa’s energy transition, with hundreds of clean energy and green development projects being implemented across the continent.
Investment cooperation for a China-Africa community with a shared future
The establishment of CADFund was a significant measure announced by the Chinese government at the 2006 FOCAC Summit to promote practical cooperation with Africa. With an initial planned size of $5bn, the fund is managed by the China Development Bank (CDB) and began operations in 2007. At the 2015 FOCAC Johannesburg Summit, President Xi Jinping announced an injection of an additional $5bn to CADFund, bringing its total size to $10bn.
Guided by its shareholder, CDB, the fund has focused on Africa’s development needs and operated on market-based principles. It has brought Chinese capital, technology, standards, production capacity and management expertise into Africa, creating jobs, increasing exports and generating tax revenue for local communities, leading to mutual benefits and common development. To date, CADFund has made investment commitments of about $7.6bn in 39 African countries, mobilising $32bn investment and financing by Chinese enterprises in key areas such as infrastructure, industrial capacity cooperation, agriculture, public welfare, digital innovation and green development. Notably, CADFund is the first company to jointly launch a special publication on South-South cooperation with the United Nations Office for South-South Cooperation, presenting successful cases of investment.
Supporting China-Africa industrial cooperation to advance the “China-Africa industrialisation cooperation plan”
CADFund has supported leading Chinese manufacturing enterprises in investing in Africa, facilitating the transfer of China’s production capacity in industries such as cement, glass, machinery, automobiles and electronics to Africa. This initiative has transformed “Made in China” into “Made by China and Africa”, significantly accelerating Africa’s industrialisation process. CADFund has also invested in industrial park projects such as the Lekki Free Trade Zone in Nigeria, the TEDA Suez Economic and Trade Cooperation Zone in Egypt, and the Hisense Industrial Park in South Africa. These investments have guided Chinese enterprises to “go global” in groups, fostering the development of local industrial chains both upstream and downstream.
Supporting infrastructure connectivity to implement the “China-Africa infrastructure cooperation plan”
CADFund has invested in a series of flagship projects. One notable example is CADFund’s investment in Ghana’s Africa World Airlines (AWA), which has grown to be the largest passenger airline in Ghana. This investment has significantly alleviated local aviation capacity constraints and promoted connectivity in West Africa. In recent years, however, some African infrastructure and public welfare projects have faced difficulties in contract delivery and delays, partly due to the increasing debt burden of local governments. To address these challenges, CADFund has innovated its investment model. For instance, by subscribing to “Belt and Road” bonds issued by Shaanxi Construction Engineering Group, CADfund has directed financial support to small infrastructure projects that are vital to people’s livelihood in five African countries, including roads, pipelines and schools.
Supporting Africa’s digital transformation to promote the “digital innovation programme”
CADFund has actively embraced the global trends of technological revolution and industrial transformation. Responding to the development needs of African countries for digital infrastructure and digital economy, CADFund has played a strategic role as an investor in China Telecom and China Mobile, supporting the construction of fibre-optic backbone networks, undersea cables, and data centres. CADFund’ investment has also supported local communities by facilitating projects in remote education and telemedicine. Additionally, CADFund launched the China-Africa Digital Economy Cooperation Entrepreneurs Initiative, encouraging upstream and downstream companies to invest in Africa’s digital infrastructure and digital economy, thereby empowering the digital transformation and upgrading of traditional industries.
Supporting Africa’s green growth to deliver the “green development programme”
CADFund has been committed to promoting green, low-carbon development and responsible investment principles. It has supported several green industries, including clean energy and green transformation of traditional industries. For example, the photovoltaic power station project in South Africa, supported by CADFund, has been generating a stable output of about 300 million kWh electricity annually, reducing carbon emissions by over 100 000 tons each year. Another investment, the cement plant project in Tanzania, utilises world-leading green dust collection equipment and waste heat power generation technology, reducing carbon emissions by about 35 000 tons annually.
In 2023, CADFund, as the cornerstone investor, provided $300 million equivalent of RMB to support the issuance of sustainability panda bond by the Egyptian government, which was the first panda bond offered by an Africa country. The fund raised will be used for Egypt’s clean transportation and renewable energy projects, making a significant contribution to Africa’s green transition.
Supporting trade between China and Africa to advance the “trade promotion programme”
Covid-19 disrupted global supply chains, affecting the financing needs of enterprises along the commodity supply chain. To mitigate these adverse effects, CADFund purchased perpetual corporate bonds, issued by Xiamen Xiangyu Group and Xiamen C&D Group, to support their supply chain projects in Africa to create secure, stable, and efficient trade and logistics channels. Additionally, CADFund has partnered with the United Nations International Trade Centre in the Partnership for Investment and Growth in Africa and the Partnership for Enhancing Export Capacity of Africa to China successively. These efforts have helped 20 African small- and medium-sized manufacturing enterprises increase their exports to China by over $3.5 million.
Supporting Africa’s agricultural modernisation to advance the “poverty reduction and agricultural programme”
CADFund invested in the Mozambique Agricultural Park using a “company plus farmers” model, training local farmers in rice cultivation technology. This has increased rice output to 5-7 tons per hectare, playing a crucial role in alleviating local food shortages. The former president of Mozambique even named the rice produced by the project “Bom Gost (Good Taste)”. The project also features technology cooperation, using Chinese drones and related innovations to effectively increase grain production. Another investment, the sisal project in Tanzania, employs around 750 local workers and has planted over 3220 hectares of sisal as of the end of 2023, producing significant economic and social benefits. The Tanzanian company, in collaboration with China Agricultural University, has also undertaken a village learning centre on poverty reduction, the first project in Africa sponsored by the International Poverty Reduction Centre in China (IPRCC).
Supporting Africa’s health improvement to deliver the “health and medical programme”.
CADFund invested in the Humanwell Mali pharmaceutical factory. With an annual capacity of 40 million bottles of infusions and 30 million bottles of syrup, the factory is the most modern in West Africa. This project has ended Mali’s history of being unable to produce its own medicines, greatly alleviating drug shortages in West African countries, and drug accessibility for the western African population. At the height of the pandemic, CADFund also leveraged its platform to coordinate the delivery of urgently-needed testing kits to Ethiopia and organise logistics for supplies and donations through the companies it has invested in across Africa, helping to address critical shortages of epidemic response supplies.
Supporting Africa’s talent development to advance the “capacity building programme”
CADFund has actively pursued people-centred development by investing in projects that create jobs and enhance youth skills. The Hisense South Africa Appliance Park Project with investment from CADFund has promoted the localisation of technology and talent, employing over 700 local workers, who make up more than 90% of the workforce. Additionally, CADFund has engaged in tripartite cooperation with the United Nations and other international organisations, achieving practical results in capacity building. In 2022, CADFund partnered with the Chinese Embassy in Gambia and the United Nations Office for South-South Cooperation to donate smart conference machines to Gambia, supporting youth employment and entrepreneurship in Africa. In May 2023, through the Hisense South Africa Appliance Park and Mozambique Agricultural Park, CADFund collaborated with the United Nations Industrial Development Organization to launch the “Shine Your Light” lamp and rice donation initiative for South African youth. These initiatives have received widespread praise from both domestic and international communities.
Writing a new chapter in building a high-level China-Africa community with a shared future
China-Africa cooperation has entered a new phase of building a high-level community with a shared future. China is moving towards its second centenary goal, on track to build a prosperous, democratic, culturally-advanced, harmonious and beautiful modern socialist country by 2049. To this end, China will continue to pursue high-standard opening-up and accelerate a new development pattern with domestic circulation as the mainstay, and domestic and international circulations reinforcing each other. This will create more opportunities for China-Africa economic cooperation. Africa, on its part, is steadily advancing towards the vision outlined in the African Union’s Agenda 2063. The official launch of the African Continental Free Trade Area (AfCFTA) and the deepening collaboration among sub-regional organisations have accelerated Africa’s economic integration and economic convergence at the sub-regional level. Africa’s resource endowments, enduring demographic advantages, and the immense potential in digital and green economic transformation will provide strong support for Africa’s economic growth and China-Africa economic cooperation.
A new FOCAC summit will be held in Beijing, where a new blueprint for China-Africa cooperation in the new era will be drawn, and a new chapter will be opened. CADFund, guided by the spirit of the new forum, will continue to leverage its role as a leading platform for investment in Africa. It will drive innovation in investment and financing models and cooperation methods, increase support for more Chinese enterprises to invest in Africa, and further promote cooperation in key areas such as infrastructure, industrial capacity, green development, digital economy, and logistics and supply chains. This way, CADFund will contribute more to Africa’s sustainable development, helping to write a new chapter in building a high-level China-Africa community with a shared future.
Shaodan Wang is the chairman of China Africa Development Fund.