Risks and opportunities

There are great opportunities for China to invest in Africa, but Chi stressed, "Our projects are those suitable investment projects [in Africa] for Chinese companies, as our mission is to encourage more Chinese companies to invest in Africa and introduce China's experience during its cooperation progress to the African companies, and also help African projects to look for qualified Chinese partners."

CADFund mainly focuses on medium and long-term investment, usually five to eight years, and is not eager to recuperate profits from each project quickly. "CADFund is a market-oriented fund, and should definitely consider the return on investment, but we care more about substantial contribution [of China's investment] to sustainable development of the African nations," added Chi.

According to statistics released by Zambia, China's investments contributed to the creation of 15,000 job opportunities in the country in 2010. In Malawi and Mozambique, a cotton planting and processing project will provide more than 100,000 jobs for local farmers.

In a way that is different from traditional investors from Europe or the United States, China's long-term approach to its investment in Africa has benefited many countries, said Lazarous Kapambwe, President of the UN Economic and Social Council. "China thinks in the long term, while investors from Europe tend to think in the short term," said Kapambwe, who is also Zambia's permanent representative to the United Nations.

"For African countries, the rise of China, and Asia in general, has given an alternative source of investments, an alternative source of financing. It also helps to create a climate in which the investors from other regions are also willing to negotiate with us on better terms," he added.

Despite the overall favorable situation, Chi also noted that there exist some common problems faced by Chinese companies when doing business in Africa.

He suggested that Chinese enterprises should respect the local laws, customs and traditions, and shoulder certain social responsibilities to gain mutual benefits.

"China's investment in Africa could lead to endless imaginative possibilities, as we believe that risk and opportunities go hand in hand," said Chi. "And we aim at providing a better livelihood, more development opportunities and more choices for local people to have a win-win result."

China-Africa Development Fund

- The China-Africa Development Fund (CADFund) is one of eight measures for China-Africa practical cooperation announced by Chinese President Hu Jintao at the Beijing Submit of the Forum on China-Africa Cooperation in November 2006. As an equity investment fund, it aims at supporting Chinese enterprises in expanding their investment in African countries. The fund went into operation on June 26, 2007, with the first-stage capital of $1 billion contributed by China Development Bank. The fund size is expected to reach $5 billion.

The fund concentrates its investments in industries and fields that will help promote Africa's economic development, such as agriculture, manufacturing, infrastructure, resources and industrial and trade parks.

CADFund' s Main Projects

In April 2008, Ghana Power Station Phase I, joint-invested by CADFund and Shenzhen Energy Investment Co. Ltd., started construction.

In March 2009, Egyptian Suez Trade Park was inaugurated in Egypt. It is the first overseas trade park project initiated by CADFund, as well as one of the key overseas trade park projects recommended by the Chinese Government.

In May 2009, the first glass factory in Ethiopia was inaugurated and was put into production.

In June 2009, the cotton-processing factory was inaugurated in Malawi. The cotton planting and processing project in mode of Contract Farming in Malawi, Mozambique will create more than 100,000 jobs for local farmers.

In May 2010, the fund and cement producer Jidong Development Group decided to invest approximately $220 million to set up a cement plant in South Africa.

In May 2011, the Chery Group and the fund decided to invest in automobile assembling plants in some African countries.

(ChinAfrica VOL.3 September 2011)