China announces $60bn funding package to strengthen investment ties with Africa

Out-Law News | 09 Dec 2015 | 11:03 am | 1 min. read

China is to offer $60 billion of funding to African nations over the next three years to support "10 major plans" aimed at strengthening ties with the continent, China’s president has announced.

Xi Jinping told the Forum on China-Africa Cooperation (FOCAC) in Johannesburg that the plans include financial backing for projects involving industrialisation, infrastructure, financial services, "green development and trade and investment facilitation".

According to China’s state-run news agency Xinhua, Xi said the $60bn package comprised "$5bn of free aid and interest-free loans", $35bn of preferential loans and "export credit on more favourable terms" and $5bn of additional capital each for the China-Africa Development Fund and the Special Loan for the Development of African SMEs. A further $10bn of 'initial capital' would be made available for the China-Africa production capacity cooperation fund.

Xi said China's increased support for the region would focus on helping African nations to "break the three development bottlenecks of backward infrastructure, talent shortage and inadequate funding".

The Chinese president also promised to establish "a number of regional capacity-building colleges for Africa, train 200,000 technicians for African countries and provide the continent with 40,000 training opportunities in China".

Xi said: "China-Africa relations have today reached a stage of growth unmatched in history. Let’s... open a new era of China-Africa win-win cooperation and common development."

Last July, the World Bank Group announced that it would host an "infrastructure-focused" trust fund being set up by China’s finance ministry to offer "strong support to African countries".

In addition to the trust fund, reportedly valued at around $50 million, the World Bank said it was joining the ministry and the China Development Bank to launch the Investing in Africa Think Tank Alliance, which aims to support the industrialisation of the region.

The developments were announced at the Investing in Africa Forum (IAF) in the Ethiopian capital city of Addis Ababa, Ethiopia. The event was supported by the World Bank, China’s government, the China Development Bank, the China-Africa Development Fund, the Ethiopian government and the United Nations Industrial Development Organization.

A report for the World Bank presented at the IAF (40-page / 2.70 MB PDF) said China and sub-Saharan Africa (SSA) trade had "rapidly intensified since the late 1990s and in 2013 China became SSA's largest export and development partner".

The bank also said FDI from China to Africa in 2013 was estimated at $3.5bn (2-page / 108 KB PDF) and cumulative investment stock at more than $25bn. China has direct investment in 50 African countries, "and is increasingly diversifying out of primary sectors", the bank said.