Chinese Premier Li Keqiang arrived in Ethiopia Sunday for the start of a four nation Africa tour (Nigeria, Angola and Kenya), his first visit to the continent since assuming his position a little over a year ago. Both nations signed 16 deals total which included legal accords covering diplomatic visa exemptions, cultural corporation and extradition, agreements on economic, trade and technical cooperation, loans and cooperation agreements for the construction of roads and industrial zones.
Chinese firms have invested heavily in Ethiopia in recent years with their worth swelling well over $1 billion in 2014, according to official figures.
Beijing is also a key partner in Ethiopia’s bid to expand infrastructure such as roads, railways and telecom services.
Huawei Technologies Co Ltd – the world’s second largest telecom equipment maker – and ZTE Corp are working to introduce a high-speed 4G broadband network in the Ethiopian capital Addis Ababa and a 3G service throughout the country.
Officials said both firms have now signed an $80 million deal to lay optical ground cables to form a nationwide network.
This is the second major high level visit to Ethiopia after last years visit by President Xi Jinping.
In continuation of Chinese investment, engagement and cooperation in Africa, Chinese Premier Li Keqiang unveiled extra aid for Africa totaling at least $12 billion on Monday, and offered to share advance technology with the continent to help with development of high-speed rail, boost collaboration in industry, finance, poverty reduction, ecological protection, people-to-people exchanges, and peace and security. Speaking in Addis Ababa, Ethiopia’s capital, Mr. Li also reaffirmed Beijing’s support for Africa’s infrastructure sector: “Infrastructure is the precondition to industrial development. China will actively participate in projects such as roads, railways, telecommunications and power in Africa”.
Li said that the new $12 billion credit line would be on top of the existing $20 billion already offered when former President Xi Jinping made loans of $20 billion to African nations from 2013-2015 when he visited in March 2013.
He also said China will discuss with the African Development Bank the prospect of establishing a joint fund to support infrastructure development.
China’s direct investment in Africa reached $25 billion at the end of last year. With Africa having four of the top 10 fastest growing economies in the world, expect more investment and commitment from not just Africa, but many other nations.
India has two reasons to take an interest in Africa – it’s deeply concerned about China’s forays into the continent’s strategic and economic space, and it’s also mindful that it requires the support of its 54 nations if it is to realize its ambitions to become a permanent member of the U.N. Security Council. India is a latecomer in Africa, but as a demonstration of its pro-active engagement with the continent, the government this week announced that its trade target with the continent has now been revised upwards to $90 billion by 2015, up from the previous target of $70 billion. The announcement came on March 17, when the India-Africa Business Council met in New Delhi for the first time. The second meeting of India-Africa trade ministers took place the same day. The growing ties between India and African nations has seen bilateral trade soar over the past decade, and India has established a number of pan-African institutions under the umbrella of the India-Africa Forum Summit for capacity building and human resource development across many areas, including the India-Africa Institute of Foreign Trade, the India-Africa Diamond Institute, the India-Africa Institute of Educational Planning and Administration and the India-Africa Civil Aviation Academy. Yet another institution, the India-Africa Business Council, was launched on March 17, with a brief to put in place a vibrant mechanism for enhancing economic and commercial relations between the two sides, especially in areas including agriculture, agro-processing, manufacturing, pharmaceuticals, railways, energy and petroleum and natural gas. As of now, India is in no position to take on China in Africa. But the Indians are clearly making a concerted pitch to win friends and influence people there.
Brazil, a growing nation in importance in foreign policy circles and world capitals is increasingly eyeing Africa in expanding its influence and businesses.
Brazil is launching a top-level drive to expand its economic ties with Africa, a sign of how crises in the rich world are pushing faster-growing emerging economies to trade and invest among themselves.The new initiative, ordered by President Dilma Rousseff after her three-country trip to Africa last month, comes as nervousness grows in Brazil over the impact in the coming months of Europe’s debt crisis and lurch toward recession.Europe’s woes, combined with anemic growth in the United States, are already dampening demand for Brazilian exports and will make it more difficult for Brazil to rebound from disappointing growth of around 3-4 percent this year.In contrast, the eight most promising emerging economies in sub-Saharan Africa, not including South Africa, have grown by an average of 6.6 percent per year over the past decade, according to Deutsche Bank. That is about the same rate as the BRIC group of big emerging countries Brazil, Russia, India and China and faster than emerging Asian economies.Africa’s total share of Brazil’s trade remains small at just over 5 percent but Brazil has rapidly grown its footprint in the region in recent years as it tries to catch up with China’s burgeoning investments and influence there.
“The crisis has accelerated this strategy,” Pimentel told Reuters. “There will be a dispute for economic space in Africa, and Brazil has to be positioned there.” Pimentel will lead government officials and business executives this month on a 10-day mission to explore opportunities in the three countries that Rousseff recently visited – Angola, Mozambique, and South Africa. The new thrust builds on progress made under former President Luiz Inacio Lula da Silva, who visited at least 25 African countries and doubled the number of embassies in the region as he looked to establish Brazil as a leader of the developing world. Brazil’s overall trade with Africa has quadrupled since 2002 to $20.6 billion last year, compared to its $82 billion trade with the European Union. The fast-growing ties are overwhelmingly based on the exploitation of commodities as Africa taps Brazilian firms’ expertise in mining, oil exploration and tropical agriculture. Mining giant Vale (VALE.N) opened a $1.7 billion coal mine in Mozambique in May that Pimentel said would give a $1 billion boost to Mozambique’s trade balance next year. Brazilian construction firm Odebrecht is the largest private employer in Angola, with activities including food and ethanol production, factories and supermarkets. Petrobras(PETR4.SA), Brazil’s state-controlled oil company, is active in Angola in deep-water drilling. Brazil sees a growing market for its services and goods related to such investments. BRAZIL’S TRUMP CARD – BEING NICE Almost half of sub-Saharan African exports now go to emerging and developing markets compared with less than a quarter in 1990, according to the International Monetary Fund. China alone accounts for about 17 percent of the region’s trade, with India and Brazil accounting for 6 percent and 3 percent respectively. Skeptics say Africa’s low level of business diversity and its relatively small economic output limits its potential to become a major trade and investment partner for Brazil. “It’s still a very small market, income is very concentrated and the space for advance is small,” said Bruno Lavieri, an economist at Sao Paulo consultancy Tendencias. “Even in the long term it will take decades for Africa to be really an important player in Brazil’s trade.” Brazil has also struggled to match China’s financial clout in the region as Beijing backs its companies with generous subsidized loans. Jinchuan Group, China’s dominant nickel producer, outbid Vale this year when it bought South African mining firm Metorex for more than $1.3 billion. Pimentel said his group would be looking at creating new financing mechanisms to support Brazilian projects. But Brazil believes it has a trump card against China that it intends to play in its new economic push — put simply, that it treats Africans better. Chinese firms have been accused of flouting worker safety laws in some African nations and have also been criticized for importing Chinese workers rather than hiring locally. “This is our big selling point – that we are arriving in these countries doing more than just selling products and services,” said Pimentel. “Brazilian companies have a good image in Africa. This compensates for our fragility in financing compared to China.” Brazil’s shared Portuguese language with countries like Angola and Mozambique, ethnic ties, a common history of colonialism and Brazil’s success in alleviating poverty and hunger at home also help its brand on the continent. Embrapa, Brazil’s agriculture research agency, has operations in four African countries where it is transferring its technology and expertise in raising crop yields that helped turn Brazil into a tropical farming powerhouse. Rousseff said during her trip that a pharmaceutical plant being financed and assisted scientifically by Brazil should start next year making cheap anti-retroviral drugs to help Mozambique’s fight against AIDS. Even with competition from China, Africa’s rich and largely untapped resources mean Brazil still has huge potential to expand its presence, said Jorge Heine, the CIGI chair in global governance at Canada’s Balsillie School of International Affairs. “Given Brazilian needs and the abundance of natural resources in Africa, it is by no means evident that we are near the limit of the volume of trade between Africa and Brazil,” he said.
Brazil is interested in looking for new markets to diversify it’s economy, which is oriented towards the U.S., Europe and China. As a BRIC nation as well, it is strategically trying to position itself as a player on the international scene. Hence it following in the foot steps of follow BRIC nations Russia, India and China.
With growing trade between Africa and China, Standard Banks aims to take advantage of the growing economic links between both sides.
Standard Bank Group Ltd. is seeking to benefit more from the growing trade and investment between China and Africa, expanding its Africa business and looking for ways to cut spending outside the continent, it said Thursday.
“The biggest opportunity, the fastest growing opportunity, is the burgeoning Sino-Africa trade and investment relationship,” Deputy Chief Executive Sim Tshabalala said in an interview.
Standard Bank, Africa’s largest lender by assets, said earlier this year that it would realign the bank to put more resources in Africa while reducing businesses outside the continent that don’t feed into the Africa growth goal.
In 2009, China passed the U.S. to become Africa’s biggest trading partner. In 2011, Standard Bank estimates merger-and-acquisition activity from China on the continent totaled $5 billion, of which the bank said it advised on about 30%. Mr. Tshabalala said he expects investment from China to grow further in 2012 with a number of deals already in the pipeline that should be announced this year.
The Industrial & Commercial Bank of China Ltd. is a 20% shareholder in Standard Bank, with the latter aiming said to benefit more from that relationship.
Reducing balance sheets outside the continent will be “gradual,” said Jacko Maree, the bank’s group chief executive. In 2011 Standard Bank sold a majority stake in its Argentina operations to Industrial & Commercial Bank of China for $600 million. The sale is still in progress and subject to some regulatory approvals. The bank also completed a stake sale in Troika Dialog Group in Russia, for which it received an upfront consideration of $372 million.
“Where we get opportunities to shed investment bank or universal opportunities outside Africa, we will,” Mr. Tshabalala said.
As part of the bank’s aim to grow business with Chinese companies doing deals in Africa, it said it would increase its presence in Beijing and downsize in Hong Kong.
Recent Africa-China deals that Standard Bank advised on include the $1.3 billion Africa-focused miner Metorex Ltd. sale to Chinese nickel company Jinchuan Group Co. The bank also advised on the 25% stake sale of South Africa’s Shanduka Group to China’s sovereign-wealth fund China Investment Corp. for 2 billion South African Rand ($263.4 million), completed in December.
On Thursday, Standard Bank reported that net profit for 2011 rose 23% to 13.27 billion rand from 10.77 billion rand.
With the emergence of China as the worlds economic growth engine, there many opportunities to take advantage of. This is another sign of the growing importance that Africa will have economically.
The new African Union headquarters was inaugurated by China’s President after being built and financed by China.
Chinese President Hu Jintao is expected to visit Addis Ababa this month to inaugurate a new African Union headquarters financed by China and built largely with Chinese labor. The project was launched when Moammar Gadhafi was maneuvering to move Africa’s diplomatic capital to Libya.Official African Union and Ethiopian sources confirm that President Hu will be in Addis Ababa January 28 to open what is being called “China’s gift to Africa.” The inauguration ceremony will be held the day before African heads of state hold their January meeting at AU headquarters for the first time. According to custom, African heads of state meet every January in Addis Ababa. But the summit previously has been held at the city’s United Nations conference center because the AU headquarters building was too small. Construction of new facility began in June 2009, when Addis Ababa’s position as Africa’s diplomatic capital was in doubt. The city has been home to the continental body since its founding, largely due to the influence of the late Emperor Haile Selassie, who was one of the driving forces behind creation of the Organization of African Unity in 1963.But in 2009, the late Libyan leader Moammar Gadhafi was the AU chairman, and he made no secret of his desire to build a grand new headquarters in his hometown of Sirte. That plan was thwarted, however, when China agreed to pay for a $200 million facility in Addis Ababa. It was built by the China State Construction Engineering Corporation, largely with Chinese labor. Ethiopian Prime Minister Meles Zenawi toured the new facility last week and hailed the close cooperation with China. He revealed that he had lobbied Chinese officials to build the new headquarters, donated land adjacent to the old AU campus, and exempted taxes on all imported construction materials. His remarks were reported by Chinese and Ethiopian state media, which were invited to cover the event. AU Projects Director Fantahun Hailemikael says the new facility will vastly improve the African Union’s institutional capacity. “Almost 48 years after foundation of the OAU (Organization of African Unity), the African Union is now able to have such a big facility that can fulfill its requirement in terms of office and in terms of conference,” he said. “The Chinese government generously has given this facility as a gift to Africa and the African Union.”The complex features a 2,500 seat amphitheater and a helicopter landing pad so visiting dignitaries can be flown in from the airport, eliminating the need for motorcades that tie up traffic. The office tower will become home to 700 of the 1,300 African Union staff members. The other 600 will remain in the old section.The new facility symbolizes China’s growing involvement in Africa, and individually with most of the 54 AU member states.In 2010, China moved ahead of the United States as Africa’s largest trading partner. The Chinese State Council, or Cabinet, reported trade with African nations reached $114 billion in 2010, as compared to $10 billion in 2000.Industry experts say 70 percent of the continent’s oil exports go to China.
This is a continuation of China’s soft power projection Africa.
Here’s video report about the grand opening: