This follows a recent report that claimed more than three billion rand would be pumped into Klerksdorp in South Africa, as Chinese investors explore the possibility of being able to revive the area’s deep gold mines.
“To talk about a three billion rand investment in the pipeline, I think that’s a bit of an exaggeration, somewhat of a mirage if you ask me. I’ve heard so many times talk of industrial parks and beneficiation centres,” Frontier Advisory CEO Martyn Davies told CNBC Africa.
“I think the intent is to be applauded but ultimately when it comes to implementation of these things, particularly in South Africa, it’s very challenging. [This is] particularly considering the nature of the workforce, the culture of the workforce, and often the lack of skills we have.”
Davies added that Chinese investors, as well as others, often see phenomenal potential the country has, but that is it was possible that the potential somehow distorts their views of the economics of this country.
“The narrative in the last 10 to 12 years of Africa’s often been [that] the headlines are dominated by big Chinese state-owned companies investing or allocating tens or hundreds of millions of dollars in capital to big infrastructure, big extractive industry assets,” Davies explained.
“That’s important. However, perhaps some more arguably important story of China engagement of Africa has been the mass movement of Chinese entrepreneurs, very small microenterprises across the entire continent. Practically every single small village or town you travel to across South Africa, you’ll always find a Chinese restaurant and a Chinese trading store.”
A growing Chinese population in South Africa and the continent will continue to have a profound effect on the trading patterns, but Davies adds that this also provides a very different nature of engagement, which is often overlooked.
In 2013, 1600 hectares of land in the Modderfontein area was sold to Chinese investors for the construction of residential, commercial and retail development.
“I think any investment is to be encouraged in our country no matter what sector it is largely. I think you have a lot of exaggeration, like Sandton [being] the next Manhattan. There’s almost a naivety [in] Chinese investors coming into South Africa or Africa. Things are very different.”