Johan Steyn, portfolio manager at Prescient Africa Equity Fund, says the reality of Africa’s situation is that it needs China’s investment.
“The shortage in capital and infrastructure has been so dyer that your African leaders have been too willing to negotiate with a deep pocked player like China. China wants tangible benefits out of the transaction and is not willing to go the aid route as they see that as unsustainable in creating dependence,” he said.
Steyn says African leaders need to take into account the interests of the wider population and not mortgage resources for self-gain.
“African leaders need to create the business environment free from fraud and corruption so that we can actually see some return on investment form some of these Chinese investments.”
The continent also needs to attract investment from other sources to break the high dependence on a single partner.
There is no doubt that Africa has greatly benefited from the partnership. The infrastructure networks, being supported by China, have been critical for economic activities as well as lifting the growth trajectory.
“In 2013 Africa –China trade was over 210 billion US dollars, which over the last 10 years makes up about a 30 per cent cumulative annual growth.”
Steyn says that one of the big changes in China’s involvement on the continent is that it has gone from investing in the mines and in the transport networks, which allow them to extract and deport commodities outside the country, to taking an interest in partnerships where both parties benefit.
“If you look at what Africa lacks in terms of reaching its growth potential – shortage of financial, human capital and infrastructure networks – it’s a big thing hampering its growth.”
“China is a partner that is willing to address those issues. They have the capacity and the skills to bring the engineering skills, architectural skills as well as the construction ability to the continent to establish that infrastructure development but also they have the financial capacity.”