Portuguese-speaking Africa awaits arrival of large Chinese industrial investments

Support from China for the industrialisation of Angola and Mozambique has been set as an objective on a government level, as large investments in local production capacity, even more necessary at a time of economic difficulties, are now expected.

The Forum for China-Africa Cooperation (FOCAC) held in December 2015 in Johannesburg set the goal to shift Chinese industries to Africa, a subject that was discussed once again during the recent visit by Mozambican president, Filipe Nyusi, to Beijing, as well as when his Angolan counterpart was in Beijing.

The idea of moving Chinese industry to Africa is central to the recent compilation of studies “China-Africa: A Maturing Relationship? Growth, Change and Resistance” by the South African Institute of International Affairs (SAIIA), in which researchers Carlos Oya and Terry McKinley, of the School of Oriental and African Studies (SOAS), University of London, identify a number of opportunities in the current situation, particularly in Angola.

The researchers write that the adverse economic climate in economies such as Angola can, on the one hand, affect public and private investment that is currently planned, but on the other hand, “the excess production capacity in countries such as China in the manufacture of low technology products and building materials can lead to a process of moving to low-cost production sites “, particularly in Africa.

The fall in commodity prices such as oil, may even “help accelerate investment in more industry and services, relieving the pressure of the raw materials market”, which “is beginning to happen in Angola, one major exporter of oil,” the researchers say.

“In Angola, the government – which is currently immersed in a budget crisis – began to articulate more openly the need for diversification and development of the industry, with an increasing emphasis on promoting the manufacture of building materials, agricultural processing and production. The shortage of foreign currency is also gradually leading companies to seek suppliers of local products, especially in building materials,” they added.

In the same SAIIA compilation, US researcher Deborah Brautigam ( “Johns Hopkins China Africa Research Initiative”) says that the investment applications approved by the Chinese Foreign Trade Ministry by the end of 2014 included 128 industrial projects in Nigeria, 80 in Ethiopia, 77 in South Africa, 48 in Tanzania and 44 in Ghana.

In the same year, according to the same information, China invested US$123 billion worldwide, of which only US$3.2 billion went to Africa, a flow that has remained relatively stable.

“African countries with approved Chinese investment are classified into first, second, fourth, fifth and seventh in terms of the size of their population compared to other African nations. This suggests that the local market size may be the most important factor for a large number of potential Chinese manufacturers,” says Brautigam.

Giles Mohan, of the Open University, points out that China has invested heavily in infrastructure in Africa, and that there is a trend in Angola for business creation by Chinese citizens arriving in the country to work on large public company projects.

Chinese multinationals have shown less willingness to outsource services “and thus potentially develop links” and share knowledge, but “this seems to be changing” with the recent drop in prices of raw materials and necessary cost cuts, in particular through relocation, says Mohan.

In a speech included in the SAIIA compilation, researcher Justin Yifu Lin, of Beijing University, argues that “continued industrial diversification and modernisation are the way to create jobs and achieve prosperity” and “dynamic and increasing wage growth in China will be an opportunity for Africa.”

“African countries, if they can capture these opportunities, can grow as dynamically as the East Asian countries because, fundamentally, all successful countries began the transformation of their structural situation through light industry,” he said. (macauhub/AO/CN/MZ)