Out-Law News 2 min. read
24 Mar 2015, 4:52 pm
Xin Shunkang said the total value of Chinese investments in Namibia is currently around $3bn, while Chinese firms in the country employ more than 6,000 Namibians.
Xin said investments have risen steadily since China and Namibia signed a ‘Reciprocal Investment and Protection Agreement’ in 2005.
According to Xin, the Chinese government is also working on “at least 10 new projects” for Namibia, covering the transport, education and health industries. In addition, Xin said China provided Namibia with “free aid” amounting to $29 million in 2013 and a further $16m last year, under an agreement on bilateral economic and technological cooperation.
According to the Forum on China-Africa Cooperation (FCAC), Chinese investments in Namibia in the period 2011-2012 grew by $179m.
The FCAC said that on 13 March, Namibia’s 209-kilometre ‘Main Road 25’ (MR 25), built at a cost of around $70m by a Chinese company in the northeast Zambezi region, was formally opened by Namibian president Hifikepunye Pohamba.
According to the FCAC, the road is the longest built since Namibia's independence and was constructed in partnership with the national Roads Contractor Company Ltd, with the Namibian government also contributing to funding.
MR 25 connects the Wenela border crossing between Botswana and Namibia and the countries’ Ngoma border crossing. The road will also connect the Trans-Zambezi Highway that forms part of the Walvis Bay-Ndola Lumbumbashi Corridor. Thirty-nine Namibian small to medium enterprises were sub-contracted for the project, the FCAC said.
Earlier this month, a member of the World Economic Forum’s Global Agenda Council on China, Martyn Davies, said there is an African “incline” towards China’s commercial sphere of influence.
Davies, who is also the chief executive officer of Frontier Advisory, a research, strategy and advisory firm that specialises in emerging markets, said: “As China’s strategy towards Africa matures, so too must Africa’s strategy towards China. Beijing is no longer just an actor in Africa’s resources sector but is broadening the scope of its commercial foray into the continent. African governments need to respond accordingly and be more agile in their policy-making vis-a-vis China’s engagement.”
Davies said that in 2008, Beijing’s financial authorities “used a sizeable stimulus of approximately $570bn to pump-prime economic growth”. “This was in response to rapidly slowing global growth following the financial crisis, and it had a very positive knock-on effect on Africa’s growth trajectory.”
“Ironically, China’s actions reinforced Africa’s commodity dependence, with strong commodity prices providing a deterrent, or at the very least a distraction, for African policy-makers to accelerate their efforts towards diversification,” Davies said.
However, “changes now impacting the Chinese domestic economy hold out a new promise for aspirational African economies,” Davies said. “The rising cost pressures on China’s light industrial manufacturing sector will increasingly lead to manufacturing capacity to relocate to lower-cost foreign economies over the long term. This trend of Chinese ‘hollowing out’ of low-end manufacturing and offshoring to Africa is likely to be the next driving force of the relationship.”
In the first 10 months of 2013, China's direct investment in African non-financial sectors increased 71.6% year-on-year to $2.54bn, according to Chinese Ministry of Commerce figures reported by the country’s state-run Xinhua News Agency. The vice-chairman of the China council for the Promotion of International Trade, Zhang Wei, told Xinhua that more than 2,000 Chinese companies are investing in Africa in sectors such as agriculture, infrastructure, finance, logistics and construction.
The third annual Deloitte African Construction Trends Report (28-page / 2.01 MB PDF), released earlier this year, said overall investment in African ‘mega projects’ increased by 46% to $326bn in 2014, led by heavy investment in transport, energy and power.
