APA News, 16/04/2009
Although China’s new engagement with Africa is still emerging, it has remained a minor investor in Africa and it’s foreign direct investments (FDI) stock of US$ 2.6 billion in Africa until 2006 accounted for less than 1% of total FDI stock owned by all foreign counties in Africa, said the Organization for Economic Co-operation and Development (OECD) in a report released recently in Beijing and a copy of which was made available to APA Wednesday.
The European and North American countries with traditional ties with Africa have continued to occupy prime positions as foreign investors in Africa, said the report entitled “China: encouraging responsible business conduct”, adding that “The top investor in Africa remained the United Kingdom with a 16.6% share of total FDI stock in Africa, followed by the United States with a 9.2% share and France with a 7.7% share”.
“In terms of flow, China’s share in total FDI flows to Africa is slightly larger than its share of FDI stock, at 1.2% over 2003-05, but this is overwhelmed by the large inflows originating from the United Kingdom (42.2%), the United States (9.2%), France (7.6%), Spain (5.6%) and the Netherlands (4.9%)” the report said.
“Among Asian investors, however, China exceeded Japan and Korea in both flow and stock of direct investment in Africa; and China has become a leading source of FDI in Africa from developing countries” the report added.
As for the amount of investments the OECD said in it’s report that “China’s OFDI (outward foreign direct investment) flows into Africa were estimated to be US$107 million per annum in the latter half of the 1990s, rising from a mere US$14 million in the first half of the 1990s”.
During the period 2003-06, an average of US$326 million of investment was made annually by Chinese enterprises in Africa. By end-2006, China’s OFDI stock in Africa had reached US$ 2.6 billion added the report.
The top five countries with China’s largest OFDI stocks, all of them resource-rich countries (Algeria, Nigeria, South Africa, Sudan and Zambia), accounted for 54.6% of China’s total OFDI stock in Africa as of end-2006.
For several African host countries China’s investment has become prominent as a source of FDI: African countries which sourced more than 5% of their FDI stocks from China so far are Niger (27.5% of its FDI stock received from China), Madagascar (10.8%), Guinea (8.0%), Zambia (7.1%), Gabon (6.5%), Benin (6.4%) and Mauritius (5.7%).
“In terms of investment flows, the list of African countries favored by Chinese enterprises did not change much during 2003-2006, with Algeria, Nigeria, Sudan, South Africa and Zambia in the top list” added the report, stressing that “These five popular destinations continuously absorbed more than a half (76.2%) of China’s OFDI flows into Africa during 2003-2006”.