Sunday, June 7, 2009

China urged to invest more in Africa's manufacturing sector

by Li Nuer, Song Ying and Tichaona Chifamba (Xinhua) -  VICTORIA FALLS, Zimbabwe, June 6 2009

Africa needs more Chinese investment in the manufacturing sector so that it can move up the value chain and increase the incomes of its people, a senior COMESA official said on Saturday.

The Common Market for Eastern and Southern Africa (COMESA) secretary-general Sindiso Ngwenya told Xinhua in an exclusive interview that although Chinese companies had invested mainly in the services sector, Africa would want them to do more in the manufacturing sector so that less wealth is exported abroad.

"With regard to trade, the trade between COMESA countries and China has been growing more than 50 percent to 100 percent depending on the country but on average more than 50 percent annually, and this can be reflected by the trade figures themselves where by the end of 2008 China-Africa or Africa-China trade was approaching the 100 billion U.S. dollar mark," Ngwenya said.

"But regarding investment, yes, Chinese companies are in the region. For example in Zambia when other companies were closing the mines the Chinese companies have continued to operate because they are not there for the short term but they are there for a long term partnership that is mutually beneficial to all of us," he said.

"This is the situation but I would hasten to add that we need more Chinese investment in manufacturing so that we can then go up the value chain and increase the incomes of our peoples and ultimately of our governments," he said.

Ngwenya said this on Saturday one day before the 13th COMESA Summit meeting in the Zimbabwean resort city of Victoria Falls. A customs Union of the region will be launched during the summit meeting by 19 African state leaders.

On how this could also benefit China, he said the current economic crisis had resulted in many companies shutting down in China. But if Chinese companies had taken advantage of COMESA with its access to the European market, they could have managed to operate from Africa and still export to Europe and the Americas while fulfilling Africa's quota.

"So the challenge is that China needs to not only invest in resource extraction like mining et cetera, but we also need to see Chinese investment in manufacturing. I know that they have investments in services, restaurants and so forth, but that is not good enough because we must begin to add value. For instance you have the China Non-Ferrous Metal Corporation in Zambia where they are building their exclusive economic zone."

However, he thanked China for the support it has continued to render to Africa in general and COMESA in particular.

On whether the COMESA market was big enough to absorb Chinese investment, Ngwenya said the region was a huge market of 400 million inhabitants, and the fact that China has always been selling to the region meant that the market was there.

"But regarding infrastructure investments, I would urge that the strategy should be that China should come together with our own companies to build capacity and at the same time implement these projects because if they are implemented without any local participation, there would be no transfer of knowledge and skills," he said

He said joint ventures like the Tazara railway line between Zambia and Tanzania were the ideal partnership.

Ngwenya also urged China to cooperate more with COMESA as a regional grouping rather than with individual countries. "There are certain things that we can do regionally like for instance in terms of trade, in terms of investments, although they will take place at the national level."