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How China’s $60 Billion For Africa Will Drive Global Prosperity

The basis of Chinese investment in Africa is now changing, perhaps in part due to slowing growth in China and the crack downs on corruption taking place in China and in many African countries, notably Nigeria. In fact, both traditional Western and Chinese investors have acknowledged over the last two years that new, business-focused, transparent investment strategies are urgently required for Africa. Both sets of foreign investors are now collaborating more with credible private local companies and institutions, rather than governments and/or politically exposed people and organisations.

However, China has been the first to back this new focus with significant specific investment commitments. In December 2015, President Xi Jinping ushered in a new era of “real win-win cooperation” between China and Africa. This strategy aims to create mutual prosperity, allowing investors to “do good while doing right.” China has backed this proposal up with a commitment of $60 billion of new investment in major capital projects, which are tied to developing local economic capacity. This level of commitment contrasts starkly with the action, or lack thereof from the West. Western banks and investment institutions tied to archaic and largely ineffective Africa investment models are in danger of missing out on the double digit returns that successful African investments provide. Overall there is strong and growing sentiment that the political upheavals and slow adoption of sustainable business models in Europe and America, present an opportunity for Asia and Africa to help each other to develop and thrive.

 By 2050, 25% of the world’s nine billion population will Africans by 2050 and most of them will be under 30. To unlock the prosperity that such a human capital boon can lead to a transition must be made from financing strategies based on aggressive extraction of short-term high returns and raw materials to those focused on sustainability. The commitments made by President Xi Jinping in 2015 follow this model – comprehensively targeting areas that should foster sustainable economic growth: industrialization, agriculture modernization, infrastructure, financial services, green development, trade and investment facilitation, poverty reduction and public welfare, public health, people-to-people exchanges, and peace and security.
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