Ethiopia’s effort to benefit from China-Africa trade

BY MENGISTEAB TESHOME

Over the past 20 years, China’s trade with Africa has increased twentyfold making China Africa’s second largest importer of Agriculture products as well as the largest bilateral infrastructure financing partner. China has also emerged as one of Africa’s major providers of economic inputs. Since 2000, Chinese’s investment in Africa has been rising slowly but steadily, with private enterprises as a major player in economic, trade and investment cooperation.

According to data from China’s Ministry of Commerce, China’s stock of direct investment in Africa at the end of 2020 stood at USD 47.35 billion. In 2019 the Ministry pointed out that private companies have accounted for around 70 % of Chinese investment in Africa. A 2021 China-Africa Business Council (CABC) survey of nearly 100 key private companies found that the proportion of “reinvestment” in Africa was found to be 30 %. Given that a number of companies have not “registered” in the investment system and that “reinvestment” by companies is not included in the statistics, this report estimates that by the end of 2020 the stock of Chinese business investment in Africa is not less than USD 56 billion.

This signals that as China-Africa cooperation upgrades and expands in depth and quality. Chinese enterprises are evolved to be a strong force, and the presence of Chinese private enterprises in Africa, which dates back to the 1980, is worth our attention.

Following the “Ten Major Cooperation Programs” and the “Eight Major Initiatives” jointly formulated and implemented within the framework of the Forum on China-Africa Cooperation 2018, investments in infrastructure, manufacturing, mining, agribusiness, industrial parks and other areas have gained momentum. A large number of rail, road, airport, seaport, power plant and other projects have been successfully implemented, bringing significant changes to the economic and social development of Africa. An increasing presence of Chinese companies can be particularly observed in countries such as Nigeria, South Africa, Egypt, Angola, Zambia, Democratic Republic of Congo, Ethiopia, Kenya, Congo-Brazzaville, Ghana, Algeria and Tanzania. Recent trends also indicate that “China’s Top 500 Private Enterprises” have increasingly shown interest in development and investment in Africa.

Given their advantage over Chinese SMEs in terms of capital, technology, talent and internationalization, countries are emerging to think that the top 500 Chinese Private Enterprises will assume a prominent role in furthering Africa’s industrialization and integrated development, and introduce innovative investment models within China-Africa economic and trade cooperation.

With a more market-oriented approach, and boosting investment into Africa continue to grow, private companies have an essential role to play in this process. In addition to traditional sectors, Chinese enterprises are exploring and venturing into new areas such as medium and high-tech manufacturing, healthcare and pharmaceuticals, digital economy, aviation industry and more.

Apart from trade and investment, Chinese enterprises are also becoming an important force behind Africa’s inclusive economic development. African nations have not only warmly welcomed contributions of Chinese enterprises in industrialization and employment, but also in people’s livelihoods. Bringing a unique approach and features to poverty reduction to African countries, Chinese enterprises have met their corporate social responsibilities and most recently, strongly supported local public health efforts in the fight against the current pandemic. Despite being faced with challenges of the pandemic, global economic slowdown, trade protectionism and rising debt, Chinese companies have remained optimistic and willing to invest in Africa and are committed to achieve more.

In addition they improve their aptitude to address their own problems and gaps, particularly gaps in understanding of Africa’s diverse cultures, laws and policies, thus, strengthening their capacity to face high risks, explore tripartite cooperation, formulate long-term business plans and successfully integrate into Africa’s economic and social development endeavor.

In line with the effort to diversify the destination of export and increase the number of exporters, Ethiopia is working in established fashion to meet the huge demand of the nation foreign currency. According to Ethiopian Ambassador to China, Teshome Toga, recently Ethiopia has begun negotiations with its Chinese counterpart to export fruits and meat products to the China market.

Following the establishment of the Forum on China-Africa Cooperation in 2018, China promised to publish a Report on Chinese Investment in Africa on a regular basis.

Accordingly, China has issued the second report published by China-Africa Business Council (CABC) at a ceremony held in Beijing on last Tuesday.

The report, released under the title “Chinese Investment in Africa (2022): China-Africa Cooperation from a Supply Chain Perspective,” reviews the experience of China-Africa investment cooperation and put forward proposals for future cooperation.

This year’s report has featured statistical and research data from diverse sources in addition to the analysis presented on the Chinese-African business cooperation.

It also showcased efforts made by Chinese enterprises in supporting Africa’s supply chain development as well as the challenges faced during the process.

The report provided 32 recommendations for Chinese and African governments as well as enterprises.

Speaking on the occasion, Ambassador Teshome said that Ethiopia has been working to strengthen bilateral trade and investment with China.

Noting that the two countries have been enjoying a strong bilateral economic cooperation, the ambassador said Ethiopia is one of the beneficiary countries under the Belt and Road Initiative of China.

The Addis Ababa-Djibouti railway and a significant number of other huge industrial parks are the results of this cooperation, he added.

According to him, Ethiopia is keen to strengthen its strategic cooperation with China with a view to realizing the economic transformation of the country as it requires technological capability and huge investment, ambassador Teshome stressed.

Now, in a bid to boost trade relations with China, Ethiopia has started negotiations with its Chinese counterpart to export meat and fruit productions to the China market, he noted.

The negotiation is being undertaken in line with the step put forward by Prime Minister Abiy Ahmed that paves the way for Ethiopian Agricultural products to penetrate into the global market, Teshome added.

According to the ambassador, banana, avocado and mango will be the first batch of Ethiopia’s agricultural productions planned to be exported to China after the negotiations and other requirements are settled.

This year’s report was launched in the presence of the Director-General of the Department of African Affairs of the Ministry of Foreign Affairs of China, Wu Peng and Permanent Representative of the African Union to China, Rahamtalla M. Osman and ambassadors of African countries.

It was indicated during the occasion that due to the Forum on China-Africa Cooperation, the Belt and Road Initiative and other government efforts, China and Africa have realized practical cooperation in a wide range of areas, in particular, in industrial and supply chain development

The Ethiopian Herald  31 August 2022

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