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Africa urged to look to China for economic growth
African countries eager to expand global trade and investment links should look to China, where a raging hunger for commodities presents new opportunity for Africa’s exporters, according to a recent economic summit.“China potentially can be a giant market for Africa,” said Augusto Lopez-Claros, chief economist at the World Economic Forum. “At the moment, it is largely a missed opportunity.”
China’s economic boom is already reverberating across Africa as Chinese companies look for new sources of oil and other fuels, invest in mining operations, set up textile plants and increasingly look at agricultural opportunities.
At the World Economic Forum’s Africa summit in the Mozambican capital of Maputo, participants were told that this could be just the beginning of a rapid growth in trade and investment links - although big hurdles remain.
“African countries have taken advantage of this boom to a certain extent, but I don’t think they’ve capitalized on it enough,” said Dana Botha, Hong Kong managing director for South African banking giant Absa.
Sino-African two-way trade stood at around $12.38 billion in 2002, and Chinese officials have forecast it could more than double to some $30 billion by 2006.
Africa’s reliance on commodity exports, as well as its vast natural resources, make it a valuable partner for China’s expanding industrial sector, which increasingly is investing in African ventures - a small but rapidly growing portion of the foreign direct investment Africa desperately needs.
A China-Africa summit held in Ethiopia late last year resulted in agreements to set up 17 ventures, estimated to be worth $680 million, with Chinese companies in sectors from cement to pharmaceuticals.
Botha, citing Chinese statistics, said various African fuel and commodity exports were rising sharply - noting that Africa’s crude exports to China were up by some 44% year-on-year in the first two months of 2004 compared with the same period in 2003.
Other African exports, ranging from groundnuts to copper, are also doing well in the China market, a rare bit of good news for a continent which still only accounts for between two and three percent of total global trade.
Lopez-Claros said African companies and governments should try to address bottlenecks, particularly in the transport sector, which hinder moving goods to the Asian market and should look carefully at joining together to maximise their trading influence with China.
“Maybe it would make sense to focus on a multi-lateral approach, to focus on those commodities where Africa does have leverage,” he said. (Reuters)
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