Monday, May 19, 2014

New $2 bn fund, China & Africa Development Bank

https://d13uygpm1enfng.cloudfront.net/article-imgs/en/2012/07/19/AJ201207190100/AJ201207190101M.jpgAccording to the Financial Times, the Chinese and the Africa Development Bank will soon announce a contribution of $2 bn to an Africa-wide investment vehicle, "Africa Growing Together Fund." Unlike most Chinese finance on the continent, this would be open to all companies to compete. If it's true (and it is still to be confirmed), this is a huge change and a very welcome one. While the multilateral banks are not immune from corruption and embezzlement challenges, they do have stakeholders that try to hold them accountable in a transparent process. That has not been the case with the Chinese policy banks. I suspect that Chinese firms will still win the majority of contracts but what an excellent tactic by a maturing Chinese leadership to make them compete internationally for their wins. This kind of competition is how companies become excellent, not by having deals handed to them, or by winning through collusion or non-competitive means. I can't wait to learn more.
A hat tip to John Briscoe. Photo credit: Asahi.com (hotel construction in Rwanda)

1 comment:

  1. While most of the Chinese funded projects in Africa have been awarded to companies belonging to Chinese, it does not mean that there is no project funded by the Chinese government ever be awarded to companies owned by non-Chinese

    That is one of the fallacies that you might have committed, Deborah, in your article

    Furthermore, many other projects in Africa that have been funded by sources other than China, even those which are supposed to be "non-profit", are often rigged with hanky-panky practiced

    Please check out the following article on Slate, Deborah:

    http://www.slate.com/blogs/the_eye/2014/04/16/an_ingenious_portable_lamp_that_s_lighting_up_rural_mali_by_italian_architect.html

    If you read the article carefully you would come across the cost of that mobile LED lampost --- "At $330, the lamppost is cheap compared to “fixed” solar street lamps, and the LED unit accounts for 70 percent of the cost "

    Yes, $330 for a kit consist of a solar panel, 4 LED lamp, battery chargers, and some metal fixtures

    Last time I checked the marketplace, the cost of all the components of that "mobile LED lampost" all put together doesn't even top $100, and yet this supposed "charitable project" comes with a price tag of $330 per kit

    In other words, projects funded by other sources are rigged with all kinds of hanky-panky practices which includes corruption

    That is what I really want to stress, Deborah, please do not criticize the Chinese funded projects just because they are funded by China - you need to have a more balanced view on the projects that are being undertaken by all parties (China and non-China) and you need to compare the benefits that those projects are giving to the people of Africa

    I am not saying that the projects funded by China are perfect --- no, there are so many things that can be done to improve those projects --- but as I have outlined above, Deborah, the Chinese funded projects are not inferior to those funded by others

    I hope that you will take a more balanced view from now on

    Thank you !

    ReplyDelete