Monday, March 30, 2015

Chinese Agricultural Engagement in Africa: Policy Briefs

Our sister website, the SAIS China-Africa Research Initiative at Johns Hopkins University, has now published the latest (and last) in a series of policy briefs focused on Chinese agricultural investment and other engagement in Africa. These policy briefs provide original, fieldwork-based insights and information that is not available anywhere else. The papers on which they are based were presented at our 2014 SAIS-CARI conference on Chinese agricultural investment: 'Land Grabs' or 'Friendship Farms'?

  • Policy Brief 01/2014: The Political Ecology of Chinese Investment in Uganda: the Case of Hanhe Farm, Josh Maiyo.
  • Policy Brief 02/2014: Chinese Agricultural Investment in Mozambique: the Case of Wanbao Rice Farm, Sérgio Chichava.
  • Policy Brief 03/2014: Chinese Training Courses for African Officials: a “Win-Win” Engagement?, Henry Tugendhat.
  • Policy Brief 04/2015: Chinese Agricultural Engagement in Zambia: A Grassroots Analysis, Solange Guo Chatelard and Jessica M. Chu.
  • Policy Brief 05/2015: Chinese Agricultural Entrepreneurship in Africa: Case Studies in Ghana and Nigeria, Yang Jiao.
  • Policy Brief 06/2015: Assessing the Impact of Chinese Investment on Southeast Africa’s Cotton: Moving up the Value Chain?, Tang Xiaoyang.
  • Policy Brief 07/2015: Neither ‘Land Grab’ nor ‘Friendship Farm:’ Chinese Agricultural Engagement in Angola, Zhou Jinyan.
We appreciate support from the Smith Richardson Foundation and from Johns Hopkins University School of Advanced International Studies that made the conference and these policy briefs possible.

Tuesday, March 24, 2015

Mysteries of the China Africa Development Fund

The China Africa Development Fund (CAD-Fund) launched by China Development Bank (CDB) in 2007 remains poorly understood. For example, a 2012 statement by the Africa Finance Corporation outlining a strategic partnership being developed by the AFC and the CAD-Fund describes the CAD-Fund as having "US$50 billion" in funds under management.   Surprise: when fully mature several years from now, CAD-Fund will only be a $5 billion fund. In the past 3 years, no one has corrected that error at the AFC website.

Others have described the small CAD-Fund as a "sovereign wealth fund" -- this is not technically correct, as an adviser for China's sovereign wealth fund, China Investment Corporation (CIC) confirmed to me. Sovereign wealth funds are usually funded directly from central bank reserves arising from trade and budget surpluses (e.g. Korea Investment Corporation; China Investment Corporation) or natural resource exports (Kuwait Investment Authority, etc.). The CAD-Fund is a private equity fund, and was supposed to raise its own funds on the private market, after the initial infusion of $1 billion from CDB.

After two years of trying to raise the second $2 billion, CAD-Fund had to ask CDB for help. CDB arranged to provide CAD-Fund with a loan at LIBOR plus a margin, with an 8 to 10 year term. As noted in the financial newspaper Caixin in April 2012: "Development bank takes out loan after domestic institutions decline to invest" in CAD-Fund.

On another note, it is true that the CAD-Fund is not at all transparent. Its website gives no lists of the projects in which it invests, aside from a few paltry examples. Is this standard practice for other private equity funds, or something uniquely Chinese?

Wednesday, March 11, 2015

African Roads: Why So Many Chinese Contractors?

Thika Road, Nairobi      credit:
Sitting in yet another airport, after yet another delayed flight, after yet another conference on China and Africa. Pondering this question: African governments routinely award road construction contracts to Chinese and other foreign companies: South African, Italian, and so on. Why is this the case? A recent discussion in the comments section of this blog addressed that issue. Readers' thoughts welcome.

@Anonymous: Africa needs more infrastructure, no one denies that. I just have one question. Why is it that it is only foreigners who can build this infrastructure? Why can't we Africans rise to the challenge of learning how to construct the infrastructure we need? Is constructing infrastructure too hard for us Africans?

@Margaret Lee: I agree with you. Africans have the capacity to build infrastructure. The problem is that the Chinese are sending many of their people out of China to get jobs because there are too many people in China. All over the continent you have well qualified African engineers who can design new infrastructure and people to actual do the construction. In addition, most African countries have the monetary resources to pay for the needed equipment and supplies. The real issue rest with African leaders who are not serious about African development and would rather allow foreigners, like the Chinese, to do the work. This has been the problem with Africa since independence. Noted brilliant African scholar, now deceased, Claude Ake in his book on Democracy in Africa says,"..the assumption so readily made that there has been a failure of development is misleading. The problem is not so much that development has failed as that it was never really on the agenda in the first place. By all indications, political conditions in Africa are the greatest impediment to development.."