Business Daily (Nairobi)

NEWS
16 October 2007

By Dominique Patton
Nairobi

African governments need to do a better job of marketing the opportunities to be gained from Chinese aid to local businesses, say researchers.

China pledged at a major summit last year to double its assistance to the African continent by 2009. But researchers from both regions say that it will be difficult for African companies to profit directly from China's loans and development projects.


"It is still difficult for Africans to get involved in Chinese aid projects," said Victor Yuan, chairman of Horizon Consulting, a China-based research group that surveyed views on Sino-African co-operation among Chinese and African officials and business leaders.

"Currently the aim of these is to use Chinese technology to implement the projects."

Most Chinese infrastructure projects rely heavily on state-owned companies but some contracts should be turned over to local businesses. However Mr Yuan says that most companies do not know how to access these ventures.

"There is a need to publicise the co-operation policies and make them clearer to local people," he told a conference on Sino-African trade in Beijing. Mr Yuan also accused China's Exim bank of failing to provide adequate information on projects it is funding. "Companies are puzzled as to how to get access."

Zhao Changhui, director of Asia-Africa Development and Exchange Society at the bank, claims the bank's funding is transparent. "It is not a closed circle, it's public. Every piece of information can be found on our website."

But Sanusha Naidu, research fellow at the Centre for Chinese Studies in South Africa's Stellenbosch University, believes it is down to local governments rather than the loan provider to market opportunities to the private sector.

"It's not a closed door policy but I wonder to what extent African governments are pushing the agenda and creating knowledge of opportunities for their businesses to take advantage of?"

"We've seen the unleashing of very substantial funds from China in the last eight months or so but what we're scared of is how much of this will be repatriated back to China. I'm worried that Chinese companies in their prowess may totally outdo African companies."

Ms Naidu suggests that aid projects should incorporate requirements for Chinese companies to take on junior African partners that could benefit from knowledge transfer.

Mr Zhao admits that suitable local businesses are difficult to find. "We always try to find as many local partners as possible but a company has to prove that it is qualified in that sector."

"We want to have more local companies so that we can have better access to the marketplace and then build a two-way partnership," said Mr Zhao.

"But as a provider of Chinese loans we know the Chinese companies better and know which company would be better for the job." Some Chinese aid has already evolved into economic co-operation or market-based projects, said Mr Yuan.

For instance, Huawei's initial investments in Africa started out as aid projects but once networks were laid, they led to independently run joint ventures.

However there is a lack of long-term thinking and co-ordination between government departments.

Aid projects lack third party supervision in Africa and there is insufficient support from the Chinese government to make them sustainable in the long-term, according to his study.