Meeting the Needs of Africa

China Today: Is there any standard applicable to the CAD Fund’s choice of projects? How do you take the needs of the African continent into account?

Chi: The actual needs of Africa have been foremost in the CAD Fund since its establishment. We encourage big Chinese companies with solid reputations to invest in the continent, and proactively channel Chinese capital into industries and projects that Africa most wants to develop. As both a bridge and platform, the CAD Fund has gone all out to promote Africa’s economic development and improve the lives of local residents.

We focus on projects likely to enhance the internal dynamic force that drives local economic development and improves people’s living standards. We also keep close tabs on the market and balance risks and returns.

When choosing a project, we first study local conditions and assess the region’s comparative advantages and most suitable development path. We then evaluate from those perspectives the prospects and potential of the project. An investment must meet local needs, which represent the real market.

China Today: The Chinese government has always attached great importance to Sino-African relations, but the CAD Fund operates independently and takes responsibility for profits and losses through a market-based mechanism.

Is there any situation under which the CAD Fund sacrifices profits in efforts to promote Sino-African relations?

Chi: No. The CAD Fund is the first and only professional private equity fund focusing on investments in Africa. Its purpose is to encourage and support Chinese enterprises to invest in Africa. When it comes to choosing projects and evaluating risks, however, we make our own choices through market-based mechanisms and pursue sustained returns. What we do differs from economic aid. We follow standard investment rules and procedures, conduct market investigations, and make investments based on risk-return evaluations.

The stable development of Sino-African relations has provided a favorable environment for bilateral cooperation in various areas. By promoting Chinese investment in Africa we hope to forge a new type of Sino-African strategic partnership.

Great Potential for Investment Cooperation

China Today: China has provided much economic aid to Africa and also large amounts of low-interest loans. Compared to such aid, what are the advantages of the CAD Fund? Are African nations happy with the help they receive from it ?

Chi: China and African nations are all developing countries. The two regions’ respective socio-economic development and resources define the Chinese and African economies as highly complementary. The history of Sino-African economic and trade cooperation shows that traditional models of cooperation such as aid and taking on African contracts have played an important role in promoting the China-Africa economic and trade relationship.

China’s present goals are to transform its economic development model and adjust its economic structure. As African nations enter a period of greater political stability the common focus of their governments is on developing their rapidly expanding economies and getting rid of poverty. Investment cooperation, as the most stable and sustainable model for bilateral cooperation, hence meets the needs of China and African nations, and has good prospects. Direct investment in Africa will improve its ability to generate sustainable economic development.

China’s investment in Africa has escalated over the past few years and played an important and strategic role in promoting Sino-African economic cooperation and advancing socio-economic development and industrial upgrading. Chinese investment is a way of expanding the social and economic benefits of traditional China-Africa cooperation and strengthening its internal structure.

The CAD Fund, in a joint effort with Chinese enterprises, offers what African countries most need for development, including capital, technology, talented human resources and management experience. Investment has a bright future and will become the most important model for future China-Africa economic and trade cooperation.

China Today: Amid China’s present economic transition the Chinese government encourages Chinese enterprises to go global and expand investment overseas. How will the CAD Fund take advantage of opportunities it has?

Chi: To make the most of this turn of events we must be far-sighted and understand more about the international scene. We can then decide on the CAD Fund’s best path of development.

The CAD Fund has now developed into the largest platform for China’s direct investment in Africa. We provide an all-round service, including research into capital, markets, industries and Africa’s development experience, investment and risk management, and legal consultation. After years of accumulated experience, the CAD Fund has become adept at guiding Chinese enterprises’ investment in Africa.

Better Investment Environment

China Today: African countries are clearly interested in China’s development experience. Personally speaking, do you think China’s model is suitable for African countries?

Chi: China and African countries are at similar, but not identical, development stages, and are becoming increasingly complementary in their process of urbanization and industrialization. African countries now face impediments to economic development similar to those China has experienced, such as irrational industrial structures, lack of industrial products and consumer goods, and underdeveloped infrastructure. Some are trapped in poverty.

Reviewing China’s development history, we can see that when faced with similar problems it has stuck to its path of development with Chinese characteristics. The successful use of investment, especially the introduction of foreign capital, has played a big part. This is what African countries could learn from China. International investment could compensate for the domestic shortage of money supply and help improve industrialization, create more jobs, increase tax revenue and improve trade conditions. It could also bring in cutting-edge technology and development experience.

African countries want to learn from China’s development experience, but the two regions have different systems and mechanisms. The former should make adjustments based on their actual conditions while at the same time learning from China.

China Today: China and Africa now understand more about each other and have a well-established cooperation partnership that has deepened in various fields. What do you think the African market can do to be more attractive to Chinese enterprises?

Chi: Many Chinese enterprises are drawn to the vast African continent by virtue of its rich resources and huge market potential. In recent years, many African countries have experienced a good momentum of economic growth, thus offering opportunities to Chinese enterprises. But the African market is still unstable and filled with uncertainties, which is why Chinese companies tend to take a prudent approach.

African countries are in the process of urbanization and industrialization. The introduction of foreign capital could help ease problems caused by shortages of funds, technology, management experience and talented workers. Having worked hard over the past few years to improve their investment environment, many countries are nevertheless still at varying levels of development. It is our hope that the governments of African countries will adopt effective measures to improve the investment environment, such as keeping policies stable, opening up markets, reducing foreign exchange controls and establishing preferential tax policies for foreign investors.