Opening address - Forum on Chinese investment for sustainable trade and economic growth in Africa

31 May 2016
ITC News
Speech delivered by ITC Executive Director Arancha González at the Forum on Chinese investment for sustainable trade and economic growth in Africa
31 May 2016 - Beijing - China

Dear Ms. Xiong Jiuling, Chairwoman, China Council for the Promotion of International Trade (CCPIT) Beijing Sub-council,

Dear Mr. Shi Jiyang, Chief Executive Officer, China-Africa Development Fund (CADFund),

Dear Mr. David Kennedy, Director-General for Economic Development, UK Department for International Development (DFID),

Excellences Ambassadors,

Distinguished guests,

Ladies and Gentlemen,

In 2015, the United Nations agreed to the new Sustainable Development Goals (SDGs), which pay special attention to sustainable economic and inclusive growth as means to promoting development. The achievement of these goals is a shared responsibility between government, private sector including investors and civil society. In addition, most of the 17 goals relate to economic activities as they require significant investment in production, services and infrastructure.

According to World Investment Report by United Nations Conference on Trade and Development (UNCTAD), Foreign Direct Investment (FDI) inflows is expected to rise to USD 1.5 trillion in 2016 and to USD 1.7 trillion in 2017. South-South FDI flows have intensified in recent years. FDI from developing economies has grown significantly over the last decade and now constitutes over a third of global flows.

China is part of the largest outward investing economies. China has doubled its level of foreign direct investment to Africa from 2005-2009 to 2010-2014. Energy, transport and mining however account for over 90% of Chinese investment in Africa. While the light manufacturing and agro-processing sectors offer great opportunities for economic and export growth, they remain largely untapped by Chinese investors.

Africa is the world's second fastest-growing continent in economic terms. Its demographics are also promising. Technology and innovation are on the rise. Africa has become the 2nd most attractive investment destination in the world. Moreover, Africa's rapid urbanization, expanding middle class and increasing household expenditures are creating millions of consumers. Opportunities for investment are huge.

But investment alone does not automatically guarantee sustainable development. It requires inclusiveness and partnership. Investors have an opportunity and responsibility to go beyond capital investment and make a positive, meaningful impact on the lives of local communities.

Let me start with Inclusiveness: It is about turning investment into local value addition and more jobs, especially for women and youth. It is about anchoring investments into productive sectors, support compliance with international standards and trading these products in international markets. It is about SMEs.

Small and medium size enterprises (SMEs) are the growth levers to ensure investments result in local value addition and job creation. SMEs are the missing link for this growth to be inclusive. When SMEs are able to access new investments, build trade capacity and skills, and when they are empowered to become more competitive and connect to international markets ― in a nutshell, when SMEs trade ― they generate more and better jobs.

This is what the Partnership for Investment and Growth for Africa (PIGA) aims at: bringing investment into productive sectors in Africa for increasing the competitiveness of African exports in world markets and contribute to employment.Increased Chinese investments supporting African SMEs in the light manufacturing and agro-processing sectors will leverage opportunities to increase exports to the regional and global markets.

Let me now turn to Partnership: investment is all about constant dialogue between investors and SMEs, between the private and the public sector.

PIGA is a strong Partnership between the International Trade Centre, the governments of the United Kingdom (UK), China, Ethiopia, Kenya, Mozambique and Zambia.

I am pleased that these partners, the UK Department for International Development and the China-Africa Development Fund (CADFund), have chosen the International Trade Centre to be their implementing partner for PIGA. PIGA can leverage on ITC’s more than fifty years of experience in delivering trade-related technical assistance, capacity building and trade and investment market intelligence to benefit SMEs, trade and investment support institutions and policymakers.

Since its launch in October 2015, PIGA scoping phase is progressing well. Key results achieved so far: strong ownership from the 4 partner countries and China; Strong partnership established with DFID-China, CADFund and CCPIT; an analysis of the investment opportunities in the four African countries and a second one on their export potential which we will discuss in today's panels; a Network of more than 60 Chinese companies interested in investing in Africa; Business investment linkages initiated with 20 Chinese companies which have already commenced investment discussions in the 4 countries.

The presence of more than 300 companies today demonstrates strong interest and buy-in. My hope is that by the end of the year we can have concrete, even if modest, results to open the door for greater investment deals in the future.

I warmly welcome all participants and wish us all productive and fruitful discussions.