Sinohydro Group boosts African stakes
08:03, October 21, 2010
Sinohydro Group, a leading State-owned group in hydropower
construction, will increase its investments in Africa, said a senior
company official.
"We are conducting a series of projects in some African countries,
including a copper and cobalt mine in the Democratic Republic of
Congo, and two hydropower stations, one in Mozambique, and the other
in Zambia. We are also looking closely at investment opportunities in
Liberia," said Ding Zhengguo, assistant president in charge of
overseas projects for Sinohydro Group, on Tuesday.
The actual amount of investment involved is still uncertain and will
depend on specific stages of negotiation, because some African
countries have yet to establish a sound legal framework to support
investments, he added.
More Chinese investments are flowing into Africa as the continent
emerges as one of the most important outbound direct investment (ODI)
destinations.
In 2009 alone, China's ODI in Africa shot up to $1.44 billion, a rise
of 55.4 percent year-on-year, official figures showed.
On Thursday, the Ministry of Commerce released an annual report on
China-Africa trade and economic relationships, saying Chinese
companies are expected to tap into many new sectors, including mining,
financing, aviation and tourism.
The number of Chinese companies operating in Africa exceeds 2,000 and
is expected to increase, said the ministry.
On the other hand, poor infrastructure and a lack of adequate market
mechanisms in some African countries have prompted concerns among
Chinese businesses about the continent's investment environment,
according to Cao Zhongming, deputy director-general of the African
affairs department of the Ministry of Foreign Affairs.
However, he was optimistic about the future for Chinese businesses in
African markets.
"China and Africa are highly complementary in investment. In the long
term, the African market will have a bright future," he said.
The return on investments by Chinese companies in Africa is between 24
and 30 percent, compared to a rate of between 16 and 18 percent in
developing countries as a whole, said the Ministry of Foreign Affairs.
Foreign direct investment volume in Africa has registered rapid growth
over the last six years, jumping from $18 billion in 2004 to $36
billion in 2006.
It peaked at $88 billion in 2008, before falling back to $59 billion
in 2009 as the international financial crisis worsened, according to
official figures.
The World Bank estimates that African countries will need to invest a
total of $93 billion per annum on infrastructure, but says they can
currently only manage $45 billion.
Source: China Daily
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