China promises Africa $1 trillion financing

via China promises Africa $1 trillion financing 20/11/2013  by Agencies NewZimbabwe 

CHINA has pledged to provide $1 trillion in financing to countries in Africa over the next 12 years.

Speaking at a summit in Hong Kong, Zhao Changhui of China’s state-owned Export-Import (Exim) Bank said the money will go toward helping the region build highways, railways, airports and other infrastructure.

It’s a big number, equal to the total amount of gross domestic product the continent is expected add between now and 2020. Here’s another comparison: In 2011, World Bank spending was just $5.6 billion on the continent.

If Zhao’s promise can be believed, China will fund the region with about $83 billion a year, with about 80% of the money coming from Exim Bank in the form of direct investment and loans.

The catch is that we may never completely know how much China actually spends, or where the money will go.

Chinese aid, investment and lending to Africa are notoriously difficult to decipher, since the country doesn’t release details about the financing of its overseas projects, despite international demands for more transparency. To complicate matters, China has no one agency responsible for foreign assistance, making those funds especially hard to track.

But even taking China’s opacity into account, it’s clear the country has been more involved in African infrastructure than its Western counterparts, which tend to focus on social issues like education, health, or food.

China accounts for more than 30 % of the total value of infrastructure projects in Africa and has been involved in high-profile projects like expanding Zimbabwe’s energy sector.

And it’s clear that Africa badly needs the investment: Economists believe Sub-Saharan Africa needs to be spending about $93 billion every year to close the region’s infrastructure gap with other parts of the world. China’s financing could help to plug the gap, but to what extent we may never know.

 

COMMENTS

WORDPRESS: 12
  • comment-avatar
    Chivulamapoti 8 years ago

    Heeeeere’s Johnny-the-ZingZong! SinAfrica Incorporated taking over the Continent – told ya!
    China is so over-populated, polluted and greedy, it had set it’s sights on Africa. China-masa has the moolah (cash)to succed big time. British colonization was kindergarten compared to the Chinks! Happy days Mugarbage and ZPF, you got your Master!

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    Mugarbage 8 years ago

    we dont want you yellow devils……you are worse than the british. you want to line the pockets of corrupt governments to benefit yourselves but the REAL people of africa remain in poverty and abused for cheap labour. be off with you mazhingzhongs….you bring deceitful promises.

  • comment-avatar

    Don’t forget now !! vote zangzupf at the next elections.There will be more chinese than locals.

  • comment-avatar
    GoFaith 8 years ago

    Africa must embrace this golden opportunity with both hands. If this money is put to good use, then the continent will spring to a world class economy – investing in infrastructure and employment creation. The problem is lack of accountability by most leadership who divert such monies to line their pockets through provision of inflated tenders of their kith and kins and the like.

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    William Doctor 8 years ago

    As always – money will come with strings attached. I doubt that the present cohort of African leaders will be strong enough to make sure that their people are protected.

    If China [or at least the communist party] doesn’t allow their people the vote, and shows little concern for human rights – then these same principles will be exported to Africa [which is good for leaders – but bad for the masses].

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    They are not doing this building for anyone but themselves. They are the new colonisers and they will make the English, Portuguese and French colonists of old look like angels and they will never give it back. They will enslave the Africans. Open your eyes for Gods sake.

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    Twinn 8 years ago

    The heading should read: China promises Africa $1 trillion financing in return for 5 trillion in natural resources.

    • comment-avatar
      Boss MyAss 8 years ago

      BUT OF COURSE: The world is experiencing one of the biggest revolutions in history, as economic power shifts from the developed world to China and other emerging giants. Thanks to market reforms, emerging economies are growing much faster than developed ones.The globalization of venture capital is taking many forms, ranging from global fund-raising and cross-border investment, to exits on foreign stock exchanges or by foreign acquisition, to VC firms opening offices overseas and helping their portfolio companies access markets in new regions.China has a unique pattern of pouring 30% to 50% of its invested capital into profitable companies (a level three to four times higher than the US or European VC sectors).

      The traditional model of foreign aid doesn’t work: the crushing debt burden of repayment, the frequency with which corrupt officials divert funding away from its intended purposes, the unpredictability of funding flows from donor nations, the stifling of innovation, and concerns over building a culture of dependency. There has been a growing realization that aid cannot be fully effective in the absence of strong institutions and a commitment to transparency in recipient nations.Looking beyond foreign aid, the usual economic development palliatives are not up to the task. Foreign direct investment flows are not high enough to drive aggregate demand and growth, and portfolio capital flows for many developing and frontier markets are at a trickle due to insufficient banking institutions and capital market development. Sovereign debt reduction all too often benefits the entrenched elites and does not translate into real infrastructure improvements for the poor. Microcredit, which seeks to provide small-scale entrepreneurial financing to the poorest of the poor, has been widely heralded as a fresh approach. But it is not the panacea that was once envisioned: it still has limited penetration in many neglected regions and, while alleviating, it can never drive economic growth to the levels required to build a global middle class.This is the point at which financial innovation has to enter the game. A wave of innovation has swept through the world of philanthropy and the world of bilateral and multilateral development finance agencies in recent years; foundations, foreign government donor countries and NGOs alike have been implementing new models, approaches, and technologies. But pull mechanisms—financial incentives that trigger donor payments when specific outcomes are achieved—remain a surprisingly underutilized tool. Unlike grants, or push mechanisms, they are paid out after results are realized, and they allow donors to reward whichever entity (or entities) actually produces the desired outcome. Both grants and incentives can be effective, and tool selection should depend on the circumstances. But donors should consider expanding their use of pull mechanisms where possible and they can be coordinated and integrated into new financial facilities and financial products for development.

      Pull mechanisms are an attractive option for several reasons. They do not require donors to pick winners in advance, decreasing the risk that subjectivity will influence award selection. Moreover, donors only pay when results are achieved; if no entry proves to be effective, donors keep their money. The greatest appeal of pull mechanisms is that donors are not just funding good intentions; they know they are eliciting the desired outcomes for which they are paying. Table 1 outlines the differences between pull and push mechanisms, situations where they are best utilized, and examples of specific tools. Foreign aid has traditionally relied almost exclusively upon push mechanisms, which have discouraged market development.

  • comment-avatar
    Boss MyAss 8 years ago

    去他妈的你的自我
    Qù tā mā de nǐ de zìwǒ

  • comment-avatar

    Nooo! China does not put money on the table. What they do is evaluate the projects using local costing. Then they request the host to pay 30% upfront. The rest of the 70% paid by the host goes to Chinese Sovereign wealth funds and personally to the officials over 25years.

    They take the money and go to China to invest it in cheap manufacturing from the free capital. They use the proceeds to employ cheap Chinese unemployed. They bring the fast wearing products to Africa and sell them cheaply.

    They employ cheap labour and prisoners to do the project at the cost less than the 30% paid originally, based on China costing.

    If its a road, the surface thickness of the tarmac is about half a centimeter. Potholes emerge immediately after commissioning.

    That is China, the Tiger. But you can’t blame them. In Africa they found stupid governments. Especially in Zimbabwe! YOU WANT CHINA TO DO FOR YOU WHAT YOU SHOULD DO FOR YOURSELF?

  • comment-avatar

    Gora, very good, pragmatic comment. Many African countries, particularly Zimbabwe do nothing to promote trust to international companies, either East or West. The grabbing of the farms and proposed “Indigenisation” of international companies has meant that these companies have looked elsewhere for safe countries to invest in.
    They are not interested in politics, only that they can make sound, long term investments with reasonable profit. That is what happens in every country, East and West. So if a country grabs like Zim did with the farms etc it is seen as a high risk and will attract companies who will want a large payback in exchange for investing.
    Until Zim gets a stable government who abides by international rules there will never be good, long term investment aka South Africa.

  • comment-avatar
    die groot wit aap 8 years ago

    If you believe in the Christian Bible (I do) you should remember what is written in the book of Proverbs: “the rich ruleth over the poor and the borrower is the SLAVE to the lender”.

    If this happens, your black communist Master will have sold you and your generations for eternity. Yes, he will have sold you for a fee. I suspect that without transparency in their lending, the first 1 billion dollars will go directly into an Asian bank account (probably) Singapore into a Mugabe account. It will be laundered by showing it as a “loan” that will never be paid back, the same way drug money is laundered.
    This is part of their plan, over the last 4 years that is now coming to light.

    Then your new yellow, communist, master will lay claim for repayment of any amount he desires, then foreclose on your resources, and your grandchildren.

    Keep in mind that this is the same savage master that has your wovits poaching elephant ivory, rhino horn, they even torture a poor puff-adder by cutting out his gall bladder whilst still alive so that he can drink the bile. It is his culture.

    Now he must poach your elephants and rhinos because he poached the Chinese elephants and rhinos to extinction more than 500 years ago. Check for yourselves.

    If this new yellow master takes over, the curse of when “the crocodile eats the sun” will NEVER be lifted. Then the hyena
    will feast upon your bones. There will be nothing left. After that, even the hyena will starve.

    die groot wit aap has spoken.