Africa turns into new investment destination

Investors are courting Africa like never before. The resource-rich continent, which has massive business potential, is turning into the new investment hub for many countries — with Japan and China taking the lead.
Japanese Prime Minister Shinzo Abe is set to unveil aid and development projects at a conference in Kenya this weekend. He will meet business leaders to tap the burgeoning African markets. Tokyo is keen to help Nairobi expand the congested port of Mombasa. It also wants to play a crucial role in the road-widening and rural highway projects. Similarly, China is strengthening its cooperation with Kenya in a big way. The East Africa Railway is being constructed by China Road and Bridge Corporation (CRBC) and The Export-Import Bank of China is financing 90% of the ongoing development of the Mombasa-Nairobi section.
In June this year, Japan signed a key automobile industry trade deal to ship 10,000 Japanese tractors to Harare. Earlier, the two countries struck a $5.8-million deal to finance road construction on Zimbabwe’s north-south corridor. China too has invested heavily in Zimbabwe to boost its agriculture and infrastructure projects. Recently, Zimbabwe agreed to a $2.7-billion pact with firms from China and Austria to upgrade the country’s busiest road linking South Africa with the countries to the north.
Beijing Automotive International Corp — a Chinese state-owned car manufacturing company — plans to pump in $819 million in a new plant in South Africa. The world’s second largest economy is also growing its business linkages with Nigeria — which is shifting its focus on the non-oil sectors to diversify its economy. Nigeria is looking for investments of $7 billion in mining and steel over the next decade. It is in talks with Russian and Chinese companies to revamp Ajaokuta — a steel complex near Niger River.
Apart from Japan and China, the UAE, India and South Korea too have mounted efforts to woo African countries. Amid the recessionary trend, entrepreneurs are seeking new growth markets and Africa offers huge hope to them.
Total merchandise trade between the UAE and Africa shot up from $5.6 billion in 2005 to $17.5 billion in 2014. This shows their economic ties have zoomed manifold. More trade delegations are being sent from UAE to Africa and interactions are making the trading process smoother.
India’s Prime Minister recently undertook a five-day tour to Mozambique, South Africa, Tanzania and Kenya. India inked agreements with Mozambique and Tanzania for import of pulses. It also offered $92 million Line of Credit to Tanzania for a major water supply plan. Pacts were also signed in healthcare with Kenya under which New Delhi would help set up a pharmaceutical company in Nairobi to manufacture drugs. South Korean President Park Geun-hye, who also visited Africa this year, has said that her country would be an “African companion” in development matters and laid out a blueprint for Africa-South Korea ties that would bolster trade, education and cultural co-operation.
As Africa takes business centrestage, it has to ensure that the investment enthusiasm doesn’t taper off. Some of Africa’s less-safe states have to improve security in their territories. The new scramble for Africa will benefit the continent only when its leaders put state’s welfare on top.