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Lovemore Chikova : News Editor

The following quotation from China’s Director General of the Department of African Affairs of the Foreign Ministry Mr Lin Songtian is very incisive in describing relations between his country and Africa. “The engine to drive cooperation between China and Africa has been changed, the structure has been changed, the situation has been changed and of course the outcome has been changed,” he said recently.“Whoever gets ready themselves will get the support from China. If you choose to sleep, maintain the situation as it is, as it was, you are free, we respect you. We will never force you to follow us.

“This is now the cooperation driven by the market, not by the government, so whoever gets themselves ready, you benefit first and benefit more, this is the message to you. I hope you will share with your people.”

Mr Lin was speaking to African journalists in China’s Sichuan city where coordinators of projects being undertaken in Africa toured the Singapore-Sichuan Hi-Tech Innovation Park.

The coordinators were mainly government ministers from various African countries, who included Macro Economic Planning and Investment Promotion Minister Obert Mpofu.

Well, the message is loud and clear from China.

It now needs bold decisions by African countries to ensure that they excite more investment from the Asian economic giant. It is no longer time for government grants from the Chinese side, and this coming after the realisation that such grants can no longer sustain the level of development that Africa requires. Government grants would rather be directed to other areas like training and human resources capacitation, and will no longer be channelled to mega developmental projects.

And by their nature, Government grants are very limited.

This explains why China has decided to put the private sector and financial institutions at the forefront of undertaking projects in Africa.

This means there will be increased competition among African countries to attract investment from Chinese firms, as they have to come up with viable projects which can entice the private sector.

It’s like a rude awakening to most African countries that were used to extend a begging hand to the Chinese government for additional grants.

The Chinese firms, being the private sector as they are, will be hunting for investment opportunities and look forward to returns on their investments.

It is now time African countries exploit their numerous advantages to attract more investment from China.

Since the Forum on China-Africa Cooperation summit in Johannesburg in December last year, China has been pursuing this new line of cooperation with African countries.

Statistics show that the cooperation has now gone commercial and only those projects considered feasible are taken on board.

Partial figures released at the recent African coordinators meeting for projects being implemented by China showed that the bulk of the aid coming from the Asian country is now commercial. For instance, since the focac summit last year, China and Africa have signed more than 180 cooperation agreements with a total value of $32,4 billion.

Of this, $29 billion is made up of commercial loans, accounting for 89,62 percent. During the coordinators meeting, the two sides signed 60 cooperation agreements worth $18,2 billion, of which $14,7 billion or 80,8 percent were contractual investment by Chinese firms in Africa.

That there is huge demand and development potential in Africa in industrial development, infrastructure, agriculture modernisation and urbanisation is of no doubt.

On the other hand, China has an advantage over Africa in technology, equipment, talent and capital that have the potential to unlock value from these sectors.

And there is a huge potential of enhancing this relationship, considering that China is the largest developing country in the world, while Africa is the fastest developing continent.

The approach being taken by China means that only those countries which are organised in terms of coming up with competitive and viable projects will benefit first. And this also includes Zimbabwe, where a number of private sector projects are already being undertaken between Chinese firms and Government. Government planners now need to deepen their skills and come up with more viable projects that attract the private sector from China and funding from that country’s financial institutions. Bold steps have to be taken to make the investment environment more favourable by addressing factors that usually slow down the interest of investors. It is important that Government has been working on various ways of making it easy for investors to do business in the country. These, coupled with shrewd planning, can result in the country fitting pretty well into the scheme of things and China’s new focus. It is important for Zimbabwe to overhaul its system so that it becomes investor friendly.

The country already has a competitive advantage in attracting private sector investment from China given its strategic position in Southern Africa.

That Zimbabwe’s economic infrastructure can still be ranked second from South Africa in the region is a good starting point.

Zimbabwe’s other advantage is that it is very rich in agricultural and mineral resources. But more areas need to be opened up to investors, as there is lots of potential in sectors like finance, telecommunications, automobile and insurance. What is also needed is to urgently look at laws, regulations and policy documents that hinder the flow of foreign capital.

The regulatory environment can discourage foreign direct investment, especially if it is excessive, where much time and money are spent in trying to comply. The result of such cumbersome processes is that the investor looks elsewhere easier to set up business. What is also important is to develop and rehabilitate some of the infrastructure to make it attractive to investors.

Zimbabwe already has a skilled labour force, thanks to the education policy adopted at independence in 1980, which gave an opportunity to everyone to pursue their academic dreams. Perhaps what is needed is to look at the cost of that labour, as it has the potential to discourage investors if it is considered too high and unsustainable.

The tax regime also needs to be looked at to ensure that it is favourable to foreign investors and if possible tax concessions should be offered.

Related to the tax regime are export-friendly policies, which can play a major role in persuading Chinese investors to come to Zimbabwe.

One of the major purposes of attracting foreign direct investment is for the country to build up its foreign reserves, while also creating employment.

So, policies that encourage investors to export as much as possible are needed. Zimbabwe is known for its peace and stability and the maintenance of such is important to give potential investors confidence.

Dealing with corruption should also be another top priority and the tough measures being taken against the scourge need to be strengthened.

China’s intolerance towards corruption should be emulated in this regard.

Thanks to its efforts, the Asian country is much regarded as “one of the most attractive destinations in the world for foreign investment”.

It is now Africa’s turn to learn how others attracted foreign direct investment.

Tough luck for countries that will not be up to the task in their quest to attract investment from China.

Like what Mr Lin said: “It’s hard if the people cannot catch the train on time, the train will not wait for them.”