China Investing More in Africa’s Manufacturing Sector

Published Date : Jul 01, 2015

World Bank has pointed out that China is increasingly putting its money in Africa’s manufacturing sector. According to a report released at the Investing in Africa Forum at Addis Ababa, the World Bank mentioned that Africa needs to put conscious efforts to create a positive environment which would attract investments from China in Africa’s under developed manufacturing sector. The Investing in Africa Forum is jointly held by China, Ethiopia, and the World Bank. Though China had been earlier investing in construction sector and extractive industries in Africa, the last couple of years have witnessed increased investment in the manufacturing sector. The World Bank has estimated that China’s cumulative investment stock in the African manufacturing sector grew by 10% year-on-year to US$2.4 billion by the end of 2011. In the duration between 2003 and 2014, the largest share of Chinese capital investment was in the manufacturing sector in Africa.

The World Bank mentioned that the increase in foreign investment from China will lead to employment opportunities in the under developed continent. In the face of increased labour costs in China, the Chinese companies are likely to outsource labour-intensive manufacturing operations to Africa. The continent has a huge opportunity to develop with investment and technology transfer from China. With the continued expansion of economic ties between China and Africa, Chinese investment in the manufacturing sector will help Africa to diversify its exports which have been majorly raw materials so far. 

The World Bank has further noted that with Africa eyeing long term development under Agenda 2063, China’s investments in African countries will boost industrialization. To create conductive environment for further investments, African nations need to provide supportive policy network along with lowering energy and transportation costs and increasing the flexibility of labour markets. Ethiopia and Rwanda have emerged as the beneficiaries of Chinese investment in the recent years.