Investment is at the heart of Africa's needs. It is a continent with the fastest growing population, but receives less foreign direct investment (FDI) than any other emerging region.
There is a common misconception that Mainland China invests massively in Africa. The reality is that China's project finance in Africa is ten times larger. In other words, actual investment by China in Africa is much smaller than debt-generating flows.
Chinese investment in Africa is still at an early stage compared with that of European countries that have a colonial past in Africa, especially France and the United Kingdom. China's dominance is more obvious as acquirer of assets (M&A), but the bulk of FDI in Africa is greenfield and Europe remains the largest investor.
China's FDI into Africa is creates fewer jobs per unit of investment compared with its investments in other regions. For FDI to be welcomed and sustainable, its nature will need to change so as to create more jobs. In other words, China will need to refocus its investment towards manufacturing, which is more labor-intensive.
Companies hoping to compete in the African markets should keep a close eye on these trends. Without job creation, FDI into the continent might not be sustainable in the long term.
Join this roundtable luncheon to hear from Alicia Garcia-Herrero, Chief Economist for Asia Pacific at NATIXIS, who will share the findings and insights from her latest research titled: "China's investment in Africa: What the data really says, and the implications for Europe." She will also analyze in depth how the continent's population dynamics affect FDI.