The China-Africa Development Fund (Chinese: 中非发展基金), more commonly known as CAD Fund, is a China Government Guidance Fund solely funded by China Development Bank, a Chinese government policy bank. The aim of the fund is to stimulate investment in Africa by Chinese companies in power generation, transportation infrastructure, natural resources, manufacturing, and other sectors.
 | |
| Founded | June 26, 2007[1] |
|---|---|
| Headquarters | Beijing, China |
Area served | China, Africa |
Key people | Zhao Jianping (Chairman) Chi Jianxin (President) |
| Website | www.cadfund.com |
History
editThe creation of CAD Fund was announced as one of the "Eight Measures" for Sino-African relations at the Beijing summit of the Forum on China-Africa Cooperation (FOCAC) by President Hu Jintao on November 4, 2006. It was established in June 2007 with US$1 billion of initial funding by the China Development Bank and is envisioned to grow to US$5 billion in the future.[1] The fund entered into its second round of fundraising in May 2010 to raise US$2 billion.[2] In 2015, China announced its plan to expand the CAD fund to $10 billion.[3]
Investments
editThe investment mechanism of the China-Africa Development Fund operates primarily through the following processes: adhering to the principle of marketization, the Fund independently selects investment projects based on the investment policy set by the board of directors; It autonomously decides whether to invest and determines the scale of investment in line with the relevant investment decision protocols, aiming for long-term returns. Investments are allocated based on project merit rather than by country; the primary recipients of support are Chinese enterprises engaged in economic and trade activities in Africa or projects funded by these enterprises; targeted sectors include those crucial to the economic recovery and development of African countries, such as agriculture, manufacturing, and infrastructure that directly impacts people's livelihoods.[4] The Chinese government has also implemented several preferential policies for the China-Africa Development Fund, including exemptions from corporate income tax on earnings generated from investments in Africa.[5]
As of 2010 the fund had invested in 30 projects in Africa worth around US$800 million. In 2009 alone, the fund invested US$140 million of China's total US$1.3 billion invested in Africa that year.[2] The fund primarily focused on industrial development. For example, in 2010 it teamed up with several partners by contributing 382.5 million ZAR into a 1.65 billion ZAR investment by Jidong Cement to build a cement plant in Limpopo, South Africa.[6]
The fund has also participated in acquiring natural resource assets by forming a joint venture with China National Nuclear Corporation (then China Guangdong Nuclear Power Group) to acquire most of the Husab Mine for US$996 million in February 2012.[7]
The fund made a rare move in media in December 2013 when it was the financial partner in the acquisition of 20% of Independent News and Media SA, a newspaper publishing house in South Africa, for 400 million ZAR.[8]
Examples of other equity investments
edit- China-Africa Xinyin Investment (35%)
- Huayou Cobalt (SSE: 603799, 7.59%)[9]
- Africa World Airlines[10]
Grants and other activities
editThe China Africa Development Fund provides support in connection with the overseas special economic zones that Chinese enterprises have established in Africa.[11] Although the Chinese government generally takes a hands-off approach to the development of these zones, leaving it to Chinese enterprises to work with host countries to establish them, the CAD Fund provides support in the form of grants, loans, and subsidies.[11]
Specific current involvement
editThe CAD Fund has completed over 60 projects, but also acts as a resource to organize the independent investments of Chinese firms. Sometimes these projects have very few funds directly from the US$10 billion allocated for the CAD Fund, but benefit from the CAD Fund's logistical experience and monitoring in order for investments to flow with greater efficiency.
The CAD Fund in Ethiopia targets agricultural and rural development.[12] In 2009, in a joint venture with the Xinxiang Kuroda Mingliang Leather Co. Ltd, the CAD Fund invested roughly US$27 million towards a large leather product factory close to Ethiopia's capital, Addis Ababa. The Fund has also helped establish Ethiopia's special economic zone in collaboration with Chinese companies called the Ethiopian Eastern Industrial Zone (EEIZ). Wherein several independent investment projects are undergoing with potential for large job creation for the local population.[13]
The Cad Fund's main investment in Ghana are power plant construction and developments. Most notable is the Asogli power plant in Tema.[14] This plant is the first private owned electricity producing plant in Ghana, using natural gas.
The CAD Fund helped organize over US$16 million in investments towards hydro-power plants as well as several infrastructure improvements. The fund will also support the organization of several Chinese firms with the construction of a large port in Lamu as a part of the Lamu Port Southern Sudan-Ethiopia Transport Corridor project (LAPSSET).[15]
The CAD Fund opened an office in Johannesburg which brought investments in the mining sector by Chinese companies as well as venture projects with South African companies. The largest single investment by the CAD Fund in South Africa occurred in 2010 through their support of the Jidong Development Group which invested roughly US$52 million towards the creation of a cement plant. The CAD fund also directly invested several million USD towards several renewable energy projects. The Fund has also worked to establish and promote the Coega Industrial Development Zone in Port Elizabeth to stimulate further independent investments and job creation.[16]
The bulk of the CAD Fund's investments in Zambia are centered around cotton cultivation projects as well as copper mining projects.[17]
In 2007, the Liberian government opened an open-pit iron ore mine in southwestern Bong County for public bidding. The contract was eventually awarded to China-Union (Hong Kong) Mining Company Limited. However, due to a lack of follow-up operations, the company invited the China-Africa Development Fund (CADF) to participate in the project, selling an 85% stake to the Fund. In 2010, CADF subsequently sold a 60% stake to WISCO International Resource Development & Investment Limited.[5]
See also
editReferences
edit- ^ a b "Company Overview". CAD Fund website. CAD Fund. Archived from the original on 14 November 2013. Retrieved 22 February 2012.
- ^ a b Yan, Zhou (28 May 2010). "CAD Fund to boost footprint in Africa". China Daily. Retrieved 22 February 2012.
- ^ Murphy, Dawn C. (2022). China's rise in the Global South : the Middle East, Africa, and Beijing's alternative world order. Stanford, California. p. 74. ISBN 978-1-5036-3060-4. OCLC 1249712936.
{{cite book}}: CS1 maint: location missing publisher (link) - ^ Zhang, Zezhong (2013). 新时期中非经贸合作机制研究. Shanghai: 上海人民出版社. ISBN 9787208113114.
- ^ a b Wei, Jianming (2012). 中国税收优惠政策及其应用 2012. Beijing: 中国税务出版社. ISBN 9787802358560.
- ^ "China seals cement deal with S Africa". The Financial Times. May 13, 2010.
- ^ Stewart, Robb M. (February 2012). "Rio Tinto Accepts Chinese Bid for Kalahari Shares". The Wall Street Journal. Retrieved 22 February 2012.
- ^ Sam Sole and Craig Mckune (28 August 2014). "What's black and white and in the red all over?". Mail and Guardian. Retrieved 8 September 2014.
- ^ 华友钴业关于公司股东中非发展基金减持股份计划的公告 (in Chinese)
- ^ "Africa: Ghana's leading carrier, Africa World Airlines takes delivery of 7th aircraft". 29 October 2018.
- ^ a b Murphy, Dawn C. (2022). China's rise in the Global South : the Middle East, Africa, and Beijing's alternative world order. Stanford, California: Stanford University Press. p. 177. ISBN 978-1-5036-3060-4. OCLC 1249712936.
- ^ Brautigam, D.; Tang, X. (2012). "An overview of Chinese agricultural and rural engagement in Ethiopia. Development Strategy and Governance Division" (PDF). International Food and Policy Research Institute – via Google Scholar.
- ^ Geda, A.; Meskel, A.G. (2009). "Impact of China-Africa Investment Relations: Case Study of Ethiopia". African Economic Research Consortium – via Google Scholar.
- ^ Schickerling, E. J. (2012). The role of the China Africa Development Fund in China's Africa policy (Doctoral dissertation, Stellenbosch: Stellenbosch University). Stellenbosch University Press (Thesis) – via Google Scholar.
- ^ Ombaba, K. M. B.; Arogo, P. A.; Bii, P.; Omuya, J.; Ongeri, L.; Kabuka, P. O. (2012). "A study on the impact of China's investments in Africa: the case of Kenya". Sabinet African Journals. hdl:10520/EJC127664 – via Google Scholar.
- ^ Alden, C.; Wu, Y. (2014). "South Africa and China: The making of a partnership. Johannesburg: South African Institute of International Affairs" (PDF). South African Institute of International Affairs – via Google Scholar.
- ^ Mushota, C. E. (2021). "China in Africa: Partner or Exploiter? The Case of Zambia". CUNY Academic Works – via Google Scholar.
