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Private Sector a Key Driving Force
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Entrepreneurs in the private sector constitute an important motive force for development and economic growth.


A key issue, therefore, is determining how engagement between Africa and Asia can create new avenues for entrepreneurship development and also increasing roles for the indigenous private sector in Africa's development and output growth.


Africa has many medium and large firms, especially financially autonomous state-owned corporations and those that have been successfully privatized in the last two decades.


However, the African business ecosystem is dominated by micro, small, and medium-sized enterprises (SMEs) and the preponderance of informal transactions.


There are four main challenges, however.


The first is to transform and rapidly upgrade the technological base, productivity and international competitiveness of Africa's enterprises.


The second is to identify niches where Africa's SMEs have or can acquire and retain competitive advantage in a globally integrated economy.


The third is to facilitate the integration of African SMEs into global value chains and their penetration of lucrative, but highly competitive and demanding, external markets.


The fourth is to assure access to financing on affordable and reliable terms.


There is considerable potential for a win-win partnership between African entrepreneurs and their Asian counterparts.


The reality is that, today, through their internal optimization of value chain processes and the accompanying allocation of capital investments in production sourcing and distribution channels, large transnational (or multinational) corporations play a determinant role in international trade.


There is a great role to be played by Asia's transnational corporations in deepening cooperation between Africa and Asia by fostering the modernization of African SMEs and their integration into global trade.


China's investment


Chinese firms are encouraged to invest in Africa.


A package of economic and trade cooperation measures introduced by China presents the country's private firms with unprecedented opportunities to invest in Africa.


Chinese President Hu Jintao announced at the two-day Beijing Summit of the Forum on China-Africa Cooperation in November 2006 that China will double aid and provide US$5 billion in preferential loans and buyers' credit to Africa, in addition to establishing a China-Africa development fund.


"The new steps will certainly encourage Chinese private firms with capacity to invest in Africa," said Zhao Jinping, vice-director of the foreign economy department under the State Council Development and Research Center.


Suo Zhanrong, president of the Huifeng Group in North China's Inner Mongolia Autonomous Region, said governmental support has injected new energy into private firms and expressed his confidence about the prospects of Chinese medicines in the African market, as his group plans to increase Chinese medicine exports to the continent.


Sheng Jushan, general manager of the Guoji Group in Central China's Henan Province, said his company recently set up an economic cooperation zone in Sierra Leone, which has attracted about 20 small and medium-sized Chinese enterprises.


China's Huawei Company, whose sales volume in sub-Saharan African countries exceeded US$1 billion, has become the largest CDMA product provider in the region, paying taxes worth US$40 million to African countries.


The Chunnan Group in eastern Jiangsu Province exports about 100,000 air-conditioners, washing machines and electric bikes to Africa annually.


Wang Jianping, president of Hashan Company in eastern Zhejiang Province, said his firm has decided to increase investment in Nigeria from US$2 million to US$6 million, in order to boost the development of the local shoemaking industry.


According to Import and Export Bank of China figures, of the 800 Chinese enterprises that have invested in Africa, only about 100 are State-owned enterprises, the rest being privately owned firms.


The Chinese Ministry of Commerce, National Development and Reform Commission, Ministry of Finance and National Development Bank, are working on new policies and detailed measures to facilitate China's investment in Africa, according to sources.


Chinese private companies will play a larger role in expanding investment in Africa, said Wang Licheng, vice-president of the Chamber of Commerce on Sino-African Trade.


(AfDB, Xinhua News Agency May 15, 2007)


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