Opportunities abound for Chinese investors on the continent for the benefit of themselves and the population

When Chinese investors decide to locate in Africa, they are guided by factors that include fast-growing market size - depending on a growing population - and the need to build adequate infrastructure to guarantee continuing economic growth.

The rapidly emerging middle class in eastern and southern Africa has been a big incentive for investors locating in Africa, as its needs increase enormously on a yearly basis.

The vast region has a population estimated at 650 million people, which is about half of that of China. It is made up of 26 countries belonging to three different trading blocs. These are the East African community, the Common Market for Eastern and Southern Africa and the South African Customs Union.

For years, the region has performed well in terms of economic growth. Several countries have registeried growth rates of 7 percent, and some have attained 12 percent. With this kind of growth, sustained for more than a decade, the future economic prospects for these countries are extremely positive, and this has influenced Chinese investment in Africa.

The region has been relatively politically stable for over a decade, with only a few countries experiencing conflicts. Africa, with very young population and abundant natural resources, provides just the right conditions for long-term development. Increased public and private investment is needed to meet the ever-rising needs of the growing population.

Those contemplating a long-term presence will note that, with the prevailing population growth rate estimated at 2.7 percent on average throughout the region, in 30 years the population will double. This will present more challenges and opportunities for further investment as the market grows.

Chinese investors are welcome to look at emerging opportunities in Africa. They have been involved in huge infrastructure construction projects that include railways, ports, energy, roads and housing. The continuation of Chinese support for Africa will provide the capacity the continent needs to realize continuous economic growth.

Africa needs to build a strong foundation for future development. However, due to low income levels, huge infrastructure projects may present funding challenges. Therefore, collaboration with public and private Chinese investors is inevitable. This presents opportunities for Chinese investors to complement host governments' efforts to build a foundation.

Africa bursting with investment potential

The fast-growing population requires huge resources to be put into health, education and training. This calls for partnerships with Chinese investors to change the lives of young people and increase their productivity by providing employment opportunities, training and experience. Unemployment levels have reached unsustainable levels in some countries, sometimes exceeding 50 percent.

The region needs to attract investors, particularly in industries where many young people can be gainfully engaged. Textiles, leather, food processing, assembly lines for electronics, motor vehicles and business process outsourcing are examples of industries that could reduce unemployment by absorbing significant numbers of young people.

Under the United States African Growth and Opportunity Act, African countries are allowed unrestricted access to the US market for thousands of products. This access is open to investors located in Africa. Chinese investors can take advantage of this market opportunity and thereby help ease Africa's unemployment problems.

China has for a long time used Dubai as a market outlet for goods destined for Africa. Locating investment in Africa will result in reduced prices, as Dubai as a middleman will be eliminated from the supply chain. This will gradually make Chinese products more competitive in the African market. With a presence in Africa, Chinese investors can invest in adding value to raw materials from the continent for final products destined for the Middle East market through the United Arab Emirates.

The abundance of natural resources in Africa cannot be overemphasized. The potential quantities and qualities of some mineral resources are still unknown. Through collaboration and partnerships with China, proper surveys and mapping of these mineral resources can be undertaken with a view to future extraction and value addition, creating wealth and more economic benefits for the people. Some of the minerals known to exist in abundance include iron ore, coal, titanium, aluminum, nickel, copper, gold and manganese.

Chinese investors are welcome to examine opportunities for extraction and processing of minerals, which will generate the required resources for rapid economic growth and development.

The author is general manager for investor services of the Kenya Investment Authority. The views do not necessarily reflect those of China Daily.