Key industries, including agriculture, infrastructure, mining, technology and automotive, are being re-imagined as Africa and China collaborate in a rapidly changing global economy. In a world that is seeing a significant shift in influence as new economic powerhouses emerge, this ushers in an exciting new era of opportunities.

Research indicates that over the last two decades, trade between Africa and China grew from a $12 billion annually to over $280 billion. China has become one of the most critical trading partners for the African continent, despite the world having to navigate the Global Financial Crisis (2008 – 2009), a commodity downturn (2014 – 2015) and the COVID-19 pandemic.

In this context, the opening of the Absa office in China is an important step in boosting market access opportunities for China in Africa.

As an executive leadership team, the decision to move into a new geography is a process that takes a lot of thought and due diligence. Our competitive advantage has always been that we have a keen understanding of the African continent, an on-the-ground presence in multiple markets and experience in key industries including power, renewables, infrastructure, mining, agriculture as well as technology, media and telecommunications (TMT).

Our departure point for this strategic decision is that Africa will play an increasingly important role in the global economy. Resource-rich, a youthful population and an emerging middle class are all factors that will combine to create an attractive investment proposition. To this end, capital will follow yield-rich environments and we anticipate that the continent will remain a destination of investment capital in the coming years.

The nuance here is that we must create the right partnerships and trade relationships. Historically, Africa has struggled with a trade imbalance primarily exchanging natural resources for manufactured goods – ultimately resulting in imports exceeding exports and limited long-term capital formation for infrastructure projects.

This is where the China and Africa story does capture the imagination. In 2013, China committed to the Belt and Road Initiative aimed at investing in infrastructure across more than 150 countries and regions.

Over $134 billion has been invested by China into African infrastructure between 2000 and 2022. These investments have covered a variety of projects from energy to information and communications technology (ICT). With infrastructure playing such a key role in the Belt and Road Initiative, China has proven to be an excellent partner for offering good value for money, giving Chinese firms a competitive advantage over other operators.

As a bank, this is an important consideration for us as we are always looking to find strategic funding partners for infrastructure projects – including those in the African energy sector – and we recognize that fostering deep, meaningful relationships with our Chinese counterparts will give us the tools to transform key sectors on the continent.

One of the key concerns around foreign direct investment into Africa has been the historically extractive nature of these investments. China has recognized the importance of localization and building industrial capacity in Africa and invested in many strategic projects.

Examples include a cement manufacturing plant in Zambia, the Beijing Automotive International Corporation (BAIC) manufacturing plant in South Africa and Special Economic Trade zones in Kenya, Rwanda, and Nigeria.

These investments are also embracing new technologies which will drive local technical skills and infrastructure through key value chains including automotive. We have seen the likes of BTR Group commit to investment in a lithium battery plant in Morocco while technology giant Huawei Technologies has committed over $300 million into data centers and cyber-security industries.

In its home market, China speaks of the new quality productive forces – a reference to investments in advanced manufacturing, green technology and upgraded supply chains. As these investments mature, China continues to move away from a low-cost manufacturing economy to a sophisticated global hub – that in turn allows for skills transfer into investment destinations such as Africa.

Bi-directional travel between China and Africa is also expected to provide a boost for economic activity in the tourism sector as we foster deeper economic ties. This interest in Africa is reinforced through data released by one of the major Chinese travel platforms indicating that countries including Egypt, Morocco, Kenya, and Mauritius were popular choices for young Chinese tourists during the May Day holiday.

These investments are not purely economic in nature but also allow African countries the opportunity to establish their own agency, governance, and independence. By empowering African countries at this level, they can negotiate more favorable terms as they become an investment destination of choice. Africa is expected to play an increasingly important role in the global economy. Our opening of this office will enable us to build stronger commercial relationships between our clients in Africa and China. We look forward to the coming years and the opportunity to strengthen this partnership.