China to build EA state $10m car assembly plant

By BENON HERBERT OLUKA
Special Correspondent

Uganda will start assembling vehicles and motorcycles in January 2008 in a joint venture that will see the Chinese government and Chinese automobile manufacturer, Geely International play a crucial role.

The three have formed MFK Corporation to run the project, for which the government will provide the enabling environment while the Chinese will provide the technical expertise.

Uganda will be the third country in East Africa to have an automobile assembly plant after Kenya and Tanzania.

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Entrepreneurs From China Flourish in Africa

NY Times has an article about Chinese businessmen thriving in Africa. Increasingly you are starting to hear more of these stories, and the risks the Chinese are willing to make in Africa. The Chinese are not doing this because the love Africa, they see an opportunity to make a lot of money!

Infrastructure investment opportunities in Africa

Many in development ask themselves, "how can Africa grow", or "how do we alleviate poverty in Africa"? The quick answer to all that is investment in some form of loans, aid and so on, and so forth. However, let's remember that great civilizations such as; Roman Empire, Greeks, Egyptians, and Incas grew by infrastructure. Infrastructure is key in linking people, places, things, and most important commerce. Commerce is the lifeblood in any civilization, this lifeblood enables farmers to grow crops and be able to transport their produce thousands of miles. Kenya is a good example of this, farmers are transporting flowers to be sold in the European market.

What Africa needs right now is multi-billion dollar investment in the following infrastructure: railways, and roads. I didn't mention telecom, because to have fiber optics you need roads to build the fiber network. This fiber is what is needed if Africa is going to take that leap in Information Technology Enabled Services (think Outsourcing/BPO - ITES).

People reading this post will ask, "how can Africa afford all this". I wrote two months ago about how the Chinese use a process called full-cost recovery to recoup the cost of any public works project. When a highway is built, the Chinese levy tolls to recoup the costs of the road. Tolls pay for the cost of the roads faster, then raising public taxes to build and maintain the road. Read this post I wrote in June.

China's infrastructure investment could have a very positive spin-off in lowering transaction costs and assisting African governments to address social calamities such as poor health services, energy crisis, and skills development among others.

China: Africa’s Friend or Foe?

Why China is making headway in Africa

Africa has suffered under the structural adjustment programs forced upon it. Aid and trade have been increasingly conditional. The US and World Bank claim to be fighting poverty in Africa, but after two decades of structural adjustment, the conditions of the African poor have worsened, with indices of exploitation and deprivation increasing by geometric proportions. According to one estimate, at the present pace of investment in Africa from the West, it will require more than one hundred years to realise the Millennium Development Goals. Chinese investment potentially provides an alternative for African leaders and entrepreneurs, while providing long term potential for the development of African economies.

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China: Developing Giant and Emerging Development Actor

I took time out of my busy management consulting schedule to attend an event about China development in Africa by Center for Global Development here in Washington, DC. I actually learned a few things about China's development, (some of you know I very passionate about China's investment in Africa). David Dollar, the country director for China and Mongolia for the World Bank, shared his thoughts and views about the Chinese approach to infrastructure development.

David mentioned that China uses full-cost recovery for most infrastructure projects, that's how the Chinese have been able to grow their infrastructure at break-neck pace. Full-cost recovery in public infrastructure works like this; when a highway is built there are tolls levied so that the costs of the highway project can be recouped and used to fund other public works projects. China is even selling some of it's infrastructure to the securities markets and getting a second return of their monies. David said, that this Chinese approach is a novel and interesting idea that the Chinese are not even initiating in Africa. In Africa, the Chinese ask governments what they want and they fund and build the projects according to that countries particular need.

Callisto Madavo a Zimbabwean, said that it's noble for the Chinese to invest in Africa and build projects. However, the Chinese are not allowing knowledge transfer to take place. For most projects in Africa they import their own Chinese workers and they do all the engineering and the design. The work the African natives do are mostly labor type of activities.

Africa is now at a interesting point in history: growth rates are high, turmoil and war are down, and Mobile handset penetration is high. We also have developing countries looking at our continent for resources and returns for their capital, mostly China, India, some Middle east countries. What I think is going to happen in Africa for the next 10-15 years in extreme growth fueled by natural resources (hard metals, and oil) and telecoms (Mobile phones and broadband). However, we will need to address the negatives of this growth; disposable income, public health reforms and sustainability.