From politics to business: how a state-led fund is investing in Africa? The case of the China-Africa

Boston: Boston University Global Development Policy Center

DOI: https://doi.org/10.1080/23743670.2021.1896156
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Chinese development and finance in Africa has been increasing constantly, with president Xi Jinping announcing 60 billion U.S dollars of financing and aid to Africa at the Forum on China-Africa Cooperation (FOCAC) in 2018. Meanwhile, state-owned and state-led funds, especially bilateral and multilateral cooperation funds have flourished in the past decade, while no literature has examined these funds. As the Asian-giant becomes an increasingly important political and economic actor on the continent, this paper explores how a state-led fund is investing in Africa. In particular, the paper looks at the investment of the China-Africa Development Fund (CAD Fund), an equity investment fund focusing on investment in Africa. This paper first and foremost attempts to understand the investment motives for the CAD Fund through analyzing its governance structure and investment strategies, specifically by looking at how the Fund facilitates industrial alliances, its platform model in the infrastructure sector, and its involvement in agriculture. It argues that the CAD Fund is neither entirely state-controlled nor fully market-led in its motivation, incentives and daily operations. Nevertheless, even though the fund is oriented towards development related sectors, the primary driver of CAD Fund’s investments is the combination of state interest and market forces, rather than the development of Africa. Moreover, with its more diversified and relatively flexible investment approaches, the Fund, along with other government-led funds, such as Silk and Road Fund, China-Latin America and Caribbean Industrial Investment and Cooperation Fund, has the potential of filling the gap between official grants and loan under the traditional model, which carries the possibility to transform the shape of global development finance.

About the author

Li, Hangwei

Political Science

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