Author: Deborah Bräutigam.
Chinese companies have been investing in agriculture in Africa since the mid-1980s. As China opened up to markets at home, Chinese companies in Africa were encouraged to seek new sources of income. Most had arrived in Africa to carry out foreign aid projects during the 1970s and 1980s, although some were sent by their parent companies to explore investment opportunities in agriculture, forestry, and fisheries. These investment efforts have accelerated in recent years, although not nearly as far as is commonly believed.
In the late 1980s and 1990s, Chinese companies sought to lease several of the old Chinese aid projects that were being privatized under structural adjustment programs: Segou sugar complex in Mali, Magbass sugar complex in Sierra Leone, Koba Farm in Guinea, Mpoli Farm in Mauritania, and so on. China State Farm Agribusiness Corporation (CSFAC) began new agricultural investments in Zambia in 1989 and invested in two colonial-era sisal farms in Tanzania in 1999. By the new millennium, CSFAC had seven agricultural investments in Southeast Africa and West Africa, worth approximately US$35 million. These investments have continued in a pattern that has emphasized acquisitions of existing farms as well as new, green-field investment.
The Chinese government has programs to encourage agricultural investment overseas, although most of these are components of larger programs promoting ‘going global’ across a number of sectors. Agriculture was included in the ‘going global’ program as early as 2001, and was included as part of the Ministry of Finance program of special funds set up in 2005 to promote outbound foreign investment. The Ministry of Agriculture and the China Development Bank signed an agreement in 2006 to work together in five areas, including development of projects using overseas land and water. China Eximbank signed an agreement with the Ministry of Agriculture in 2008 to promote overseas investment in agriculture using export seller’s credits and investment loans.
While the efforts above were not specific to Africa, in June 2010, China’s top state-owned agribusiness group, China National Agricultural Development Corporation Group (CNADC) and the China-Africa Development Fund, set up a joint venture, ; China-Africa Agriculture Investment Co., Ltd. (CAAIC). Funded at RMB 1 billion (US$161 million), CAAIC was intended to be a platform to promote China’s farming, fishing, animal husbandry, livestock, and agro-processing and marketing investments in Africa. China’s 12th five year plan (2011-2015) encouraged Chinese firms to build productive capacity in developing countries with comparative advantage in agriculture, as part of the ‘going global’ strategy.