Progress of the $5bn equity China-Africa Development Fund

The flagship of Chinese equity investment into Africa, the $1 billion China-Africa Development Fund, opened a branch in Addis Ababa on 30 March. The first branch in Johannesburg was opened in March 2009 and a third office is planned for Lusaka. Initial financing came from the China Development Bank (CDB) and is set to grow to $5 billion.
Heading the new office is Wang Yong, who was Managing Director of CADF’s Eastern Africa Investment Department in Beijing. One target is better cooperation with the African Union, also based in Addis. In March, CADF Chairman Zhao Jianping met officials from the African Union Commission and its New Partnership for Africa’s Development programme, the UN Economic Commission on Africa and the African Development Bank. The AU and the China-Africa Fund are working on a memorandum of understanding that could lead to joint projects in the transport, telecommunications, tourism, agriculture and manufacturing. The Fund was set up after a 2006 China-Africa cooperation forum and launched in June 2007.
According to its website (, the Fund “will abide by the principle of sincerity, friendship, equality, mutual support and joint development as well as make efforts to support and expand the investment of Chinese enterprises in Africa, and promote mutual benefit of China and Africa and beyond”. It often invests alongside Chinese ventures wanting to go into Africa and aims to take a minority stake. It claims to work on market principles rather than driven by political and other objectives. Investments can range from $5 mln to $50 mln per project and the aim is to exit after 5-8 years.
The Fund had more than 100 projects under study in 2008. According to a report in Africa-Asia Confidential (, the Fund is the “go-to financier for troubled Chinese companies and for manufacturing firms seeking to set up operations in Africa”.
CDB is controlled by the State Council, China’s highest decision-making body, and the CADF is treated with the secrecy expected from top-level institutions, says the magazine. By the end of 2009, the Fund had invested nearly $700 mln in over 30 projects, leading to a total investment of about $3 bln by Chinese enterprises.
Follow this link for the magazine’s report on the Fund’s quick moves to show results and get invested, as well as some of the implementation problems. Projects include the Shenzhen Energy 500 megawatt thermal power project in Ghana; the China Union iron ore deal in Liberia, rehabilitating the Bong Mine; the Angel Yeast $51 million project in Egypt which values the Fund’s high-level backing, useful for winning permits, perhaps more than its $2 million investment. CADF has prospected Angola, Ethiopia, Ghana, Kenya, Liberia, Mauritius,Mozambique, Sudan, Zimbabwe and others.


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