"China endorses ‘small and beautiful’ projects in Africa despite challenges" 11 October 2024

China renewed its commitments to Africa this September at the Forum on China-Africa Cooperation (FOCAC) in Beijing. The renewal included endorsing “small and beautiful” livelihood-improving projects and bankrolling sustainable energy projects...

despite the promising potential of these smaller efforts, Chinese investors are increasingly wary of overseas markets... no matter the size of the project, many of the transaction activities stay the same, making limited-scope investments less appealing...

Chinese producers have long been providing African countries with equipment and technology for producing goods and services and other income-generating activities. But for the continent’s renewable-energy sector to take off, many more skills and much more experience is needed...

Chinese corporations also see the business benefits of Africa’s efforts to boost local talent. For instance, Chinese company Beijing Forever Technology has established the Forever TVET Institute, a vocational school based in Kigali, Rwanda, that has been providing training courses on electricity, construction of infrastructure projects, and operation of heavy machinery since 2018...

Chinese companies in other industries are also intrigued by business opportunities in Africa. Tailing Electric Vehicle, one of China’s top three electric motorcycle and tricycle producers, has manufacturing and assembly plants in Kenya and Rwanda. Horwin, another leading Chinese brand, has joined forces with Spiro, Africa’s largest e-motorbike and scooter provider, to assemble e-bikes and batteries in local factories...

However, currently, Chinese institutional investors – meaning companies or organisations which invest money on behalf of other people – active in Africa do not prioritise investing in small and beautiful projects...Sinosure, China’s policy insurance company, has also lowered its appetite. Smaller projects without financial banking from a larger entity are generally considered more risky...

More targeted incentives are needed to address these barriers...By protecting an exporter against the risk of non-payment by a foreign buyer, export credit insurance can help mitigate the risks associated with opportunities in Africa, and leverage more private investment to the continent...