Africa should better position itself to take advantage of China investment

5th August 2011 By: Bradley Dubbelman

The African continent needs to position itself to take advantage of and leverage off the opportunities afforded by the global expansion of Asian economies, specifically China and India, said emerging market advisory firm Frontier Advisory senior director Abdullah Verachia.

He said, it was imperative that countries on the African continent take advantage of changing global market dynamics in order to fully benefit from increasing investment from China and India.

This involved increasing competitiveness on a national level, which would trickle down the production line and positively affect the different countries’ competitiveness at a corporate level, as well as on an individual level. “National competitiveness underpins the rapid growth of China, as that country plans to be the world’s biggest economy by 2021,” he comments.

Verachia argued that South Africa was particularly competitive on an individual and corporate level, but fell short of fulfilling its competitiveness potential on the international stage, mainly as a result of skills shortages owing to poor education levels. This was reflected in the country’s drop in the World Economic Forum’s competiveness rankings from number 45 in 2009 to number 54 in 2010.

He noted that African countries were familiar with Western investment, specifically from the US and the European Union, and followed a traditional model of engagement with these trading partners.

The wave of Chinese investment on the continent, however, means that countries needed to reassess how they engaged and did business with the Asian giant. “Those States that best position themselves to do business with China will gain competitive advantage on the continent,” he said.

Brics Advantage

Meanwhile, Verachia argued that the motive for including South Africa in the Brazil, Russia, India and China (Bric) bloc was not altruistic, but was rather to gain a springboard to engage markets in the Southern African Development Community.

He said that South Africa has been slow out of the starting blocks and unprepared to adapt to the rising global political and economic influence of China, and called for a better understanding on how to take advantage and engage with the new economic giants.

“South Africa should take advantage of its strategic position in the Brics bloc and improve its engagement with these emerging powers in order to bolster investment in the country, but also on the continent,” Verachia concluded.