{"id":10063,"date":"2020-02-07T18:48:16","date_gmt":"2020-02-07T22:48:16","guid":{"rendered":"https:\/\/www.bu.edu\/gdp\/?p=10063"},"modified":"2022-06-21T11:48:22","modified_gmt":"2022-06-21T15:48:22","slug":"from-politics-to-business-how-a-state-led-fund-is-investing-in-africa-the-case-of-the-china-africa-development-fund","status":"publish","type":"post","link":"https:\/\/www.bu.edu\/gdp\/2020\/02\/07\/from-politics-to-business-how-a-state-led-fund-is-investing-in-africa-the-case-of-the-china-africa-development-fund\/","title":{"rendered":"From Politics to Business: How a State-led Fund is Investing in Africa? The Case of the China-Africa Development Fund"},"content":{"rendered":"
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Photo by Pieter Van Noorden via Unsplash<\/figcaption><\/figure>\n

Since 2009, China has been Africa\u2019s largest trading partner for ten consecutive years. Today, the continent is also China\u2019s second largest market for overseas project contracting and fourth largest outward investment destination. China\u2019s expansion in Africa also fits into Chinese leader Xi Jinping\u2019s development framework, the Belt and Road Initiative. China\u2019s political and economic engagement in Africa has been widely discussed in media and scholarship, presented as one element of China\u2019s \u2018global rise\u2019, a vision of Beijing-driven neo-colonialism or neo-imperialism, a promotion of an alternative\/non-Western development models in the process of decolonization and\/or a new dimension of multilateralism of South-South Cooperation. Most academic and public attention has focused on infrastructure projects and China\u2019s two development banks, the China Development Bank and the Export-Import Bank of China, despite the emergence of other sources of Chinese finance, especially a range of bilateral and multilateral funds.\u00a0<\/span><\/p>\n

In a <\/span>new working paper<\/i><\/a><\/strong>, <\/span>Hangwei Li<\/a> uses project data, media reports and interviews to first present the funding mechanism and explores the logic behind how and why certain development projects have been financed, with a focus on the China-Africa Development Fund (CAD Fund), an equity investment fund focusing on investment in Africa. She then highlights the prospects and the challenges that exist in a state-led fund. Finally, Li contributes to the understanding of how a state-led fund uses a market approach and equity investment to serve China\u2019s interests in Africa.<\/span><\/p>\n

Li argues the CAD Fund is neither entirely state-led nor fully market-led in its motivation, incentives and daily operations. Nevertheless, the primary driver of CAD Fund\u2019s 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 creating a revolution on the ground by filling the gap between official grants and loans under the traditional model, with the possibility to transform the shape of global development finance.<\/span><\/p>\n

Main findings<\/strong>:<\/span><\/h5>\n