What Is the China-Africa Development Fund?
The China-Africa Development Fund (CADFund), established in June 2007, is the first Chinese equity investment fund that focuses on investments in Africa. The CADFund encourages and supports Chinese enterprises to invest in Africa. It is operated by the China Development Bank.
Understanding the CADFund
The China-Africa Development Fund was one of eight measures announced by Chinese President Hu Jintao at the Beijing Summit of the Forum on China-Africa Cooperation in November 2006. It was inaugurated on June 26, 2007. The investments within the fund are concentrated in industries and fields that help promote Africa's economic development, such as agriculture, manufacturing, infrastructure, and resources. The CADFund has become the primary platform for Chinese investment in Africa.
Objectives of the CADFund
The CADFund aims to help solve the challenges that Africa faces in its course of development and to create positive economic and social outcomes. Through its investments, the CADFund focuses on strengthening Africa’s development and enhancing its competitiveness in the global economic environment. It provides capital financing for companies to invest in Africa, value-added services and aid in resolving issues in the continent, and links Chinese companies and partners with African projects.
Principles of the Fund
The CADFund invests in Chinese firms that have economic and trade activities in Africa as well as Chinese firms that have invested in African businesses and projects. The guiding principles of the fund include the promotion of investment in Africa, abidance by market regulations and representation of mutual benefits. The fund invests through equity investments, quasi-equity investments (such as preference shares and convertible bonds) and fund investments.
Chinese firms must fit certain criteria to apply. These include a solid credit record, both a clear equity and management structure, strong shareholder relations, a transparent balance sheet and a clear strategy for Africa along with a team that has African experience.
The CADFund gives priority to a number of industries that are central to the development of African countries:
- Agriculture and manufacturing
- Infrastructure and related industries such as electric power, energy facilities, transportation and urban water supply
- Natural resources such as oil, gas and minerals
- Industrial parks