China tills vigorously at African agro opportunities

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Alex Pestana, investment strategist
Business Standard | September 09, 2011

China tills vigorously at African agro opportunities

Marc Hasenfuss / Cape Town

The China-Africa trade soared to $120 billion last year, from negligible levels in 1999, according to Alex Pestana, investment strategist at Sanlam Investment Management (SIM).

Speaking at the annual African Cup of Investment Management at the weekend, Pestana noted China was urbanising at 24 million more people a year. And, the galloping trend in consumption.

Pestana told Business Standard it would not be surprising to see the Chinese trade with Africa easily increasing annually by five to six percent.

He said China was currently paying particular attention to Africa’s arable land. Rapid economic growth had extracted a serious environmental bill in China, with “tens of milions” at risk of “desertification in China”. The arable land opportunity in Africa was obvious, he said, as only 15 per cent of sub-Saharan Africa’s potential arable land was being used for agriculture.

He reckoned there were 142 Chinese agricultural investment projects scattered over sub-Saharan Africa at the end of 2009. And, that the Chinese Food and Agricultural Organisation had already set up a $30-million trust for investing in Africa.

He said the Chinese Development Bank had granted loans worth millions of dollars to agricultural processing firms in East Africa, and the Chinese had given $1bn in agricultural loans to Angola, as well as pledging $800mn to Mozambique. China had also invested in arable land in Kenya, Tanzania, Uganda and Mozambique.

He argued that China’s increased presence in Africa would have a major influence on food prices and land prices, meaning African agri-businesses would enjoy significant benefits from China.
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