Chinese factories to be blueprints of future African deals

While agreeing that investments form an integral part of global economic relations, Jourdan noted that treaties are signed by governments to assure private investor security in case of political turmoil while also reducing the possibility of double taxation.

According to the UNECA report, most deals signed by African nations are with Western countries that have traditional ties with the continent. It particularly covers sectors such as minerals and natural resource industries.

Africa has yet to achieve continental or global goals and is facing punitive actions arising from disputes in the implementation of the bilateral treaties. The continent could benefit from a review of the treaties.

Jourdan said that deals signed mostly at a high level should ensure maximum benefit for the host country in terms of expanding productive capacity, generating employment and contributing to income-creation.

Although three countries (Kenya, Ethiopia and Tanzania) already have been chosen for the Chinese factory-relocation pilot project, Jourdan said that the success of the move will depend largely on how fast African governments will implement policies to speed up regional integration.

"A continental free trade area will flatten border barriers, hence making transportation between countries cheaper, and (it) opens a bigger consumer market," he said.

Jourdan applauded export taxes imposed by countries such as Ethiopia, which encourage investors to move to the next step of value-addition.

It is in Ethiopia that Hujian Shoes, the first Chinese factory to move there in 2012, has been successful and has announced plans to expand its workforce to 30,000.

Chinese private-sector investment has occurred particularly in manufacturing, which is set to continue in the near future.

"Underpinning this trend is increased demand stemming from moves to restructure industry in parts of China, as labor-intensive firms relocate their operations to other parts of the developing, world including Africa.

"Due to the simplicity of operations of Chinese companies, many African countries are responding to China's demand by providing development policies and strategies conducive to maximizing private Chinese investment," said the report.

Lucymorangi@chinadaily.com.cn