GT Voice: It’s imperative to enhance security while investing in Africa
Published: Nov 23, 2021 08:44 PM
China-Africa relations Illustration: Liu Rui/GT

Illustration: Liu Rui/GT

The Chinese embassy in the Democratic Republic of the Congo (DRC) issued an alert on Sunday, warning Chinese citizens not to go to the high-risk provinces of the African country, after five Chinese nationals were kidnapped in an armed attack at a local mine on the same day. 

The incident happened a few days after three Chinese nationals were kidnapped by armed bandits at a private Chinese company in Kogi State, Nigeria, last week.

The frequent kidnapping of Chinese citizens prompted the Chinese Foreign Ministry on Monday to issue a warning about security risks in some African countries.

To a certain extent, the armed attacks encountered by Chinese citizens in Africa may underline a considerable rise of their exposure to local security risks as Chinese investment in Africa rose sharply in recent years.

According to data from China's Commerce Ministry, China's foreign direct investment in Africa reached $2.96 billion in 2020, still maintaining a rising trend despite the pandemic, with aggregate Chinese direct investment in the continent exceeding $47 billion.

With a growing number of Chinese companies trying to gain a foothold in Africa, it has become a topic of concern as to how Chinese companies can avoid local investment risks and ensure their investment security. Moreover, since Chinese companies' investments in African mines are drawing attention from the West, many expect that such investments may face more uncertainties.

Take China's mining investment in the DRC as an example. The African country accounts for about two-thirds of the world's cobalt sources, a key material in the production of electric vehicle batteries. Back in 2008, the DRC government signed a $6 billion "infrastructure-for-minerals" deal with Chinese companies. However, according to recent Reuters report, the DRC government has been reviewing and reassessing some contracts with Chinese investors, including the reserves at the Tenke Fungurume copper and cobalt mine of China Molybdenum Co.

The development underlines increasing complexity in the investment environment for Chinese companies in Africa as Western countries are trying to drive a wedge between China and African countries by accusing China of exploiting resources there.

Yet, it is worth noting that China-Africa cooperation is mutually-beneficial in nature and has been largely welcomed by African countries. 

At the request of local governments, Chinese enterprises have conducted a good number of infrastructure and livelihood projects, contributing to local employment significantly. In the face of the challenges posed by economic globalization and their own development difficulties, most African countries hope to strengthen economic and trade cooperation with China to avoid the risk of being marginalized in the global supply chain.

There is indeed infinite business opportunities in Africa, but opportunity and risk often coexist. It is essential for Chinese companies to take risks into account when it comes to exploring business in Africa.

At present, the biggest risk to African investment is workers' security, including threats from political unrest, military conflict as well as health conditions and natural disasters. It is imperative for Chinese companies eyeing investment in Africa to assess local political and security environment in a comprehensive manner, respect local culture, and contribute to local economies' persistent progress.