Infrastructure provides opportunities to attract investment, create more jobs

Chinese-built industrial zones under the Belt and Road Initiative, or BRI, have become effective platforms for African countries to learn about China's development experiences and realize their industrial transformation.

Hisham AbuBakr Metwally, an economics researcher with the Egyptian Ministry of Foreign Trade and Industry, said that while African countries are striving to catch up on the industrialization front, such joint economic zones with China give them opportunities to attract investment as well as to learn about best practices when it comes to China's economic development.

"Such industrial zones under the BRI support growth in Africa and help the continent achieve employment goals," he said.

Data from the General Administration of Customs showed that Chinese companies invested $34 billion in overseas economic and trade cooperation zones in BRI related countries, and about 4,500 Chinese companies have established operations in the zones. And they have paid $2.8 billion as taxes and fees to local governments and created more than 300,000 jobs for locals.

On the Africa continent, there are currently 25 Chinese-built industrial zones, which have created more than 40,000 jobs for locals and paid nearly $1.1 billion of taxes to local governments, Qian Keming, vice-minister of commerce said at a news conference in June. And he said that China is encouraging the construction of more industrial zones in Africa.

These industrial zones are defined by the Ministry of Commerce as industrial parks that are independent legal entities established overseas by Chinese companies. They have complete infrastructure, clear industrial development strategies, and provide public services to companies in it.

One of the flagship projects is the Chinese-built Eastern Industry Zone, which is 30 kilometers from Addis Ababa, the capital of Ethiopia. It is also Ethiopia's only overseas industrial zone at the national level.

Founded in 2007, the zone has 83 manufacturers and has created over 10,000 jobs for locals. The companies there are mainly engaged in sectors like cement, footwear, automobile assembly, and textiles& garments, according to its website.

Another model for development is the China-Egypt TEDA Suez Economic and Trade Cooperation Zone, which is located in a desert 50 kilometers south of the seaport city Suez and 120 kilometers east of Egypt's capital Cairo.

The zone has 84 enterprises, including 42 manufacturing companies, and has attracted more than $1 billion investment. It has also generated about $58.2 million in taxes, according to the Egypt-TEDA SEZone (Suez Canal Economic Zone) Development Co.

The industrial park hosts companies involved in manufacturing, logistics, technology development, commerce, and finance.

Metwally said that this industrial zone has not only attracted Chinese companies, but also investments from other countries. For example, Russia has been attracted to invest in the same region with a big industrial zone.

"The China-Egypt TEDA Suez Economic and Trade Cooperation Zone is a breakthrough and offers a model for Egypt's industrialization," he said.

Zhang Jianping, the director-general of the Institute of West Asia and Africa at the Chinese Academy of International Trade and Economic Cooperation under the Ministry of Commerce, said that the BRI is a huge platform for global cooperation and development under which China and Africa can work together to realize the United Nations' 2030 Agenda for Sustainable Development.

Offering a model

Zhang said that the building of industrial parks under the BRI is critical to Africa's development. The African countries' infrastructure is relatively poor, and their development capacity is relatively weak. So, if they try to realize industrialization project by project, it will be slow.

"But industrial parks could quickly pass China's experiences to African countries, helping them bring industries together, improve efficiency and reduce risk amid development," he said.

Moreover, industrial parks can help improve infrastructure, offer jobs and vocational training to local workers, and generate taxes for local governments.

Jiang Hao, a partner at global consultancy Roland Berger, said that with the BRI, an increasing number of Chinese companies were willing to invest overseas.

For overseas companies that want to invest in Africa, these industrial parks can help them understand the destination countries' business environment, get better access to local recourses, simplify the examining and approving formalities and reduce legal risks.

He also said that these parks could speed up building of African countries' industrial capacity.

"For example, if a vehicle manufacturing factory comes up in an industrial park in Africa, downstream enterprises, including auto parts makers, are very likely to follow suit. Thus, an African country could rapidly build up a complete supply chain for the auto industry," he said.

Metwally said that many African countries attached great importance to the BRI as they want to get involved in mega-infrastructure projects financed and implemented by China, as these projects have a positive impact on boosting economies and contributing to growth."