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Tanzania’s Industrialisation is Strongly Supported by China Africa Development Fund

Tanzania’s Industrialisation is Strongly Supported by China Africa Development Fund

The Tanzanian Government has recently announced that over 100 Chinese investors will set up their businesses in the country, as part of a five-year program backed by the China Africa Development Fund (CADFund), a state-run fund launched in 2007 to strengthen Sino-African commercial ties and which in Tanzania aims to boost local industrialisation. 

The announcement was done by Deputy Permanent Secretary at Prime Minister’s Office, Ms. Regina Kikuli and Tanzania Investment Centre (TIC) Executive Director, Ms. Juliet Kariuki during the last China Tanzania Industrial Development and Poverty Reduction meeting on 26th August, 2015 in Dar es Salaam, commercial capital of Tanzania.

China-Africa Development Fund was established in 2006 as one of the eight policy measures proposed by the Chinese government during the Beijing Summit of the Forum on China-Africa Cooperation to promote practical cooperation between China and African countries. Its objective is to support and encourage Chinese companies to invest in Africa. With the initial scale set to be US$ 5 billion, the fund was organized by CDB and started operation in June 2007. It offers a market-based channel to convert foreign reserves into funding sources.

During the Johannesburg Summit of the Forum on China-Africa Cooperation held in December 2015, President Xi Jinping announced that China would inject additional US$ 5 billion into the fund in support of the “10 Cooperation Programs” between China and Africa, raising the fund’s size to US$ 10 billion.

Since its inception, China-Africa Development Fund provided active support for economic and trade cooperation between China and African countries, focusing on a group of agricultural, infrastructure, manufacturing, industrial park and resource development projects. It effectively stimulated Chinese investment in Africa, and contributed greatly to infrastructure construction, technical advancement, exports and employment growth in the destination countries, playing an active role in industry and production capacity integration between China and Africa. The fund is warmly received by African countries and led to enhanced economic and social development in Africa and improved the competitiveness of African economies in the world.

The program is the outcome of the Tanzanian President Jakaya Kikwete’s visit to his Chinese counterpart on 24th October, 2014 where an agreement on industrialization and poverty reduction was signed by both sides, explained Ms. Kikuli on her speech. 

China is an example of how through industrialisation and agricultural growth, one country can raise job creation to improve living conditions and help millions of people to get away from poverty, she added. 

Ms. Kariuki alo stressed that CADFund will not only help funding private investments in Tanzania, but will also assist the TIC on identifying genuine Chinese investors. 

She also extended an invitation to the National Development Corporation (NDC) and the Export Processing Zones Authority (EPZA) to take advantage of the CADFund’s five-year program to boost manufacturing and agricultural sectors countrywide. 

On the Chinese side, CADFund’s Vice President Yang Aiwu, added that his organization is willing to raise investments in Tanzania due to the straight economic growth and quick increase in population which is one of the highest in the world at an annual rate of 3.0% compared with a world average at 1.2% according to the World Bank.

Chinese Foreign Direct Investment (FDI) in Africa at the end of 2014 were totaling USD 24.5 billion representing 14% of China’s total FDI in that year according to the World Resources Institute (WRI). 

Tanzania accounts for the 16.3% of China’s FDI to Africa with USD 4 billion in the year 2014, an increase of 100% from the total Chinese FDI recorded in the country at the end of 2013 according to the Chinese Embassy to Tanzania.
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