China's President Xi Jinping is welcomed at the State House in Dar es Salaam.
China's President Xi Jinping is welcomed at the State House in Dar es Salaam.

Xi says China development will help Africa 'grow richer'



DAR ES SALAAM // China's president told Africans yesterday he wanted a relationship of equals that would help the continent develop, responding to concerns that Beijing is only interested in shipping out its raw materials.

On the first stop on an African tour that will include a BRICS summit of major emerging economies, Xi Jinping told the Tanzanian president, Jakaya Kikwete, that China's involvement in Africa would help the continent grow richer.

"China sincerely hopes to see faster development in African countries and a better life for African people," Mr Xi said in a speech laying out China's policy on Africa, delivered at a conference centre in Dar es Salaam built with Chinese money.

Renewing an offer of US$20 billion (Dh73.4bn) of loans to Africa between 2013 and 2015, Mr Xi pledged to "help African countries turn resource endowment into development strength and achieve independent and sustainable development".

Africans broadly see China as a healthy counterbalance to Western influence but, as ties mature, there are growing calls from policymakers and economists for a more balanced trade deal.

"China will continue to offer, as always, necessary assistance to Africa with no political strings attached," Mr Xi said to applause. "We get on well and treat each others as equals."

But gratitude for that aid is increasingly tinged with resentment about the way Chinese companies operate in Africa, where industrial complexes staffed exclusively by Chinese workers have occasionally provoked riots by locals looking for work.

Countering concerns that Africa is not benefiting from developing skills or technology from Chinese investment, Mr Xi said China would train 30,000 African professionals, offer 18,000 scholarships to African students and "increase technology transfer and experience".

"The Sino-Tanzania relationship has endured a lot," said Mr Kikwete, whose nation built close ties with China in the early years after independence from the British in 1964. "Now we have become all-weather friends."

China built a railway linking Tanzania and Zambia in the 1960s and early 1970s.

The two leaders witnessed the signing of trade and other deals, including plans to co-develop a new port and industrial zone complex, a loan for communications infrastructure and an interest-free loan to the government. No details were given on the size of the loans or the industrial projects.

Mr Xi's next stop was South Africa for a BRICS summit today and tomorrow, where he could endorse plans for a joint foreign exchange reserves pool and an infrastructure bank.

Those proposals respond to frustrations among emerging markets at having to rely on the World Bank and International Monetary Fund, which are seen as reflecting the interests of the United States and other industrialised nations.

Nigeria's central bank governor, Lamido Sanusi, wrote in the Financial Times this month that the trade imbalance between China and Africa was "the essence of colonialism" and cautioned the continent was vulnerable to a new form of imperialism.

China is keen not to be perceived as an imperial master.

"The legacy of [the] West is the feeling that Africa should thank them, and that Africa should recognise that it is not as good as the West," Zhong Jianhua, China's special envoy to Africa, said before Mr Xi's trip. "That is not acceptable."

Lu Shaye, head of the Chinese Foreign Ministry's African affairs department, said it was the West which was only interested in African resources, not China.

"What have western countries done for Africa in the 50 years since independence? Nothing. All they have done is criticise China and that is unfair," he told a Hong Kong television station.

Mr Xi's African tour ends in Republic of Congo, from which China imported 5.4 billion tonnes of oil last year. That amount was just 2 per cent of its total oil imports, but potentially the source of a lot more.

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The biog

Hometown: Birchgrove, Sydney Australia
Age: 59
Favourite TV series: Outlander Netflix series
Favourite place in the UAE: Sheikh Zayed Grand Mosque / desert / Louvre Abu Dhabi
Favourite book: Father of our Nation: Collected Quotes of Sheikh Zayed bin Sultan Al Nahyan
Thing you will miss most about the UAE: My friends and family, Formula 1, having Friday's off, desert adventures, and Arabic culture and people
 

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Brief scores:

Toss: Australia, chose to bat

Australia: 272-9 (50 ov)

Khawaja 100, Handscomb 52; Bhuvneshwar 3-48

India: 237 (50 ov)

Rohit 56, Bhuvneshwar 46; Zampa 3-46

Player of the Match: Usman Khawaja (Australia)

Player of the Series: Usman Khawaja (Australia)

The BIO

Favourite piece of music: Verdi’s Requiem. It’s awe-inspiring.

Biggest inspiration: My father, as I grew up in a house where music was constantly played on a wind-up gramophone. I had amazing music teachers in primary and secondary school who inspired me to take my music further. They encouraged me to take up music as a profession and I follow in their footsteps, encouraging others to do the same.

Favourite book: Ian McEwan’s Atonement – the ending alone knocked me for six.

Favourite holiday destination: Italy - music and opera is so much part of the life there. I love it.

Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”