China, India boost Africa's growth: World Bank

Updated: 2006-11-14 09:25

Africa is reaping the fruits of a new "Silk Road" to the fast-growing Asian economies, notably through a sharp rise in trade and investments by China and India, a new study by the World Bank has found.

According to the study, "Africa's Silk Road: China and India's New Economic Frontier," 27 percent of African exports are sold in Asia, up from 14 percent in 2000 or three times the amount in 1990.

Europe, Africa's leading trade partner since the early independence days, has lost ground with a 50 percent fall between 2000 and 2005 in the share of African exports to European Union members, said a report of the study released here on Monday.

Approximately 47 percent of Africa's exports to Asia comprise oil and natural gas, which represent 12 percent of Africa's overall exports to the world. The leading non-oil mineral and metal products include gold, silver, platinum, iron, aluminum, iron ore, copper, and pearls.

The study finds that existing Chinese and Indian investment in Africa is concentrated on raw materials, notably in the mining and oil sectors.

However, the two Asian countries "are fast diversifying outside the natural resources sector into the apparel, food processing, retail, fisheries, commercial real estate, labor- intensive light manufacturing and the services sector in ways that could help Africa move away from over-reliance on a few export commodities which has left the continent so vulnerable to economic shocks," said the report.

China and India's foreign direct investments in Africa, although more modest than trade flows, are also growing very rapidly, the "Silk Road" study reveals, drawing parallels with the Silk Road used by traders from 100 B.C.

"This new Silk Road presents a significant, and to date, rare opportunity to accelerate Africa's growth, expand intra-African trade and hasten the continent's integration into the global economy," said Harry Broadman, World Bank's economic advisor in the African region and the author of the study

The study finds that in both Africa and Asia there are strong complementary relationships between foreign direct investment (FDI) and trade.

"Chinese and Indian firms operating in Africa have been playing a significant role in facilitating these linkages between FDI and trade on the African continent," said the report.

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