McKinsey releases ‘lions and dragons’ report on China-Africa economic ties

By AT editor - 28 June 2017 at 8:53 am
McKinsey releases ‘lions and dragons’ report on China-Africa economic ties

A long-awaited McKinsey report on China-Africa economic partnerships and relationships has been released, with insights drawn from more than 100 senior African leaders and more than 1,000 owners or managers of Chinese businesses in eight African nations.

There are thousands of Chinese firms – far more than officially counted, McKinsey says – operating  across many sectors of the African economy. Nearly a third are involved in manufacturing, a quarter in services, and around a fifth in trade and in construction and real estate.

The “Dance of the lions and dragons” report gives a detailed portrait of how Chinese interest has evolved, with China becoming Africa’s biggest economic partner in just two decades.

“In manufacturing, we estimate that 12 percent of Africa’s industrial production—valued at some $500 billion a year in total—is already handled by Chinese firms,” McKinsey said. “In infrastructure, Chinese firms’ dominance is even more pronounced, and they claim nearly 50 percent of Africa’s internationally contracted construction market.”

China now ranks No. 3 as a donor, and represents a $440 billion Africa-China opportunity by 2025.

Among the businesses interviewed, Africans made up 89 percent of the workforce and given the data, that means several million jobs are with Chinese firms. Half of those firms have introduced a new product or service, while a third have introduced a new technology. While those findings were on balance viewed as positive, McKinsey did find shortcomings and areas for significant improvement.

Recommendations included the need for Chinese companies to make a greater effort to source with African businesses missing out on opportunities, and the need for African managerial leadership. The report also addressed labor and environmental violations. “These range from in inhumane working conditions to illegal extraction of natural resources including timber and fish,” McKinsey said.

To view the complete report, see this link.

Image: McKinsey Co

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