Safeguarding nature becomes second nature

Sustainability is a key word for Chinese companies looking for an investment edge

African countries and Chinese investors are both increasingly aware of how critical sustainable development is as Africa industrializes and urbanizes, industry insiders say.

"African governments' competence in passing environmental legislation is improving all the time," says David Humphrey, head of infrastructure and power for Standard Bank, the biggest commercial bank in Africa.

"Chinese investors are also much more aware, whether they be construction firms or financial partners, that you cannot ignore the environment."

Humphrey was in Beijing for the annual Africa Infrastructure and Power Forum, at which African organizations meet project owners and Chinese investors who are putting huge amounts into Africa. The forum attracted hundreds of companies.

The development of African infrastructure, particularly electricity generation and distribution, falls well short of what is required, with the African Investment Bank calculating that the continent has an infrastructure deficit of $93 billion a year.

China has made the biggest contribution to Africa's infrastructure and power sectors, Humphrey says.

"Wherever you go in Africa you see buildings, railways and shopping malls that were built by Chinese."

Humphrey says that working for Standard Bank, which has served many Chinese investors in Africa, he has seen industrialization and urbanization in many parts of Africa, and economic development is pushing ahead everywhere.

China could play a huge role in ensuring this is sustainable, he says, particularly given that China has led the world in urbanization for the past 30 years.

It is in infrastructure, especially the power sector, that such a contribution could have the greatest influence over the environment, local economies and people's lives, he says.

"If you think of urbanization, what do you mean by infrastructure? It is power, water, housing and utilities. It is the whole that makes up the urban environment."

How well African national and local governments plan economic and urban growth and bring it to fruition differs from country to country, he says.

"But generally countries have got better at developing and delivering infrastructure projects. There used to be a lot of informal urbanization, but now things are being done in a more developed way, resulting in better roads and better hospitals."

Ensuring that environmental protection is comprehensively planned and implemented is a top priority for Standard Bank in all the projects that it works on, he says.

"When we talk about infrastructure finance, the higher standards win. When you look at building a new railway or new road, you must have proper environmental assessment. In fact we always think it is the most important thing to be done first, because you really need to understand the impact of a project on the environment, making sure you can finance it in a sustainable way."

Standard Bank is a strategic partner with the Industrial and Commercial Bank of China in helping improve the value chain that can be offered to Chinese investors, including credit cards, loans and foreign exchange services.

Humphrey says that as a banker he has witnessed China's key role in the urbanization of Africa, and the awareness that it has brought to bear on matters of sustainability when doing business in Africa.

Chinese companies used to eschew investing in long-term projects in Africa, ones that took 10 years or 20 years to complete, he says, but now more and more Chinese investors and construction firms are willing to look to the future and go ahead with such investments alone or in partnership with others.

"Chinese contract firms and investors are becoming much more comfortable with the idea of staying in Africa for a long time."

When building hospitals and schools they are employing more locals and shouldering more social responsibilities, he says. They are also more willing to localize and bridge cultural gaps.

Many Chinese contractors used to bring in Chinese to work on their projects and then pack up everything and leave once work was complete.

Their changed behavior is "winning hearts and minds in Africa, because the benefit of Chinese investment is being shared by the Chinese firms and countries, especially cities, as well. I think things are coming right and we can be very optimistic."

Sun Hao, professor of the China Metallurgical Industry Planning and Research Institute, says that with globalization, sustainable development has become a worldwide trend, one that less developed countries are highly conscious of.

African countries could learn from China on economic development, including from lessons China itself has learned about the importance of respecting the environment, and on capital and technology.

"In Africa, urbanization and industrialization cannot afford to rely on outdated ways. Just as many Chinese companies have become aware of the importance of acting strictly within the framework of the law, African countries are conscious of that too, and have put in place mechanisms to ensure they do so."

He cites a Chinese company that last year was about to build a freight-handling terminal in West Africa through which 200,000 metric tons of freight would pass each year, but to protect flora and fauna changed the location several times, entailing more spending.

Chi Zhenbo, assistant president of the China Three Gorges Corp, the developer of the world's biggest power station for the Three Gorges Dam, says the company now focuses on developing clean energy, such as hydropower, wind power and solar power, including in Africa.

As more Chinese companies go global, China Three Gorges Corp is more confident about investing large amounts of capital overseas, he says, taking technology with it and carrying out many different activities, ranging from designing to building and to managing and operating completed projects.

Measures aimed at protecting natural resources and the environment have become more stringent worldwide, he says, and the company has needed to heed them. For example, when it built a power station in one Asian country it needed to protect stone that was regarded as sacred, even if that entailed higher costs.

The company would like to take such an approach in Africa, he says.

"As with Africans themselves, Chinese investing in the continent care about the environment, and are keen to share with the locals the benefits of acting in that way, and at the same time respect their culture."

chenyingqun@chinadaily.com.cn

(China Daily Africa Weekly 10/30/2015 page9)