As of end-April 2012, the China-Africa Development Fund (CAD Fund), a subsidiary of China Development Bank(CDB) that has been operating for five years, has committed to up to ten African agricultural projects, with actualized investments exceeding US$57 million and projects spanning multiple sectors including cotton, leather processing, sisal, sugar, farm equipment assembly and sales. CAD Fund, China's equity fund focusing on African investments, has innovated on investment models to support agriculture development in Africa for local social interest and mutually-beneficial cooperation between China and Africa.
Despite rich natural endowments and favorable climate, Africa has long been struggling with its agricultural development due to funding and technological difficulties and from time to time is plagued by food crisis. With its expertise in farming and agricultural production and successes in food security, China has been viewed as a favored partner by African countries. In the aim of helping its African partners with their capacity building in agriculture, the CAD Fund has innovated on investment models, by leveraging CDB's strengths in planning advisory and lending businesses. This new model has made easier for CDB's clients that are agribusiness companies to invest and operate in Africa, greatly benefitting local agriculture and livelihood.
Case in point is the China-Africa cotton project. CAD Fund and Qingdao Cotton Company came up with a "company + rural household" model to help introduce China's mature technologies in cotton breeding, planting, field management and processing are to Africa's cotton plantation bases. The model was first applied in Malawi and saw significant rise in quality, output and purchase orders of the local cotton, and creation of an extended value chain with cooking oil extraction (from cottonseeds) added to the supply chain. The project soon repeated successes in Mozambique, Zambia and other major African cotton producing nations. As of 2011, close to 40,000 tons of cotton was harvested by the China-Africa cotton project, translating to income rise for 110,000 rural households and 600,000 farmers. The Malawi project later was selected by the China-Africa agricultural exhibition center, as a model cooperation project.
Other successful projects include the investment in Africa's largest leather processing factory in Ethiopia, China National Agricultural Development Group's Africa Agriculture Investment Company. Its track record of impressive performance has proven the strengths of CAD fund in project execution. "CAD Fund works to capitalize on CDB's know-hows in development finance and advance planning, while combining advantages of Africa and China to pursue win-win solutions." According to Mr. CHI Jianxin, CAD Fund's President.
The CAD Fund, established in June 2007, is one of the Eight Initiatives for China-Africa Cooperation announced by President Hu Jintao during the 2008 Beijing Summit FOCAC (Forum on Africa-China Cooperation). CDB contributed the initial funding of US$1 billion funding, and the fund is to raise the total size to US$5 billion.