China’s belt and road initiative (BRI) initiatives differs from the Asian country’s previous investment programmes in other countries, in that it seeks to achieve more sustainable and longer-term investments, Pinsent Masons partner Sam Boyling outlined during an Africa Infrastructure Conference, held in Johannesburg.
BRI projects and investments require greater economic justification, with China pursuing projects that deliver financial and economic dividends, rather than projects that are desired for political aims by the host government.
Speaking about Pinsent Mason’s experience with the BRI, Boyling indicated that it is the only law firm that has been involved in all five of the projects facilitated thus far by BRI transactions.
He cited the Thar Block II coal mine, in Pakistan, as a case study for BRI.
Boyling highlighted that finance was sourced from a range of sources. Therefore, while the project was led by China, it did not dominate the financing.
Boyling did note that not all BRI projects have been successful, with some having run into trouble.
He highlighted, however, that such failed projects can present a number of lessons, such as the dangers of partnering with the wrong local partners, and not being cognisant of political risks that may be present.
Moreover, there are also some projects that get stalled.
To ensure the success of projects, Boyling suggested that Chinese entities partner with strong local partners, identify market opportunities early on and engage with the local supply chain.
He, meanwhile, indicated that energy projects would remain a major focus under the BRI.
In terms of African opportunities, there has been a long tradition of Chinese investment in Africa, with strong political ties and access to natural resources. This could be built on in the future.
Boyling said perceptions of risk in Africa were greatly over-exaggerated.