China's interest in investing in Africa makes sense for both partners and should transform economies long reliant on commodity exports, Reuters quoted Ethiopia's prime minister as saying today. China pledged last year to give Africa $10 billion in concessional loans over the next three years and it is ploughing money into developing infrastructure in many nations on the world's poorest continent. Prime Minister Meles Zenawi said it made sense for China to spend in Africa, partly because its massive foreign exchange reserves are largely denominated in dollars and it needs to diversify those assets. Rising labour costs in China also meant that the Asian giant would want to start relocating some manufacturing industries to countries where wage bills may not be as high. Meles said that at the same time, African nations needed to shift towards industrialisation and boost skills after a decade of growth that has done little to transform economies driven by exports of natural resources and agricultural commodities. "At the moment, this is consistent with China's interests," Meles told the World Economic Forum on Africa in Tanzania. "It's in their interest to spend tens of billions of dollars in Africa and it's in our interest to have access to those tens of billions of dollars," he said.
