A US$5 billion fund was launched yesterday to finance Chinese companies' investment in Africa.

The China-Africa Development Fund (CADF) has drawn first-phase funding of US$1 billion from China Development Bank (CDB), one of the three State-owned banks which finance policy-related projects.

The fund will rise to US$3 billion in the second phase before finally reaching US$5 billion, said Gao Jian, vice-president of CDB and chairman of the new fund.

The launch of the CADF, one of the measures promised by President Hu Jintao last year to support African development, was approved by the central government in March.

More investors may join the fund, Gao said. "The fund will invest in equities and bonds of Chinese enterprises and projects operating in Africa to help them access capital."

In addition, the fund will provide management and consulting services to Chinese companies in Africa, he said.

For now, the CADF will focus on industries crucial for the economy of African countries and the wellbeing of local people, such as agriculture, manufacturing, infrastructure and resources, Gao said.

The fund is also likely to work with local partners to build a cross-region road system in Western Africa and build power plants in some countries.

Before the launch of the fund, CDB reached initial agreements with potential partners among domestic companies, including China National Agricultural Development Group Corp, China National Machinery & Equipment Import & Export Corp, and Shenzhen Energy Group Corp.

Sino-African economic and trade ties have been expanding rapidly in recent years, Minister of Commerce Bo Xilai said at the fund's opening ceremony, adding he hopes the fund "will be an accelerator" in building the relationship.

Unlike other types of government aid to Africa, the CADF "will be an independent business but with a business target limited to breaking even or making a marginal profit," according to Gao.

(China Daily June 27, 2007)