Korea wants a bigger role in Africa's investment story
Twenty years after launching its economic cooperation framework with Africa, South Korea is looking to deepen its footprint on the continent. This time, the conversation is increasingly about investment, technology and business.
At the Korea-Africa Economic Cooperation (KOAFEC) Ministerial Conference in Seoul in September, artificial intelligence took center stage, as the official theme of the gathering focused on harnessing AI and digital infrastructure for Africa's transformation. However, beyond the discussions on AI, data centers, and digital skills, another narrative emerged: Korea's desire to increase its business involvement with Africa, while African governments seek partners capable of providing financing, technology, industrial capacity, and long-term investment.
The conference brought together approximately 800 participants, including representatives from 45 African countries. This marked 20 years since the establishment of KOAFEC in 2006 as a platform for collaboration between Korea, African nations, and the African Development Bank. Over the years, Korea has contributed $132.82 million to the KOAFEC Trust Fund, with around $50 million allocated to technical assistance and project preparation.
While this may seem modest, these funds have facilitated the preparation of over 40 investment projects valued at more than $6 billion and mobilized additional financing of at least $4 billion.
During the conference, the African Development Bank and the Export-Import Bank of Korea signed a new five-year cooperation agreement, aiming to identify and co-finance projects in various sectors, including energy, transport, digital infrastructure, and critical minerals. This agreement also opens the door to loans, guarantees, and equity investments, potentially offering a pathway for Korean capital and technology to be integrated into African projects at an earlier stage.
While AI dominated discussions at this year's conference, the enthusiasm must be tempered with the reality that Africa still accounts for less than 2% of global data-center capacity. Building an African AI economy necessitates addressing fundamental questions such as electricity supply, data storage, financing infrastructure, and the development of operational skills.
Korea's proposed 'K-AI Package' aims to tackle several of these challenges simultaneously by combining data centers, energy infrastructure, connectivity, and AI applications in sectors like agriculture, healthcare, transport, and energy. Additionally, the establishment of a Korea-Africa AI Hub will bring together governments, universities, financial institutions, researchers, and businesses in a single platform, potentially attracting commercial investment.
Beyond AI, Korea's interest in Africa extends to critical minerals, which are crucial for Korea's manufacturing economy and global supply chains. African countries are increasingly seeking investors not only for mineral extraction but also for processing, manufacturing, and other value-chain components. Korea's extensive experience in automotive manufacturing, batteries, electronics, engineering, and heavy industry presents an opportunity to collaborate with African countries in these strategic mineral industries, potentially creating a unique investment proposition beyond the traditional commodity relationship.
Ultimately, the success of the next phase of Korea-Africa cooperation will hinge on the ability of Korean companies, banks, and institutional investors to become comfortable investing in African markets. KOAFEC's role in connecting various aspects of this puzzle, including project preparation, development finance, guarantees, government relations, and private sector involvement, presents a promising foundation for increased Korean investment in Africa.
Written by urgent.news from Africa Business's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
