Investment in Africa

Wednesday, April 03, 2019

China is not “moving relentlessly across Africa”. Despite what Peter Navarro, head of US President Donald Trump’s National Trade Council has written, that China is “locking down strategic natural resources, locking up emerging markets and locking out the United States”, experience on the ground tells a different story.

China is competing aggressively for influence and market share in Africa, but, in doing so, it is empowering African countries to chart their own course, pick their own partners and insist on their own priorities.

It is naive to think that China’s motives in Africa are purely altruistic - any more than those of the West. Beijing sees African commodities and consumers as essential to the long-term dynamism of its own economy.

To secure access to those commodities and simultaneously grow African markets for Chinese goods and services, China is deploying its state-owned enterprises to win African infrastructure contracts, supplemented by its banks to fund them.

The rewards promise to be substantial. The McKinsey Global Institute projects that by 2025, African household consumption and business-to-business (B2B) spending could reach $5.6 trillion. That is equivalent to nearly a third of current US gross domestic product.

China has its eyes on Africa’s economic takeoff and is investing heavily in the infrastructure needed to make it happen. In December 2015, President Xi Jinping pledged $60bn in new loans, exports credits, investment funds and grants.

The conservative calculations of Deborah Brautigam at the SAIS China-Africa Research Initiative, show that between 2000-2014, Chinese financiers had already channelled $86.3bn to African governments and state-owned enterprises. A figure equivalent to the total global exposure of the US Exim Bank as of 2016.

It is equally naive to say that China is solely motivated by an aggressive desire to lock out the US and others from Africa’s minerals and markets, in the manner of Britain’s East India Company in the 18th and 19th centuries.

A Guest Editorial