General Knowledge

10 facts about Chinese investment in Africa

China is attempting to liberalise its economic model and one huge step to take for such a goal is to walk on the footsteps of The West. Therefore, Chinese Belt and Road Initiative is an attempt of China to increase its global share of market and economy. One obvious footprint of Chinese investments in the global economic order is visible in Africa. Here are ten facts about Chinese investment in Africa which make the entire project pretty interesting.

1. Overall Foreign Direct Investment in Africa is pretty low

The first thing to keep in mind is that the foreign direct investment in Africa is pretty low when compared with the rest of the world. As of 2018 figures provided by the World Bank, the world leading economies like US, China, Germany, Brazil and Hong Kong remain at the top of the FDI recipient list. 2018 witnessed a total of $1.2 tr in FDI around the world. Middle East and North Africa combined received an FDI of $61 bn while Sub-Saharan Africa received an FDI of $32bn. OECD members which include no African country, received a total FDI of $431bn. Once FDI is divided per capita in case of Africa, the numbers become even more smaller than expected.

2. $305.95 bn of Chinese investment between 2005-2019 in Sub-Saharan Africa

According to the Chinese investment Global tracker, she has invested $305.95bn between 2005-2019 in sub-saharan Africa. Further. In the same period, $200bn has been invested in North Africa and Arab Middle East countries, like KSA, Yemen etc. These investments range from Agriculture, Energy, Chemicals to Metals industry. The data has been collected by the American Enterprise Institute.

3. Chinese investment in Africa is lower than European counterparts

It’s a fact that Chinese investment in Africa is lower when compared to the former colonial masters such as France and UK. So, Europe is one of the key investors in Africa. The trend shows that China is keen to catchup with the levels of investments arising from the Europe into the Africa.

UNCTAD data shows that between 2013-2017, the investment from China is pretty positive whereas the European counterparts also show divestment. For Example, in 2013 Chinese investment stood at $26bn whereas in 2017 it increased to $43 bn, similarly, French investments in 2013 stood at $64bn, whereas it was same in the year 2017. A divestment trend is particularly visible in the US FDI during the same period.

4. Transport Sector and Energy Sector Received Major Chinese Investment in Africa

It’s interesting to note that transport sector received major chunk of Chinese FDI in Africa. After analysing the data obtained from the American Enterprise Institute, the following graph could have been plotted.

Transport and Energy tops the list of Chinese investments in Africa between 2005-2019

During these years, transport sector received an investment of $125.4 bn whereas the real estate sector received an investment of $44.8 bn. It shows that green investment were pretty lower in Africa when it came to Chinese interests. Further, Energy sector received the second highest investment of $120.6 bn during the period.

5. Chinese investment in Africa is creating lesser jobs than expected

As the major chunk of investment goes to transport, energy and real estate initiatives like construction, which serves the strategic interests of the China; therefore, job creation is lower than expected. fDI Investment suggests that as of 2018, 1.78 people find job for every $1m invested, as far as green investment is concerned, which doesn’t take into account the transport and energy sector. The lower number shows that job creation can not be successful in Africa by Chinese FDI, unless China decides to invest in the manufacturing industry.

6. Nigeria and Algeria are the highest recipient of Transport sector Foreign Direct Investment of China

Nigeria and Algeria received the most Foreign Direct investment between the period of 2005-2019 by the Chinese private and state owned companies. Nigeria received a total of $15.9bn investment between the period. One of the important project in this regards is the rail project, which was awarded to the Chinese company in 2018 and was worth $8bn.

Algeria on the other hand received the second most highest Chinese FDI, which amounts to $8.3bn in the transport sector in the above mentioned period.

7. Angola and Egypt received the highest Chinese FDI in Real Estate Sector

As far as Angola and Egypt are concerned, these countries attracted highest Chinese FDI in real estate sector. Angola received a total of $7.3bn investment between 2005-2019; whereas, Egypt received a total of $6.1bn of Chinese investment in the same period.

Most projects in Angola are of construction nature which are conducted by Chinese CICI company. A detail of these projects are available on the CICI website, the projects include Angolan Social Housing Projects, Angolan National Tourist Area Project etc. Similarly, the projects in Egypt are also of construction nature, the company majorly involved in the projects is Sinoma. One important project in Egypt is a cement plan near the city of Cairo. The Sinoma claims it to be one of the biggest cement plant in the world which can produce 6,000 tons of cement per day.

8. These are top 10 African countries which received most Chinese Foreign Direct Investment between 2005-2019 in Transport Sector

As per the data provided by the AEI, the following ten countries received the major FDI by China. These are expressed by a graph, along with their names. The investment data is distributed according to the transport sector investments, since a major chunk of Chinese investment in the Africa accounts for the same sector.

Nigeria tops the list of Chinese investment in Transport Sector

9. These are top 10 African countries which received most Chinese Foreign Direct Investment between 2005-2019 in Real Estate Sector

As Chinese companies are pretty much intuitive and expert in creating mega structures; therefore, the third most (or top most green) investment of China in Africa is done in the real estate sector. The following ten countries received a major chunk of the Chinese real estate investment in the Africa between 2005-2019.

Angola tops the list of Chinese investment in Real Estate Sector

10. These are top 10 African countries which received most Chinese Foreign Direct Investment between 2005-2019 in Energy Sector

Energy is pretty important for any country or region. Without proper energy one can not manufacture products and capital goods. Therefore, China has invested into energy.

Nigeria tops the list of Chinese investment in Real Estate Sector

Nigeria received a mix of FDI in energy sector, a few projects are Hydro power based, others are to be run on thermal power plants. In 2017, a $5.8bn hydroelectric power project was announced in Nigeria and it was reported by CNN. The capacity of the project is 3,050MW of energy needs, which would be completed by a consortium of Chinese state owned companies.

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