Summary
Over the past couple of decades China has become a leading story in the economic development of Africa. Through loans, grants and direct investment, Beijing has established a huge presence in countries which traditionally fall outside of major western interests. Yet for all the touted economic gains, problems have emerged; debt levels in some African states are alarmingly high.
However, some countries have done well out of China, playing a clever game of international diplomacy. China has benefited from a relative lack of attention given to Africa by western powers, but that is beginning to change, albeit slowly compared to the recent expansion of Chinese interests.
Key Highlights
- China promised $175bn between 2014 and 2024, eclipsing every monetary promise to have been issued before. Cities such as the capital of Ethiopia, Addis Ababa, are replete with new roads and skyscrapers built by China. Many other African cities share similar stories of transformation.
- The result of playing the international diplomatic game as President of Kenya Uhuru Kenyatta has done is not only are foreign nations competing for business, thus improving terms, but also Kenya is highly unlikely to become dependent upon China in a similar fashion to Djibouti.
- Arguably the leading reason behind the ease with which China has maneuvered into becoming a major foreign power in Africa is the relatively low level of attention European and North American countries have paid to many countries in the world’s poorest continent.
Scope
- Examines how China is catching up to Europe in Africa
- Looks at the positive impact Chines money has had on the continent
- Assesses what some of the risks to small African states of courting China
- Looks at the extent of Chinese investment into Africa
Reasons to buy
- What are the risks of African countries taking on Chinese loans?
- Are some African states overexposed to China?
- What is the extent of Chinese involvement with Africa?
- What is the western response to Chinese activity in Africa?
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Table of Contents
Overview 2
Catalyst 2
Summary 2
Extent of Chinese investment into Africa is far reaching but has caused problems 5
Scale of lucrative Chinese deals makes the Far-Eastern giant more powerful than the West 5
Chinese money is transforming cities across the African continent, dominating development 6
Encouraging flow of money from China does come with drawbacks 7
Many African countries have much to gain out of China 9
Kenya is demonstrating how to gain the best deal from East and West 9
Chinese money is becoming a common option for African ports in need of funding 10
Governments could forge more economically sustainable relations with China 11
Some countries are becoming overexposed to China 12
Djibouti serves as example of becoming overexposed to Chinese money 12
Debt is becoming a growing issue for Chinese involvement in a growing list of African states13
Signs are Beijing is recognizing potential problems African nations may have repaying debt 14
Although interest in Africa from outside China is growing, it remains insufficient 16
Lack of interest from United States leaves key competition against China in Africa 16
Europe has failed to invest heavily into Africa, limiting competition faced by China 17
Major German companies are branching out into Africa in pursuit of business benefits 17
Economic Partnership Agreements represent progress but suggest European Union has not done enough so far 18
Conclusions 20
China has transformed the economic landscape of Africa and shows no sign of slowing down 20
Appendix 21
Sources 21
Further Reading 21
Ask the analyst 22
About MarketLine 22
Disclaimer 22
List of Figures
Figure 1: Scale of Chinese money flowing into Africa 5
Figure 2: Ethio-Djibouti Railway line 6
Figure 3: Zambia imports from China, 2008 to 2017 ($m) 7
Figure 4: Kenya GDP ($bn) 2000 to 2016 9
Figure 5: Kribi port, Cameroon 10
Figure 6: Zambia exports of copper and articles thereof to China, 2008 to 2017 ($bn) 11
Figure 7: Djibouti 12
Figure 8: Djibouti external debt ($m) 2008 to 2016 13
Figure 9: Chinese President Xi at the 2018 Forum for China-Africa Cooperation 14
Figure 10: US exports to Africa 2008 to 2017 ($bn) 16
Figure 11: Angela Merkel on official tour of Africa, 2018 18
