Does China’s Relationship With Sub-Saharan Africa Need To Be Reassessed?

The China Africa Research Initiative at the Johns Hopkins University has over the past week released its data concerning Chinese investment in Sub-Saharan Africa.[1] The figures show the sum of Chinese loans to be less than commonly assumed, whilst demonstrating that the “Angola Model”, using commodities as collateral, account for only a third of the total loans.

 

China’s investment in Africa has over recent years received much attention, and deservedly so. China is now by far the largest donor to sub-Saharan Africa outside of the OECD countries, funding diverse development projects in agriculture, education, economic infrastructure and extractive industries. Chinese investment is nothing new, as the relationship with states such as Zambia dates back to the 1960s and the construction of the Tan Zam railroad in part to facilitate China’s access to the Copperbelt. In the context of the Cold War, Africa provided China with an opportunity to increase its political power in a time of tension with the Soviet Union.

However, since the early 2000s, Chinese loans have dramatically increased to sub-Saharan Africa. The data provided by the China Africa Research Initiative demonstrates that the Chinese financial commitment to the region has grown from $0.2 billion in 2000 to almost $17 billion in 2013. Between 2000 and 2014, ‘the Chinese government, contractors, banks and contractors extended $86.9 billion worth of loans’ to sub-Saharan Africa. Although the findings grab the headlines, commentators argue that the figures show Chinese investment in Africa is actually far less than commonly reported.

The research, based upon 1,123 reports, demonstrates that only 56% of the loans materialised and are being used, whilst the rest have either been cancelled or turned out to be mistakes. Where the loans go also makes for interesting reading. Oil-rich Angola receives by far the largest proportion of Chinese investment ($21.2 billion) and are almost exclusively based upon oil as collateral. Yet elsewhere, including the second largest benefactor Ethiopia, Chinese investments have avoided the use of commodities as collateral. Despite being resource-poor, Ethiopia has been deemed a stable investment due to political stability and a growing tertiary sector. Only a third of the investments have followed the so-called “Angola model”. Political alignment between the Chinese and the two largest recipients of the loans has gone hand in hand, with Ethiopia and Angola both following Chinese approved state-development models.

Whilst China’s investment in sub-Saharan Africa is less than previously thought, the research demonstrates that development assistance loans will continue to grow. The Export-Import Bank of China has not yet overtaken the World Bank as the largest provider of development assistance loans to Africa, it is scheduled to do so in the coming years.

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source: http://www.diplomaticcarrier.com

 

[1] All information and statistics for this piece are drawn from the China Africa Research Initiative at the Johns Hopkins University. For the report see – https://observingafrica.files.wordpress.com/2016/04/77387-chinaafricaloansbriefingpaper_saiscari.pdf

Does China’s Relationship With Sub-Saharan Africa Need To Be Reassessed?

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