writes Abiodun Egbetokun
Africa-Press – Eswatini. Chinese investments in Africa offer significant growth opportunities, but they also raise questions about the long-term impacts of the development projects. China’s involvement in Africa is nuanced and must continue to be examined.
While the Chinese involvement has evoked debate and concerns about transparency, pricing, human rights, and the environment, their loans are projects-tied and have helped move up the infrastructural curve with people realistically seeing bridges, railways, power plants, and roads. This, in addition to the seemingly non-interference and non-conditionality principles of their aid, is why China is increasingly popular among African leaders and people are brushing aside the criticisms of China. – Taiwo Hassan, Nigerian journalist
Despite persistent challenges, Africa’s economic landscape has undergone a significant transformation. The continent has seen a strong post-Covid recovery, rising prospects of intra-African trade under the African Continental Free Trade Area (AfCFTA) and substantial investments in digital infrastructure, renewable energy, and human capital development.
According to the African Development Bank, Africa’s GDP growth, which was about -2 per cent during the Covid-19 pandemic in 2020, rebounded to 3.4 per cent in 2021 and 4.1 per cent in 2022. Growth is expected to be 3.7 per cent in 2024 and 4.3 per cent in 2025.
Investments in education and workforce training programs have also expanded. According to UNESCO, per-capita government education spending rose in sub-Saharan Africa from approximately £1,700 in 2012-13 to about £2,300 in 2020-21.
Expansion in access to ICT services reflects rising investments in digital infrastructure. The International Telecommunications Union reports that the share of Africa’s population using the internet reached 37 per cent in 2023 from a mere 2 per cent in 2005.
The affordability of mobile and fixed broadband is improving faster in Africa than in the rest of the world. Renewable energy projects have also seen significant growth, with the International Renewable Energy Agency reporting that electricity from solar and wind sources in Africa increased from about 4,000 GWh in 2012 to more than 32,000 GWh in 2021.
Africa, once termed the ‘dark continent’ is now seen as the ‘world’s next destination’ for investment. Enhanced regional cooperation and strategic partnerships with global economies are fuelling this transformation. For example, under the AfCFTA, the United Nations Economic Commission for Africa estimates that intra-African trade will increase by more than 50 per cent by 2025.
This is a realisation of a cardinal goal of Agenda 2063, the African Union’s strategic development framework that, among other things, recognises the importance of partnerships not only within the continent but also with key global players such as the European Union, the US and China.
The surge of Chinese financing in Africa
China’s role as an international partner for Africa is noteworthy. Recently, there has been a shift towards greater Chinese aid and investments in Africa. For instance, the EXIM Bank of China was reported in 2019 to be the largest creditor to Nigeria over the last 20 years.
Data from the China-Africa Research Initiative (CARI) at Johns Hopkins University shows that Chinese FDI flows have consistently increased, indicating a long-term strategic interest in Africa. A turning point appeared around 2012, when China became the largest foreign investor in Africa, surpassing traditional Western donors like the United States (Figure 1).
The investments are heavily concentrated in sectors like construction, mining, and manufacturing, which are vital for Africa’s economic diversification and structural transformation.
Chinese investments have also demonstrated the potential for job creation across Africa. Infrastructure and manufacturing investments from China generated more than 18,000 jobs annually over the decade leading up to 2022, more than any other foreign country.
Impact
Despite these benefits, the economic and political context of Chinese aid and investment is complex. Tangible infrastructural development and apparent non-conditionality are advantages of Chinese aid. China often provides aid with fewer conditions than Western donors, which appeals to African countries seeking rapid development.
This approach has sparked debates about long-term implications for governance and debt sustainability. Critics argue that China’s investments in Africa ignore human rights and focus on natural resources or sectors with high immediate returns, such as mining and construction, which might not always align with Africa’s long-term developmental goals, but do meet China’s own strategic goals.
The quality and sustainability of jobs created by Chinese investments are also debated. While some studies highlight positive outcomes like increased employment and industrial capacity, others point to potential negative effects such as labour exploitation and environmental degradation.
Data from CARI shows the fluctuating number of Chinese workers in Africa over the years: the number increased from 152,038 in 2011 to a peak of 263,659 in 2015, before declining to 88,371 in 2022 (Figure 2). This trend raises questions about the balance between the deployment of Chinese labour and the creation of local jobs.
Chinese investments now play a significant role in Africa’s economic and social landscape. However, empirical evidence on their impact is not straightforward. Some research suggests that the influence of China can catalyse productivity and competitiveness, while others indicate detrimental effects on local industrial output. This nuanced reality highlights the need for a balanced analysis that considers both the benefits and potential pitfalls of Chinese engagement in Africa.
Amidst this conflicting evidence, it is crucial to critically explore and understand the full effects of Chinese investments on African economies. While they offer significant opportunities for growth and development, it is essential to monitor their impact on social welfare indices, particularly employment. This is not just helpful for appreciating the dynamic changes underway in Africa, but also for creating evidence-informed policies that maximise benefits for all stakeholders involved.
Need for balance
Despite the complexities, Chinese investments in Africa are ultimately useful in a continent that struggles to meet its own needs. The benefits of Chinese investments are substantial, particularly in terms of accelerating infrastructure development. Projects such as railways, power plants, and roads have significantly improved connectivity and stimulated economic activities, laying a strong foundation for future advancements. However, there is a strong need to balance the costs, especially in terms of long-term development and social welfare.
Debt sustainability is a major concern. Many African countries risk falling into debt traps due to the large loans that they can access more readily from China. The long-term economic stability and sovereignty of these countries are thereby negatively affected.
Additionally, the sustainability and quality of jobs created by Chinese interests are frequently problematic. Reports of labour exploitation, including poor working conditions, unfair wages and rights abuses, are concerning.
Moreover, environmental degradation resulting from large-scale construction and mining projects poses significant threats to local ecosystems and communities. There are also reports of workers’ rights violations.
These issues highlight the need for strategic governance, robust policies and stricter oversight.
LSE
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