Chinese investment in Africa: Much ado about nothing?

Guest post by Vijaya Ramachandran

There has been much talk and worry in recent months about China’s growing investments in Africa (see here for an example). But what is actually happening on the ground?

The truth is–we don’t really know. At this point, popular fear about China and its motives in Africa vastly exceeds our knowledge of actual events.

Take the case of Zambia. There is a long list of proposed infrastructure projects that supposedly involves Chinese investment. The Zambians have made a concerted effort since 2003 to attract Chinese money. Despite this, only one hydropower project has resulted as of 2007–the Kariba North dam–on terms that are not particularly good for Zambia.

This is not to say that there isn’t any investment at all–in the construction sector in Ethiopia for example, there is a large and visible Chinese presence.

But in Angola, where a deal was signed some years ago that was widely reported to include the resettlement of a quarter million Chinese people to that African nation, there is little evidence that this has in fact occurred. Other aspects of the deal are being implemented (including fairly large-scale road construction), but not in the earth-shaking manner that was originally predicted.

On paper, the list of proposed investments in infrastructure is indeed very long. Some investments are likely to come to fruition over the next few years. In my forthcoming book on Africa’s Private Sector (coauthored with Alan Gelb and Manju Shah, both longtime researchers of African development), I will present this list and discuss possible consequences.

One of the main conclusions of our analysis of private sector enterprises is that infrastructure-related services (particularly power and transport) are extremely expensive to businesses in Africa, relative to other parts of the world. There is enormous scope for investments in infrastructure in the region, particularly in the area of clean energy which for much of Africa is also the most cost-effective way to address this gap.

China can certainly help with this enormous task. But given that not much has actually happened on the ground yet, we should probably not rush to judgement.

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