Sunset on a rising city: Addis Ababa has been transformed by an infrastructure boom. (Photo/ Flickr/ Jeff Rebiffé)

Infrastructure Is China’s Sweet Deal For Africa, From A Country That Used More Cement In 3 Years Than The US Did In A Century

IT HAS been 16 years since the Forum on China-Africa Cooperation (FOCAC) was formed, as the primary institutional vehicle for China’s strategic engagement with sub-Saharan Africa.

Since then, China’s trade with Africa has grown by an astonishing 2,900%, from about $10 billion in 2000 to an estimated $300 billion in 2015.

China has also become the largest single source of financing for infrastructure development outside of national budgets in sub-Saharan Africa, contributing over US$13.4 billion in the region in 2013 alone, according to data from the Infrastructure Consortium for Africa (ICA).

This investment has served to fill the gaps that are not met by either the private sector or by official development finance, says a recent report from the Brookings institution.

Though there is the perception that China focuses its investment in resource-rich countries, in a crude minerals-for-infrastructure exchange, that was only true for China’s early engagement with Africa, in countries like Angola.

The data shows that the reach of Chinese investment has broadened: while Chinese financing in resource-rich countries is still double the average volume of that in non-resource rich ones, the gap has sharply narrowed over the past decade or so.

The cumulative average of Chinese financing to resource-rich countries doubled from $300 million to over $622 million between 2005-2008 and 2009-2012.

But over the same period, Chinese commitments to the non-resource-rich countries leapt from $43 million to $285 million—a 550% increase.

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The poster child for this investment is Ethiopia, as a (non-fragile) low income country punching above its weight in attracting funding.

The East African nation achieved around two-thirds of the allocation of Nigeria’s from development finance institutions, notwithstanding the Ethiopian economy’s being less than one-tenth of the size of the Nigerian economy.

This is mostly driven by China’s intensive investment in the country.

In analysis by country, Ghana and Ethiopia have been the largest recipients of Chinese infrastructure financing over 2009-2012, receiving more than $6.7 billion and $4.7 billion, respectively.

They have replaced the oil-rich Sudan, which was the largest recipient during 2005-2008, the data from Brookings shows.

Other notable recipients of Chinese financing are Cameroon, Zambia, and Nigeria—each, however, receiving less than $2 billion over 2009-2012.

The analysis shows that China is especially targeting the transport sector, particularly railways and roads. These are sectors in which Chinese firms have a lot of experience, and which have received less interest from private investors in Africa.

Most of these firms cut their teeth building mega-infrastructure projects domestically in China, a country that consumed more cement in three years (2011-2013) than the US did in the entire twentieth century.

As China became more and more built up, these firms had to export their excess capacity in order to remain profitable – which is how Africa became China’s agenda in the first place.

More recently, Chinese financing has increasingly targeted the energy sector and hydropower in Africa; here China is joining the efforts of the private sector and official development aid to close the energy gap in the region.

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