Who Will Benefit More from Chinese Investment in Africa, China or Africa?

Nigerian Persident Muhammadu Buhari (L) meets with Chinese leader Xi Jinping in Beijing, China, April 12. Nigeria is considering seeking Chinese assistance in dealing with its budgetary deficit. Photo/Kyodo News/Pool/Getty Images

The investment of the Chinese Government into Africa is currently on the high side, many African countries are benefiting from the generosity of the Chinese. However, it is believed in some quarters that this investment is a systematic way of ripping Africa of its potential.

Last month (April), President Muhammadu Buhari of Nigeria was in China to strengthen bilateral agreements with the country. One of the agreements signed between the two leaders allows for the yuan and naira to be exchanged directly without the dollar being the gateway for transactions any longer.

In 2014 alone, Chinese companies signed over $70 billion in construction contracts in Africa that will yield vital infrastructure, provide jobs and use the skill set of the local workforce.

Chinese President Xi Jinping, right, shakes hands with his Tanzanian counterpart Jakaya Kikwete during a signing ceremony at the Great Hall of the People in Beijing, Friday, Oct. 24, 2014. China said it will provide $81 million worth of aid to help fight Ebola in the three West African countries at the heart of the crisis. The foreign ministry says Xi made the announcement when he met Kikwete. (AP Photo/Takaki Yajima, Pool)
Chinese President Xi Jinping, right, shakes hands with his Tanzanian counterpart Jakaya Kikwete during a signing ceremony at the Great Hall of the People in Beijing, Friday, Oct. 24, 2014. At that point Tanzania and China had inked more than $1.7 billion in investment deals as Beijing deepens ties with East Africa. Photo/AP/Takaki Yajima

Huawei, a Chinese multinational networking and telecommunications company established its West African training school in Abuja, Nigeria, which honed the skills of engineers who are rolling out cell phone technology that is rapidly changing the telecommunications landscape of Nigeria, and Africa at large.

In the same vein, Bagamoyo, Tanzania is currently a focus of international news as China makes a low-interest loan of $10 billion available for the construction of a modern container terminal 15 kilometers south of the city and also plans to fund the establishment of a special economic zone in the hinterlands behind the port of Dar es Salaam.

China is committed to developing the birthplace of humanity in the area of utility and transportation.


However, the Chinese have not been explicitly transparent about the loans granted to African countries most especially in the area of financial flow. The Chinese do not report their annual or country-level commitments to loans and aid, although they publish aggregate figures every few years.

The incursion of the Chinese into Africa is also a means of employment generation for their nationals, this is a method of building infrastructure with foreign labor. Some of their local workers employed to handle these projects, have been “imported” into Africa, and were sent from China to act as managers and to train future managers.

Many of the Chinese firms investing in Africa are state-owned. These companies get substantial subsidies from the Chinese government.

Chinese African trade is projected to double by 2020, and already totals over $200 billion, more than twice the level of US-African trade.  Nearly half of China’s total foreign aid goes to African nations.

The stakes are high because of the continent’s abundant raw materials. Chinese leaders have recognized the increasing need for natural resources, food and product markets necessary for continued economic growth. Mining investments account for nearly one-third of China’s total foreign direct investment in African nations.

Furthermore, the continent is a logical place for China to extend its geopolitical influence. The undeveloped countries of Africa represent a prime opportunity for China to significantly expand its global presence and influence in the world.

china and liberia
Liberian children hold Chinese flags before the arrival of China’s former President Hu Jintao in Monrovia, February 1, 2007. The photo highlights the recent years of influence China has had on the continent. Photo/Reuters

It is obvious that the Chinese are taking risks as they see Africa, with different eyes than the West, as an economic region with enormous potential. China, Asia’s economic superpower, is hungry for natural resources, energy, food and markets for its products. Africa has about 40 percent of the earth’s reserves of natural resources, 60 percent of uncultivated agricultural land, a billion people with rising purchasing power, and a potential army of low-wage workers.

Africa is one of the world’s fastest-growing regions, pressing forward like a “galloping lion.” The foreign investment rate of return in Africa is higher than that of any other major developing area in the world.

china and africa
Chinese and African laborers work at the construction site of the TAZARA railway. In the 1970s, China sent experts, specialists and about 15,000 workers to the continent for the construction of the railway that links the East African port of Dar es Salaam in Tanzania with the town of Kapiri Mposhi in Zambia’s Central Province. Photo/China.org.cn

Obviously, it seems at this stage, China has far more to gain from all these investments in Africa.

(With information from Nigerian Reporter and Foreignpolicy.com)