By Adetunji Bolorunduro (Afriscaper)


Business team shaking hands in front of the Chinese flag


At the opening ceremony of the China-Africa Cooperation summit in Johannesburg in 2015, President Xi Jinping in his opening speech said: “Let’s join hands…and open a new era of China-Africa win-win cooperation and common development”. At the same forum, he pledged China to invest $60 billion in the next 30 years on developmental across the continent of Africa. In addition, he promised loans on zero interest loans as well as million of emergency food aid. Even though he did not specify how the Funds are going to disbursed as well as the mechanism to be used in determining which country in Africa get what.

However, these funds are meant to be invested into Infrastructure, human capital, modernized agriculture, accelerate industrialization, vocational training, scholarships and government grants.
It is interesting to also note that by the year 2016 had invested above $14 billion in Africa. Data available from FDI Intelligence reveals that the Chinese capital investment rises by 515 percent up to July 2016 over the figures for the whole year 2015.
China emergence as big player in overseas investment in Africa can be attributed to both micro economic and macro economic factors; Chinese firms in industries like mining and crude oil expanded globally recently and they heavily depended on natural resources. As a result of the resource scarcity in China, this drives Chinese investors to invest heavily in resource-endowed economies. Another factor is China’s savings rate, which is higher than the investment rate, most of these savings don’t come directly household savings, and these are savings from private and government enterprises. Government enterprises do not pay dividends to any shareholders since it is state owned enterprises, while Private firms to have higher savings because they finance their firms from retained profit from savings. For individuals or any country, the difference between savings and investments is a current account surplus relative to the Gross domestic product, an individual or country with a surplus will have enough to lend out In the case of China, an excess of savings over investment has been accumulated in decades.


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However, there has been a lot of criticism that Chinese investments into Africa are directed to resource-endowed countries, it is interesting to note that Chinese investment and Western investment into Africa are in similar directions. According to data from Ministry of Commerce (MOFCOM) which shows the activities of Chinese private sector in Africa, from the year 1998 to the year 2012, about 2,000 Chinese firms invested in about Forty-Nine African Countries. In total, about 4,000 investments are being carried out as investors can engage in multi investments. The conclusions from these data are that Chinese Investments are not mainly into the resource-based sector. In fact, Chinese investments are also into services, with a significant percentage also into the manufacturing sector. Furthermore, Chinese investments into Africa have Spread accordingly into both non-resource and resource-endowed countries.
Chen et al (2015) using data from the ministry of commerce for the year 2012 with addition updated data by David Dollar to 2014, was able to draw out the 10 biggest recipients out of 49 African economies that received Chinese ODI. AS at year-end of 2014, Chinese Overseas Direct Investment into Africa stood at $32 billion.

Figure 1. Chinese Direct investment and Global investment in Africa (in millions of USD)


In conclusion and as shown in the table above, Chinese composition of Investment is relatively little when compared to total foreign investment.

Table 2, Distribution Of Chinese ODI Deals In Africa, 1998-2012



From the figure above, which shows the distribution of deals by country. There is a clear indication that China is investing across all the economies in the continent. Both in resource endowed and non-resource endowed economies.

Figure 3. Distribution of Chinese ODI projects, by Country



Chen et al followed the IMF categorization (a) oil exporters; (2) non-oil, resource-intensive countries; and (c) the rest of Africa’s economies, and using data available from MOFCOM. The majority of Chinese investments are in the service sector, fewer in the manufacturing sector and also it is worthy to note that there are also few of those investments from China going to less-endowed resource economies.

Infrastructure Investments In Africa
Over the last few decades, Chinese presence in the area of infrastructure development and investments has been increasing and this is good news for everyone who is aware of the ageing and decaying infrastructures in some African countries. Basic infrastructures like good roads, stable power, railways, etc drives economic growth

Figure 4. Surge in External Financing of African Infrastructure


The figure above showed that Chinese investment and financing of infrastructure projects started from zero in the year 2000 to a US$8 billion in the year 2010. Recently, on an average level of about $5 billion annually. The continent level of infrastructure in both quantity and quality compared to developed and developing economies are non-comparable. Lack of sound infrastructures like good roads, power, ports etc is a key reason for poor Africa’s growth.

The figure about shows the distribution of ODF, PPI, and Chinese investment across some major countries in Africa. It is also important to know that poor resource economies like that of Ethiopia and Ghana are major recipients of infrastructural investments from China. Also Chinese Investments in countries like Zambia and Cameroun re not significantly large.

Conclusions and Recommendation

In my few years in China, both my Chinese and western friends have asked me frequently my views about China economic activities with Africa.

China and Africa relations should be view as one with mutual benefits. Not as a win-lose situation. Beyond doubt, both China and Africa tend to benefit from this cooperation.
In a recent research from the Brookings Institution,  an American-based non-profit public policy organization that conducts in-depth research that leads to new ideas for solving problems facing society at the local, national and global level.

5 key facts about Chinese infrastructure Investment in Africa were drawn:
1. In a survey, about 70% Africans have a positive view about China
2. China inward investment into China is also directed to manufacturing industries and service, not only resourced based as most people think
3. China’s overseas investments are profit-driven
4. Out of the total figure of Africa’s investment stock, only about 3% are China’s Overseas investment
5. Lastly, Chinese investors are not attaching social benefits to their investment in Africa.

I shall make few recommendations. Firstly, African countries need to be more transparent and open with trade deals with China. Another one is the area of data, almost all African countries do not have a data bank for all investment and trade activities, and those available are merely randomly computed and manipulated.

China can further help contribute to Africa economic growth by helping to create good investment climate and enabling environment that includes rule of law, transparency, developing more industrial trade zones, tackling corruption, eradication of bottlenecks and wastages in both private and public sector, efficient and effective custom services, human capital development, flexible wage rate, and more sophisticated financial institutions, that will make infrastructure investments yield more positive economic growth.

Chinese Leader, President Xi Jinping ushered in a new era of “real win-win cooperation” between African economies and China in 2015. And I believe this will help to create a win-win situation, mutual benefits from investments, propelling prospective investors to “do good while doing the right thing” in Africa.



Chen, Wenjie and Heiwai Tang. 2014. “The Dragon is Flying West: Micro-level Evidence of Chinese Outward Direct Investment,” Asian Development Review, vol. 31, no. 2, pp. 109-140.

Chen, Wenjie, David Dollar, and Heiwai Tang. 2015. “Why is China investing in Africa? Evidence from the firm level,” John L. Thornton China Center Working Paper, Brookings Institution. Retrieved from

Cheng, Leonard and Zihui Ma. 2007. “China’s Outward FDI: Past and Future” in “China’s Growing Role in World Trade,” eds., Robert Feenstra and Shangjin Wei, University of Chicago Press.

Claire Groden, 2015. China To Invest $60 Billion in African Development

David Dollar 2016 “China’s Engagement with Africa” From Natural resources to Human Resources
John L. Thornton China Center Working Paper, Brookings Institution

Gutman, Jeffrey, Amadou Sy, and Soumya Chattopadhyay. 2015. “Financing
African infrastructure: Can the world deliver?” Africa
Growth Initiative Publications, Brookings Institution.

Elizabeth Manero 2017. China’s Investment in Africa: The New Colonialism

Jadesimi Amy 2017 “How China’s $60 Billion For Africa Will Drive Global Prosperity”