Chinese Investment in Africa to Bolster Economy in Many Countries

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SEATTLE — Africa is bustling with investment, economic and business potential. Chinese investment in Africa, in particular, has been growing: trade between China and African countries rose by a fifth in the first quarter of 2017.

Chinese investment in Africa has the potential to encompass poverty reduction, developing health infrastructure, generating employment, boosting business opportunities and ensuring sustainable industrialization. Chinese investment is financing many billion-dollar projects in the country. A significant amount of China’s Outward Direct Investment (ODI) in sub-Saharan Africa is linked to trade, and according to a recent report by McKinsey and Company, there are more than 10,000 Chinese business operating in Africa.

African countries have massive potential for growth owing to their young populations. Roughly 200 million of the African population is between 15 and 24. In 2010, the total population surpassed one billion. In the past 10 years, six of the world’s fastest growing economies have been African nations.

Recently, China opened its first military base in Djibouti, a small island nation located in eastern Africa. China also participates in U.N. peacekeeping missions in countries such as South Sudan, Mali and the Democratic Republic of Congo.

The progress made through Chinese and African cooperation is laying the foundation for continued cooperation between the two countries. China unveiled its 10 cooperation plans for Africa back in 2015 to provide a basic framework for its development agenda for the continent. Chinese investment in African countries is steadily growing. Mobile phone producer Tecno, as well as telecommunications companies Huawei and ZTE, are dominating African markets.

China is working to expand its Belt and Road Initiative to the realms of energy and infrastructure. With the assistance of state-owned rail and construction firms, it is building a railway system to improve the connection between countries across the African continent. Ethiopia and Djibouti will especially benefit from the project.

There are drawbacks to Chinese investment in Africa. Some believe that China’s investments are ‘soft power’ tactics solely for the purpose of expanding into unchartered markets. Many also claim that China could do better in hiring more locals to work at their firms, and that African nationals are paid low wages with little to no benefits for their work. Chinese state enterprises often dominate African markets.

Chinese involvement in Africa opens the door to investments in education and healthcare. The United Nations Fund for Population Activities argues that the Chinese companies should work to combat population growth, reproductive and healthcare issues by investing in healthcare that covers contraceptive, maternal and newborn health services and helps address illnesses such as malaria, tuberculosis and AIDS.

Chinese investment in Africa nations is emblematic of economic cooperation and integration between two emerging markets with great scope and potential. Economic investment alone, however, is not enough: In order to end poverty, we must ensure that social investments (such as healthcare and education) are a priority. Effectively combining economic and social investment in Africa could be a great way to tap into the potential of millions of individuals and reduce poverty.

Shivani Ekkanath

Photo: Flickr

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Shivani Ekkanath

Shivani is an Indian writer for The Borgen Project living in Singapore. Her hobbies are music, dance and writing. She loves reading about current affairs, political relations and other social issues.

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