Chinese Investment
It is no secret that Africa is one of the most attractive investment destinations in the world today. Among the countries vying for a spot in the foreign direct investment space is China – a country who has been Africa’s largest trading partner since 2009.

Chinese foreign direct investment went from $500 million in 2003 to almost $15 billion by 2012, and this year China has promised to triple Africa’s line of credit from $10 billion to $30 billion.

So where is all of the money going?

China, a beacon of infrastructure achievement itself, is investing largely in roads, rail and aviation networks around the continent.

China recently signed on to give $3.8 billion to help build the “Lunatic Line”—a rail line that will run from Nairobi to Mombasa and eventually link Uganda, Rwanda, Burundi and South Sudan. This line, which was first built in the late 19th century, has been decaying for decades due to conflict, corruption and general neglect.

China also pledged $12 billion in energy and infrastructure projects in Nigeria as well as an additional $2 billion for the China-Africa Development Fund.

Why is Chinese investment in infrastructure so important?

In a continent where only a third of Africans living in rural areas have access to an all-season road, investment in roads and rail lines allow people the freedom to travel more easily for jobs as well as for educational and health reasons. The access the infrastructure facilitates helps decrease poverty levels because people are able to access and participate in their country’s economy more easily.

Another attractive characteristic of Chinese investment for many African countries is the promise of non-interference in local politics. While loans from the International Monetary Fund or other Western nations often come with prerequisite guidelines and reforms to be met before aid or investment is received, China requires none of these. As Chinese Premier Li Keqiang aptly put, “We will not interfere in the local politics of any African country, or ask Africa for things which are impossible to observe or do.”

China, who reduced their own poverty levels by 55.7 percent from 1990 to 1997 alone, may be able to provide just what Africa needs to overcome barriers to creating a robust and thriving infrastructure and economy.

– Andrea Blinkhorn

Sources: Business Day 1, Business Day 2, Daily Mail, Heritage Foundation, Wall Street Journal
Photo: Oil and Energy Daily