Why China is the „most aggressive investor nation“ in Africa

Thanks to African Loft I learned, that there is a market analysis about China and their business in Africa. Excerpt:

„While America is preoccupied with the war in Iraq (cost: half a trillion dollars and counting), and while think-tank economists continue to spit out papers debating whether vital resources are running out at all, China’s leadership isn’t taking any chances. In just a few years, the People’s Republic of China (PRC) has become the most aggressive investor-nation in Africa.“

My question: What does Germany, what does Europe do? (I think, they just spent money and hope, the Africans will think good of them.)

The World Bank report says, that „China’s investment in the power sector is crucial for Africa’s future and is exactly what Africa is missing“. China has been investing in hydropower schemes for the last five years.:“Once completed, these schemes will increase the total available hydropower generation capacity in Sub-Saharan Africa by around 30 percent.”

China is the largest construction market in the global economy. This explains why the concessional loans given to African leaders for infrastructure programs have a special clause that stipulates that construction supplies and 70% of the workers involved in the project should come from China. In 2006, China & India & the Arab League invested 8 billion dollars in Africa while the whole ODA + private investment + concessional loans + lines of credit coming from all the OECD members only added up to 5.3 billion dollars.

The credit lines given by the Chinese Ex-Im Bank to different state and private companies reached US $20 billion in 2005, making this bank one of the largest export credit agencies in the world. The report gives the best description of the new economic strategy that became known as the “Angola mode” (which basically means that a government that has a poor credit can repay a loan in natural resources). By 2005, the total value of trade between Africa and China reached US$36 billion dollars up from less than US$10 billion dollars in 2001. (page 3)

Chinese financing commitments in infrastructure projects in Sub-Saharan Africa amounted to a total of 15,968 million dollars over the past 6 years.  While 36 African states have signed an economic deal with the Chinese government, around 70 % of Chinese financing commitments go to only four African states: Nigeria, Angola, Ethiopia and Sudan.


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