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This week, as the Forum on China-Africa Cooperation (FOCAC) opened, President Xi Jinping announced that China will be providing $60 billion in financial support to Africa. President Xi gave the following breakdown for the partial distribution of funds: $20 billion in credit lines, $15 billion in grants, interest-free loans and concessional loans, and $10 billion in investment financing.
This support will come in the form of government assistance and investment. The investment plan has drawn criticism from pundits stating that it could burden developing nations with unsustainable levels of debt. In 2015, President Xi made a similar pledge to Africa; at the summit, he announced that the $60 billion promised in 2015 have been either delivered or arrangements are being made for deliveries.
In light of President Xi’s announcement, this post presents figures on Chinese investment to Africa, the countries it is concentrated in, and the sectors they finance.
The American Enterprise Institute, a Washington, D.C., based think tank, has developed the China Global Investment Tracker. The tool presents data, ranging from 2005 to 2018, and covers thousands of transactions. As seen in Figure 1 below, Chinese investment has increased globally, and Africa is the third-largest destination for Chinese investment behind Asia and Europe. However, investment toward sub-Saharan Africa slightly declined in 2017, following the slight drop in aggregate Chinese investment.
One-quarter of all Chinese investment is concentrated in Nigeria and Angola (Figure 2). Nigeria is one of China’s largest investment partners on the continent; five of the $60 billion pledged at the 2015 FOCAC summit were dedicated to Nigeria. In recent years, Nigeria has received relatively large funds from China for railways. China is backing two major standard-gauge rail projects: One is a line from Lagos to Kano, the other is a coastal railway from Lagos to Calabar. The Nigerian government hopes that the latter will support peacekeeping in the Niger Delta region, thus improving oil investments there (oil is another key interest of China in Africa).