China: Largest Investor for Infrastructural Construction in Africa

Published By : 01 Dec 2015 | Published By : QYRESEARCH

In Africa, 80% of the infrastructure funding is backed by state-run development financing, with China topping the list of investors, as stated by a report.

In spite of the steadfast growth of private sector funding in the last decade, public sector could tighten its grip further. The Export-Import Bank of China have pledged to spend US$1 trillion in Africa in the next decade, as per analysis of the law firm, Baker & McKenzie, and the Economist Corporate Network.

If the pledge of the Chinese lender materializes, it would overshadow the investment flows that are currency provided by both private and public agencies across the world.

Chinese institutions are already listed as the largest single source that are funding infrastructure in China, which accounted for US$13,4 bn in 2013, the latest year for which data is available, as per the report titled, Spanning Africa’s Infrastructure Gap, which will be published this week.

However, that could be prove to be a drop in the ocean. As stated by the chief risk analyst at country-level at Export-Import of China in a conference in 2013, Mr. Zhao Changhui, told that his country have plans to invest US$1 trillion in Africa in the next decade.

Mr. Zhao further stated that, as a consequence of ‘one belt, one road ‘initiative in China, countries in East Africa such as Ethiopia, Tanzania, and Kenya are receiving more attention. However, Mr. Zhao could not reached for the confirmation of the declaration.

As stated by Calvin Walker, who heads the project finance at Baker & McKenzie, there lies a lot of visibility on these numbers, but investments that are coming from China are significantly disproportionately large as compared to the money pouring from other countries.

Overall, as the findings of the report, the funding for infrastructural development in Africa totaled at US$328 bn from 2009 to 2014, which comes out to US$54 bn per year.

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