China far ahead of US and West in infrastructure funding for Sub-Saharan Africa, study finds

Think tank’s review of 535 deals in 2007-20 shows Chinese banks provided more than twice the amount from US, German, French and Japanese lenders combined
Western nations slow to pump up investments despite ‘much rhetoric’, lead author of study says

China-Africa relations

Reuters

Published: 3:15pm, 9 Feb 2022

Why you can trust SCMP

China’s development banks provided US$23 billion in financing for infrastructure projects in Sub-Saharan Africa from 2007 to 2020, more than double the amount from similar lenders in the United States, Germany, Japan and France combined, a new study has shown.

The Centre for Global Development said a review of 535 public-private infrastructure deals funded in the region in the years reviewed showed that China’s investments dwarfed those of other governments and multilateral development banks.

Nancy Lee, lead author of the paper and a senior policy fellow at the centre, said overall public funding for projects in Sub-Saharan Africa remained stuck at around US$9 billion, well short of what the region needed for roads, dams and bridges.

African nations push China for better trade deals before Senegal summit

“There is a lot of criticism of China,” she said. “But if Western governments want to boost productive and sustainable investments to meaningful levels, they need to deploy their own development banks and press the multilateral development banks to make these investments a priority.”

Between 2007 and 2020, China Exim Bank and China Development Bank provided US$23 billion in financing, while all other major development finance institutions combined provided US$9.1 billion, the report found.

The main US development finance agency, now known as the US International Development Finance Corp, lent just US$1.9 billion for infrastructure in the region during that period, less than a tenth of what China provided, it noted.

01:45

Top Chinese diplomat tours East Africa to promote peace, ensure stability for belt and road allies

Multilateral development banks like the World Bank were found to have provided just US$1.4 billion per year on average for public-private infrastructure projects in Sub-Saharan Africa from 2016-20.

China’s lending to Africa has come under heightened scrutiny in recent years for lack of transparency and its use of collateralised loans, with economists at the International Monetary Fund and World Bank warning that many low-income countries are facing or already in debt distress.

But Western countries have been slow to pump up investments despite “much rhetoric”, Lee said.

As EU gears up to rival China in Africa, will deeds match words?

The administration of US President Joe Biden in July unveiled a new push to expand business ties between US companies and Africa, with a focus on clean energy, health, agribusiness and transport infrastructure. But its ongoing review of trade policies has left the private sector skittish about committing funds.

A top US trade official last week said Washington had been engaging in robust talks with Kenya as part of its drive to expand trade investment on the African continent, and would have more to say in coming weeks.