GDP Center Round-up: The 2024 Summit of the Forum on China-Africa Cooperation
By Akanksha Goyal and Angie Ye
The 2024 Summit of the Forum on China-Africa Cooperation (FOCAC) will be held in Beijing from September 4-6, 2024, with African leaders and members of FOCAC scheduled to attend.
Since the inception of the FOCAC in 2000 and the China-Africa Development Fund in 2006, China’s economic ties with Africa has deepened significantly. Over the past two decades, what have been the impacts and implications of China’s growing economic presence on the continent?
Ahead of the FOCAC, the Boston University Global Development Policy Center has produced a suite of research investigating the trends, outcomes, benefits and risks of China’s economic engagement with Africa. Below, see a summary and highlights of the latest research:
Relative Risk and the Rate of Return: Chinese Loans to Africa Database, 2000-2023
A new update to the Chinese Loans to Africa (CLA) Database, managed by the Boston University Global Development Policy Center, estimates that from 2000-2023, Chinese lenders provided 1,306 loans amounting to $182.28 billion to 49 African governments and seven regional borrowers.
In 2023, Chinese lenders issued 13 new commitments with a value of $4.61 billion to eight countries and two regional financial institutions. This represents the first time the annual loan amount to Africa has risen since 2016 but is far below the early years of the Belt and Road Initiative (BRI), in which cumulative commitments surpassed $10 billion annually.
A new policy brief analyzes the state of Chinese lending to Africa ahead of the 2024 FOCAC Summit. Their findings suggest that, going forward, China will likely continue to pursue a bifurcated strategy of risk-averse experiments with borrowers that received fewer loans in past years and decidedly riskier forms of engagement with its longtime partners. Additionally, the size of future individual loans is expected to shrink, even in countries that have a long history of engagement with China, as the pre-pandemic pipeline of big-ticket projects empties out. Explore the data and read the policy brief.
Chinese companies have installed over 25 GW of generation capacity in Africa, making up more than 15 percent of sub-Saharan Africa’s installed generation capacity. Despite their undeniable contribution to the power sector in sub-Saharan Africa, the price and investment outcomes of these projects have varied. Chinese companies have been observed to construct both low- and high-quality infrastructure projects in Africa, with some projects seen as affordable and others more expensive.
Why have the outcomes of these projects varied and how do African host states exercise agency to influence the outcomes of Chinese-supported power generation projects?
A new working paper by Naa Adjekai Adjei examines how African host states exercise agency to influence the outcomes of Chinese-supported hydropower plants in Ghana and Uganda. It analyzes the financing and construction of hydropower plants financed by the Export-Import Bank of China and Sinohydro in Uganda and Ghana using semi-structured interviews and document analysis. Read the working paper and read the blog summary.
Chinese Economic Ties and Low-carbon Industrialization in Africa
Since the establishment of the FOCAC in 2000 and the China-Africa Development Fund in 2006, China’s economic ties with Africa have grown and deepened significantly. However, China’s deepening connections and in particular, its foreign direct investment (FDI), in Africa have been the subject of discussion regarding their composition, goals, nature and implications for the continent’s industrial and economic development.
How does Chinese FDI influence the carbon intensity of the manufacturing sector in African recipient countries?
A new working paper by Solomon Owusu, Keyi Tang and Gideon Ndubuisi examines the impact of Chinese FDI on low-carbon industrialization in Africa, within the context of China’s growing economic ties with the continent. Read the working paper and read the blog summary.
The Southern African Development Community (SADC) region has one of the highest solar irradiation and great wind energy potential in sub-Saharan Africa. The falling costs of both solar photovoltaic and wind energy technologies and the discovery of transition minerals essential for the shift to low-carbon economies in several SADC countries makes the region a favorable destination for renewable energy project developers. However, so far, only 1 percent of solar and wind energy potential has been tapped.
Structures and policies to promote investment in renewable energy in the SADC region exist. Why then, is the total contribution of solar and wind energy still low in most SADC countries, despite abundant renewable energy sources and supporting structural frameworks?
A new report by the Boston University Global Development Policy Center, the Southern African Development Community Development Finance Resource Centre and the SADC Centre for Renewable Energy and Energy Efficiency highlights the inadequacy of regional and global prefeasibility facilities for expanding renewable energy and energy access in the SADC region. Read the report and read the blog summary.
Amid a weak and uneven economic recovery in the Global South, regional development and infrastructure investment seem to be critical to sustainable development. In particular, infrastructure provision is seen as an “unmissable driver for development” in sub-Saharan Africa. Aside from institutional reasons, physical infrastructure is critical in facilitating market integration and freeing lagging regions from the poverty trap. In many sub-Saharan African countries, regional development goals are often associated with the public infrastructure provision to increase productivity and promote welfare.
Over the past 20 years, China has grown to be the largest financier and constructor of infrastructure in the region. Have Chinese investment projects directly impacted local economic activities in sub-Saharan African countries? And are there spatial spillover effects from those infrastructure projects across regional borders?
In a new working paper, Yan Wang and Yinyin Xu use aspatial and spatial econometrics analysis to gauge the impact of Chinese infrastructure projects on economic activities in local jurisdictions in sub-Saharan Africa. They find that the existence of Chinese infrastructure projects leads to increased economic activity proxied by nighttime luminosity and notable positive spillovers in neighboring jurisdictions in the region. Read the working paper and read the blog summary.
China-Africa Economic Bulletin, 2024 Edition
African countries have and are shaping development goals in alignment with the United Nations 2030 Sustainable Development Goals and the African Union Agenda 2063. Potential sources of financing for energy and transition materials have become increasingly important for devising strategies that will allow Africa to achieve these goals.
Over the past three decades, China-Africa economic engagement has deepened across trade, development finance and FDI, contributing to African countries’ development and bringing about economic benefits and environmental risks.
A new report by the Boston University Global Development Policy Center and the African Economic Research Consortium analyzes China-Africa trade, finance and FDI from 2000-2022 to evaluate trends, reveal gaps and identify pathways for China to support Africa’s energy access and transition amidst economic challenges and energy opportunities. Read the report and read the blog.
China is an important partner in providing critically needed finance and infrastructure development capacity for African countries. With a growing awareness of environmental, social and governance (ESG) risks associated with infrastructure development, it is important to consider to what degree development projects cause ESG-related harm to host countries and communities.
Are Chinese-financed development projects in Africa meeting China’s stated ESG guidelines?
A new report by the Boston University Global Development Policy Center, the Fudan University Green Finance and Development Center, the South African Institute of International Affairs and LSE IDEAS uses a consistent ESG framework based on stated Chinese and local ESG requirements and recommendations to analyze five development projects. The Chinese-supported projects are in three African countries that are recipients of large amounts of Chinese financing on the African continent – Egypt, Nigeria and Ethiopia – and two sectors: energy and industrial parks, which are aligned with China’s ambitions to enhance energy access and support manufacturing in Africa. The report also assessed the case studies’ potential risks to biodiversity and Indigenous lands, based on their spatial locations. Read the report and read the blog summary.
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