How China is transforming Africa into the next ‘factory of the world’ – by Matt Davis (Big – August 12, 2018)

In the past few years, Chinese investment in Africa has exploded. While the US currently has $58 billion worth of investments in Africa and China has $40 billion, the US’s investments in Africa have been dropping over time. Consider the fact that in 2014, the US pledged to invest $14 billion in Africa over the next decade. China pledged to invest $175 billion in the same time period, dwarfing the US’s commitment.

Unlike the US, China’s investments mainly take the form of loans for infrastructure development. In contrast, US investment is focused on aid programs—primarily healthcare and education. Many Africans welcome China’s investment into much-needed infrastructure, but it’s not clear how much of a benefit African nations are seeing.

One major issue is that many countries are becoming excessively indebted to China. Kenya, for instance, has $50 billion of debt, 72% of which comes from China. In Senegal, highways, industrial parks, and other infrastructure projects are being funded by a $1.6 billion loan (source in French).

Djibouti has received $1.1 billion in loans to upgrade its seaport and to build a railway to Addis Ababa, a water pipeline from Ethiopia, and a new airport. Not only are these loans greater than what many countries can afford to repay, much of their value goes straight back to China.

Tim Wegenast, the author of a report on Chinese mining in Africa by the German Institute of Global and Area Studies, stated that, “It’s more or less safe to say that Chinese companies employ less local labor than other companies because they bring over many Chinese workers, and when they develop local infrastructure, they provide countries with loans which are being used to pay for it, which is then constructed by Chinese companies and Chinese labor.”

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