Académique Documents
Professionnel Documents
Culture Documents
Measuring the value of overseas contracts won by Chinese companies and financed by
China is an art and not a science. The estimates vary widely. There is no centralized Chinese
database recording these flows. The information is compiled by organizations such as the World
Bank based on official Chinese statements and media reports. Determining when a project
represents a commitment, when it is subject to further negotiations, and how much of the project
is funded by Chinese sources involves a lot of guess work.
A Brookings Institution study titled Financing African Infrastructure concluded that
China financed each year from 2007 through 2012 on average about $5 billion worth of
infrastructure projects in Sub-Sahara Africa. In 2012, the Brookings Institution estimate for
infrastructure financing in Sub-Sahara Africa was $4.4 billion.
The Infrastructure Consortium for Africa (ICA), a group of organizations hosted by the
African Development Bank (ADB), developed much higher estimates for Chinas financing of
infrastructure in Africa in its Infrastructure Financing Trends in Africa 2013. Although it
includes North Africa in its estimates, there were no flows to North Africa from 2011 through
2013. The ICA estimated Chinese infrastructure financing in Africa at $14.9 billion in 2011,
$13.4 billion in 2012, and $13.4 billion in 2013.
It is not clear why there is such a huge difference between the Brookings Institution and
ICA estimates, although it may have to do with how each study defines an effective commitment
and/or involve a broader definition of infrastructure used by the ICA. The ICA ranks China as
the single largest financer of infrastructure in Africa. At $13.4 billion in 2013, China financed
almost twice as much infrastructure as the $7 billion estimate for runner up United States. Other
countries, development banks, and coordination groups were well behind China and the United
States.
Regional and Sector Focus of Financing
The geographical focus for Chinese financing of infrastructure has been changing over
the years. According to the ICA, more than half of the financing went to West Africa in 2012
followed by East Africa and Southern Africa. Central Africa received a small amount and North
Africa nothing. In 2013, East Africa received 70 percent of Chinas infrastructure financing
followed by West Africa and Southern Africa. Central Africa received a small amount and North
Africa nothing. According to the Brookings Institution, Ghana and Ethiopia were the largest
recipients of Chinese infrastructure financing from 2009 through 2012. Other major recipients
were Cameroon, Zambia, and Nigeria.
In earlier years, Chinese financing tended to follow opportunities in Africas energy and
extractive sectors. Since 2010, China has broadened its infrastructure financing to non-resource
rich countries, especially those that have strong economies. Most of the financing still goes,
however, to resource rich countries.
2
Increasingly China has provided financing for the transport and hydropower sectors,
although energy remains important. From 2005 to 2012, 53 percent of Chinas financing in SubSaharan Africa went to transport, 34 percent to energy, 8 percent to telecommunications, and 5
percent for water supply and sanitation. Most of the financing is done by the Export-Import
Bank of China.
Financing for infrastructure is usually tied to projects implemented by Chinese
companies that use a percentage of Chinese labor; the percentage of Chinese labor varies
significantly from country to country. For example, the China Civil Engineering Construction
Corporation is building the Ethiopia-Djibouti railway while the China Roads and Bridges
Corporation is constructing the Mombasa-Nairobi highway.
A recent initiative is the $2 billion Africa Growing Together Fund, a co-financing
arrangement by the Peoples Bank of China and the ADB. Resources from the fund will finance
over a ten year period eligible sovereign and non-sovereign guaranteed development projects in
Africa. Theoretically, this fund will finance projects by both Chinese and non-Chinese
companies.
Investment in Infrastructure
The China-Africa Development Fund (CADF) is a $5 billion private equity fund that
invests in Sino-African joint venture companies. By the end of 2012, CADF had committed $2.4
billion to 61 projects in 30 African countries and disbursed $1.8 billion for 53 projects. The
CADF website does not provide any information about the projects, but the fund would seem to
be inappropriate for most infrastructure projects. CADF says it is looking to emphasize
agricultural and industrial projects rather than infrastructure projects.
Chinas $650 billion sovereign wealth fund also wants to invest globally in agriculture,
technology, real estate, and infrastructure. Again, there may be limited opportunity to invest in
infrastructure projects as they generally are not designed to turn a profit.
Hydropower Case Study
The China Africa Research Initiative at Johns Hopkins University did an excellent
analysis earlier this year titled Chinese-Financed Hydropower Projects in Sub-Saharan Africa.
Since 2000, Chinese construction companies and banks have shown sustained interest in 53 large
hydropower projects in Africa. By the end of 2013, however, only 17 of these projects had
secured Chinese financing. The total cost of the 17 projects is about $13 billion, of which China
is believed to have committed about $7 billion.
Chinese companies are building 6 additional large hydropower projects in Africa financed
by non-Chinese sources. China Exim bank provided at least some financing for 16 of the
projects, sometimes as sole financier, and sometimes as part of a consortium. The Industrial and
3
Commercial Bank of China provided some financing for one project in Ethiopia. The China
Development Bank had not yet financed any hydropower projects in Africa.
The study spells out the 5 kinds of loan instruments provided by China Exim bank. Most
Chinese financing required the host government to supply 10 or 15 percent of the project cost up
front. Chinas National Development and Reform Commission approves projects above $300
million, while Chinas State Council must sign off on projects valued above $1 billion. Chinese
companies secure projects through one of 3 processes: tender negotiations, tender invitations, or
public bid invitations.
China is an important player in African infrastructure development but most of the
activity is based on concessionary loans tied to construction of projects by Chinese companies.