Investment in Africa:
Africa has defied a global downturn in foreign direct investment (FDI) as the continent’s flows increased to US$46 billion in 2018, a rise of 11 per cent over the previous year, according to the UNCTAD World Investment Study 2019. Here are the Major NEP investors in Africa.
We found 141 instances of Chinese participation in African infrastructure projects between 2000 and 2008. These are primarily state-owned companies, with links to funds rendered accessible to their Exim Bank by the Chinese Government. Many of these loans have been issued on a concessional basis, and others are related to imports of commodities from China and are to be repaid through commodity exports.
Many of the large scale Chinese projects involve high bundling of aid, trade and FDI.
Often this pooling entails major synergies between economic resources, social infrastructure and preparation in exchange for exposure to resource reserves that will reimburse China’s expenditure.
While China has a strong interest in Africa’s natural resources to fuel its own economic development, there is little sign that its involvement in Africa’s infrastructure sectors is unfairly oriented. To promote the production and sale of resources. The main motivation seems to be more competitive to take advantage of the business prospects in Africa. Nonetheless, there are significant instances of Chinese infrastructural spending in prestige facilities, such as stadiums and homes, which could set the stage for potential investments in which Chinese businesses have exposure to Africa’s natural resources.
China is predominantly Africa’s main Network Equipment Provider (NEP) supplier of construction equipment.
Brazil, the second-largest NEP7 investor in African development. It has been participating in 38 development ventures in Africa since 2000. Brazilian assistance to Africa is in an early stage and much of its development participation has been gained by competitive tenders.
There is no indication of the leveraging of assistance, exchange and FDI in Brazilian programs, while there is often strong coordination (notably in Mozambique) between the activities of Brazilian firms in the resource sector and the development of economic infrastructure that partly meets the needs of such resource investments.
There has been a sharp growth in Brazil’s exports of construction equipment to Africa.
Korea is the third biggest NEP7 economy in the infrastructure sector in Africa. Of all NEP7, its activities more strongly resemble those of Africa’s traditional economic partners.
Korea is a part of the DAC. For the 21 development programs in Africa, 19 are aid-funded and two are FDI-funded. Despite its focus towards the DAC, there is a high proportion of Korean projects in social infrastructure.
Next to China, Korea is the largest of the NEP construction equipment exporters to Africa.
India is behind Korea in relation to the number of infrastructure ventures it is active in. Fifteen examples of involvement in Africa’s development have been reported since 2000. These have been focused on economic infrastructure, especially power and rail.
India’s assistance to Africa is nominal, but there are indications that it is adopting a more constructive and pragmatic path to its involvement in Africa. This is clear in its participation in a major rail project in Nigeria, which requires some merging of assistance, trade and private sector participation.
Exports of construction equipment to Africa are low.
Turkey has a strong global presence in the construction sector, and it is not surprising therefore that it has been involved in a number of infrastructure projects, 14 in total since 2000. Particularly in the airport and oil-infrastructure sectors.
Although Turkey has a growing aid programme, its participation in Africa’s infrastructure sectors has been driven by its private sector winning open tenders. Although most of these projects have been in North Africa, Turkey is now making a major push for deeper involvement in SSA.
Exports of construction equipment to Africa have been minimal.
Malaysia’s & Russia’s Investment
Malaysia and Russia have a very limited presence in Africa’s infrastructure sectors, each having been involved in 5 infrastructural projects since 2000. Neither country has an aid programme of significance, and relations with Africa are driven by strictly commercial imperatives.
Malaysian firms are concentrated in the oil sector (having divested from the ICT sector), and Russian investments are concentrated in power and oil-infrastructure. Neither economy is an exporter of any signs of construction equipment to Africa.
Office of the Special Adviser on Africa (OSAA)