China’s development banks financed $23 billion in infrastructure projects in Sub-Saharan Africa from 2007 to 2020, more than double what U.S., German, Japanese and French banks combined lent, according to a new study.
Chinese investments dwarfed those of other governments and multilateral development banks in a review of 535 public-private infrastructure projects funded in the region during those years, according to the Center for Global Development.
Lead author Nancy Lee, a senior policy fellow at the center, said total public investment in infrastructure in sub-Saharan Africa remains at about $9 billion, far short of what the region needs for roads, dams, and bridges.
“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.”
China Exim Bank and China Development Bank combined to provide $23 billion in financing between 2007 and 2020, while all other major development finance institutions provided $9.1 billion, according to the report.
During that period, the U.S. government’s main development finance agency, the International Development Finance Corp, lent just $1.9 billion for infrastructure projects in the region, less than a tenth of what China provided.
During 2016-2020, multilateral development banks like the World Bank invested just $1.4 billion a year on average for infrastructure projects in sub-Saharan Africa, the report found.
A growing number of economists have warned that many low-income countries are facing or already in debt distress due to China’s lending to Africa due to its lack of transparency and its use of collateralized loans.
Western countries, however, have been slow to increase investments despite “much rhetoric,” Lee said.
As part of his administration, President Joe Biden announced a new push to increase business ties between the U.S. and Africa, mostly in the fields of clean energy, health, agribusiness, and transportation. However, its ongoing review of trade policies has left the private sector wary of investing.
A Last week, a top U.S. trade official said Washington has been in vigorous talks with Kenya regarding its drive to increase trade investment on the African continent, and he would have more information to share in the coming weeks.