Africa has experienced exponential growth in the past few years and has surpassed China and India as the fastest urbanization region of the world. This presents economies with resources to invest in the continent with endless opportunities to not only cement their political agenda but also avails the opportunity to exploit the natural resources that are abundant in Africa. China has been at the forefront of investing in Africa and the moves are going to pay handsomely when the investments begin raking in money.
According to the IMF, Africa is the second-fastest-growing region in the world. The population is expected to double which will likely increase the consumption of goods and or services. China has continued to position itself strategically and is the main country investing in infrastructure in the continent. Over 10,000 companies from China are undertaking various projects in the continent of Africa. Since 2005, China’s investments in America surpass $2 trillion, and deals worth $300 trillion are being negotiated.
The cooperation between China and Africa has continued to flourish over the past eleven years. Delegates from China and Africa met for the China-Africa forum which was held in 2018. This has seen China surpass the US as the largest trading partner with Africa. During the forum, China announced that it would be injecting $60 billion in financial aid to Africa.
There are several reasons why China has continued to invest billions of dollars into Africa, one of which is to acquire raw materials that are readily available in Africa to manufacture goods such as platinum, cobalt, manganese, and Uranium. Another reason is that China wants to cement its political influence in China. The third reason is that China wants to take advantage of the endless opportunities that are presented by Africa emerging economies.
The Quest for raw Materials
China’s primary investment focus in Africa is mining and oil. Over the years, however, China has invested in almost all sectors of the economy most notably transport. For example, China has put in millions of dollars for the development of a modern railway system and modern highways.
China investment in Africa spans all sectors of the economy including in key infrastructure areas such as telecommunication, port construction, and food processing. China is set to gain profits from large investments. Most of the companies that invest in Africa are owned by the government which gives them an edge because they get most of the tenders because they enjoy government support.
Africa is rich in raw materials. The continent accounts for 90% of the total cobalt and platinum throughout the world. The continent of Africa also accounts for half of the world’s gold, two-thirds of manganese, and 35 % of uranium. Africa is also rich in Coltan accounting for 75% in the world. It’s used to manufacture electronics. China has also made military inroads in Africa which has increased its competition with the United States.
China Investing in Africa to Fuel its Growing Economy
China’s economy has been growing exponentially and in light of this, there’s a continued need for natural materials and markets for its manufactured goods which are richly available in Africa. As most countries in Africa strive to become middle-income economies, there’s a rise in consumer spending and China wants to take advantage of this to sell its products.
China’s investments in mining in Africa account for a third of all investments in the continent. China’s growth depends on the availability of raw materials and the country, therefore considers Africa as a strategic partner.
China Investing In Africa for Political Reasons
This is another motivation as to why China is looking at the continent of Africa. India has been a rival of China and therefore, not a suitable country for the Asia giant to assert its growing political dominance. Growing Africa economies afford China the chance to further its political agenda.
China’s political motivations are evident in the type of investments it’s making in Africa. The country has pumped in millions of dollars in utility infrastructure including telecommunication transport, and even in military power which allows it to influence the countries politically.
China investing in Africa makes Makes Business Sense
Developed countries have been depending on China to produce goods and or services at a cheap price because of its low cost of production. For China, it has to look at countries where it will benefit the most. The country has already invested heavily in other Asian countries but now, its time to look to Africa. Most of the African countries have raw materials and ready markets for manufactured goods.
Africa’s growing economies also require large investments and China’s economy can provide loans and grants to such countries. As China invests in infrastructure and other important sectors of the economy such as agriculture, African countries feel indebted and will remain loyal and support whatever agenda the country is driving.