Wednesday, May 1, 2013

Tracking Chinese Investments In Africa

Chart of the week: tracking China’s investments in Africa

Much has been written about China in Africa – a relationship that has been described as neo-colonial as China’s appetite for African resources has boomed and China has embarked on landmark projects such as the headquarters of the African Union in Addis Ababa (pictured left).
But quantifying the China-in-Africa story has been hard. There are official projects, aid donations, gifts, credit lines and more. Adding all that up is tricky – but a new database from AidData shows just how vast and sprawling Chinese investment in Africa has become. Chart of the week has run the numbers.
The first thing to note is that collecting this data is a huge undertaking. It tracks over 2,000 offical and unofficial projects to the end of 2011, from office furniture in Angola to railways in Zambia.
Chinese development finance is incredibly hard to quantify. A report from the Center for Global Development identifies three reasons why China is not keen to be transparent about its funding:
First, Chinese officials have argued that publishing country-level data will draw attention to which countries are the largest recipients and result in pressure from other governments for more aid. Second, it is possible that there are no official aggregate data as flows come from various ministries, and officials may still be unsure of how to price Chinese labor used to implement projects… Third, publishing total volumes of Chinese aid may also provoke domestic criticism about spending abroad when there are so many Chinese still living in poverty.
So this database is a departure from previous best-guess analyses. It includes grants, loans, military activities, foriegn direct investment, private export credits, securities of multilateral agencies, grants from charitable NGOs/foundations, and bilateral portfolio investments.
Beyondbrics has taken the data from two groups, official and unofficial projects. (There are also military projects, but we have exlcuded these as they are typically quite small in value and distort the relationship of project numbers to value.)
Looking at the chart below, we can see that the real surge in Chinese activity in Africa was in 2006. That year, investments and aid went up to $35.2bn from $8.4bn in 2005. The next big surge was in 2010 – over $51bn in projects is listed, although that has tapered off in 2011, with $34.8bn.
Source: AidData
In terms of the number of projects, rather than value, 2006 was also the key year, with 282 official and unofficial listed entries in the database, a number that has not been surpassed, although the value of projects has gone up since.
Also worth noting is that although the number of official projects compared to unofficial has stayed high – over 70 per cent of projects are official in every year studied – they are becoming dwarfed in value by unofficial projects. From 2006, when the surge in Chinese money started, 62 per cent of the value of Chinese investment was “official”. In 2011, it had fallen to just over 21 per cent.
Another way of expressing that is to look at the average project size – although it should be used with caution as mega-value deals can skew the numbers. But it is revealing all the same: official projects on average have fluctuated between around $40m to $100m in the 2006-2011 period. Over the same time, unofficial projects have averaged between $220 to $650m, increasing each year bar one.
In all, the level of Chinese investment is far greater than previously thought: over $260bn tracked in this database, which covers 2000-2011. AidData says there are “1,422 official projects to 50 African countries over the 2000-2011 period that have at least reached commitment stage, totaling $75.4bn.” But as the overall data show, the unofficial total may be much, much higher.