Estimating the Economic Impact of Chinese BRI Investment in Africa

The report assesses the impact of China's Belt and Road Initiative (BRI) on African infrastructure, economic growth, trade, and debt sustainability. While finding that Chinese investment helps close the infrastructure gap and can boost GDP, the authors note risks including debt distress in specific countries, environmental degradation, and the crowding out of local manufacturing by Chinese imports. Case studies in Kenya, Ethiopia, and Nigeria demonstrate positive outcomes in transport and energy, though the failure of Nigeria's NIGCOM satellite highlights risks of using the continent as a testing ground. The report concludes that benefits generally outweigh costs, provided African nations improve project management and negotiate more symmetrical trade and loan terms.

• Chinese infrastructure investment in Africa is heavily concentrated in the transportation and energy sectors, with an estimated 66% of investment directed there.
• There is a negative correlation between the volume of Chinese loans and the quality of infrastructure in recipient countries between 2015 and 2017, suggesting that countries receiving larger loans had relatively lower infrastructure quality.
• Trade between China and Africa is asymmetrical, with Africa primarily exporting raw materials and importing high value-added manufactured goods, leading to a trade deficit of approximately $25 billion in 2018.
• Chinese imports of manufactured goods can harm local African industries; in South Africa, increased import penetration was linked to a 5% decline in manufacturing output and an 8% drop in employment.
• The Mombasa-Nairobi Standard Gauge Railway (SGR) in Kenya, funded 90% by China, reduced passenger travel time from ten to four hours and freight costs from $0.20 to $0.08 per ton/km, contributing to a 1.5% increase in Kenya's GDP.
• Kenya's Olkaria IV geothermal power station, partially funded by China, reduced electricity costs from $0.15 to $0.085 per kWh and helped Kenya become Africa's largest geothermal power producer.
• In Ethiopia, the Adama II wind farm provides about 10% of the country's electricity (over 15% during the dry season) and has facilitated technology transfer by training 30 national power company engineers.
• The NIGCOM satellite project in Nigeria failed in mid-2008 due to technical errors in its solar arrays, raising concerns that Africa is used as a testing ground for Chinese firms.

APA

ADENIRAN, A., EKERUCHE, M. A., ONYEKWENA, C., & OBIAKOR, T. (2021). Estimating the Economic Impact of Chinese BRI Investment in Africa. South African Institute of International Affairs. https://saiia.org.za/wp-content/uploads/2021/06/Special-Report-adeniran-ekeruche-onyekwena-obiakor.pdf

Chicago

ADENIRAN, ADEDEJI, MMA AMARA EKERUCHE, CHUKWUKA ONYEKWENA, and THELMA OBIAKOR. Estimating the Economic Impact of Chinese BRI Investment in Africa. South African Institute of International Affairs, 2021. https://saiia.org.za/wp-content/uploads/2021/06/Special-Report-adeniran-ekeruche-onyekwena-obiakor.pdf.

Wikipedia

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BibTeX

@techreport{adeniran2021estimating, author = {ADENIRAN, ADEDEJI and EKERUCHE, MMA AMARA and ONYEKWENA, CHUKWUKA and OBIAKOR, THELMA}, title = {{Estimating the Economic Impact of Chinese BRI Investment in Africa}}, institution = {South African Institute of International Affairs}, year = {2021}, month = jun, url = {https://saiia.org.za/wp-content/uploads/2021/06/Special-Report-adeniran-ekeruche-onyekwena-obiakor.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }