China plugs $5.5bn into Africa’s railways
State-owned company set to build new rail lines in Nigeria and Zimbabwe as part of ‘New Silk Road’ strategy
China sees rich potential in Africa and has invested enormous amounts into developing the continent. Still, African citizens are concerned over poor labour practices, and safety and environmental standards, that have been promoted by investors
China’s growing influence in Africa has continued with the news that one of its state-owned rail companies, China Railway Construction Corp (CRCC), will build infrastructure in both Nigeria and Zimbabwe. The deals – amounting to $5.5bn – are the latest in a series of substantial investments made by Chinese companies in the region, which forms part of a strategy to help create a new trade route back to China.
While Chinese investment in the region has helped develop many of these economies, some African countries have begun to complain about the relationship
The deals will see a $3.5bn intercity rail link built in Nigeria, which will help fuel the significant economic growth seen in the country over the last few years. CRCC will also invest $1.9bn into a real estate project in Zimbabwe, which will include a number of transport improvements. Last year, CRCC signed a $12bn contract for another rail line in Nigeria.
China has seen Africa as a key trading region for a number of years. It has invested huge amounts into a number of Africa countries as a means of gaining access to precious resources that aren’t available domestically. Sudan, South Africa, Nigeria, Angola and Egypt have formed the backbone of its investment strategy. Energy sources, in particular oil, have been China’s main focus, but it has also felt that developing African economies will spur trade between the two regions.
China is also Africa’s largest trading partner, with $198.5bn worth of business taking place in 2012, dwarfing the $99.8bn between the US and Africa. At the same time, China has poured money into aid efforts in the continent. According to the Brookings Institute, CNY 256.29bn ($38.45bn) – 45.7 percent of China’s foreign aid – was directed to African countries by the end of 2009.
While Chinese investment in the region has helped develop many of these economies, some African countries have begun to complain about the relationship. Concerns over labour practices used by Chinese firms, as well as poor adherence to safety and environmental standards, have led some countries to look elsewhere for investment.
The importance of trade with Africa for China’s economy is clear: 80 percent of the country’s $93.2bn worth of imports in 2011 came from the continent. However, while China is playing a leading role in the development of the African economy, other countries are also looking to invest in the region: India’s trade with Africa nations is expected to reach $100bn by the end of this year, while Brazil and Turkey have also been signing a number of deals.
