The Chinese Land Grab in Africa Pt. II: Where Did All the Money Go?

Chinese Investments and What Nations are Being Helped

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Looking through a map of Chinese investments on the African continent, it is an indisputable fact that Chinese investments are heaviest in natural resource industries. In fact almost 20% of the investments have gone to oil and natural gases. Those investments will go to the usual suspects Nigeria, Niger, Cameroon, Ghana, as well as some others, Tanzania, Uganda, and Madagascar.

It seems that the Chinese are being quite liberal, so to speak, with the nations they invest in.  Money has been spread generally along the west African coast, concentrated in a cloister of Southeastern African nations and east African nations. While there are investments going towards civil construction in Algeria and manufacturing in Egypt, those are exceptions however, not the rule in Northern Africa.

Some would argue that the Chinese are too liberal. Of the G8 dedicated to ‘pulling’ Africa out of poverty, China is the only one, so far, going in aggressively. Where meetings would normally be held to discuss the impact to the local economy, human rights implications and environmental concerns, the Chinese don’t debate, they just build. This has lead to mixed results like the ghost town, Nova Cidade de Kilamba, Angola. The development cost $3.6 billion and covers over 12,000 acres. The project was supposed to develop a metropolitan area for Angolans to live, go to school and work. However, the $120,000-$250,000 price tag for an apartment far outstrips the average Angolan per capita income of $740. Most would call this a development failure in, even if the buildings are pretty.

On the other hand, China’s President pledged not only $20 billion in loans to African nations this summer, but also extended a promise to send an envoy of 1,500 medical professionals to African nations, train 30,000 Africans and offer 18,000 scholarships. It isn’t clear what those Africans will be trained to do, where, or by whom and what the scholarships will provide for, but it is clear that African nations desperately need not only to develop their infrastructure but also the vast human capital that sits primarily in poverty.

Dambisa Moyo, a world-class economist weighed in on this evolving relationship earlier this summer in the New York Times saying that the intensions of China are quite pure. For her, the Chinese have to “satisfy China’s population and prevent a crisis of legitimacy for their rule, leaders in Beijing need to keep economic growth rates high and continue to bring hundreds of millions of people our of poverty and to do so, China needs arable land, oil and minerals."

So while we may have examples of Chinese investments not panning out, or tensions between real people and the government, Moyo wants us to believe that Chinese intentions are good. Next time, we will see whether their intensions are good, and whether despite their intentions, Chinese investments are doing more harm than good.

Click here to be directed to "The Chinese Land Grab pt. I."