China’s investments in sub-Saharan Africa have grown 40-fold since 2003 and its state-owned enterprises have been able to roll out projects quickly and in every country on the continent, primarily building things like hydroelectric dams on the Nile, highways to oil regions and railways to carry iron ore. China’s government joined with the African Development Bank to create the $2 billion Africa Growing Together Fund. While Chinese companies have been criticized for importing Chinese labor rather than training and employing Africans, they are now building garment manufacturing plants to take advantage of Africa’s cheap labor amid high unemployment. U.S. development in Africa has been private-sector driven and concentrated in just a few countries including Liberia, Mauritius and South Africa. President Barack Obama wants American companies to do more. In August 2014, U.S. companies pledged $14 billion in investments at the U.S.-Africa Leaders Summit in Washington. In 2013, the U.S. began the Power Africa initiative to build electricity grids and generators across six countries by working with African companies and U.S. partners that have top-of-the-line technology, including General Electric, and offering $7 billion in financial support and loan guarantees. But by the time of Obama’s 2015 trip to Africa, Power Africa projects had not delivered any electricity. And power shortages are cutting into growth.
European imperialism left deep scars in Africa. During the Cold War, the U.S. and Soviet Union intervened to put dictators in power who lined their own pockets and left legacies of poverty, famine and conflict. Foreign aid was often misused and diverted for weapons. Food aid imported to combat famines depressed prices for local farmers. Unrest led to little investment in infrastructure; even now about 600 million sub-Saharan Africans — about 70 percent of the population — lack electricity. Though Africa is rich in minerals and energy sources, few Africans have benefited from exports of those materials. Some economists and policymakers have even argued that dependence on natural resources does more harm than good — a phenomenon they call “the resource curse.”
China’s rapid-fire, state-funded building provides quick fixes to pressing infrastructure needs in Africa, though some critics say construction can be shoddy. China also isn’t fussy about working with controversial political regimes, bestowing legitimacy on leaders in countries that U.S. companies won’t touch. Though it sometimes pays little heed to the political and environmental impact of its investments, China’s government has stepped in when its investments were threatened — as it did in South Sudan — and thus could help promote calm. Yet Chinese growth is cooling, GDP data and IMF forecasts show, and this could be a drag on its projects in Africa. While the U.S. is trying to use development as a way to shore up regional stability, its investments can take longer to get the jobs done, since companies have to satisfy shareholders and projects often undergo environmental vetting before they can get off the ground. U.S. companies are also subject to anti-corruption laws that make it almost impossible to do deals in places where bribery is common. U.S. and Chinese investments in transportation and electricity should make it easier for African businesses to get goods and services to and from the continent. African planners hope this will help lift the average per-capita income past $10,000 in many countries in the next three decades.
The Reference Shelf
- Video: President Barack Obama’s speech at the U.S.-Africa Business Forum in Washington
- The White House put a U.S. Power Africa page on its website to promote its plan to double access to electrical power on the continent.
- The Brookings Institution has analysis on China and the U.S. in Africa at this topic page.
- The Forum on China-Africa Cooperation tracks joint efforts throughout the continent.
- Howard W. French has detailed China’s efforts in his book, “China’s Second Continent: How a Million Migrants Are Building a New Empire in Africa.”
(This QuickTake includes a corrected description of the Africa Growing Together Fund.)