China promises Africa $1 trillion in financing, but the true sum may never be known

Show them the money.
Show them the money.
Image: Reuters/Christopher Herwig
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China has pledged to provide $1 trillion in financing (paywall) to countries in Africa over the next 12 years. Speaking at a summit in Hong Kong, Zhao Changhui of China’s state-owned Export-Import (Exim) Bank said the money will go toward helping the region build highways, railways, airports and other infrastructure.

It’s a big number, equal to the total amount of gross domestic product the continent is expected add between now and 2020. Here’s another comparison: In 2011, World Bank spending was just $5.6 billion on the continent. If Zhao’s promise can be believed, China will fund the region with about $83 billion a year, with about 80% of the money coming from Exim Bank in the form of direct investment and loans.

The catch is that we may never completely know how much China actually spends, or where the money will go. Chinese aid, investment and lending to Africa are notoriously difficult to decipher, since the country doesn’t release details about the financing of its overseas projects, despite international demands (pdf. p. 13) for more transparency. To complicate matters, China has no one agency responsible for foreign assistance, making those funds especially hard to track.

But even taking China’s opacity into account, it’s clear the country has  been more involved in African infrastructure than its Western counterparts, which tend to focus on social issues like education, health, or food. China accounts for more than 30% of the total value of infrastructure projects in Africa and has been involved in high-profile projects like expanding Zimbabwe’s energy sector. And it’s clear that Africa badly needs the investment: Economists believe Sub-Saharan Africa needs to be spending about $93 billion every year to close the region’s infrastructure gap with other parts of the world. China’s financing could help to plug the gap, but to what extent we may never know.