Africa is trapped into Chinese Debts, with the continent loans tallying at US $143 billion from 200-2017 according to a research done by China Africa Research Initiative. China still pledged to lend Africa US$ 60 Billion in 2018. Chunks of the funding are directed to infrastructural development with East Africa alone owing China more than US $ 29.4 in infrastructural loans.
Is China assistance to Africa good or bad? What is the reason behind China Investment to Africa? What is China really doing in Africa? The latter are some of the questions that most African residents ponder about. Nonetheless, Aside from the development loans, Chinese locals, as well as corporations, have invaded the local markets disrupting supply and demand for goods and services. As of June 2017 more than 10,000 Chinese –owned corporations were operating in Africa according to a McKinsey& Company report.
Thus, China goods are sold in the local African markets on cheap putting loads and loads of African production companies and small-scale retailers out of business. With China enjoying the economies of scale in the production of textiles, electronics, among other products on a low, their Export industries find lucrative markets with non-stringent terms of doing business in less developed African Counties, thanks to the continents already trapped in large Chinese Debts. It has also become easier for Africans to import goods from China, and this really disrupts the local African markets.
Additionally China Capital flows into Africa has created more job opportunities and big contracts for Chinese servicing contractors. Even some of the servicing contracts that local constructions company could handle are awarded to state-owned Chinese companies, who employ a majority of Chinese residents to handle the manual task. A few locals benefit from these construction projects and the Chinese residents’ presence keeps on increasing in Africa. It is estimated that more than 1 million Chinese live in Africa, and the majority of them get hired in constructions jobs and some venturing into business.
Chinese dominance in Africa economy in the past decade has been increasing and based on the economics of scale in productions, favors by African governments and large foreign debt trap, majority of local companies are unable to compete favorably with Chinese companies in production and distribution of goods in the continent.
It still remains unclear why some local African governments fail to protect the local business from the competition and invasion leaving most African residents hold the notion that Chinese are only interested in African resources and they are colonizing Africa.
Works Cited: Forbes, Bookings.edu, QZ
By Samson Ogaye
Africa Global News Publication
