14 Jun 2021

Africa eyes more Chinese investment to boost post-pandemic recovery, study finds

CMS survey shows that 72% of African executives will be more open to new Chinese projects

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Almost three quarters of senior executives in Sub-Saharan Africa expect countries on the continent to be more open to investment from China under its Belt and Road Initiative (BRI) as they seek post-pandemic economic growth, according to a survey by CMS.

The Belt and Road: The View From Africa report found that 72% of respondents will be more open to new BRI projects, with 62% saying they aim to maintain or increase their involvement in the Chinese investment programme. 

Hugo Coetzee, a partner and head of CMS’s Africa practice, said: “Over the years, we have seen continued commitment from China to invest and develop trading relationships across the region. While there is some debate about the long-term future of BRI, the post-pandemic recovery in China bodes well for future investments in participating nations and is perceived with enthusiasm in Africa.”

Coetzee added that China’s pivot towards greener and more sustainable projects could have a greater impact on the continent, as well as an increasing emphasis on digital and health-related BRI investments.

Some 46% of African respondents said they plan to focus their efforts on targeting renewable energy or hydro projects in the future, almost three times higher than those that have done so in the past (16%). Meanwhile, 86% of respondents expect the pandemic to boost ‘Health Silk Road’ projects.

While enthusiasm for and satisfaction with BRI investment was stronger in Africa than anywhere else outside of China, that enthusiasm has dampened over the past 12 months. Sentiment towards BRI fell to 54% from 64% 12 months ago, though that was a milder decline than seen in other regions, CMS said. 

Half of African respondents also said their BRI involvement had turned out to be more challenging than they had expected. According to one survey respondent quoted in the report: “Even after the problems were encountered due to their (China’s) over-ambition, they lacked the perception to acknowledge these issues and act accordingly.”

Some 61% of African respondents said legal and regulatory risk is a key concern with BRI projects.

As BRI moves into its second phase (BRI 2.0), 81% of respondents believe road-building projects present the most opportunities, followed by renewable and hydro (55%), energy networks and power grids (53%) and logistics-related projects (49%).

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