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In 2006, which China named the “Year of Africa,” it quadrupled its investment commitments to infrastructure in Sub-Saharan Africa, to more than $7 billion. In 2007 China committed another $4.5 billion. Such funds could make a significant contribution toward meeting Africa’s infrastructure investment needs. In the power sector, where Africa faces some of its largest gaps, China is investing $5.3 billion, including $3.3 billion in projects that, if completed, will increase the region’s hydro generation capacity by 30 percent. China’s growing role in Africa has generated much discussion. A new study seeks to add concrete numbers and solid analysis.

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1. Introduction 

2. China's Growing Ties with Sub-Saharan Africa
Complementing the growth in trade has been an expansion of Chinese foreign direct investment in Africa, particularly in the natural resource sector. According to the Ministry of Commerce, the volume of Chinese FDI to Africa increased from around US$50 million per year in the early 2000s to around US$400 million per year in 2004–05.

3. Methodology
Estimating the extent of Chinese financing of infrastructure project in Africa presents numerous methodological challenges because official Chinese data sources do not produce figures at the level of disaggregation required to document this specific issue. This report is based on both existing information sources and a new project database.

4. The Emergence of Chinese Infrastructure Finance
The findings are that new commitments of Chinese infrastructure finance, which had oscillated around US$500 million per year in the early 2000s, grew substantially after 2003, stepping up to around US$1.3–1.7 billion per year in 2004 and 2005, topping US$7 billion in 2006, and tailing back to around US$4.5 billion in 2007.

5. Economic Complementarities Between China and Africa
The growing economic ties between China and Africa, including China’s emerging role as a major financier of infrastructure in the region, can be understood in terms of the evident economic complementarities that exist between the two parties. On the one hand, Africa counts among its development challenges a major infrastructure deficit, with large investment needs and an associated financing gap. China has developed one of the world’s largest and most competitive construction industries, with particular expertise in the civil works critical for infrastructure development.

6. The Financing Perspective
Loans from the China Export-Import Bank account for the vast majority—92 percent—of the recorded Chinese infrastructure finance commitments in Sub-Saharan Africa in 2001–07. More recently, a number of projects have been funded by the China Africa Development Fund established by the China Development Bank. This follows public announcements of CDB’s intention to rapidly expand its overseas portfolio.

7. The Changing Landscape of Infrastructure Finance
To reach a better understanding of the significance and implications of this trend, it is equally important to take a wider-angle view, and place the Chinese contribution in the broader perspective of infrastructure finance in Africa. To do this, it is necessary to compare China both to traditional sources of infrastructure finance, such as official

development assistance and private participation in infrastructure, as well as to other non-OECD financiers such as India and the Arab donors.

8. Conclusion   
China’s approach to its intergovernmental financial cooperation forms part of a broader phenomenon of south-south economic cooperation between developing nations. The principles underlying this support are therefore ones of mutual benefit, reciprocity, and complementarity. Unlike traditional ODA, financing is not channeled through a development agency, but rather through the Ex-Im Bank with its explicit mission to promote trade.