China-US Investment Competition in Africa

 Deutsche Welle published on 12 December 2025 an article titled "Africa at the Center of US-China Resource Race" by David Ehi.  

In 2023, American companies invested more in Africa than did Chinese companies.  But figures for one year are misleading.  In recent years, Chinese companies have invested more in the continent than American companies.  

The author argues that US foreign direct investment (FDI) in Africa is focused on making a profit for the investing company.  Chinese FDI, ultimately backed by the government of China, pursues long-term strategic goals, especially in the critical minerals sector.  

Infrastructure Financing in Africa: China and the Rest

 The Washington-based Center for Global Development published in February 2022 a study titled "Stuck Near Ten Billion: Public-Private Infrastructure Finance in Sub-Saharan Africa" by Nancy Lee and Mauricio Cardenas Gonzalez.

The study looks at construction-ready transactions with private participation in Sub-Saharan Africa (SSA) from 2007-2020.  Total domestic and external finance for these projects averaged $9 billion annually for all of SSA.

Chinese development finance institutions (DFIs) provided 2.5 times more finance from 2007-2020 than all other bilateral DFIs combined.  The US DFI finance was an order of magnitude smaller than China's finance, and no upward trend is yet evident.

Comment:  While China's loan program has been impressive, this is the period when Chinese infrastructure financing for SSA was at its highest.  It was not significant before 2007 and China signaled at the 2021 FOCAC it would start cutting back on infrastructure loans to Africa.  It is also important to distinguish between loans and grant aid.  The European Union, United States, and Japan are far ahead of China in providing grant aid to SSA.  

The Sino-American Scramble for Africa

Project Syndicate published on 20 March 2020 a commentary titled "The Sino-American Scramble for Africa" by Colin Coleman, Yale University.

The author argues that the American Prosper Africa strategy is incomplete at best. Compared to China's engagement it is under-resourced, limited in scope and narrowly targeted. On its own, it offers little hope that the United States will arrest the decline in its economic position on the continent, relative to China.

Is US Really Ready to Invest $5 Billion in Ethiopia?

The Financial Times published on 5 March 2020 an article titled "US Ready to Back Ethiopian Reform with $5bn Investment" by David Pilling.

Ethiopia's minister of finance told the Financial Times that the United States is ready to invest $5 billion in Ethiopia through its newly created International Development Finance Corporation (IDFC) in an effort to support private sector reform and counter China's influence in the country. Deployment of the funds from IDFC depends on Ethiopia's successful implementation of certain reform measures. The chief executive officer of the IDFC told the Financial Times that if these reforms are implemented, Ethiopia would be well positioned for a "significant" IDFC commitment that would encourage "billions" in financing from the American private sector.

It is time for a reality check. First, funding from the IDFC is predicated on Ethiopian implementation of unspecified reforms. These reforms may or may not occur. Second, the American private sector will have to come up with most of this $5 billion investment, not the IDFC. The private sector will engage in Ethiopia only when it believes it can make a profit. It is too early to determine what projects in Ethiopia are seen as sufficiently profitable to attract $5 billion in investment. Third, the IDFC, which replaces the U.S. Overseas Private Investment Corporation, is designed to support American investment globally, not just in Africa and certainly not just in Ethiopia, which will be competing with the rest of the world for support from the IDFC.

While the IDFC is an important new initiative that has the potential to encourage and support increasing American investment in Africa and globally, it is also important to be realistic about the results in any particular country.

US International Development Finance Corporation vs China

The Financial Times published on 23 December 2019 an article titled "China's $1.3tn Global Spending Spree Will Collapse, Says Top US Official" by James Politi and Demetri Sevastopulo.

The article notes that Adam Boehler, the new chief executive of the US International Development Finance Corporation, which replaces the Overseas Private Investment Corporation, said that China's international investments were "100 per cent" like a house of cards because of "debt overload, poor infrastructure, bribes [and] lack of transparency." Boehler added "we have to be there as an alternative because I could see China take down a whole bunch of emerging countries . . . there will be more and more cracks and then the glass will break."


Some unsolicited advice for Mr. Boehler and the International Development Finance Corporation: Get your own house in order and leave the criticism of Chinese financing to others. There are legitimate criticisms of China's approach to finance, but the sky is not falling.

US Africa Strategy Misses the Mark

World Politics Review published on 13 February 2019 a commentary titled "The New U.S. Strategy Fixates on China While Mimicking Beijing's Approach" by Cornelia Tremann, freelance writer based in Dakar, Senegal.

The author argues that by fixating on China, the new U.S. Africa strategy suffers from two fundamental paradoxes that will undermine its goals of containing China and developing a prosperous African continent through U.S. investment. First, acknowledging that Africa is not a U.S. foreign policy priority will make it harder for U.S. companies to enter African markets or win government contracts. Second, increasing commercial ties with African countries in order to advance prosperity, security and stability is what China has already been doing for decades in Africa. Boasting about a new U.S. strategy in Africa that looks a lot like China's while criticizing Beijing's approach, undermines American credibility.

I would add a third paradox. The U.S. government has minimal control over U.S. private sector willingness to invest in or trade with Africa. Market forces and profit are the major determinants, not government "encouragement." The government of China because of its top-down structure is in a much stronger position to "encourage" its private and state-owned sectors to invest in and trade with Africa.

The author concludes that a better U.S. strategy would be to recognize China as a legitimate actor in African development, acknowledge that despite the negative aspects [and there are some] it can be a force for good, and frame it as a regional partner.

US Policy in Africa

Tibor Nagy, assistant secretary of state for African affairs, testified on 12 December 2018 before the House Foreign Affairs Committee on US policy towards Africa. His remarks were titled "Development, Diplomacy, and Defense: Promoting U.S. Interests in Africa."

Nagy repeated many of the Africa policy themes that were common in previous administrations. There was one change concerning China, which he said is asserting itself in Africa economically, militarily, and politically. As a result, the US must remain a positive alternative, and make clear that engaging with the United States will mean greater prosperity and security for Africa.

Will New US Agency Match China's Financing in Africa?

The New York Times published on 14 October 2018 an article titled "Trump Embraces Foreign Aid to Counter China's Global Influence" by Glenn Thrush.

This is a good account of the new US International Development Finance Corporation (IDFC) that has the authority to provide up to $60 billion in loans, loan guarantees, and political risk insurance to companies willing to invest in developing countries.

It is important to understand that the funding is NOT limited to Africa and will probably be used more frequently in Asia and Latin America. This bipartisan effort won the support of the Trump administration once it was cast as a way to compete with China. While it is a welcome addition to US tools for competing with China and other investors in the developing world, there should be no illusions about its impact in Africa. The $60 billion is a cap covering an undetermined number of years. It doubles the cap of the Overseas Private Investment Corporation (OPIC), which IDFC has replaced. OPIC's global exposure as of 2017 was $23 billion with about $6 billion of this or 27 percent going to Sub-Saharan Africa. OPIC funding favored safe investments; IDFC can be expected to follow a similar policy. China will likely remain a significantly more important source of lending to Africa even with the creation of the IDFC.

Aid to Africa: China and the US

The Diplomat published on 11 October 2018 a commentary titled "Aiding Africa: If Not China, Then Who?" by Grace Guo, Vienna-based researcher.

The focus of the article is the large amount of concessionary loans that China has provided to Africa in recent years and whether there is any alternative to Chinese financing. It is important to understand that collectively, international financial institutions and Western countries provide far more financing to Africa than does China.

The commentary is misleading on several other points. The title suggests that Chinese loans constitute aid. While China's loans are significant and often fill a financing void not met by other sources, it is usually not aid. Most of the loans must be repaid with interest.

In recent years, US aid to Africa has been averaging about $8 billion annually versus about $2.5 billion in aid annually from China. United States' aid is in the form of grants. While the United States does not provide loans to Africa, there is no reason to be defensive about the amount of aid that it offers. In addition, Chinese loans are usually offered in connection with infrastructure projects that are contractually tied to Chinese companies, thus keeping much of the financing in China.

The commentary implies that a new American institution, the International Development Finance Corporation (IDFC), might be the answer to competing with China's loans to Africa. The IDFC replaces the Overseas Private Investment Corporation (OPIC) and several components of USAID. At $60 billion, the IDFC's maximum contingent liability limit is about double that of the former OPIC. The IDFC is a welcome addition to US financial institutions but when it comes to competing with Chinese loans one must be careful. The $60 billion is a GLOBAL cap; this is not an Africa only program. Conventional wisdom suggests that most of the financial support will go to projects in Asia. The portion that is designated for Africa is likely to be well under the amount of new loan activity offered by China.

The commentary suggests that China's $60 billion financial pledge over three years at the 2018 Forum on China Africa Cooperation (FOCAC) is a "doubling down" of its financial pledge at the 2015 FOCAC. This is misleading. China also pledged $60 billion over three years at FOCAC in 2015. In addition, the financial package for 2018 includes $10 billion whereby China "will encourage" companies to invest in Africa. Chinese companies are routinely investing in Africa, as are American companies. It is difficult to understand why this has been included as part of the new $60 billion package.

Finally, the commentary notes that 70 percent of Kenya's debt is held by China. This repeats a common mistake about Kenyan debt. China does hold 72 percent of Kenya's BILATERAL external debt, but this is only part of Kenya's total external debt. When you include Kenya's debt owed to international financial institutions and commercial banks, China holds only 21 percent of Kenya's external debt.

New US Head of African Affairs Faces Challenging Environment

The Institute for Security Studies (ISS) published on 23 August 2018 a commentary titled "America's New Africa Chief Inherits a Rudderless Ship" by Peter Fabricius, ISS consultant.

The author cites some of the challenges facing new Assistant Secretary of State for African Affairs, Tibor Nagy, as he takes charge of the Africa portfolio. One possible silver lining is that the White House will largely ignore Africa, giving Nagy a free hand to determine Africa policy.