Sub-Saharan Africa Tops Chinese BRI Construction Engagement In 2023
Namibia, Eritrea and Tanzania have seen major growth in the first half of the year.
Sub-Saharan Africa saw a 130% year-on-year increase in Chinese investments related to the Belt and Road Initiative (BRI) during the first half of 2023 and a 69% increase in Chinese construction contract engagements. This is according to the China BRI Investment Report 2023 H1, published by the Green Finance & Development Centre (GFDC) at Shanghai’s Fudan University in July.
Sub-Saharan Africa was the dominant region for construction engagement and the second most important target region for BRI investments, after East Asia.
According to the GFDC, in the 10 years since the announcement of the BRI, cumulative engagement in the 148 BRI partner countries has now crossed the US$1 trillion mark, with about US$596 billion in construction contracts, and US$420 billion in non-financial investments.
During the first half of 2023, the centre recorded 103 BRI deals worth US$43.3 billion, compared with US$35 billion in the same period in 2022. These were spread across 45 countries, with 24 countries receiving investments and 29 seeing construction engagements.
The report states that the major growth countries of Chinese engagement were Bolivia (+820 %), Namibia (+457%), Eritrea (+359%) and Tanzania (+347%), making Sub-Saharan Africa the fastest growing area of BRI engagement.
The country with the highest construction volume in the first half of 2023 was Saudi Arabia, with about US$3.8 billion, followed by Tanzania (US$2.8 billion) and UAE (US$1.2 billion).
Regarding BRI investments, Indonesia was the single largest recipient with about US$5.6 billion, followed by Peru (US$2.9 billion) and Saudi Arabia (US$1.6 billion). Twenty six countries saw a 100% drop in BRI engagement compared to the first half of 2022, including Turkey, Poland, and Kenya.
Some 38.6% of Chinese BRI construction engagements during the first half of 2023 were in Sub-Saharan Africa, and 16.7% of BRI investment was in the region.
The report states that the focus of China’s BRI engagement remains infrastructure, particularly energy and transport, however, it adds that metals and mining is a growing area of strategic importance, driven by the green transition.
The other key trend identified by the report is the general decrease in the size of BRI deals.
For construction projects, the average deal size in the first half of 2023 was the lowest since the BRI was announced in 2013, at about US$327 million. Compared to the peak in 2017, this is a 35% fall.
The average deal size for investments was US$392 million. This represents a 48% drop from the 2018 peak. The average deal size in the first half of 2022 was US$617 million.
The GFDC notes that in 2023, for the first time, more than 50% of BRI engagement has been through investments where Chinese investors take equity stakes with higher risks, rather than through construction contracts backed by loans.
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