1. What data really says about China’s investment in Africa
What data really says about China’s investment in Africa? Implications for Europe
Alicia Garcia Herrero
Senior Fellow, Bruegel
Joint work with Jianwe XU
Non-resident fellow Bruegel
May 2018

2. Roadmap Focus on sectoral composition an job creation
1. We look into the universe of Chinese investment and finance and compare it with Europe
Direct investment
Mergers and Acquisitions
Greenfield investment
Project finance
Focus on sectoral composition an job creation

3. Africa receives very little FDI even when compared with other emerging regions

4. China has been increasing its FDI into Africa but much more its lending (especially into project finance)

5. As investor, other countries, especially European are more important

6. Even if China’s investment into Africa is small compared to its lending, still relevant as share of total investment in Africa, especially for M&A
Note: the total value of the M&As in Africa for are sourced from The UNCTAD World Investment Report.

7. The EU’s importance is true especially for greenfield
The EU’s importance is true especially for greenfield. M&A is very volatile for all

8. Sectoral distribution all points to the importance of resources or infra real estate

9. This is true even for project finance

10. In China’s greenfield investment creating new jobs in Africa
In China’s greenfield investment creating new jobs in Africa? Not really many
For the past five years, 99,000 jobs were created. On average, one million dollar greenfield investment created only 1.78 jobs in Africa over the past five years, much smaller than the average job creation per million dollar for greenfield investment from China overseas (=2.24 for the past five years)
Most of the jobs were created in Ethiopia, followed by Nigeria and South Africa. The fewest jobs, given the amount of investment, have been created in Egypt.

11. Greenfield investment in the traditional sector creates more jobs
While real estate sector accounts for half of China’s greenfield investment in Africa, it only contribute to 9% of the jobs created. Most of the jobs are still linked to the traditional sectors such as textile and metals.
Excluding the real estate sector, one million dollar investment create 2.85 jobs in Africa (in line with job creation by China elsewhere, excluding real estate)

12. All in all
China has become a large investors in Africa but Europe is still the largest. This is true both for M&A and greenfield investment
Greenfield investment is more relevant for China (as well as EU and US).
But project finance (lending) is the lion share of China’s financial involvement in Africa
The sectoral composition of China’s investment is very concentrated in resources and infra/real estate. This is true even for greenfield but also for project finance.
It should not be surprising then that not many jobs are being created out of China’s investment in Africa.
Moving forward, China’s involving in productive/job-creating sectors would clearly be welcome for a continent with the most rapidly growing population.

13. Thank you!