China in Africa: Financial Implication

It relates to the invitation of encouragingcross-border expansion so as to derive benefits from the other economies by harnessing onto each other's competitive advantage.The research questions are: first, Is China's FDI benefiting the economies of African countries by penetrating into their market?; second, What are the advantageand disadvantages of China's financial implication in African countries?; lastly, What challenges will China have to face while operating within African countries? This has resulted in an improvement in both

China in Africa:
Financial
Implication

ACKNOWLEDGEMENT
Throughout the writing of this dissertation, I received a great deal of support an
assistance. I would firstly like to extend my gratitude towards my Supervisor whose immense
knowledge in the field contributed invaluable insights while formulating my study, specifically
the research topic and methodology. Finally, I would like to show my heartfelt gratitude towards
my family, friends as well as tutors among others who were there to lend me an ear when I
needed one and help me sail through this dissertation smoothly all this while.

ABSTRACT
The purpose of this paper is to reflect upon the financial implications of Chinese Foreign
Direct Investment on Africa in the light of globalization. Globalization has been a highly
debatable topic since its inception. It relates to the invitation of encouraging cross-border
expansion so as to derive benefits from the other economies by harnessing onto each other's
competitive advantage. The research questions are: first, Is China's FDI benefiting the
economies of African countries by penetrating into their market?; second, What are the
advantage and disadvantages of China's financial implication in African countries?; lastly, What
challenges will China have to face while operating within African countries? Our investigation
connotes that Chinese investment has mainly been motivated from the need to fulfil its scarcity
for natural resources. This has resulted in an improvement in both Chinese corporations in terms
of profit, performance as well as mutual national benefits along with increase in productivity,
work conditions, standard of living and employment opportunities for African countries.
Keywords: Financial Implications, Investment, China, Africa, Employment, Resources,
FDIs

EXECUTIVE SUMMARY
This study summarizes the financial implications of China's Foreign Direct Investment
(FDI) on Africa. China has been a reclusive economy with a policy of non-interference in the
affairs of countries in which it operates. The main aim of China to invest in Africa is to get
natural resources that are required for its extractive industries. Along with this, Africa initiated
the practice of inviting FDIs from 1980s which helped in revival of its manufacturing, services as
well as mining markets in addition to the standard of living and overall growth in African
countries. Prior to which there had been no such facilities available in that region. This attracted
investments from countries like China that derived benefits in the form of natural resources and
in return provided employment opportunities as well as improved standard of living to the people
of African countries in which such corporations were operational.
Based on the research conducted through Primary as well as Secondary Research, a
Probabilistic random sampling carried out for 20 African Economists derived that the largest
market of Africa pertains to Mining. Apart from this, it is recommended that the government
must invite Foreign Direct Investment from Chinese Corporations as well as other countries too
so as to improve the work conditions, living standards as well as over all employment and GDP
in the African Economies.

Table of Contents
China in Africa: Financial Implication............................................................................................1
ACKNOWLEDGEMENT...............................................................................................................2
ABSTRACT.....................................................................................................................................3
EXECUTIVE SUMMARY.............................................................................................................4
1. INTRODUCTION.......................................................................................................................1
2. LITERATURE REVIEW............................................................................................................2
Benefits of China's FDI to economy of African Countries by penetrating in to their market.....2
Advantage and disadvantages of China's financial implication in African countries..................4
Challenges that could be faced by China while operating within African countries...................7
3. RESEARCH AIM........................................................................................................................9
Aim..............................................................................................................................................9
Objectives....................................................................................................................................9
Research questions.......................................................................................................................9
4. METHODOLOGY......................................................................................................................9
Research paradigm.....................................................................................................................10
Research philosophy..................................................................................................................10
Research approach.....................................................................................................................11
Research design.........................................................................................................................11
Data collection...........................................................................................................................12
Data Assessment........................................................................................................................13
Sampling....................................................................................................................................13
Access and ethical consideration...............................................................................................14
Limitations.................................................................................................................................14
Equipments................................................................................................................................14
5. FINDINGS.................................................................................................................................14
6. EVALUATION OF RESULTS.................................................................................................17
Data Interpretation.....................................................................................................................17
7. CONCLUSION..........................................................................................................................26
8. IMPLICATIONS FOR PRACTICE AND FUTURE RESEARCH .........................................27

9. BIBLIOGRAPHY......................................................................................................................29

1. INTRODUCTION
Overview:
Globalisation helps business entities to get interconnected and execute business activities
in different countries for the purpose of generating higher sales and profits. With the help of it
cultures can also be exchanged by nations that are involved in collaboration of business
operations. When world started to globalised then various territories started to make investments
in other regions in order to expand and establish business there. At the same time Chinese
organisations made FDI in African countries which helped them to develop the economy.
Increasing interest of China in Africa has resulted in conflicts with other countries. Due to this
US also started to make investment in those countries and in year 2017 its contribution in Africa
was highest as compare to any other territory (Benfratello, D’ambrosio and Niu, 2019). Various
types of factors have been integrated in to Chinese society which includes economic, social and
cultural factors. Currently china is benefited hugely from globalisation because it is facilitating
the companies which are operating business in this country by helping them to establish branches
in different nations and execute operations there. With the help of globalisation various
opportunities to touch international market are grabbed by China. It also provide chance to
communicate with international suppliers, investors and customers which helps to enhance
profitability and productivity of business entities of China.
Background: Various African countries such as Republic of Congo, Kenya, Nigeria and
Ethiopia are being selected by Chinese organisations to establish their business there and help
them to develop the economy. It has resulted in enhanced profitability of those organisations and
growth of African countries. Globalisation has provided opportunity to the Africans to come
China and work there. Currently around 200000 Africa's citizens are working in this country. In
order to develop the economy African government (Cheung and et.al, 2012). China has build up
world's second largest economy and it has experienced a boast growth fro which most of
countries usually dreams. This nation has mark its development all over the world not only in
technological sectors but also in term of economy by investing in several other countries like
Africa, US and many more. Foreign direct investment performed by China within African
countries contribute a lot in improving the economical condition of these countries. Over year
2003-14 flow of Chinese FDI has increased significantly where the FDI stock of China has rose
in Africa from $491 million to $32.4 billion. There are three major countries of Africa such as
1

Ethiopia, Kenya and Nigeria that has experience a tremendous growth after the FDI contribution
of China.
Significance: Research topic of this report is China in Africa which is based upon FDI
made by Chins in African countries such as Nigeria, Republic of Congo, Kenya, Ethiopia etc. It
will help to find out financial implications of China's FDI on Africa. With the help of it learners
will be able to enhance knowledge about FDI which is made by Chinese organisations in
businesses of Africa.
Rationale: China in Africa is selected by the researcher for the purpose of analysing
impacts of China's FDI on African countries. This can help the observers to enhance knowledge
regarding increased interest of China in African countries for the purpose of making FDI. With
the help of present research learners will be able to analyse all the issues and challenges that
have taken place before and after FDI of China in African countries (Gusarova, 2019).
2. LITERATURE REVIEW
It is a type of review article which helps researcher to find answers for their research
questions and achieve all the objectives that were formulated previously. It helps to evaluate
some of the selected topics that are related to research which helps learners to attain detailed
information regarding the main subject of study. The data which is already being studies by
others and used by researcher to resolve all the questions of present study is considered as the
part of literature review. It is mainly based on secondary information which is gathered from
different sources such as journals, websites, articles etc. Sometimes primary information is used
for the purpose of literature review which includes peer reviewed articles and one to one
interaction. Main aim of writing a literature review is to provide detailed information of research
objectives to the observers and readers of whole study. Only relevant and appropriate
information is used in literature review which is beneficial for students who are going to study it
in future for the enhancement of their knowledge.
Benefits of China's FDI to economy of African Countries by penetrating in to their market
According to Meunier, (2014) China has started to invest in African countries in 1980s
and since 2000 its investment in Africa it is continuously increasing and benefiting their
economy. Various organisations that are related to China, have helped such nations to establish a
up stream -downstream-integrated chain of the industry. It has resulted in the transformation of
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resource advantage into economic growth opportunities. Hybrid forms of financing tools are
used by China in order to blur classical variation between FDI and aid. In the last decade
economy of Africa experienced a huge transformation due to FDI of China as various
investments and new projects are being attracted by the continent which has developed economy.
Continuous increment in the interest of China in African regions has created debates between
scholars and journalists in developed as well as developing countries. In year 2018 FDI inflows
of Africa were 72 billion which has been reduced up to 50 billion in year 2012. Flows of FDI are
still much higher in African countries such as Nigeria, Republic of Congo, Kenya and Ethiopia.
It shows that investment conditions are improving in Africa and legal authorities are generating
friendly business environment for organisations. It is the only continent where FDI has been
increased in 2012. Private sector of the region mostly depends upon foreign direct investment
and if it get stopped by China then it can result in huge losses to the countries which are
operating business under this sector. The partnership of Africa and China is long lasting because
Chinese companies started to make investments in African countries many many years ago.
Government of China encourage its local organisations which are investing in FDI for Africa in
order to expand the business (Impact Of China on Africa, 2019). By the end of year 2012
Chinese government signed a bilateral investment strategies with 32 different nations of Africa
and generated joint economic commission mechanism with 45 African countries. 85% of whole
investments from different countries in Africa goes to 15 different oil exporting regions.
As per the views of Sun, (2014), Chinese companies dominate African economy as the
private sector depends upon FDI of China. The World Bank have analysed that a large
proportion of FDI around 50% to 80 % is used by African Countries for the purpose of
exploitation of natural resources which helps to develop the economy. After China's FDI a huge
growth is bing recorded in African nations such as Nigeria, Republic of Congo, Kenya etc.
Remaining part of it is used by other sectors of the territory. These are telecommunication,
banking. Light manufacturing and construction. It is vital for Africa to attract more investment
for such factors by increasing their attractiveness. In year 2017 FDI from China is being
decreased and US made more investments as compare to any other nation. It has been analysed
by African countries that their FDI number is being increased by 6% to 718 projects which is
raised as compare to previous year where it was 676 and lowest in all 20 years of investment.
FDI of China has resulted in enhanced employment opportunities for individuals in African
3

countries and also contributed in the development of the economy. Currently China is playing an
essential role in the development of economy of African countries due to its increased FDI in
those nations. China mainly focused on its expansion in African countries with the help of its
investments in Kenya, Republic of Congo, Nigeria and Ethiopia.
As per research performed over Ethiopia, it has been found that this country is second
most populous and fastest growing economical region of Africa. This become possible with
China's involvement in educating population, improving infrastructure and investment. After
getting FDI from China, its GDP has found at $2500 per capita which increase at 6.2% annual
pace and poverty rate also fell down by 31%. But the trade balance of country is negative i.e. it
reached upto -13.6 from -9.1 as they import more and export less.
From research over another country of Africa i.e. Nigeria it has been found that Chinese
companies are worlds largest investors that support country to increase its GDP by 100.6 USD in
June 2018. In addition to this from year 2004-2017 around $44 billion Chinese FDI has marked
within Nigeria which support in infrastructural development of country. The inflation rate of
Nigeria slow down from 11.28 to 11.26 % in October 2018.
By performing research over Kenya, it has been determined that investment performed by
China contribute upto a great extend in development of country by improving infrastructure and
providing employment. There is around 7.4% fall in unemployment rate after China contribution
and GDP rate is also get raised upto $98.264 billion by making it 65th largest economy. But its is
amounted up to 7.99 percent in 2017 as compare to last year i.e. 6.32%.
Advantage and disadvantages of China's financial implication in African countries
As per the article given by Mark Klaver and Michael Trenilcock, it has been analysed that both
China have been penetrating the marketplace of Africa from last few years (Chinese foreign
direct investment in Africa: a deep analysis of the pros and cons by Mark Klaver and Michael
Trebilcock, 2019). In this regard, through effective collaboration as well as cooperation of
partnership of both counties, makes Africa as one the greatest allies for China in global market.
In the year 2018, on Cooperation Forum of China-Africa, Chinese economist has announced to
give financial support to Africans i.e. near about $60 billions. As African market is rich in
context with some raw materials, particularly fuel, oil and minerals therefore, desire to get secure
its solid base is one of the major advantages China can get. But its investment in Africa helps in
strengthening the balance sheet as well, because China is considered as one of the largest
4

economy and also the biggest trading partner of Africa. In order to improve and develop
infrastructure of African market, Chinese firms have given major resources like backed loans and
make more investments in its organisations. This would give opportunity to Africa to capitalise
on Chinese FDI for sustainable economic growth.
Mission of China-Africa Cooperation Forum- “To collaborate and cooperate with
Government, business communities and Civil society to balance the excess of globalization and
other aspects with Non Trade Concerns”.
Goals of China-Africa Cooperation Forum- “To influence policymakers as well as raise
awareness over Non Trade Concerns and to encourage participation of stakeholder.”
Therefore, this mission and goals have provided various benefits to both Chinese and
Africans for economic development. Foreign Direct Investment in Africa results in boosting its
growth and development, that may comes in different forms like Merger and acquisition, land
purchase by overseas partners, Fixed capital investment on manufacturing industries, distribution
centres and more. In context with Africans, some main benefits it can gain after making
partnership with China are given as below:-
 FDI leads to boost growth – as per recent growth rates within Sub-Saharan Africa of near
about 8%, the substantial progress of this country has been made in reducing extreme
poverty (Foreign Direct Investment in Africa, 2018).
 Eliminate technological barriers to trade resources, semi-finished and finished products
and services.
 Avoidance of transportation costs, and other barriers like tariff and non-tariff
 Chinese investment within fertile and underdeveloped farmland will raise productivity of
farms in Africa. It also results in increasing income level of whilst as well as keeping
down world food prices give millions of the poorest people
 Capitalising Chinese FDI also allow many African governments to take loan from China
instead of World Bank and International Monetary Fund.
 Economy of Africa also runs with growing trade surplus as shown below:
5

Apart from various benefits, Africa-China partnership create various issues and risks for
Africans also. It includes:
 Fears about accelerating the process of natural resource depletion of Chinese FDI for
African countries is rely heavily on source of wealth and income.
 Some economist of Africa have argued that Chinese companies have also set up their
businesses as a route for trading products into USA. Therefore, avoiding such tariffs
impact negatively on economy of Africa.
 Some other major disadvantages include fear related to weak CSR responsibilities from
investors of Chinese, balancing economic-power and more.
 Along with this, inward migration of Chinese workers has also created limited
employment for African citizens.
 Import of Chinese products more also impact negatively on sales performance and
profitability of domestic companies of Africa marketplace, which is the major
disadvantage of collaboration of China-Africa partnership.
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Challenges that could be faced by China while operating within African countries
The Republic of China has been increasingly investing in African Countries with a desire
to enhance its accessibility to critical resources such as oil and bauxite among others. However,
this may not be the only reason why the Communist country is interested in the latter. Postel,
(2014), reiterates that one of the major objectives to invest in African Countries by China is to
support its existing industries who rely heavily on such natural resources. Thus, leading to the
stagnated profit derivation as well as growth in the projects initiated in such countries. The main
foreign direct investment channels for Chinese corporations include commercial deals, aid
projects as well as contractual implementation in relation to African Government and other
organisations (Chinese Trade Impact on Africa's GDP, 2019).
As stated by Diamond, (2015), it is highly important to have proper coordination as well
as connection between various infrastructural systems so as to ensure smooth functioning of the
project at all levels. China has not been able to achieve this criteria in the projects initiated by it
in African Countries. The infrastructure projects lack the proper connectivity and coordination in
its system, sometimes violating the national plans and guidelines itself.
Another possible challenge that can be faced by China while operating in African
Countries is Conditionality. According to Collier and Dercon, (2014), China's foreign policy has
been heavily criticized due to its lack of conditionality in Africa. The bureaucratic mechanisms
involved in the China's foreign policy restrict its actions to only those which fulfil self-interests
rather than mutual motives of both Africa and China. Due to African laws and regulations,
Chinese enterprises also face the fear of being pressurized by the local, home-grown companies.
Most of African FDI (Foreign Direct Investment) is accumulated from the Western Countries.
Being a small player, it becomes difficult for China to compete with other well-established firms
belonging to the other side of the world.
Crane and Matten, (2016) points out that African countries are one that tend to have poor
governance and infrastructure related property rights and rule of laws. These leaves such
corporations open to the risk of being defrauded leading to loss of substantial profits critical to
their success. China's definition of an Foreign Direct Investment differs in terms of the usage and
activities defined by them. This definition may be further classified into inward and outward
FDI. Mainly it includes those activities that encourage spot exchange, real object or technology
between the foreign-funded enterprises through interaction, cooperation and coordination,
7

usually in the form of Chinese-foreign equity joint ventures. The African countries are largely
motivated by how effectively does a foreign corporation is able to create jobs, enhance standard
of living as well as working conditions among other factors.
Following their own policy of non-interference, there are no benchmarks or preconditions
that help in generating an impact assessment as well as performance appraisal. This leads to a
degradation of the Chinese Organisation as a whole. Therefore, the portrayal of Chinese
corporations, in the eyes of public, is one of being an enabler of waste, inefficiency and
Corruption which is not a healthy symptom for any organisation. As noted by Evans, (2016), this
poses a challenge for China in the sense that there is lack of trust among the public when it
comes to such enterprises operational in Africa. Following this trend, there has been a
consequent incident of social unrest among workers, mainly relating to working conditions, that
has led to the increase in hindrance of work and decline in productivity in these corporations
(Chinese Engagement in Africa, 2019). Thus, leading to the reduction in bottom-line profits as
well as deviation from organisational goals and objectives.
For Chinese Corporations, its normal to expatriate employees to other countries including
Africa for easier and smooth functioning of a given project or organisation, specifically, in terms
of planning, cooperation, coordination and communication of the operations to their managerial
authorities or supervisors. However, Zeng, (2015) observes that there has been a hostile
environment brooming in the African countries with anti-Chinese Sentiment, Social Tension and
militant rebel groups. Along with this, increasing wage disputes and unprincipled labour
practices have only added to the woes of Chinese Corporations.t A stable business environment
is of paramount importance for any organisation to conduct its business as well as functions
smoothly. Africa, itself being a highly complex and regime country, further complicates the
situation for Chinese Counterparts as there is presence of high instability in the business
environment itself. This, in turn, challenges the policies and procedures followed by China,
mainly in regards to the non-interference factor.
Hence, it is important to point out that China has many challenges that are faced by them
in their African domain. The economy has not been able to fully become a big player in Africa
even though most of its practices resonate with African way of living unlike its western
counterparts who have been insistent on advocating transparency, governance, diplomatic
channels as well as due diligence. However, the African public has had a negative impact
8

resulting in creating an image for such Chinese Corporations to be that of corruption,
bureaucracy, wastage, lack of trust, transparency and inefficiency. This again has posed a
challenge for them to operate effectively in African Countries so as to gain bottom-line profits
along with fulfilment of mutual interests of both countries. This lack of trust and poor
governance practices are some of the most crucial and damaging variables for any organisation.
Even though China is not advocate of open practices, it has affected the corporations in the long
run, making it difficult to engage in an hostile environment with poor working conditions as well
as social unrest.
3. RESEARCH AIM
Aim
“To identify the financial implication of China on the African countries. A case study on
African market”.
Objectives
 To identify the expansionary policies of China.
 To analyse the financial condition of African countries.
 To analyse the financial implication of China in the African countries.
Research questions
 Is China's FDI benefiting the economies of African countries by penetrating into their
market?
 What are the advantage and disadvantages of China's financial implication in African
countries?
 What challenges will China have to face while operating within African countries?
4. METHODOLOGY
It is a process which is used by researcher to gather appropriate information to complete
whole research. For this purpose primary and secondary data is used by the person who is
working of research. Different types of sources such as interviews, surveys, articles, websites etc.
are used to accomplish research aims and objectives. Present as well as historical data is also
used by research methodology (Hu and et.al., 2019). It is a chapter of dissertation which includes
methods, approaches and designs that are going to be used in whole study.
9

Research paradigm
It is a set of assumptions that are made by researchers for the purpose of conducting a
research. It helps researcher to find appropriate answers for research questions. With the help of
it decisions regarding carrying out a study can be formulated. There are two types of research
paradigm that are described below:
Qualitative: It is a scientific methods of observation which is used to collect non
numerical information. It covers meaning, definitions, symbols, metaphors and description of all
the relevant elements that are related to research topic. It is mainly used for the purpose of
understanding perceptions and views of people which can help to find answers for research
problems. Researchers use this paradigm for getting in depth information of topic. With the help
of this concepts, theories and views of respondents are analysed (Kinyondo, 2019).
Quantitative: It is mainly used for the purpose of finding solutions for numerical
problems. With the help of this method appropriate solutions can be found for research problems.
It emphasises on objectives, statistical data, mathematical information and different
measurements. Under this approach computational techniques is used to reach at a solution for
research problems.
This present study is based upon qualitative and quantitative data which will help the
researcher to achieve all the objectives and aims that are related to research.
Research philosophy
It is the procedure in which data is gathered, assessed, monitored and gathered. It is an
important element of the job materials pact for those seeking academic positions, particularly for
those applying to research institutions. It is a summary of the research interests and experience
which includes past, present and future endeavours. There are two different types of research
philosophy and both of them are described below:
Interpretivism: This philosophy is used by researchers for the purpose of interpreting
elements of the research that are studied by them. It is best suitable technique for qualitative
paradigm of research. It is based upon meaning, methodologies, interviews and participation
observations which rely on subjective relation between researcher and subject. It is focused with
epistemological issues that are related to research topic (Kolstad and Wiig, 2012).
Positivism: Under this philosophy of research natural phenomena, its properties and
relations are used for the purpose of conducting the research. Data which is being derived from
10

sensory experience, interpreted through reason, forms and logics is used by researcher to use in
the research. It is best suitable philosophy is best suitable for quantitative research.
Present study is based upon interpretivism as well as positivism because qualitative and
quantitative both types of researches are going to be used for it.
Research approach
It can be defined as a plan or process which is used by researchers formulating
assumptions for research. With the help of this all the questions that were formulated by
researcher are being answered or their solutions are figured out. There are two different types of
research approaches that are going to be used for present research. Both of them are described
below in detail:
Inductive: It is concerned with the formulation of a new theory rather than working on
an old one. With the help of it researchers identify themes by studying different documents,
articles, journals, books and other printed material. It is mainly used with qualitative method of
research.
Deductive: in this approach of research old theories are used by researchers to find
solutions for research problems. It is focused with development of hypothesis which is based
upon existing theory and then a strategy is being designed to test the pre-formulated hypothesis
of research (Larue, 2019).
In present research inductive as well as deductive approaches are going to be used for the
purpose of successful completion of the study. As qualitative and quantitate paradigms are
implemented in this research so it is vital to use both the approaches in order to get appropriate
information regarding topic of research.
Research design
The set of various procedures and methods that are used in collection and analysis related
activities of research problems are known as research design. In other words it can be defined as
a overall strategy which is used for the purpose of integrating different components of research
that are monitored by researcher. There are various types of research designs that are as follows:
Descriptive: With the help of this research design characteristics of a population are
studied by researchers. It guides to describe situation to the learners of research which can help
them to enhance their knowledge.
Exploratory:
11

Experimental:
Data collection
Collection of data is an integrated process of acquiring information from various sources
in order to furnish information required to carry out different experiments so as to reach a
definite conclusion or answer to a question through a detailed evaluation of outcomes. Data
Collection, irrelevant to what field it is being used in, can mainly be classified into two
categories viz. Primary Research and Secondary Research. This is very important in any
organisation such as it provides a information of business and its related activities. By gathering
information a business concern can run its business and also have chances to expand its business
at different market place. Data is collected by different sources that make easy to complete the
task on a given period of time and maintain a business by gathering information. For instance, a
person want to start a textile business, first it need to gather information about people's interest
and their taste then it need to manufacture that kind of product. Moreover, data collection is way
of responding towards a business activities and keep its profitable by collecting information. It
involves two types of data collection such as-
Primary: This is the process of collecting information from research that is done at first
time. It also can be gather by observing others, by telephone, survey, face to face interview and
through mail that give information. Basically, primary data collection is used to start new and
innovative business that helps to give ideas about people taste and expectation for particular
product and services. It gives clean and clear information that helps in business activities and
increase productivity (Mohan and Urban, 2019).
Secondary: This means collection of data which is already collected and used to run a
business. In this method information are used by other user in order to maintain a business
activities. It is done through censuses, data collection by other person, government, enterprise
records and existing marketing research. In this type of collection no face to face information
need to gather in any industry.
For present research primary as well as secondary data is being used. For the
simplification of this study, the primary data has been collected by way of questionnaire that
surveys 20 respondents comprising mainly of African Economists in order to get a detailed
insight on what are the financial implications of China's Foreign Direct Investment on Africa and
its economy. For the purpose of facilitating the study, secondary data has been collected from
12

websites, government portals, articles, journals and other literary research work of scholars in the
related field to construct the literature review section of this dissertation.
Data Assessment
This is the process of evaluating data through statistically and scientifically that helps
meeting with project quality and business process. In other words, data assessment shows the
right quality of projects and actual support to use collected data. It can be assessed through data
inventory, data classification and periodic data reassessment that helps to review collected data
and important information.
Data analysis: This is the process of checking, cleaning, transforming and moulding
information with the goal of organisation that provides valuable information and conclusion. It
also give supports and suggestion for making effective decision in order to maintain business
activities. This is important in business to understand the problems which is arising in an
industry and to define data in valuable ways that helps to organise, interprets, presents data and
making structure of useful information (Oqubay and Lin, 2019).
Sampling
This is method which is used to analysis the statical information and predetermine the
number of observation. Moreover, it is a methodology that is used to get sample from large
number of population and depend on the performance. It helps to get exact information from
customer's prospectives trough sampling method.
Probabilistic: This is used to give network assessment which is based on probability of
information instead of individual person operation's assessment. It depends on future expectation
that has chances to be arises in any business organisation. Moreover, this help to overcome the
future business problems and increase productivity. It contains high cost and more time because
it based on assumptions.
Non probabilistic: This is used to represent a group through sampling that help to chose
units from population and maintain business activities. It does not involve future expectation or
forecast in order to expand business at different place. It contains low cost and time saving
because it based on actual and accurate data that helps to represent population.
For the effective facilitation of this dissertation, Probabilistic methodology has been
chosen under which random sampling technique has been applied so as to derive valuable
outcomes for 20 African Economists in relation to the questions explored.
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Access and ethical consideration
It is very important for the researchers to fulfil all the ethical requirements of the
research. While collecting information from respondents it is vital to make sure that feelings of
respondents are not harmed by researchers. Present study is completed by following ethical
principles and the data which is gathered and used for this research is appropriate and accurate.
When researcher was working on the project it has been assured that such questions are asked
from them that does not make them uncomfortable and they can answer all of them accurately.
Limitations
Different types of limitations are faced by researcher while working of this project these
are lack of information because respondents were not ready to share personal information.
Another limitation is that it is not possible that all the online sources provide accurate
information so the researcher get confused due to this while writing literature review. At last
authentic and appropriate sources are used for the purpose of successful completion of the report.
Equipments
There are various types of equipments are used by researcher such as Laptop, USB drive
and stationary which includes books. All of them are properly utilised by researcher while
working on present study. These equipments has helped to gather relevant and accurate
information which is required to complete the research (Oqubay and Lin, 2019).
5. FINDINGS
This chapter is all about the findings that are analysed from data analysis. For this
purpose questionnaire method is used by researcher which helps to gather appropriate
information for successful completion of research.
QUESTIONNAIRE
Name:
Age:
Gender:
E mail:
1.) Are you aware with the concept of Foreign Direct Investment?
A. Yes
14

B. No
2.) Do you think financial condition of African countries is effective to attract foreign
investors for merger & acquisition?
A. Yes
B. No
3.) Are you agree with partnership of Africa and China partnership?
A. Yes
B. No
4.) Do you really believe that China has given much financial support to Africa for raising
its living standardisation?
A. Yes
B. No
5.) According to you, what are the main reasons behind investment of China in Africa
marketplace...
A. To increase political influence
B. To secure a solid base of raw materials to fuel
C. To gain competitive advancement
D. To spread its wealth
6.) Do you think China's ties to Africa is the world's biggest economic agreement?
A. Yes
B. No
7.) Are you agree with the concept that partnership of China-Africa is a one-sided trade?
A. Yes
B. No
8.) What will be the major benefits Africa can get after getting FDIs?
A. Improve infrastructure
B. Spreading wealth
C. Increase trading
9.) According to you, what challenges can be faced by China after operating its business in
African marketplace?
A. Conflicts of interest
15

B. Trade deficit
C. Long-term economic development goals
10.) According to you, which country gain more benefits after merger of Chinese and
African businesses?
A. China
B. Africa
QUESTIONNAIRE
1.) Are you aware with the concept of Foreign Direct Investment? Frequency
A. Yes 18
B. No 2
2.) Do you think financial condition of African countries is effective to attract
foreign investors for merger & acquisition?
Frequency
A. Yes 15
B. No 5
3.) Are you agree with partnership of Africa and China partnership? Frequency
A. Yes 12
B. No 8
4.) Do you really believe that China has given much financial support to
Africa for raising its living standardisation?
Frequency
A. Yes 15
B. No 5
5.) According to you, what are the main reasons behind investment of China
in Africa marketplace...
Frequency
A. To increase political influence 5
B. To secure a solid base of raw materials to fuel 8
C. To gain competitive advancement 4
16

D. To spread its wealth 3
6.) Do you think China's ties to Africa is the world's biggest economic
agreement?
Frequency
A. Yes 16
B. No 4
7.) Are you agree with the concept that partnership of China-Africa is a one-
sided trade?
Frequency
A. Yes 17
B. No 3
8.) What will be the major benefits Africa can get after getting FDIs? Frequency
A. Improve infrastructure 8
B. Spreading wealth 7
C. Increase trading 5
9.) According to you, what challenges can be faced by China after operating
its business in African marketplace?
Frequency
A. Conflicts of interest 7
B. Trade deficit 7
C. Long-term economic development goals 6
10.) According to you, which country gain more benefits after merger of
Chinese and African businesses?
Frequency
A. China 12
B. Africa 8
6. EVALUATION OF RESULTS
This chapter is mainly considered as the part of previous chapter in which findings are
analysed by researcher. This research is mainly based upon financial implication of China's FDI
on Africa. The objective is successfully met by researcher because answers for all research
17

questions are figured out. This report states that Chinese FDI has resulted in enhancement of
Africa's economy. The investment of the country was started in late 1980s and from that period it
is continuously increasing. It has resulted in development in African countries. Various
opportunities are increasing for people who are living there. With the help of FDI various
Chinese organisations started to work in Africa and resulted in enhancement of its economy.
With the help of questionnaire which is being provided to African Economists in order to gather
information of financial implication of China's FDI on Africa, it has been analysed that various
positive impacts are being left by it on the economic conditions. It has resulted in development
of countries such as Nigeria, Kenya, Ethiopia and Republic of Congo (Wen, 2019). In order to
analyse the results SPSS is used in present research.
Data Interpretation
Theme 1:
1.) Are you aware with the concept of Foreign Direct Investment? Frequency
A. Yes 18
B. No 2
Result:
Statistics
1.) Are you aware with the
concept of Foreign Direct
Investment?
N Valid 20
Missin
g 0
Mean 1.10
Median 1.00
Mode 1
Percentile
s 25 1.00
50 1.00
18

75 1.00
Interpretation: Today in order to expand business or operate it new emerging
marketplace, mostly organisations used to merge with foreign companies. In this regard, Foreign
Direct Investment refers to an investment scheme where a company gets ownership of other
entities situated in another country. In broadly terms, it includes mergers and acquisition,
reinvestment profitability to earn overseas operations, building new facilities and intra company
loans. Therefore, FDI leads to increase partnership of overseas partners, transfer of technology,
joint venture and more. As per survey on 20 economists of Africa marketplace as shown in
above figure, it has been analysed that 18 of them are aware with concept of FDI. They are well-
understood that this term is just a subset of international movement of businesses. While,
remaining 2 respondents haven't known much about same.
Theme 2:
2.) Do you think financial condition of African countries is effective to
attract foreign investors for merger & acquisition?
Frequency
A. Yes 15
B. No 5
Result:
Statistics
2.) Do you think financial
condition of African countries
is effective to attract foreign
investors for merger &
acquisition?
N Valid 20
Missin
g 0
Mean 1.30
Median 1.00
Mode 1
19

Percentile
s 25 1.00
50 1.00
75 2.00
Interpretation: It has evaluated that Africa is rich in natural resources like fuel, minerals
and oils which is enough to attract foreign investors, for making investment in African industries
to gain high profitability. This country is endowed with various valuable natural resources like
crude oil, which attracts industrialists of China to get over businesses of this country by merger
and acquisitions. The quest and demand of natural resources for manufacturing industries makes
China an attracting and formidable trading partner for Africans. Therefore, all these aspects
shows that whether financial condition of Africa is good or bad but it proves beneficial for
foreign investors to make investment over here. According to above graphical representation, it
has been interpreted that richness of minerals shows effective financial condition of Africa that
attracts Chinese more easily. The reason behind this is growing demand of crude oil and other
minerals for manufacturing their products. In this regard, 15 economists of Africa out of 20 are
agreed with this statement. While, remaining 5 doesn't agree that conducting business in Africa
proves beneficial for overseas partners.
Theme 3:
3.) Are you agree with partnership of Africa and China for economical
development?
Frequency
A. Yes 12
B. No 8
Result:
Statistics
3.) Are you agree with
partnership of Africa and
China partnership?
N Valid 20
20

Missin
g 0
Mean 1.40
Median 1.00
Mode 1
Percentile
s 25 1.00
50 1.00
75 2.00
Interpretation: Africa-China partnership has given various benefits to both nations in
developing their economy more appropriately. This would help in increasing political influence,
trading raw materials and finished products, developing good business sense and more. Most
importantly, it will help in developing and increasing trade relations for importing crude oil in
another countries for Africa. It has been interpreted from perception of 12 respondents out of 20
that major economists are agree with partnership of Africa-China partnership as greater allies.
While, remaining 8 participants are not agree with the same they have different perceptive for
such partnership, that reflect majorly on negative consequences.
Theme 4:
4.) Do you really believe that China has given much financial support to
Africa for raising its living standardisation?
Frequency
A. Yes 15
B. No 5
Result:
Statistics
4.) Do you really believe that
China has given much
financial support to Africa for
raising its living
standardization?
N Valid 20
21

Missin
g 0
Mean 1.25
Median 1.00
Mode 1
Percentile
s 25 1.00
50 1.00
75 1.75
Interpretation: Since main motive of China to make collaboration and cooperation of
Africa is to increase trade activities. Therefore, it makes more investment in Africa marketplace
for getting valuable raw materials on specific price rates more easily. But this will directly aid
Government of Africa also to capitalise Foreign Direct Investment of China for improving and
raising living standards of its local communities. Along with this, China Government also give
much financial support in order to improve infrastructure of Africa. According to above
mentioned figure, it has been interpreted that 15 respondents out of 20 are in favour with this
concept. They also believe that China has provided much financial support to Africans for
upliftment of societies. While remaining 5 respondents are not agree with the same they thought
that China has done investment only to get raw materials on cheap rates for manufacturing their
products.
Theme 5:
5.) According to you, what are the main reasons behind investment of
China in Africa marketplace...
Frequency
A. To increase political influence 5
B. To secure a solid base of raw materials to fuel 8
C. To gain competitive advancement 4
D. To spread its wealth 3
Result:
22

Statistics
5.) According to you, what are
the main reasons behind
investment of China in Africa
marketplace...
N Valid 20
Missin
g 0
Mean 2.80
Median 3.00
Mode 2a
Percentile
s 25 2.00
50 3.00
75 3.75
Interpretation: As Africa is rich in natural resources and have less tariff rates therefore,
it seems more beneficial for foreign companies to merge their businesses with African
organisations. In context with Chinese organisations, after developing
Theme 6:
6.) Do you think China's ties to Africa is the world's biggest economic
agreement?
Frequency
A. Yes 16
B. No 4
Result:
Statistics
6.) Do you think China's
ties to Africa is the
world's biggest economic
agreement?
23

N
Valid 20
Missin
g 0
Mean 1.20
Median 1.00
Mode 1
Interpretation: China has provided financial support to more than $60 billions to
African Government for improving its infrastructure and raising living standard of people.
Therefore, Africa-China collaboration is considered as the biggest alliance in the world.
According to perception of 16 respondents out of 20, it has been interpreted that they are also
believing the same. While 4 participants think against with same they don't think that it is a
biggest economic agreement.
Theme 7:
7.) Are you agree with the concept that partnership of China-Africa is a
one-sided trade?
Frequency
A. Yes 17
B. No 3
Result:
Statistics
7.) Are you agree with the
concept that partnership
of China-Africa is a one-
sided trade?
N Valid 20
Missin
g 0
Mean 1.15
Median 1.00
Mode 1
24

Interpretation: Since the main reason behind collaboration of China with Africa is to get
natural resources and raw materials on cheap rates. In this regard, its organisations purchases
high amount of such resources from Africans and export their products in such marketplace also.
Therefore, all these trading activities shows one-sided trade of China. As per above graphical
representation, it has interpreted that out of 20 economists of Africa 17 are in favour with this
concept. While 3 respondents out of them didn't go with same.
Theme 8:
8.) What will be the major benefits Africa can get after getting FDIs? Frequency
A. Improve infrastructure 8
B. Spreading wealth 7
C. Increase trading 5
Result:
Statistics
8.) What will be the
major benefits Africa can
get after getting FDIs?
N Valid 20
Missin
g 0
Mean 1.80
Median 2.00
Mode 1
Interpretation: After getting financial support of China in terms of FDI, Africans gain
various benefits. It includes improvement and development in infrastructure, spreading wealth
and economy, increasing trade activities etc. As per feedback of 8 respondents out of 20 it has
been interpreted that improving infrastructure is the main benefits gained by Africans through
FDIs. While 7 participants are in favour with spreading wealth and 5 towards increasing trade by
decreasing tariff rates.
Theme 9:
25

9.) According to you, what challenges can be faced by China after
operating its business in African marketplace?
Frequency
A. Conflicts of interest 7
B. Trade deficit 7
C. Long-term economic development goals 6
Result:
Statistics
9.) According to you,
what challenges can be
faced by China after
operating its business in
African marketplace?
N Valid 20
Missin
g 0
Mean 2.00
Median 2.00
Mode 1a
Interpretation: Collaboration of Africa-China business has given various challenges for
African Government. It includes increasing conflicts of interests, trade deficits and more.
According to given data, it has been interpreted that out of 20 respondents 7 are believed that
conflicts of interests is the major challenges for African. While other 7 respondents give their
concern towards trade deficit and other 6 towards long-term economic development goals.
Theme 10:
10.) According to you, which country gain more benefits after merger of
Chinese and African businesses?
Frequency
A. China 12
B. Africa 8
Result:
26

Statistics
10.) According to you,
which country gain more
benefits after merger of
Chinese and African
businesses?
N Valid 20
Missin
g 0
Mean 1.35
Median 1.00
Mode 1
Interpretation: In toady's context each and every country want to have benefit so that
they can maintain their sustainability in an effective manner. It has been examined that both the
country are benefited such as china are having various availability of raw material in crude oil in
effective way. Moreover, China are providing finished goods and services to Africa in this
manner both the countries are gaining in their business. Eventually, Africa was benefited with
high number of employment that help to raise economy of the country. Herein, out of 20
respondents 12 are responding that china are having more benefits after merger of Chinese and
African business. Where as remaining 8 participants are responding that Africa are less
beneficial after such merger.
7. CONCLUSION
From the above research, it can be concluded that Chinese investment played crucial role
in reducing unemployment in Nigeria, Ethiopia and Republic of Congo. They mainly invested
money in mining industry and got lots of appreciation from these three African nations. But now
scenario is gradually changing as African countries seek more investment in other areas like
service industry. In the timeline of 2008-12, huge amount of investment from China resolved key
problem of these country i.e. unemployment. Availability of natural resources is not an issue
Nigeria and other countries, main problem is lack of infrastructure. Consistent growth in FDI is
beneficial for both sides. China has world's largest population and they need raw material like
27

fuel in excessive quantity as demand of these kind of items in high. Political reasons are also
behind foreign direct investment, China understand that if they want to become superpower then
they have to make more friends and spread their presence in every continent.
Many African citizens shifted in China for job purpose. Transitions of human resource
allowed both countries in understanding each other's working culture. Figures of 2017 year
shows that investment done by USA is highest in these three countries. China started investing in
other sectors but gradually they fell behind USA. African nations understand that they cannot
rely on one country for FDI and this can be considered as the prime reason behind the assistance
which they are accepting from rest of the world. Every nation want to invest in African region
because it is an untapped market but early investments done by China is going to give them an
edge over other countries.
Nigeria, Ethiopia and Republic of Congo may face some negative impact of FDI in long
term. All the investors are going to take back profits earned from these nation to home country
and this will become a huge concern for economy in these African nations. Depletion of raw
material is another negative impact of FDI, China is exploiting natural resource of these 3
nations and scarcity of raw material will be a big trouble for Ethiopia and other two economies in
upcoming time. The recent reports depicts that investment in African continent in going down
and reduced FDI from China is main reason behind it. Most of the developed nations are
reducing their investment in Africa because of different reasons. All the investment by foreign
countries is basically for their own benefits and now they understand that potential of Nigerian,
Ethiopian and Republic of Congo's economy is not as attracted as it was before last decade.
8. IMPLICATIONS FOR PRACTICE AND FUTURE RESEARCH
This research can provide detailed information of China's FDI in Africa. With the help of
this learners will be able to enhance their knowledge regarding this topic. Findings of this
research were limited due to lack of data because respondents are not able to share detailed
information regarding the economic conditions and China's FDI in African countries such as
Nigeria, Kenya, Ethiopia and Republic of Congo (Yueh, 2019). Findings of this study can
suggest Africa to focus on increment of FDI in manufacturing, service and other sector so that
economy can be developed massively. In order to develop all other countries it is vital for
African government to attract more investments from other countries which can help to establish
more industries in territory to be developed in future. As due to increasing interest of China in
28

Africa has resulted in FDI of US in Africa and in 2017 it was higher as compare to any other
nation.
29

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