A Report on the Economic Implications of China's OBOR in Africa

This report examines the economic implications of China's Belt and Road Initiative (OBOR) in Africa, analyzing the incentives behind the initiative and its impact on various African nations. It explores the strategic rationale and significance of OBOR, focusing on its effects on trade, infrastructure development, and economic growth. Case studies of countries like Djibouti and Kenya are included to illustrate the specific impacts of OBOR projects. The report also addresses the challenges and opportunities that Africa faces due to OBOR, considering factors such as intra-state conflicts and the increase in China's soft power. It concludes by summarizing the key findings and implications for Africa's economic future, highlighting the need for policies that protect African interests and promote sustainable development. Desklib offers this document and many others as a study tool for students.

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Running read: ECONOMIC IMPLICATIONS IN AFRICA
Economic implications of China in Africa: incentives behind china’s belt and road initiative

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TABLE OF CONTENTS
Chapter 1: INTRODUCTION....................................................................................................4
1.1 Introduction..................................................................................................................4
1.2 Background..................................................................................................................5
1.3 Research Aims.............................................................................................................9
1.4 Research Objectives.....................................................................................................9
1.5 Research Questions......................................................................................................9
Chapter 2 LITERATURE REVIEW........................................................................................10
2.1 Introduction................................................................................................................10
2.2 Overview....................................................................................................................11
2.3 Implication for Africa from China’s One Belt One Road Strategy...........................12
2.4 Strategic Rationale.....................................................................................................13
2.5 Significance of One Belt One Road in Africa............................................................15
2.6 Methods to protect the African interest in OBOR.....................................................18
Chapter 3: Research Methodology...........................................................................................21
3.1 Introduction................................................................................................................21
3.2 Method Outline:.........................................................................................................21
3.3 Research Onion:.........................................................................................................22
3.4 Research Philosophy:.................................................................................................22

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3.4.1 Reason for the selection of the chosen research philosophy (Positivism research
philosophy):......................................................................................................................23
3.5 Research Approach:...................................................................................................24
3.5.1 Justification for the selection of the chosen research approach (Deductive):.........24
3.6 Research Design:........................................................................................................25
3.6.1 Validation for the selection of the chosen research design (explanatory):.............25
3.7 Data collection process:.............................................................................................26
3.8 Data analysis plan:.....................................................................................................28
3.9Ethical consideration:..................................................................................................28
3.10 Data validation and reliability:.................................................................................29
3.11 Restraint of primary and secondary data:.................................................................29
3.12 Summary:.................................................................................................................30
Chapter 4 : DATA ANALYSIS...............................................................................................32
Impact on Djibouti...........................................................................................................35
Impact on Kenya..............................................................................................................38
Trade................................................................................................................................41
Forum on China Africa cooperation................................................................................45
Aid from China for the development of road infrastructure of Nairobi...........................46
Challenges to OBOR in Africa........................................................................................47
Opportunities faced by Africa due to OBOR...................................................................47
Present infrastructural projects in Africa.........................................................................47
Increase in Chinas soft power..........................................................................................48

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Presence of intra as well as interstate conflicts................................................................52
Chapter 5: CONCLUSION......................................................................................................53

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Chapter 1: INTRODUCTION
1.1 Introduction
China’s belt and Road Initiative is known to be the 21st century Silk Road which is
made up of a “belt” of overland corridors and a maritime “road” of shipping lanes. China is
known to carry out or planning construction projects which is more than 60 countries. The
Belt and road Initiate is expected to cost more than £760bn. China have also invested more
than $210 bn which is majority in Asia (Callahan 2016). The one belt one road underlines
China's push to take a larger role in global affairs, and its need to export capacity in industries
where there is overproduction, such as steel manufacturing and infrastructure construction.
China had been always deeply involved in the economic growth of Africa from the very past.
The president of china have invested more than trillion US dollars for building the one belt
one road for globalization. The Chinese companies have already made huge investments in
Africa and now the country is looking at china for their own development. The belt and road
initiative comprises of two concurrent plans where one is the overland route which is known
to connect the Middle East and Central Asia to China. The second one is the 21st century
Maritime Silk Road which aims for connecting China and South Asia with Africa. This
initiative will be changing a number of social, economic and strategic landscapes. China have
already officially promised for helping Africa via the African union for building the
comprehensive transportation network. It is also known to heavily involve for enhancing the
power generation capacities of Africa. China also led to the establishment of the multilateral
investment Bank and Shanghai based BRICS Development bank. The African leg of the Belt
and Road Initiative is already in progress. Some of the countries which will gain benefit from
the belt initiative are Kenya, Tanzania, Egypt and Djibouti. The new Silk Road will also be
linking Chinese ports to east Africa. Till 2018, more than twenty diplomatic relations took

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place between china and other countries that include Tajikistan, Israel, Ethiopia, Madagascar
and Israel (Callahan 2016). On the economic front, the investment and trade between china
and the African countries have increased a lot. According to a report it have been found out
that the economic growth of the countries along this route is much faster than the overall
economic growth of china. Due to the foreign direct investment from China in Africa have
also increased to more than 20 percent and is still rising. China have already provide huge
help for the Africa in terms improving connectivity and development of infrastructures. The
railway which is 759 kilometer long made by china is known to connect the landlocked
Ethiopia to the trade routes of the Gulf of Aden and the Red Sea. It have carries a huge of
passengers in the late 2016. China had also constructed the Mdaraka Express which is known
to connect the capital city of Nairobi with the Mombasa. This particular railway have future
plan to extend to the northwest of Kenya.
1.2 Background
The one belt one road initiative of china known to be one of the most determined
project which is known to influence the international trade. Africa had always been an
important market in china because of the investment from the Chinese companies and banks
(Du and Zhang 2018). The abundance of natural resources in Africa makes the continent an
excellent trading partner as well as attractive investment destination for china with is t
billions of population. The On Belt One Road Initiative is known to be the transformational
development strategy as well as framework which is known to be promoted by the highest
level of the government of china it mainly focuses on connectivity and cooperation among
the countries which moves along the two main routes (Ferdinand 2016.). The Maritime Silk
Road is known to touch a large number of African countries which comprises of Ethiopia,
South Africa, Kenya, Madagascar and North Africa. It also touches the inland African
countries which are Democratic Republic of Congo, Zimbabwe and Zambia. The key sectors

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of the One Belt One Road includes development on energy and power, Infrastructural
projects, Public utilities, Development of the Financial markets and construction, logistics
and information technology.
The economic relations which is present between China and Africa started taking place from
many years. China has also become the largest trade partner of Africa which has greatly
expanded its economic ties to the continent. China has also known to boost mining sector and
oil sector in exchange for advantageous trade deals. The companies of China are also known
to diversify their business pursuits in Africa manufacturing, infrastructure and
telecommunications sector (Cheng 2016). However, China’s activity in Africa known to have
faced various criticism from both the African as well from the western society.
The projects as well investments which are undertaken in Africa under the One Belt One
Road includes:
 Huge number of railway projects have been initiated across Africa which includes
completion of first fully electrified cross border railway line of Africa connecting the
Red Sea Port of Djibouti with Addis Ababa. The project was seventy percent
financed by the Exim Bank of China and built by the China railway Group. In the
year 2017, another railway line of 845km was formed in 2017 which connects
Mombasa to Nairobi railway. The project had been constructed
 A large number of road infrastructure projects like the Mozambique’s Maputo Bridge
which is built by China Road and Bridge Corporation. The TIPAZA Cherchell Ring
Expressway Project in Algeria had been built by China State Construction
Engineering Corporation. The project had been constructed by China Rail ad Bridge
Corporation.

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China’s One Belt One Road initiative in known to be two directional in nature which are
known to promote Chinese outbound investment and also encourage international investment
into china. The Chinese government have provided considerable push for industrialization of
Africa. Currently Africa is also establishing itself as the source of labor as well as resources
for china. The private industries of china are taking hold of Africa where more than ten
thousand business of china are present there. While most of the African countries are trying
to industrialize and diversify their economies, china after 40 years of reform has accumulated
rich experience in modernization as well as industrialization (Ferdinand 2016). In some of the
cases, the projects had been suspended by the courts until the government provided enough
compensation to them. There was also a case where the environmentalists took the
government to court in opposition of the railway line which passes through the Nairobi
national park since it will adversely affect the natural habitat of the wildlife within the park.
The combination of the Chinese capital, enterprise, technology, rich experience in the
development have benefitted Africa a lot. The abundant resource of Africa with the huge
demographic dividend along with great market potential will have a great chance of creating
another miracle of development. Nigeria is also a regional and continental self determined
powerhouse is known to adopt and maintain a policy of political neutrality in case of foreign
relations. As a leading nation of West Africa, Nigeria is known to be highly respected in
China. Both Nigeria as well as China are the strategic partners which shares the similar
cultures, historical background and also celebrate their independence on the same day and
also have the highly complementary economies. Therefore comparing the size, market as well
as the population of china and Nigeria, it can be said that the two countries cooperation will
have a large potential to be depended. During the past, china also supports African nations
for attaining the political independence (Cheng 2016). Over the decade, china is also known
to become one of the major economic partner of Nigeria. Nigeria is also known to be one of

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the famous engineering market, export market, major invested destination as well as the best
trading partner in Africa. According to a report it have been found out that the economic
growth of the countries along this route is much faster than the overall economic growth of
china. Due to the foreign direct investment from China in Africa have also increased to more
than 20 percent and is still rising. The main geographical region of china’s involvement in
Africa lies along the countries involved in the belt and road initiative from Djibouti, Kenya,
and Ethiopia spreading through Nigeria. According to Breuer 2017 there’s a potential output
for success for belt and road through the creation of infrastructure project and extensions of
the maritime Silk Road in Kenya. China have already provide huge help for the Africa in
terms improving connectivity and development of infrastructures (Dai 2017). The railway
which is 759 kilometer long made by china is known to connect the landlocked Ethiopia to
the trade routes of the Gulf of Aden and the Red Sea. It have carries a huge of passengers in
the late 2016. China had also constructed the Mdaraka Express which is known to connect the
capital city of Nairobi with the Mombasa The trade between the china and Africa known to
have increased from $2 billion to more than $6 billion in 2017 which is known to represent
only 7 percent of the total trade volume between china and Africa. In the year 2016, the
investment of China in Nigeria known to have grown by 27 percent in the year 2016.
The total investment in Nigeria have climbed to $15 billion. The nation is currently
referred to as “Africa’s China” among the global investors. The influx of the advanced
technologies from China, management along with experienced talents have boosted the
development of the economy of Nigeria. The Chinese products also acts as the pillar of the
local economy of Africa which made their hometown a better place. Nigeria also have all the
required qualities for becoming one of the world manufacturer and China also have the
willingness and ability for supporting Nigeria. The One Belt and One Road Initiative of china
therefore provides a platform to china as well as Africa for effectively conducting their

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cooperation. Africa’s trade dependency on China have played an important role for reducing
the potential for interregional trade and African countries also need to develop various
policies which will be boosting the manufacturing and downstream the processing capacity.
The belt and Road initiative is also termed as the One Belt One Road which is the
development strategy which is adopted by the Chinese government. It involves infrastructural
development and investments in more than 150 countries in Africa, Asia, Middle East and
Latin America. On the other hand in case of Africa China is financing a new railway linking
Tanzania's Indian Ocean port of Dar as Salaam to Africa's landlocked interior. In South
America, plans for China to fund a transcontinental railroad from Brazil to the Pacific Ocean
are on trackThe Belt and Road Initiative is the most important feature of China’s foreign
policy1. The Initiative aims to interconnect countries in Asia, Europe and Africa through an
ambitious vision for infrastructure, economic and political cooperation. Since China’s
President Xi Jinping first proposed the Initiative in 2013, it has mainly focused on Asia and
Europe.
This particular intuitive by china is also called the Belt and Road Initiative. However, the
republic of Ghana in West Africa does not form part of the sixty countries along the one belt
one road initiative (Cheng 2016). Although there is a very good relationship present between
the Ghanaian and Chinese government which is also known as the Sino Ghanaian
relationship and it also known to affect positively and negatively on the Republic of Ghana.
Besides trade, china have been always in a good relationship with Ghana. The relationship
between the china and Ghana is rapidly deepening over all these years in terms of trade. The
Belt and the Road Initiative is known to be launched by the leadership of the people of China.
The Belt and the Road Initiative is known to cover virtually all the countries of Eurasia which
comprised of some of the Central Asia including Kazakhstan, Uzbekistan and Kyrgyzstan.
Through the belt and road initiative the government of china proposes for supporting the

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various types of interventions in the partner countries which is known to include the
infrastructure and investments into the production capacity. The objective of BRI will create
an opportunity for thee landlocked and geographically economies of China. The Chinese
government have already provide huge help for the Africa in terms improving connectivity
and development of infrastructures. The foreign trade of the countries are seemed to be one
of the areas which are mostly affected. There are known to presence of several channels
through which the belt and road initiative might influence the foreign trade of many
economies. These include development of the infrastructure which facilitates the trade of the
economies of China, development of the other infrastructure like electricity, product quality
testing, irrigation systems and certification infrastructures. The BRI is also known to affect
the foreign trade like the macroeconomic effects, cooperation in the trade policy and
facilitation of trade.
1.3 Research Aims
The aim of this research is to critically assess and understand the economic relationship
between China and countries in Africa and subsequently the impact of the Belt and Road
Initiative and debt sustainability in countries in Africa whilst also discussing and evaluating
burgeoning myths surrounding the motives for China’s investment in countries in Africa
1.4 Research Objectives
 To outline and understand the concept of the Belt and Road initiative from an African
perspective.
 To explore the incentives behind China’s increased focus in countries in Africa.
 To examine how China’s aids affects the conditions of debt sustainability in countries
in Africa.

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1.5 Research Questions
 How will China’s aids will be affecting the conditions of debt sustainability in
countries in Africa?
 What is the initiative behind the China’s increased focus in Africa?
Chapter 2 LITERATURE REVIEW
2.1 Introduction
The research study mainly focuses on the economic implication of China in Africa
regarding the incentive behind China’s belt and road initiative. It also highlights of the effect
in the Middle East which has been depicted in the entire research study. It also examines the
geopolitical and economic implication regarding the belt and road initiative. Further the
details regarding the one belt, one road initiatives from the centerpiece of the Chinese
leadership new foreign policy. The research deals with the overview and implication of the
one belt one strategy in Africa. Further discussion regarding the developments and the
improvements made in that case. The case study merely depends on the past and currents
reports and survey associated with the development of the significant aspects associated with
this project.
In the study the strategic policies adopted by both the countries which are China and
Africa have been depicted in the entire study. The political and the diplomatic point of view
of the country and the process initiative in order to remove the barriers associated in the
development of the project which is the one belt one road strategy. Details regarding the
amount of investments needed to be made by China where the African government also owes
money from the acceptance of such huge project remained transparent in this study (Aris
2016). The key parameters and the resultant output of the company have been disclosed in a
detailed manner by pointing out the glitches associated in this study. All the positive and the