East Africa: China's FDI to EAC Grows to U.S.$2.96 Billion

East Africa received a combined sum of $2.96b in foreign direct investment (FDI) from China between 2011 and 2017, according to data from the China-Africa Research Initiative.

The findings contained in data compiled by China-Africa Research Initiative, under the John Hopkins University, which tracks the country's activities in Africa signals China's increased interest in the East African region that continues to be a key recipient of the Asian country's investments.

The data, which was sourced from United Nations Conference on Trade and Development (UNCTAD), indicates that Kenya, which received $1.3b had the largest share of FDI from China followed by Tanzania, which received $890m between 2011 and 2017.

Uganda, which has in the last five years become a key Chinese partner, received $536m, mainly in the energy, transport and communication sectors.

However, Chinese companies with construction projects in Uganda have in the last 20 years seen rising earnings grossing about $8.7b (Shs32.6 trillion) in the last 20 years.

Burundi received a total of $9.91m while South Sudan and Rwanda received $39m and 18m, respectively in the period under review.

The $2.96b, according to the data, is a huge growth from the $307.76m, which the region received between 2004 and 2010.

During the period, Kenya received $166.38m in FDI followed by Tanzania, which grossed $76.82m in the period.

Rwanda received $38.22m, while Uganda and Burundi received $25.65m and $0.69m, respectively.

South Sudan, which was then still part of Sudan, did not receive any FDI from China.

East Africa has in the last two decades become a key China partner with regional member states looking Far East for financial tokens and needs to fund burgeoning infrastructure projects in the region.

In Uganda, Chinese financial institutions have in the last 15 years advanced more than $2.87b in loans to mainly finance projects in the transport, communications and energy sectors.

Mr Jim Mugunga, the Finance Ministry spokesman on Tuesday told Daily Monitor that China had increasingly become Uganda's preferred source of loans given that the Asian country undertakes bilateral loans geared towards infrastructure development.

Most of the loans, according to data from China-Africa Research Initiative, are advanced through a single bank - China Export and Import Bank - which is also known as Exim Bank.

However, many experts have pointed to the stun contrast in trade balance which puts Africa at a disadvantage. For instance, Uganda has in the last 15 years attracted FDI worth $561m compared to an income of $8.7b (Shs32.6 trillion) earned by Chinese companies working in the country in the last 20 years.

Dr Fred Muhumuza, an economist and Makerere University lecturer, said that whereas China was earning more from its investments, which had opened up oversees employment for its people, much of Africa, particularly Uganda, was more focused on getting loans and grants.

"Uganda ought to negotiate better to give her citizens an opportunity to grow their businesses," he said, arguing the government had opened up so much for so little.

Biggest FDI recipient

In the period running between 2011 and 2017, Zambia, which received $1.6b was, according to the China-Africa Research Initiative, Africa largest recipient of Chinese's FDI. 

It was followed by Ghana and Nigeria, which received $1.22b and $1.03b, respectively.