Just two decades ago, China was a relatively small investor in Africa. But since the turn of the millennium, Africa-China trade has grown about 20% per year, with foreign direct investment growing at twice that rate. China surpassed the US as Africa’s dominant trade partner almost a decade ago, per the Council on Foreign Relations. A recent, in-depth report from McKinsey shows that across five dimensions—trade, investment stock, investment growth, infrastructure financing, and aid—China is consistently among the top partners.
What’s in the near future? Massive infrastructure projects, of course, fitting into China’s BRI plans. In Nigeria, a $12 billion coastal railway will link Lagos with Calabar, a port city to the east. In Kenya, with a price tag of $3.8 billion, the 609-km Standard Gauge Railway will connect Mombasa and Nairobi. In Malawi, for $1.7 billion, a coal-powered power station will spring up, an airport will be reconstructed, and roads and hospitals will be built. Countless African countries have similarly ambitious projects planned—all with Chinese investment. Chinese firms dominate over half of Africa’s internationally contracted construction, per McKinsey, which estimates that 10,000 Chinese firms are operating in Africa today.
And looking out on a longer time horizon? McKinsey’s researchers see two scenarios. The more conservative scenario sees revenues from Chinese firms in Africa growing from $180 billion today to $250 billion in 2025. In this scenario, China would continue to focus on its current core competencies in Africa: manufacturing, resources, and infrastructure.
But a grander scenario is also within China’s grasp. If China pushes aggressively into five new sectors—agriculture, banking and insurance, housing, information communications technology and telecommunications, and transport and logistics—then McKinsey’s number-crunchers think Chinese firms might top $440 billion in revenues by 2025.