Policy Brief & Alerts

June 5, 2015

The Chinese Model Of Infrastructure Development In Africa

development is a key step in providing a competitive business environment for
African economies. It provides the backbone for poverty reduction strategies
and programmes designed to improve the livelihood of the poor. Africa is in
dire need of infrastructural development. The absence of quality infrastructure
in the continent holds back per capita economic growth by 2 percentage points
each year and depresses firm productivity by as much as 40 percent (Escribano
et al., 2008 and Kelly, 2012). Estimates suggest that around USD 90 billion is
required to close Africas infrastructure gap annually until 2020 (AICD, 2010).

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Date of Publication:January 2015

Volume Number:1 Issue 10

Document Size:12 pages

the past decade, China has financed infrastructure projects worth USD 28
billion in Africa (World Bank, 2013). In fact, from 2001 till the end of 2011,
around 10 major RFI deals were either completed, or at the implementation stage
in eight African countries: Angola, Congo-Brazzaville, Democratic Republic of
Congo (DRC), Ethiopia, Gabon, Sudan, Nigeria and Zimbabwe, with a combined
financial value of approximately USD 22 billion (Davies, 2010; China-Africa
Economic and Trade Cooperation 2013; and Konijn, 2014).

most attractive attribute of Chinese RFI loans for African countries is the
competitive interest rates and no-strings attached conditions provided by RFI
swaps. On the part of China, RFI loans provide a way to secure export markets
for Chinese goods and services, given that the approval of RFI loans by Chinas
EXIM bank is tied to the purchase of around 70 per cent of Chinese goods and
services. Thus, the use of RFI loans in Africa actualizes Chinas economic
objective of export promotion and the foreign policy of non-interference.



Nigeria Economic Update (Issue 9)

The naira depreciated by 8.2 percent from N305/$ on February 5th, to N330/ $ on February 12th 20166. The apex body identified the increased domestic demand for forex to pay for foreign medical treatments and schools fees (15 percent of total demand) 7 as the main drivers. As a result, the apex bank is considering to discontinue the provision of forex for payment of medical bills and school fees abroad and to re-channel the forex towards the manufacturing sector of the economy. With the continuous depreciation of the naira, and the CBNs resistance from calls to devalue the currency, the options for alternatives measures seem to be diminishing.

Nigeria Economic Update (Issue 47)

Recent data by NBS indicates an increase in bank credit to private sector. Specifically, private sector credit rose (year on year) by 24.4 percent to N16,185.1 billion in 2016Q3 relative to 2016Q2, with Oil and gas, and Manufacturing sectors taking the consecutive largest shares of the credit. The rise may be connected to the need to improve credit availability to critical sectors in order to hasten the recovery from the ongoing recession. The present rise in bank credit to the manufacturing sector seems to be a step in the right direction as the sector is critical to Nigerias industrialization and economic stability.

Public Debt-to-GDP Ratio

Public Debt-to-GDP Ratio: The ratio of Nigerias cumulative government debt to national GDP has maintained an upward trend indicating the countrys declining economic productivity and ability to repay