The impact of Chinese investment loans on sustainable economic development in Africa: Case studies of Kenya, Senegal, Uganda, and Zambia.

Tuhirirwe, Catherine

Abstract

With China as a leading lender in many Africa countries, this thesis aimed to ascertain the impact of Chinese loans on sustainable development in Africa. We investigated 48 African countries with a focus on four sample countries namely Kenya, Senegal, Uganda, and Zambia for the period 2000-2020, using a mixed methodological approach. From the analysis, we find that the mostly used model is the China model in conjunction with the Build-Operate-Transfer project delivery model. Also, we identify two good best practice examples in Benin and Cameroon with useful insights for loan clauses scrutiny and transparency and we highlight the need for collective agency. Moreover, we find that Africa has relatively poor governance that undermines agency and leads to higher costs of borrowing. Secondly, we find that that Africa does not have a common debt accountability framework and most of the accountability frameworks at macro level are voluntary and not all countries participate in each reporting round, which presents an opportunity for a common African debt accountability framework. Thirdly, using Generalized Method of Moments, we find that Chinese loans currently have a negative impact on sustainable development in Africa and the higher the debt transparency, the higher the project benefits. Lastly, we find that recipient countries with poor governance register the highest risks. The findings suggest that for debt to be of meaningful benefit, its process from identification of projects to the utilisation of the facilities and loan amortisation must be well guided through solid policies and procedures that encourage agency, enforcement, transparency, and accountability. Therefore, we encourage recipient governments to enact relevant laws and reinforce solid governance with enforcement policies that streamline financing procedures and processes.

Citation

Tuhirirwe, C. The impact of Chinese investment loans on sustainable economic development in Africa: Case studies of Kenya, Senegal, Uganda, and Zambia. (Thesis). SOAS University of London

• Thesis Type: Thesis
• Deposit Date: Feb 25, 2025
• Publicly Available Date: Feb 25, 2025
• DOI: https://doi.org/10.25501/SOAS.00043457
• Keywords: China, Sub-Saharan Africa, economic growth, Chinese loans, infrastructure, debt distress, debt trap, asset seizure, sustainable economic development, Agency, Game theory, Debt overhang
• Additional Information: Number of Pages : 334
• Award Date: Jan 1, 2025