Chinese Foreign Direct Investment in Africa

Tracking Chinese foreign direct investment (FDI) in Africa is a challenging task. What is clear, however, is the steady increase in annual Chinese FDI in Africa. The China-Africa Research Initiative (CARI), operating under the auspices of the Johns Hopkins School of Advanced International Studies, estimates that the annual Chinese FDI in Africa increased from $75 million in 2003 to a substantial $2.7 billion in 2019.

During this time period, annual Chinese FDI in Africa peaked at $5.5 billion in 2018 due to the purchase of 20% shares in the Standard Bank of South Africa by the Industrial and Commercial Bank of China (ICBC). This purchase is indicative of the large-scale investment being undertaken by Chinese corporations in emerging African economies. According to CARI, in 2019 the majority of annual Chinese FDI was directed to the Democratic Republic of Congo, Angola, Ethiopia, South Africa and Mauritius. Sectors of major investment included: construction, mining, manufacturing, financial intermediation, scientific research and technological service, leasing and commercial services and others.

Chinese annual FDI in Africa is likely underestimated due to the fact that offshore Chinese capital is typically not included in calculations. Furthermore, data is not often freely available for private, smaller-scale Chinese investors. Yet further, annual FDI does not include acquisitions occurring in other jurisdictions but including African assets. These acquisitions could also be considered FDI in Africa.

From an intellectual property (IP) perspective, the filing of patents, designs and trade marks in Africa could also be considered annual Chinese FDI. In particular, although at relatively low cost, the filing of IP rights in Africa provides an indicator of intended investment in Africa to commercialise those IP rights. Increased investment in Africa also incentivises IP owners to protect their IP in Africa, to keep competitors at bay.

Smit & Van Wyk specialises in protecting IP across Africa and assists clients in securing IP investments.