China has the opportunity to influence the African energy sector and is missing the opportunity to drive the continents transition to green energy, a new report suggests.
Research conducted by Boston University and the African Economic Research Consortium looked at the historical and current role of China in the African energy sector. It suggests that China can drive a shift to renewable energy on the continent. This bulletin analyses China-Africa trade, finance and FDI from 2000-2022 to evaluate how past trends reveal gaps and future pathways that China could pursue to support Africas energy access and transition amidst economic challenges and energy opportunities
China is one of Africas largest bilateral trading partners, with total trade surpassing that of the UK and the United States. China was found to have lent US$52.4bn to African energy projects since 2000; of which only 2% was dedicated to renewable energy projects. 51% of this amount was allocated to fossil fuel projects, the report says.
Based on historical trade patterns between China and Africa from 2000 to 2022, researchers found that Chinese investment in African energy follows two economic engagement patterns:
On the one hand, China has contributed to the continent's electrification through financing and investment in power plants, transmission and distribution pipelines, and solar and wind farms. On the other hand, China has also invested in the extraction and exploration of minerals and supported exports through trade, transitioning materials to China.
Researchers believe the future of the relationship could balance these dual tracks to align with Africas energy access and transition goals. There are opportunities for China to increase renewable energy financing in the continent and export renewable energy technologies back to African countries.
For China-Africa economic engagement to retain consistent significance, a shift from debt to equity finance is unavoidable. Past engagement helped African countries overcome bottlenecks in infrastructure finance, yet it replicated patterns of trade where Africa exchanged its natural resources for finished goods. If China and African countries intend to escape past patterns and tackle current development objectives like energy access and transition, then concessional loans, equity finance and trade aimed at renewables and value-added green industries are promising targets for future cooperation, reads the report.
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