The Year Ahead for China-Africa Investments
China’s $50.7B investment in Africa by 2025 will drive green energy, digital trade, and infrastructure. Jana De Kluiver of Africa International Advisors explores key trends for Africa’s competitivenes
As has been the tradition for the past 35 years, China’s foreign minister began his international travels for the year with a visit to Africa, highlighting the continent’s enduring strategic importance in Beijing’s foreign policy. While Africa accounts for a moderate share of China’s overall economic engagement, longstanding tradition underscores the region’s critical role in China’s economic and geopolitical ambitions.
Chinese Foreign Minister Wang Yi’s visit from 5 to 11 January 2025 built on the momentum from the 2024 Forum on China-Africa Cooperation (FOCAC) summit. This influential summit intended as a platform for high-level policy coordination, concluded with the adoption of the Beijing Action Plan (2025–2027). This plan includes a USD 50.7 billion investment pledge to support diverse aspects of the continent's development, ranging from infrastructure investment to security exchanges.
As China seeks to expand its influence and secure vital resources, Africa continues to play a pivotal role in its strategy. However, to fully benefit from these investments, African nations must ensure that they align with local and regional priorities, prioritize local ownership, and guarantee equitable resource distribution to ensure that these engagements improve competitiveness on the continent. Against this backdrop, African businesses should focus on three key investment trends in 2025: renewable energy and green infrastructure, digital economy advancements, and industrialization and infrastructure development.
Green Technology and Renewable Energy Initiative
Achieving a sustainable energy future in Africa presents a formidable challenge. Analysts estimate that Africa will require USD 2.9 trillion in cumulative capital expenditure between 2022 and 2050, primarily for renewable energy infrastructure, to transform the continent’s energy landscape. However, current trends fall far short of this goal. In 2022, annual energy investments totalled just USD 70 billion, with only 42% directed towards renewables. China’s comparative advantage in green tech manufacturing positions it to play a pivotal role in bridging this investment gap and accelerating Africa’s energy transition. For example, China is estimated to hold 80% of the global market share in solar power manufacturing.
Naturally, investments in renewable energy and green infrastructure remain a cornerstone of Beijing’s engagement with Africa. During his Africa tour, Chinese Foreign Minister Wang Yi reaffirmed commitments under the Beijing Action Plan, which includes launching 30 clean energy projects across the continent. High-profile initiatives, such as the USD 9.4 billion Sounda Hydroelectric Power Plant in the Republic of Congo and Namibia’s exploration of nuclear energy, exemplify these efforts. These projects aim to address Africa’s persistent energy deficits while contributing to global climate goals while providing opportunities for Chinese companies to expand their operations.
While these investments bring crucial technology and funding, challenges persist. African businesses often struggle with limited financing, reliance on foreign technology, and the risk of job displacement when foreign firms dominate projects. For example, in Kenya’s Lake Turkana Wind Power project, local firms participated in construction but were excluded from key roles in ongoing maintenance. To avoid being sidelined, local companies should be involved in all stages of the value chain supply chain. This should be accompanied by technology transfer agreements that foster long-term self-sufficiency and ensure that the projects offer maximum benefits to local populations.
Infrastructure Development and Industrialisation Support
Themes of infrastructure investment remain central to the China-Africa relationship. The Beijing Action Plan emphasizes infrastructure development’s need to closely align with the African Union’s Agenda 2063, particularly through frameworks such as the Programme for Infrastructure Development in Africa (PIDA) and the African Continental Free Trade Area (AfCFTA). These frameworks aim to create a unified, interconnected African economy by improving infrastructure, facilitating trade, and driving industrialization across the continent.
Although high-level policy alignment is crucial for a sustainable relationship, investments have to be contextualized within regional and national development stories to ensure adequate localization of benefits. Given the diverse economic structures, political systems, and cultural contexts of 54 African countries, a one-size-fits-all approach will not work.
Consequently, local businesses can significantly benefit from infrastructure projects designed with the regional context in mind. For instance, Namibia’s partnership with Chinese firms to build the country’s largest solar power plant, valued at USD 89 million, is a key example. This project is vital not only for boosting Namibia’s energy capacity but also for its integration into the Southern African Power Pool (SAPP), which connects the power grids of 12 Southern African countries. For local businesses, such projects offer opportunities in sectors like construction, materials supply, and maintenance, while also providing pathways into regional supply chains. By addressing region-specific needs, such as energy security and cross-border power distribution, local firms can secure long-term roles in both national and regional infrastructure projects.
Digital Technology and Telecommunications Expansion
Africa has a persistent digital divide with only 43% of Africans having access to the internet as of 2023. The Beijing Action Plan pledges China’s continued support for developing Africa’s digital infrastructure, including building a Digital Technology Cooperation Centre and establishing regional centres for digital education. The aim is to strengthen digital trade across the continent by enhancing connectivity and collaboration, particularly in 5G networks, smart cities, and e-commerce. This aligns with the AfCFTA’s Digital Trade Protocol, which seeks to create a seamless digital market that facilitates the free movement of goods, services, capital, and personnel.
Chinese tech firms such as Huawei, ZTE, and Alibaba have been influential in expanding the continent’s telecommunications networks, cloud computing, fiber optic cables, and fintech solutions. For example, over the past two decades, Huawei has constructed about 50% of Africa’s 3G networks and 70% of its 4G networks. Alibaba has played a key role in expanding e-commerce across Africa, providing SMEs greater access to the Chinese market with increased cooperation with local entities. In August 2024, Alibaba partnered with Ethiopia’s MKTY IT Services, boosting local e-commerce and positioning Ethiopia as a gateway to the wider African market.
Local businesses can seize opportunities by tapping into the enhanced digital infrastructure, adopting cloud-based solutions, mobile payments, and e-commerce platforms to streamline their operations. However, the dominance of Chinese-backed infrastructure could stifle local innovation and lead to profits flowing back to China. To counter this, African governments must encourage technology transfer and ensure that partnerships with foreign companies are transparent and aligned with local priorities.
The Path Forward
As 2025 begins, Africa and its partners face a critical juncture to redefine development collaboration. By prioritizing transparency, equity, and localized strategies, foreign investments can become catalysts for increased competitiveness. For China, this entails increasing its alignment with African development priorities. For African nations, it means taking ownership of their development agendas and negotiating partnerships that prioritize their people’s needs.
By bridging the gap between foreign investments and local priorities through actionable insights, Africa can leverage external partnerships to achieve the Africa We Want.
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