The complementarities of Chinese and Western development finance in sub-Saharan Africa

Abstract

This article challenges the widely-held view that the competition for markets and influence between China and the West in sub-Saharan Africa is a zero-sum game, with few incentives or opportunities to collaborate. The study examines the history and operative framework of the China Development Bank (CDB) and the International Finance Corporation (IFC) and presents two case studies – CDB’s loans to Huawei for telecommunications expansion in the region and IFC’s Africa Micro, Small and Medium Enterprise (AMSME) Program – that exemplify each institution’s approach to sub-Saharan Africa’s development challenges. These cases, the study finds, reveal a complementary, rather than conflictive, dynamic between CDB and IFC’s interests and activities in the context of the region’s infrastructure and private sector development. The paper argues that these complementarities are too often overlooked, and highlights the potential for further cooperation, proposing a mechanism through which local governments, global financial institutions, and extra-regional players can coordinate efforts to maximize the developmental impact of investment-led projects.

Keywords: China-Africa relations; Development finance; China Development
Bank; Huawei