The Impact of Chinas Economic Engagements on Private Sector Development in Sub-Saharan Africa

Abstract

Chinas growing role in Sub-Saharan Africa has attracted considerable attention across various media and academia platforms – not to mention traditional donor countries. However, the emergence of China as the largest economic partner of Sub-Saharan Africa has been largely received with negative views, with the country often facing demonization. The main point of criticism rests on the assumption that the primary motivation of China in entering into the continent is for it to secure natural resources, with all its projects operated by state-owned enterprises (SOEs) and driven by Chinese state interests. The conventional angle is not wholly mistaken, but considers the issue from only one dimension.

To better understand and explain the interactions and potential impacts, this thesis examines Chinas economic engagement in Sub-Saharan Africa from a Private Sector Development (PSD) perspective. The study is conducted by synthesizing the undervalued opportunities offered by China in Sub-Saharan Africa through a PSD analytical framework, and assessing whether China contributes to laying the foundations for the development of the private sector in Sub-Saharan Africa.

This thesis finds that, even though Chinas entry into the continent is primarily driven by pragmatic reasons, the presence of Chinese firms in Africa offers various opportunities in terms of labor market development, social and economic infrastructure and service improvement, and value chain development, all of which contribute to the development of the private sector. In addition, several unique characteristics of the Chinese presence have given new economic and geopolitical importance to the continent and provide an alternative to Africas traditional economic partners.

This paper contributes to the current debate on the China-Africa relationship, not by providing conclusive empirical answers on whether Chinas presence in Africa is good or bad, but rather through addressing the knowledge gap in the current literature by conceptualizing and revealing those fragmented and undiscovered stories about the role and impact of China, particularly on Africas private sector development.