China in Africa: An Examination of the Impact of China’s Loans on Growth in Selected African States

Abstract

This study sought to test the impact of China’s infrastructure investment on economic growth in selected African states. Many comparative studies have shown the positive role that infrastructural loans plays in supporting economic growth. However, for Africa, the role of China’s infrastructure projects has mixed views with regards to its contribution to growth and development. A survey of the literature showed that the central question about Chinese infrastructural loans is whether the infrastructural projects are beneficial or detrimental to Africa. Currently, there is no settled opinion as to whether (or not) Africa is benefiting from the Chinese economic relations. This study was quantitative, and we used panel data to achieve our objectives. The study employed annual panel data for 15 African countries covering the period of 2000–2017. The Pooled Mean Group, Mean Group, Fully Modified Ordinary Least Squares, and Dynamic Ordinary Least Squares panel techniques were used for estimation purposes. The main conclusion from the quantitative analysis of China’s infrastructural loans in Africa is that China’s efforts in developing infrastructure are translating into economic growth. This study provides evidence that China’s engagement in Africa could be beneficial, given the positive relationship between loans and economic growth.