China and US DFIs/ECAs to battle for influence in African infrastructure lending

(Infrastructure News, Johannesburg, 3 December 2018) The battle for influence on the continent between Development Finance Institutions (DFIs) and Export Credit Agencies (ECAs) from China and the United States is set to heat up over the next decade in a fierce competition that could help Africa bridge its vast infrastructure gap faster than expected. This is according to new research from global law firm Baker McKenzie. Together with data provider IJGlobal the report, titled A Changing World: New trends in emerging market infrastructure, shows that development finance lending from state-backed institutions is the most important component of infrastructure funding in sub-Saharan Africa. The report further  notes that China put US$8.7 billion in sub-Saharan Africa infrastructure projects in 2017 alone, while the US recently set up a new US$60 billion agency [USIDFC] to invest in developing countries. African Law and Business notes that competition between the US and China has been heating up within Africa. The US recently announced the establishment of a new development finance institution which will combine with the existing Overseas Private Investment Corporation (OPIC) and bring a USD 60 billion budget with the explicit intention of competing with China. The new institution will be able to invest in equity, whereas OPIC has been limited to debt only. TFX News has even speculated that the US IDFC "could eventually incorporate US Exim".