Housing crisis 2008 and Chinese FDI in Sub Saharan Africa
Over the last decade there has been a mass increase in Foreign Direct investment into Sub Saharan Africa by Chinese multi national enterprises. These large energy companies have moved into and taken over from the majority of not just western historical owned positions but mainly US based positions. This Influence of FDI by china can be seen with the $2.4 Billion in which Nigeria has secured with china so that both countries become less reliant on the US dollar. However the impact of these two countries coming together has caused lasting troubles with the US, As trump extended the travel ban for Nigerians into the US.
The 2008 financial crisis was triggered due to the lack of stability within the American housing market caused by a number of banks and insurance Agencies rating Mortgage backed securities and bonds at a lower yield of risk than the bonds were actually worth. This caused a mass failure of the bonds and a complete devaluation of the American housing market. This complete dip in the US economy is what gave a lot of Eastern countries the opportunity to invest in Sub Saharan Africa
However this lead to mass opportunity for companies in the eastern market who were developing for example the investment from china and its large volume of Foreign Direct investment in Nigeria in 2008 to 2018 demonstrates the availability of the African market place after the economic crisis. After 10 years the majority of the African market is being bought up by the Chinese FDI and to improve the strong positions that were already created in this situation due to the lack of Western influences and the strength of the eastern market after what happened with the 2008 financial Crisis. allowing for the movement of eastern company’s such as the Chinese Multinational energy companies to move into sub Saharan Africa and demonstrate their strength in this market. Overall the investment of Chinese MNE’s has led to an increase in employment for example in Nigeria 40,000 employees however this employee boost is from abroad and has not benefited the local community as the high to medium skilled workers in the community are not utilised.
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References:
Energy, G. and Energy, G. (2020) Chinese investment in Africa 2019: 63 power projects are in the pipeline, Power Technology | Energy News and Market Analysis. Available at: https://www.power-technology.com/comment/chinese-investment-in-africa-2019/ (Accessed: 15 February 2020)
Chris Giles, C. (2020) Nigeria secures $2.4 billion currency deal with China, CNN. Available at: https://edition.cnn.com/2018/05/04/africa/nigeria-china-currency-swap/index.html (Accessed: 15February 2020).
Chris Giles, C. (2020) Nigeria secures $2.4 billion currency deal with China, CNN. Available at: https://edition.cnn.com/2018/05/04/africa/nigeria-china-currency-swap/index.html (Accessed: 15 February 2020).
Top 10 exporting countries in Africa (2020). Available at: https://africa.businesschief.com/leadership/4109/Top-10-exporting-countries-in-Africa (Accessed: 15 February 2020).
