Five years after the launch of China’s BRI, it continues to grow in importance, especially as China’s trade relationship with the US evolves. Under the BRI, we expect the relationship between China and Africa to strengthen as China expands its investment in the region, especially in Sub-Saharan Africa. While investment continues in traditional infrastructure, Chinese investment in digital infrastructure via the Digital Silk Road will likely be an important theme going forward. Given the under-penetration of mobile technology in Africa and the region’s attractive demographics, we believe telecom operators and tower companies stand to benefit significantly from this initiative, although not without some political debate.
The value of investments and any income will fluctuate (this may partly be the result of exchange rate fluctuations) and investors may not get back the full amount invested.
Adrian Garcia is Senior Credit Analyst at Invesco Fixed Income.
1 Source: “Belt and Road – Making its presence felt,” Standard Chartered, October 2019.
2 Source: “African cities surge to top global growth league,” Financial Times. September 2018.
3 Source: World Bank, 2018.
4 Source: “BRI report card: deeper linkages, greater caution,” Moody’s Investor Service. January 2019.
5 Source: “China’s Digital Silk Road is looking more like and Iron Curtain,” Bloomberg, L.P., January 2019.
6 Source: “The Mobile Economy: Sub-Saharan Africa 2018,” GSMA, 2018.
7 Source: “The Mobile Economy: Sub-Saharan Africa 2018,” GSMA, 2018.
8 Source: “The Mobile Economy: Sub-Saharan Africa 2018,” GSMA, 2018.
9 Source: “The Mobile Economy: Sub-Saharan Africa 2018,” GSMA, 2018.
10 Source: United Nations, 2018.
11 Source: IHSLD Offering Memorandum, September 2016.
12 Source: Hardiman Report, 2016.
13 Source: Hardiman Report, 2016.