The urban dimension of Chinese infrastructure finance in Africa

Abstract

For many years, Chinese infrastructure finance has been secured by African governments to provide infrastructure of national significance, while cities continue to lack fiscal tools for the provision of large-scale urban infrastructure. This article not only demonstrates that Chinese infrastructure finance is being extended to municipal authorities in Africa to undertake critical urban infrastructure but also scrutinizes the urban dynamics and local impact of using Chinese infrastructure finance for urban regeneration. Through empirical scrutiny of the regeneration of Kotokuraba Market in Cape Coast, Ghana, findings reveal that municipal authorities, like national governments, are subjected to political and embedded conditionalities. However, the conventional resource-backed repayment conditionality characteristic of Chinese-funded national projects differs from the project finance model—relying on the project’s cash flow for repayment—adopted in Cape Coast. We found in Cape Coast a locally-driven emphasis on affordable rents that stands in stark contrast to the practice of project finance, resulting in potential default of the Chinese loan. The wider consequences of this disjuncture for urban development, financing and governance in Cape Coast, Ghana, and Africa are discussed.