Africa Takes the Wheel: The Role of Host States in Shaping Outcomes of Chinese-Supported Power Generation Projects in Africa

Chinese companies have installed over 25 GW of generation capacity in Africa, making up more than 15 percent of sub-Saharan Africa’s installed generation capacity. Despite their undeniable contribution to the power sector in sub-Saharan Africa, the price and investment outcomes of these projects have varied. Chinese companies have been observed to construct both low- and high-quality infrastructure projects in Africa, with some projects seen as affordable and others more expensive.

Why have the outcomes of these projects varied and how do African host states exercise agency to influence the outcomes of Chinese-supported power generation projects?

A new working paper by Naa Adjekai Adjei examines how African host states exercise agency to influence the outcomes of Chinese-supported hydropower plants in Ghana and Uganda. It analyzes the financing and construction of hydropower plants financed by the Export-Import Bank of China and Sinohydro in Uganda and Ghana using semi-structured interviews and document analysis.

The author finds that despite the same Chinese actors undertaking similar projects in the two countries, Ghana had more positive investment outcomes with projects mainly built on time, at a cost-competitive price and to an acceptable quality, whilst Uganda had less than ideal outcomes, with projects being delayed, expensive and burdened by multiple defaults. 

Drawing on the lessons from the Bui Hydropower Plant in Ghana and the Karuma Hydropower Plant in Uganda, the author provides policy recommendations for African host states to achieve positive project outcomes when undertaking Chinese-supported power generation projects.

Policy recommendations: 

• Enhance negotiation capacity: To maximize host state agency, there is a need to enhance the negotiating capacity of technocrats. It is important for host states to equip government officials with negotiation skills and a deep understanding of how state-backed Chinese agreements are generally structured.
• Enhance project management and monitoring: African governments should establish a rigorous framework to oversee project progress from inception to completion, including regular site inspections and audits, to enhance project management and monitoring. 
• Leverage the expertise of experienced consultants: Governments should engage skilled consultants to provide technical guidance and oversight when in-house expertise is lacking. Engaging experienced owner’s engineers with a proven track record in similar projects is crucial to providing oversight and ensuring quality. 

Ultimately, African host states play a significant role in shaping the outcomes of Chinese-supported power generation projects, and they are not passive receivers of Chinese investment. Therefore, it is important that they upskill themselves to effectively exercise agency throughout all project stages to maximize positive project outcomes. This proactive engagement ensures investments align with national interests and deliver balanced positive outcomes for the host country and Chinese investors alike.