The impact of Chinese investment on energy independence in Africa

Abstract

This paper examines the relationship between Chinese investment and energy independence in Africa. We use panel data from 28 African countries between 2003 and 2022. We employ robust econometric identification strategies, including fixed effect ordinary squares and the Two-step System Generalised Method of Moment. Our results are as follows. First, we find a positive and significant relationship between Chinese investment and energy independence, suggesting that the flow of Chinese monies in Africa is increasing the domestic energy production capacity. Second, the results are more pronounced in resource-rich countries, consistent with the expectation that China is attracted to resource-endowed countries. Third, we also found that institutional quality does not significantly moderate the relationship between Chinese investment and African energy independence. The results imply that contrary to the negative publicity on China-Africa engagement, China may be a good partner for promoting energy independence and attainment of sustainable development goals and commitment to sustainable energy for all initiatives. The results are robust to alternative measurement and not sensitive to potential endogeneity.