The Benefits and Burden of Chinese Foreign Direct Investment in East Africa
China’s trade and economic relationship with East Africa countries brought in much needed aid and Foreign Direct Investment (FDI) in infrastructure projects which would otherwise be too costly for these developing countries, and contributed to construction and development boom. It has made possible for some countries in the sub -region to grow their internal consumer market, generate some new opportunities for jobs and economic growth. Despite the positive aspects of China’s FDI, there are some serious concerns of the interplay between China’s foreign policy, aid and unconditional loans to East African countries. China’s lax lending practices, dubbed as “debt-book diplomacy”, could reel East African countries in a vicious circle of long term indebtedness, fiscal deficit, spending cuts and politico-economic dependence on China. Somalia could benefit from China’s FDI in infrastructure projects such as the rehabilitation and expansion of airports, ports and roads but should negotiate formal, transparent, mutually beneficial trade and economic cooperation agreement with China.