SUB-SAHARAN 

AFRICA

Trends in U.S. and 

Chinese Economic 

Engagement

Report to Congressional Requesters

February 2013

GAO-13-199

United States Government Accountability Office

GAO
United States Government Accountability Office

Highlights of GAO-13-199, a report to 

congressional requesters 

February 2013 

SUB-SAHARAN AFRICA

Trends in U.S. and Chinese Economic Engagement 

Why GAO Did This Study

Since 2001, China has rapidly 

increased its economic engagement 

with sub-Saharan African countries. 

The United States has increased aid to 

sub-Saharan Africa and in 2010 

provided more than a quarter of all 

U.S. international economic assistance 

to the region. According to some 

observers, China’s foreign assistance 

and investments in Africa have been 

driven in part by the desire for natural 

resources and stronger diplomatic 

relations. Some U.S. officials and other

stakeholders also have questioned 

whether China’s activities affect U.S. 

interests in the region. 

GAO was asked to review the nature of

the United States’ and China’s 

engagement in sub-Saharan Africa. 

This report examines (1) goals and 

policies in sub-Saharan Africa; (2) 

trade, grants and loans, and 

investment activities in the region; and 

(3) engagement in three case-study 

countries—Angola, Ghana, and Kenya. 

GAO obtained information from, 

among others, 11 U.S. agencies, U.S. 

firms, and host-government officials.

GAO was not able to meet with 

Chinese officials. GAO did not include 

U.S. and Chinese security engagement

in the scope of this study. 

 

What GAO Found

The United States and China have emphasized different policies and approaches

for their engagement with sub-Saharan Africa. U.S. goals have included 

strengthening democratic institutions, supporting human rights, using 

development assistance to improve health and education, and helping subSaharan African countries build global trade. The Chinese government, in 

contrast, has stated the goal of establishing closer ties with African countries by 

seeking mutual benefit for China and African nations and by following a policy of 

noninterference in countries’ domestic affairs.

Both the United States and China have seen sharp growth in trade with subSaharan Africa over the past decade, with China’s total trade in goods increasing 

faster and surpassing U.S. trade in 2009. Petroleum imports constitute the 

majority of U.S. and Chinese imports from sub-Saharan Africa, with China also 

importing a large amount of other natural resources. China’s exports of goods to 

the region have grown and far exceed U.S. exports of goods. Information on 

other key aspects of China’s engagement in sub-Saharan Africa is limited in 

some cases, since China does not publish comprehensive data on its foreign 

assistance or government-sponsored loans to the region. Data-collection efforts 

focused on specific countries, as GAO’s case-study analysis shows, can provide 

further insights but do not fully eliminate these information gaps.

U.S. and Chinese Imports from, and Exports to, Sub-Saharan Africa, 2001 and 2011 

Both the United States and China chiefly import natural resources from subSaharan Africa, but data from Angola, Ghana, and Kenya suggest that U.S. and 

Chinese patterns of engagement have differed in other respects. The United 

States has primarily provided grants to Kenya for health and humanitarian 

programs. Data from Ghana and Kenya suggest that China has provided much 

smaller amounts of grant assistance and pursued increasing engagement 

through loans for large-scale infrastructure projects. Information from Angola, 

Ghana, and Kenya indicates that direct competition between U.S. and Chinese 

firms is limited, with U.S. firms concentrated in higher-technology areas. Further, 

differences across the three countries suggest that host-government 

requirements, such as regulations on hiring local labor, influence Chinese and 

U.S. firms’ engagement in each case-study country. 

View GAO-13-199. To view a supplemental 

report with more details on case-study 

countries see GAO-13-280SP. For more 

information, contact David Gootnick at (202) 

512-3149 or gootnickd@gao.gov. 
Page i GAO-13-199 Sub-Saharan Africa

Letter 1 

Background 3

U.S. Goals Have Emphasized Democracy and Development in SubSaharan Africa, while China’s Policy Underscores Mutual Benefit 

and Noninterference 11

Data Show Growth in U.S. and Chinese Trade with Sub-Saharan 

Africa since 2001, but Data on China’s Grants, Loans, and 

Investments Are Limited 19

Angola, Ghana, and Kenya Illustrate Trends and Goals of U.S. and 

Chinese Engagement in Sub-Saharan Africa 39

Concluding Observations 66

Agency and Third-Party Comments 67

Appendix I Objectives, Scope, and Methodology 69

Appendix II U.S. and Chinese Government Loans to Angola, Ghana, 

and Kenya 77

Appendix III GAO Contact and Staff Acknowledgments 83

Tables

Table 1: Selected U.S. Government Entities’ Roles and Areas of 

Involvement in Sub-Saharan Africa 9

Table 2: Selected Chinese Government Entities’ Roles and Areas of 

Involvement in Sub-Saharan Africa 10

Table 3: Comparison of Selected Chinese Government Loans with 

U.S. Government and World Bank Loans to Angola, Ghana, 

and Kenya 78

Table 4: Additional U.S. and Chinese Government Loans to Angola 

and Ghana 80

Figures

Figure 1: Selected Economic and Development Indicators for SubSaharan Africa Compared with Angola, Ghana, and Kenya 4

Contents 
Page ii GAO-13-199 Sub-Saharan Africa

Figure 2: Key Chinese Government Announcements at the Forum 

on China-Africa Cooperation (FOCAC), 2000-2012 18

Figure 3: U.S. and Chinese Total Trade, Imports, and Exports of 

Goods to Sub-Saharan Africa, 2001-2011 20

Figure 4: U.S. and Chinese Imports of Goods from Sub-Saharan 

Africa, 2001-2011 22

Figure 5: U.S. Imports of Goods from Sub-Saharan Africa under 

AGOA, 2001-2011 23

Figure 6: U.S. and Chinese Exports of Goods to Sub-Saharan 

Africa, 2001-2011 25

Figure 7: U.S. and Chinese Imports of Goods from Sub-Saharan 

Africa, by Value of Imports and Country of Origin, 2011 26

Figure 8: U.S. and Chinese Exports of Goods to Sub-Saharan 

Africa, by Value of Exports and Destination, 2011 27

Figure 9: World Bank–Financed Contracts Won by Firms from the 

United States, China, and Other Countries in Sub-Saharan 

Africa, 2001-2011 30

Figure 10: U.S. Government Development Assistance to SubSaharan Africa, 2001-2010 32

Figure 11: U.S. Government Loans and Related Financing 

Committed for U.S.-Made Products and U.S. Firms’ 

Investments in Sub-Saharan Africa, 2001-2011 34

Figure 12: Reported Flows of Foreign Direct Investment from the 

United States and China to Sub-Saharan Africa, 2007-2011 37

Figure 13: U.S. and Chinese Crude Oil Imports and Total Trade 

with Angola, 2001-2011 41

Figure 14: U.S. and Chinese Firms’ Cumulative Reported Foreign 

Direct Investments in Angola and Ghana, 2007-2011 42

Figure 15: Numbers and Types of U.S. and Chinese Firms’ 

Investments in Oil Blocks in Angola and Ghana as of 2012 44

Figure 16: Available Data on U.S. Government and Chinese 

Government Loans and Related Financing Commitments 

for Angola, Ghana, and Kenya 47

Figure 17: Examples of Construction Projects Implemented by 

Chinese Firms in Angola, Ghana, and Kenya 53

Figure 18: World Bank–Financed Contracts with U.S., Chinese, and 

Other Firms in Angola, Ghana, and Kenya, 2001-2011 56

Figure 19: Nationality of Firms Competing for 47 Angolan, 

Ghanaian, and Kenyan Government Contracts, 2002-2012 57

Figure 20: U.S. Development Assistance Committed to Kenya, 2001-

2010 61

Figure 21: U.S. Imports from Kenya under AGOA, 2001-2011 62
Page iii GAO-13-199 Sub-Saharan Africa

Abbreviations

AGOA African Growth and Opportunity Act

BEA Bureau of Economic Analysis 

Commerce Department of Commerce

China Ex-Im Export-Import Bank of China

FOCAC Forum on China-Africa Cooperation

GDP gross domestic product

GSP Generalized System of Preferences

IMF International Monetary Fund

MCC Millennium Challenge Corporation

NGO nongovernmental organization

OECD Organization for Economic Cooperation and Development

OPIC Overseas Private Investment Corporation

State Department of State

Treasury Department of the Treasury

UN United Nations

USAID U.S. Agency for International Development

U.S. Ex-Im Export-Import Bank of the United States

USTR Office of the U.S. Trade Representative

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Page 1 GAO-13-199 Sub-Saharan Africa

United States Government Accountability Office 

Washington, DC 20548

February 7, 2013

The Honorable James M. Inhofe

United States Senate

The Honorable Jack Kingston

House of Representatives

China’s economic ties with sub-Saharan Africa, including its rapidly rising 

trade and investment in the region, have drawn global attention. While 

U.S. trade with the region has also increased, the United States has 

generally focused on providing development and humanitarian assistance 

to African countries, directing more than a quarter of its foreign economic 

assistance to the region in 2010. Since 2001, China has substantially 

increased its economic engagement with sub-Saharan African countries, 

with strong growth in both imports and exports. According to some 

observers, China’s foreign assistance and investments throughout Africa 

since that time have been driven in part by the Chinese government’s 

desire to obtain a share in Africa’s natural resources as well as by its 

interest in establishing diplomatic relations with countries in the region. 

Various U.S. officials and members of the U.S. business community have 

questioned whether China’s role in the region is affecting U.S. interests 

and opportunities for U.S. firms in sub-Saharan Africa.

You asked us to review the nature of the United States’ and China’s 

engagement in sub-Saharan Africa.1

To review U.S. and Chinese goals and policies with respect to subSaharan Africa, we used U.S. government documents, publicly available 

Chinese government documents, and statements from U.S. government 

This report examines (1) U.S. and 

Chinese goals and policies for sub-Saharan Africa; (2) the United States’ 

and China’s trade, grants and loans, and investment activities in subSaharan Africa; and (3) aspects of the United States’ and China’s 

engagement in three sub-Saharan African countries—Angola, Ghana, 

and Kenya.

 

1

This review was conducted in response to a request from Representative Jack Kingston 

and Senator James Inhofe—then Ranking Member, Senate Foreign Relations 

Subcommittee on East Asian and Pacific Affairs—to review U.S. and Chinese 

engagement in sub-Saharan Africa. 

 
 

Page 2 GAO-13-199 Sub-Saharan Africa

officials. To examine the United States’ and China’s engagement through 

trade, grants and loans, and investment in sub-Saharan Africa, we 

analyzed available data for the United States and China from a variety of 

U.S., multilateral, and Chinese government sources,2 generally for 2001 

through 2010 or 2011.3

 

2

The data sources we identified include trade data from the United Nations (UN) 

Commodity Trade database, the U.S. Department of Commerce’s (Commerce) Trade 

Policy Information System, and Commerce’s Bureau of Economic Analysis (BEA); aid 

data from the U.S. Agency for International Development (USAID) and scholars; loan and 

other financing data from the Export-Import Bank of the United States (U.S. Ex-Im) and 

Overseas Private Investment Corporation (OPIC); and investment data from BEA and 

China’s Ministry of Commerce. 

We did not include security issues within the 

scope of this study. To identify the best available data, as well as data 

limitations, we interviewed U.S. government officials and experts in 

Washington, D.C. We also analyzed information on U.S. programs and 

funding from the U.S. Department of Commerce (Commerce), the 

Millennium Challenge Corporation (MCC), the Overseas Private 

Investment Corporation (OPIC), the Export-Import Bank of the United 

States (U.S. Ex-Im), and the U.S. Agency for International Development 

(USAID). In addition, we analyzed publicly available information from 

Chinese government entities, such as the Ministry of Commerce; the 

World Bank; the International Monetary Fund (IMF); and scholarly 

literature, among other sources, and we obtained some data from casestudy country governments. To compare in depth the nature of the United 

States’ and China’s engagement in sub-Saharan Africa, we conducted 

case studies of Angola, Ghana, and Kenya. We selected these countries 

on the basis of our assessment of the levels, types, and intersection of 

the United States’ and China’s engagement in trade, grants and loans, 

and investment activity in each country; the three countries’ geographic 

diversity; and input from U.S. government officials and experts on China’s 

role in Africa. These case studies are meant to be illustrative and are not 

generalizable. We conducted work in Washington, D.C., and in Angola, 

Ghana, and Kenya, including meetings with officials from U.S. agencies, 

host-government ministries, U.S. businesses, other donors, and 

nongovernmental organizations (NGO). Despite our requests, we were 

unable to meet with Chinese government officials in Africa or in 

3

When data were unavailable for this period, we used data for shorter periods. For 

comparability, and given challenges in determining appropriate deflators for some data, 

we used nominal rather than inflation-adjusted values for data on trade, grants and loans, 

and investments. All information sources reported nominal data in U.S. dollars. All of the 

data we report are for calendar years, except where noted otherwise. 
 

Page 3 GAO-13-199 Sub-Saharan Africa

Washington, D.C. We have noted data limitations as appropriate, such as 

lack of available data on China’s grants and loans to the region and likely 

underreporting of China’s investment data. Overall, we determined the 

data presented in this study to be generally reliable for the purposes for 

which they are used. Appendix I provides a more detailed discussion of 

our objectives, scope, and methodology. Additional information on the 

United States’ and China’s trade, grants and loans, and investment 

activities in Angola, Ghana, and Kenya is presented in a separate 

supplemental report, GAO-13-280SP. 

We conducted this performance audit from November 2011 to February 

2013 in accordance with generally accepted government auditing 

standards. Those standards require that we plan and perform the audit to 

obtain sufficient, appropriate evidence to provide a reasonable basis for 

our findings and conclusions based on our audit objectives. We believe 

that the evidence obtained provides a reasonable basis for our findings 

and conclusions based on our audit objectives.

Sub-Saharan Africa comprises 49 countries,4 including 4 of the 10 

economies worldwide that grew most rapidly from 2001 through 2011.5

Figure 1 shows the location and selected characteristics of the subSaharan Africa region and our case-study countries.

Since 1990, overall decreases in maternal and child mortality rates, as 

well as improvements in indicators measuring education and poverty 

rates, have shown that economic and social conditions are improving in 

the region. However, countries in sub-Saharan Africa, including our three 

case-study countries—Angola, Ghana, and Kenya—continue to face 

significant development challenges, such as those related to governance 

and government transparency, and overall low income levels.

 

4

Data in this report generally do not include South Sudan, which gained independence in 

July 2011.

5

The four countries are Angola, Chad, Equatorial Guinea, and Sierra Leone. Analysis of 

economic growth was based on the World Bank’s data on annual gross domestic product 

(GDP) growth from 2001 through 2011.

Background
 

Page 4 GAO-13-199 Sub-Saharan Africa

Figure 1: Selected Economic and Development Indicators for Sub-Saharan Africa Compared with Angola, Ghana, and Kenya

Note: Data shown are the most recent available. 

a

Some data sources did not consistently classify countries in sub-Saharan Africa. For example, data 

for sub-Saharan Africa from the Human Development Index did not include Sudan. In addition, some 

data were not available for the sub-Saharan Africa region. 

b

Gross domestic product (GDP) per capita is based on purchasing power parity, which equalizes the 

purchasing power of different currencies in their home countries by taking into account the relative 

cost of living and the inflation rates of different countries, rather than by comparing the countries’ 

nominal GDP data. 

c

The World Bank classified income level by gross national income per capita as follows: low income, 

$1,025 or less; lower-middle income, $1,026 to $4,035; upper-middle income, $4,036 to $12,475; and 

high income, $12,476 or more. 

d

The Human Development Index provides a composite measure of three basic dimensions of human 

development: health, education, and income, where a ranking of 1 indicates a country with high social 

and economic development. 

e

Based on the perceived level of corruption of a country’s public sector, where a ranking of 1 indicates 

the lowest level of perceived corruption relative to other countries included in the index. 

• Angola. In 2002, Angola officially ended a 27-year civil war that 

resulted in the deaths of up to 1.5 million people and destroyed the 

country’s infrastructure. Since 2001, Angola has become one of the 

largest crude oil-producing countries in sub-Saharan Africa, and high 

international oil prices have driven the country’s high growth rate in 

recent years. The country’s efforts to rebuild following the war spurred 
 

Page 5 GAO-13-199 Sub-Saharan Africa

a construction boom and—although the country imports half of its 

food—an increased focus on agriculture. Despite Angola’s oil 

reserves and relatively high income level per capita, the UN classifies 

Angola as a least developed country, on the basis of its low ratings on 

human development indicators and the weakness of its economy. 

More than 54 percent of Angola’s population—the highest percentage 

among our three case-study countries—lives on the equivalent of less 

than $1.25 per day. In 2011, Transparency International ranked 

Angola’s public sector among the most corrupt in sub-Saharan Africa, 

and other sources have noted significant challenges including 

corruption and lack of transparency, particularly in the extractive 

industries.6

• Ghana. In 1957, Ghana became the first sub-Saharan country in 

colonial Africa to gain its independence. Ghana’s economy has 

generally been strengthened by a quarter century of relatively sound 

management, a competitive business environment, and sustained 

reductions in poverty levels. The country is well endowed with natural 

resources, and oil production that began in 2010 is expected to boost 

Ghana’s economic growth. Agriculture accounts for roughly onequarter of Ghana’s gross domestic product (GDP) and employs half of 

the workforce. In 2011, the year that Ghana began to export oil, the 

World Bank elevated Ghana to lower-middle-income status based on 

its per capita income.7

• Kenya. Kenya is considered a hub for trade and finance in the East 

Africa region of sub-Saharan Africa and is that region’s largest 

economy. Kenya’s economic growth has been affected by increasing 

inflation, high energy and food prices, and the 2011 drought in the 

Horn of Africa. In addition, contested national elections in 2008 and 

the resulting violence negatively affected the economy and foreign 

 

6

Transparency International, Corruption Perceptions Index 2011 (Berlin, Germany: 2011), 

4-5.

7

According to a report by the Center for Global Development, Ghana was able to achieve 

this change in income status relatively quickly as a result of rebasing its GDP in 2009. The 

GDP rebasing—a statistical adjustment to correct for some underreporting in national 

accounts—put Ghana in a new income category. Although the World Bank calculates 

income status on the basis of gross national income, the Center for Global Development 

report states that gross national income and GDP amounts do not differ significantly. Todd 

Moss and Stephanie Majerowicz, No Longer Poor: Ghana’s New Income Status and 

Implications of Graduation from IDA (Washington, D.C.: Center for Global Development, 

2012).
 

Page 6 GAO-13-199 Sub-Saharan Africa

investments in Kenya. Although economic recovery continues, the 

country faces challenges including a growing trade imbalance, 

corruption, and rural and urban poverty. Kenya also faces challenges 

in its manufacturing and drought-affected agricultural sectors, which 

affect the country’s economic stability. The overall welfare of Kenyans 

has improved in the past decade, with a general decline in national 

poverty and rising primary education enrollment rates. However, 

because of Kenya’s low per-capita income levels, the World Bank 

classifies it as a low-income country. The World Bank has noted that 

poverty and climate change issues remain among the country’s top

development challenges.

The United States is the world’s largest trader in goods—that is, total 

imports and exports—and its market-based economy is the world’s 

largest economy, producing one-fifth of total global economic output.8 In 

addition, the United States is the largest exporter of services, primarily 

education services; financial services; and business, professional, and 

technical services, among others. As a member of the Organization for 

Economic Cooperation and Development (OECD), the United States 

collaborates with other countries and helps set international standards on 

economic, social, and scientific issues, to help member and nonmember 

countries promote economic growth, free markets, and efficient use of 

resources.9

 

8

In 2011, U.S. GDP, based on purchasing power parity, was $15 trillion and U.S. percapita GDP was approximately $48,400. 

 The United States also coordinates its development 

assistance activities with other members of the OECD Development 

Assistance Committee, a forum of many of the largest funders of aid that 

has a mandate to promote development cooperation and other policies 

for sustainable development. In accordance with the 2005 Paris 

Declaration on Aid Effectiveness, the U.S. government generally does not 

condition its aid on, or “tie” it to, the recipient country’s use of the aid to 

procure goods or services from the United States.

9

OECD is an organization of 34 industrialized countries, operating by consensus, that 

fosters dialogue among members to discuss, develop, and refine economic and social 

policies and provides an arena for establishing multilateral agreements. 

U.S. and Chinese 

Economies
 

Page 7 GAO-13-199 Sub-Saharan Africa

China is the world’s largest manufacturer and exporter of goods,10 with 

overall economic output second only to the United States’.

11 In 2010, 

China was the fourth-highest-ranked global exporter of services, although 

it still imports more services than it exports. Unlike the United States, 

China is not a member of OECD. However, China’s entry into the World 

Trade Organization in 2001 has helped the country expand its economic 

integration with the global economy, and such integration is expected to 

help China increase its efficiency, innovation, and global 

competitiveness.12 Over the past 3 decades, China has been transitioning 

from a rural, agricultural society to an urban, industrial society and from a 

planned economy, where the government makes key decisions about 

goods and production, toward one that is, like the U.S. economy, more 

market based. During this transformation, China’s growth has been driven 

by manufacturing, in part because of its relatively low labor costs. 

However, China’s overall growth has imposed increased pressure on the 

availability of natural resources. Moreover, according to a joint study by 

the World Bank and the Chinese government, state-owned enterprises 

are not yet clearly distinguished from the private sector.13

 

10See World Bank and People’s Republic of China Development Research Center of the 

State Council, China 2030: Building a Modern, Harmonious, and Creative High-Income 

Society (Washington, D.C.: 2012). China’s State Council is the highest executive and 

administrative entity in the Chinese government and oversees all major central 

government ministries, commissions, and other key state entities. 

This study 

notes that, more than in other economies, China’s state-owned 

enterprises and government are closely connected and generally are 

11In 2011, China’s GDP, based on purchasing power parity, was $11.4 trillion, or about 

three-quarters of U.S. GDP; China’s per-capita GDP was approximately $8,500, or onesixth of U.S. per-capita GDP.

12See World Bank and People’s Republic of China Development Research Center of the 

State Council, China 2030. After 15 years of negotiations to join the World Trade 

Organization, on December 11, 2001, China bound itself to open and liberalize its 

economy and offer a more predictable environment for trade and foreign investment in 

accordance with the organization’s rules. 

13World Bank and People’s Republic of China Development Research Center of the State 

Council, China 2030. 
 

Page 8 GAO-13-199 Sub-Saharan Africa

mutually supportive and that China’s large private enterprises also benefit 

from government financing and commercial diplomacy.14

U.S. companies are subject to various regulations with respect to 

commercial activities abroad, including the Foreign Corrupt Practices Act 

of 1977, which prohibits payments to foreign government officials to assist 

in obtaining or retaining business.

15 The Foreign Corrupt Practices Act 

applies to all U.S. persons, including corporations, as well as foreign firms 

that issue securities regulated pursuant to the Securities Exchange Act of 

1934. The United States also adopted the OECD Anti-Bribery Convention 

in 1998.16 In 2011, the Chinese government amended its anticorruption 

laws to outlaw bribery of foreign public officials by Chinese nationals, 

companies, and residents for commercial benefit. Both the United States 

and China signed the United Nations Convention against Corruption in 

2003.17 According to Transparency International, in 2011, firms from 

China were perceived as among the most likely to pay bribes abroad, 

ranked at 27 among firms from 28 countries; U.S. firms, ranked at 10,

were perceived as less likely to pay bribes abroad.18

 

14For example, state-owned enterprises in China will accept informal guidance from 

government officials and, in return, are more likely to receive preferential access to bank 

finance, privileged access to business opportunities, and even protection against 

competition. However, the study notes that more than one in four state-owned enterprises 

in China incurs a loss, and state-owned enterprises have exhibited lower growth in 

productivity than have private enterprises.

15Pub. L. No. 95-213, as amended (codified at 15 U.S.C. §§78dd-1 et seq). 

16The OECD Anti-Bribery Convention establishes legally binding standards to criminalize 

bribery of foreign public officials in international business transactions. Five nonmember 

countries have adopted the OECD convention: Argentina, Brazil, Bulgaria, Russia, and 

South Africa.

17The UN Convention against Corruption calls for participating countries to criminalize 

acts of corruption and to agree to cooperate with one another to fight against and prevent 

corruption. Angola, Ghana, and Kenya, our case-study countries, are also signatories to 

this convention.

18Transparency International’s 2011 Bribe Payers Index ranks 28 of the world’s largest 

economies according to the perceived likelihood that companies from these countries 

would pay bribes abroad, based on the views of business executives as captured by 

Transparency International’s 2011 Bribe Payers Survey. In the index, lower rankings 

indicate lower perceived likelihood of paying bribes abroad. The index ranks only Russian 

firms higher than Chinese firms.

Anticorruption Laws for 

U.S. and Chinese Firms
 

Page 9 GAO-13-199 Sub-Saharan Africa

Multiple U.S. agencies oversee and implement U.S. aid, trade, and 

investment activities in sub-Saharan Africa. Table 1 lists selected U.S. 

government entities’ roles and responsibilities and areas of involvement.

Table 1: Selected U.S. Government Entities’ Roles and Areas of Involvement in Sub-Saharan Africa

U.S. government entity Roles and responsibilities

Area(s) of 

involvement

Department of State (State) Oversees policy development and bilateral relations; provides 

diplomatic presence supporting U.S. aid, trade, investment activities; 

supports Commerce’s commercial diplomacy activities, especially 

where Commerce is not present.

Trade, aid, investment

Department of Commerce 

(Commerce) 

Provides Commercial Service presence and supports trade missions to 

facilitate U.S. export and investment opportunities; helps U.S. firms 

resolve market-access problems and address trade-agreement 

compliance issues; assists U.S. firms competing for foreigngovernment contracts through its Advocacy Center.

Trade, investment

Department of the Treasury 

(Treasury)

Advocates for improvements to regulatory frameworks, transparency, 

and governance through multilateral development banks, such as the 

World Bank, to enhance private-sector investment; provides bilateral 

technical assistance in areas such as budget and economic policy. 

Aid, investment

Office of the U.S. Trade 

Representative (USTR)

Develops and coordinates implementation of U.S. trade and investment 

policy, including trade preferences; leads discussions with Trade and 

Investment Framework Agreement partners; negotiates bilateral 

investment treaties and other trade agreements.

Trade, investment

U.S. Agency for International 

Development (USADI)

Formulates U.S. development policies; implements U.S. development 

assistance activities through grants. 

Aid

Millennium Challenge Corporation 

(MCC)

Implements bilateral compacts for grant-funded development projects, 

including infrastructure construction; has signed compacts with 13 subSaharan African countries. 

Aid

Export-Import Bank of the United 

States (U.S. Ex-Im) 

Provides financing—such as working capital guarantees (preexport 

financing), export credit insurance, loan guarantees, and direct loans 

(mostly nonconcessional)—to promote U.S. exports.

Trade 

Overseas Private Investment 

Corporation (OPIC)

Assists U.S. private sector investors overseas through direct loans, 

loan guarantees, political risk insurance, and support for private equity 

investment funds.

Investment

U.S. Trade and Development 

Agency 

Funds project-planning activities, such as feasibility studies, and U.S. 

visits for African entrepreneurs to facilitate exports of U.S. goods. and 

services 

Trade, investment

Source: GAO analysis of information from State, Commerce, Treasury, USTR, USAID, MCC, U.S. Ex-Im, OPIC, and the U.S. Trade 

and Development Agency.

U.S. and Chinese 

Government Agencies 

Engaged in Sub-Saharan 

Africa

U.S. Government Entities 
 

Page 10 GAO-13-199 Sub-Saharan Africa

China’s Ministry of Commerce formulates and implements policies for 

foreign trade, economic cooperation, and overseas investments, in 

collaboration with other agencies.19

Table 2: Selected Chinese Government Entities’ Roles and Areas of Involvement in Sub-Saharan Africa

The Ministry of Commerce also leads 

China’s foreign aid by selecting projects and organizing the 

implementation of aid activities. Table 2 lists selected Chinese 

government entities’ roles and responsibilities and areas of involvement.

Chinese government entity Roles and responsibilities Areas of involvement

Ministry of Commerce Formulates and implements policies on foreign trade and investment 

activities; leads foreign aid efforts.

Trade, aid, investment

Ministry of Finance Supervises and audits implementation of foreign aid budget. Aid

Ministry of Foreign Affairs Coordinates with other Chinese ministries on issues including foreign 

trade and economic cooperation and assistance. 

Trade, aid, investment

Export-Import Bank of China (China 

Ex-Im) 

Supports Chinese government policy to promote Chinese exports and 

investment through export credits, international guarantees, 

concessional and nonconcessional loans for overseas construction 

and investment, and official lines of credit.

Trade, aid, investment

China Development Bank Serves Chinese government’s policy to promote trade and investment 

by providing large-scale, long-term funding for construction of 

infrastructure and industrial projects; oversees China-Africa 

Development Fund, which encourages Chinese investments in Africa.

Trade, investment 

Source: GAO analysis of information from the Brookings Institution, the Center for Global Development, the government of China, the 

World Bank, and China scholar Deborah Brautigam.

Note: Although China does not have an official aid agency, China’s Ministries of Commerce, Finance, 

and Foreign Affairs and the Export-Import Bank of China are among the entities involved in China’s 

development assistance activities. 

According to a white paper issued by the Chinese government, the 

Ministry of Commerce is authorized to oversee foreign aid.20

 

19For example, China’s State-owned Assets Supervision and Administration Commission 

of the State Council supervises and manages state-owned enterprises, and oversees 

related outbound investment.

In addition, 

China’s Ministry of Finance manages the budget for foreign aid 

expenditures, in cooperation with the Ministry of Commerce. The Ministry 

20The white paper was published on the Chinese state-run news agency’s website. See 

Information Office of the State Council, People’s Republic of China, “White Paper: China’s 

Foreign Aid” (April 2011), accessed Oct. 17, 2011, 

http://news.xinhuanet.com/english2010/china/2011-04/21/c_13839683.htm. 

Chinese Government Entities
 

Page 11 GAO-13-199 Sub-Saharan Africa

of Foreign Affairs manages China’s diplomatic presence and drafts 

annual aid plans with the Ministry of Commerce.21

China Ex-Im and the China Development Bank, two of the Chinese 

government’s financing institutions, promote the government’s goals 

overseas. China Ex-Im maintains sole responsibility for concessional 

loans to support China’s exports to sub-Saharan Africa and promotes 

Chinese exports and investment through export credits, international 

guarantees, and concessional and nonconcessional loans for overseas 

construction and investment. The China Development Bank provides 

large-scale, long-term funding for infrastructure construction and industrial 

projects; provides market-rate (nonconcessional) loans; and oversees the 

China-Africa Development Fund, to encourage Chinese investments 

throughout Africa.

The United States’ key priorities in sub-Saharan Africa include, among 

others, building democracy, promoting development, supporting 

commerce, and strengthening security. Also, in 2000, Congress passed 

the African Growth and Opportunity Act (AGOA), which extended trade 

preferences to eligible countries in the region.22 The Chinese government 

has published policy papers that articulate its goal of establishing closer 

ties with African countries and state its principles of engagement, which 

include seeking mutual benefit for China and African nations and not 

interfering in African countries’ domestic affairs.

 

21According to scholar Deborah Brautigam, China’s Ministries of Commerce and Foreign 

Affairs have an uneasy division of labor and sharing of authorities over foreign aid. See 

Deborah Brautigam, The Dragon’s Gift: The Real Story of China in Africa (New York, N.Y.: 

Oxford University Press, 2009), 111.

22Pub. L. No. 106-200, as amended (codified at 19 U.S.C. §§ 3701 et seq). 

U.S. Goals Have 

Emphasized 

Democracy and 

Development in SubSaharan Africa, while 

China’s Policy 

Underscores Mutual 

Benefit and 

Noninterference
 

Page 12 GAO-13-199 Sub-Saharan Africa

The U.S. government has articulated its goals for sub-Saharan Africa 

through annual Department of State (State) bureau plans for the region 

and through a U.S. strategy announced in June 2012. The fiscal year 

2013 State bureau plan for sub-Saharan Africa identifies a number of 

goals, including strengthening democratic institutions, building respect for 

human rights, ensuring countries are free of conflict, using U.S. 

development assistance to improve health and education indicators, and 

helping sub-Saharan African countries build their share of global trade.23

According to State officials, State’s annual bureau plan had served as the 

primary U.S. strategy for the region. However, in June 2012, the U.S. 

government publicly issued its interagency “U.S. Strategy Toward SubSaharan Africa.”24

According to U.S. officials, the 2012 strategy is intended to encourage an 

interagency approach for engagement with sub-Saharan Africa, with 

greater emphasis on economic and commercial activities.

In his letter introducing the current strategy, President 

Obama highlighted goals related to strengthening democratic institutions 

and growing Africa’s economy as priority efforts critical to the region. The 

2012 U.S. strategy articulates four objectives for U.S. interaction with the 

region that are consistent with the goals in State’s bureau plan: 

strengthen democratic institutions; spur economic growth, trade, and 

investment; advance peace and security; and promote opportunity and 

development.

25

 

23State’s fiscal year 2013 bureau plan for sub-Saharan Africa identified additional goals 

related to adapting to climate change, enhancing food security and sustainable agricultural 

development, building public support for a mutually beneficial U.S.-Africa partnership, and 

increasing U.S. diplomatic effectiveness. 

State, 

Commerce, USAID, and USTR officials said that several agencies are 

developing plans to coordinate in implementing the strategy’s four 

objectives. Furthermore, according to a State document, U.S. agencies 

are working to better link trade policy and development objectives. In 

addition, State has issued a directive to prioritize economic issues in U.S. 

foreign policy worldwide, including efforts to improve regional economic 

integration and introduce U.S. businesses to new markets in sub-Saharan 

24White House, “U.S. Strategy Toward Sub-Saharan Africa” (June 2012), accessed June 

14, 2012, http://www.whitehouse.gov/sites/default/files/docs/africa_strategy_2.pdf. 

25Commerce officials noted that, pursuant to the 2012 strategy, Commerce is leading the 

development of an initiative called “Doing Business in Africa” that combines the tools of 

U.S. trade promotion agencies to assist U.S. firms in exploring commercial opportunities in 

sub-Saharan Africa. 

U.S. Goals and Programs 

for Sub-Saharan Africa 

Include Focus on 

Development and 

Emphasis on Democracy 

and Economic Growth
 

Page 13 GAO-13-199 Sub-Saharan Africa

Africa. In October 2011, Secretary of State Hillary Clinton stated that, as 

part of this effort, the U.S. government is evolving its development efforts 

throughout Africa to increase investments and reinforce, but not replace, 

what these markets can achieve independently. The President’s 2011 

Trade Policy Agenda, coordinated by USTR, also states an interest in 

expanding markets for U.S. goods and services in sub-Saharan Africa 

and building the region’s economic development through trade.26

Increased trade with sub-Saharan Africa was identified as a primary U.S. 

goal in the African Growth and Opportunity Act (AGOA), which was 

signed into law in 2000 to promote stable and sustainable economic 

growth and development in the region. AGOA allows eligible sub-Saharan 

African countries27 to export to the United States, without import duties, 

qualifying goods from a list of more than 6,000 items.28 Currently, 39

countries are eligible for AGOA benefits. As part of AGOA’s “third-country 

fabric provision,” a subset of those countries can export to the United 

States, subject to a cap, apparel made with yarns and fabrics originating 

anywhere in the world.29

 

26Office of the United States Trade Representative, “2011 Trade Policy Agenda and 2010 

Annual Report,” accessed January 12, 2012, http://www.ustr.gov/webfm_send/2597. 

AGOA also called for an annual forum, known as 

the U.S.–Sub-Saharan Africa Trade and Economic Forum—a high-level 

economic dialogue among U.S. and African senior government officials, 

members of their respective private sectors, and representatives of civil 

society. U.S. officials have described the annual forum, which has been 

27AGOA authorizes the President to designate countries as eligible to receive AGOA 

benefits if they are determined to have established, or are making continual progress 

toward establishing, the following: market-based economies; the rule of law and political 

pluralism; elimination of barriers to U.S. trade and investment; protection of intellectual 

property; efforts to combat corruption; policies to reduce poverty and increase availability 

of health care and educational opportunities; protection of human rights and worker rights; 

and elimination of certain child labor practices.

28The United States also offers tariff reductions for goods from most sub-Saharan African 

countries under the Generalized System of Preferences (GSP). The Africa Investment 

Incentive Act of 2006, Pub. L. No. 109-432, div. D, Title VI, expanded the list of products 

that eligible sub-Saharan African countries may export to the United States duty free 

under GSP, which covers approximately 4,600 items. GSP and AGOA eligibility criteria 

overlap, and countries must be GSP eligible to take advantage of trade benefits under 

AGOA. 

29This subset includes “lesser developed beneficiary countries” as defined by AGOA, 

which include countries, such as Ghana and Kenya, that the UN does not classify as least 

developed countries. In August 2012, Congress voted to extend the third-country fabric 

provision, which was set to expire the following month. See Pub. L. No. 112-163.
 

Page 14 GAO-13-199 Sub-Saharan Africa

held in Washington, D.C., and various locations in Africa, as a way to link 

trade capacity building and trade opportunities. The U.S. government 

released the “U.S. Strategy Toward Sub-Saharan Africa” at the 2012 

forum, which was held in Washington, D.C., and focused on sub-Saharan 

Africa’s infrastructure development to promote trade among the countries 

of the region and with the United States.

The U.S. government also established trade and investment agreements 

with sub-Saharan African countries and regional economic communities 

to promote cooperation on trade and investment issues, including 

strengthening bilateral ties, improving the business environment, and 

building trade capacity.30 These agreements include bilateral investment 

treaties, which establish some protections and regulations for U.S. 

investments in partner countries.31

In addition, the U.S. government maintains a number of development 

assistance programs in sub-Saharan Africa to help meet stated goals on 

promoting opportunity and development.

32

 

30For example, the U.S. government has Trade and Investment Framework Agreements 

in sub-Saharan Africa with Angola, Ghana, Liberia, Mauritius, Mozambique, Nigeria, 

Rwanda, and South Africa as well as with the Common Market for Eastern and Southern 

Africa, the East African Community, and the West African Economic and Monetary Union. 

The U.S. government also has a Trade, Investment, and Development Cooperative 

Agreement with the Southern African Customs Union. In addition, according to Commerce 

officials, the U.S. Department of Commerce recently established the U.S.–East African 

Community Commercial Dialogue, the first such effort in Africa, to enable the United 

States and East African Community governments to work with their respective private 

sectors to increase two-way trade and investment.

These programs include the 

Global Health Initiative, which integrates U.S.-funded global health efforts 

such as HIV/AIDS and malaria; Feed the Future, the U.S. governmentwide strategy to address global hunger and food security; the Global 

Climate Change Initiative, which is intended to better integrate climatechange considerations into U.S. foreign assistance; Millennium Challenge 

Corporation (MCC) compacts and other programs, which provide grants 

31The U.S. government has bilateral investment treaties with Cameroon, the Democratic 

Republic of the Congo, Mozambique, the Republic of the Congo, Rwanda, and Senegal.

32In addition to providing bilateral assistance to countries in sub-Saharan Africa, the 

United States assists the region through its membership in, and contributions to, 

multilateral organizations. According to U.S. officials, the U.S. government’s position as 

the largest shareholder at the World Bank and the largest nonregional shareholder at the 

African Development Bank enables it to advance U.S. priorities in sub-Saharan Africa 

through these institutions. 
 

Page 15 GAO-13-199 Sub-Saharan Africa

for development projects to eligible countries; and Partnership for Growth, 

a U.S. partnership with select countries to promote economic growth 

through country ownership and joint decision making.33

The Chinese government’s policies and goals toward sub-Saharan Africa, 

while not specifically defined for the region, are reflected in two publicly 

released documents—its African Policy, issued in 2006,34 and its policy 

on foreign aid, issued in 2011.35 The 2006 African Policy states that 

China’s objective in Africa is to promote long-term China-Africa relations 

in a mutually beneficial manner. The 2006 policy document outlines an 

approach that includes the principles of respecting African countries’ 

independence and equality; seeking mutual benefit in economic 

development and cooperation on social development; fostering 

cooperation with Africa in the United Nations and other multilateral 

systems; and enhancing mutual learning in areas such as governance 

and development. Additionally, the 2006 document states that to establish 

relations with China, a country must adhere to the “one China” principle—

that is, cease official relations with Taiwan.36

Regarding trade relations with Africa, China’s 2006 African Policy 

includes plans to facilitate access for African commodities to the Chinese 

market and provide duty-free treatment for imports of some goods from 

least developed countries, including those in Africa. Additionally, the 2006 

policy document expresses support for Chinese investments in Africa and 

 

33In sub-Saharan Africa, Ghana and Tanzania participate in the Partnership for Growth 

Initiative.

34Ministry of Foreign Affairs, People’s Republic of China, “China’s African Policy,” 

accessed October 11, 2011, http://www.fmprc.gov.cn/eng/zxxx/t230615.htm. 

35The policy is stated in a white paper published on the Chinese state-run news agency’s 

website. See Information Office of the State Council, People’s Republic of China, “White 

Paper: China’s Foreign Aid,” accessed October 11, 2011, 

http://news.xinhuanet.com/english2010/china/2011-04/21/c_13839683.htm. 

36This report did not include an analysis of U.S. or Chinese security-related goals in subSaharan Africa. We did not obtain information on China’s security goals or policies in the 

region.

China’s Stated Policy for 

Africa Emphasizes Mutual 

Benefit and 

Noninterference
 

Page 16 GAO-13-199 Sub-Saharan Africa

announces continued assistance for Chinese firms through loans and 

credit lines with preferential terms.37

China’s published policy on foreign aid, released in 2011, specifies goals 

that include helping recipient countries, including those in Africa, build 

development capacity, improve livelihoods, and promote economic 

growth and social progress. The 2011 policy document emphasizes 

“South-South cooperation” on foreign aid, indicating that China views 

itself as a developing country mutually engaged with other developing 

countries. Similar in content to China’s African Policy, the 2011 policy 

document notes the following principles of China’s foreign aid policy:

• helping countries build their own capacity for development and selfreliance by fostering local personnel and technical capacity, building 

infrastructure, and using domestic resources;

• not imposing political conditions or interfering in countries’ internal 

affairs, and respecting recipient countries’ role in guiding their own 

development;

• fostering equality and mutual benefit and accommodating recipient 

countries’ interests;

• maintaining a realistic sense of China’s capacity and resources to 

provide assistance, while recognizing the needs of recipient countries; 

and

• attending to reform and innovation to improve the outcomes of foreign 

aid.

China’s 2011 policy document also indicates that China provides 

resources for foreign aid through grants, and interest-free and 

concessional loans. China offers foreign aid in the form of projects, goods 

and materials, emergency aid, and debt relief, among others. Moreover, 

the 2011 document states that 40 percent of China’s global foreign aid 

expenditures in recipient countries worldwide are for construction projects 

in which China provides some or all of the financing, services, materials, 

and labor. Unlike the United States and other nations, China is not a 

member of the OECD’s Development Assistance Committee and has not 

agreed to eliminate the tying of aid to the use of its own goods and 

 

37China’s trade activities in Africa are also partly driven by its “Going Global” policy, 

initiated in 1999, which encouraged Chinese firms to seek trade and investment 

opportunities globally, and as part of which large, generally state-supported Chinese firms 

make investments to boost China’s long-term national growth.
 

Page 17 GAO-13-199 Sub-Saharan Africa

services.38

The Chinese government has also articulated aspects of its policy toward 

Africa, including sub-Saharan Africa, at the Forum on China-Africa 

Cooperation (FOCAC). The Chinese government initiated FOCAC in 

2000 as a high-level platform to announce major Chinese initiatives, such 

as large infrastructure financing packages and trade preferences for 

Africa, and has convened high-level Chinese and African officials every 3 

years since 2000. At the 2012 FOCAC, held in Beijing, the Chinese 

government reiterated principles from prior meetings and previously 

issued policy documents, including maintaining high-level engagement, 

strengthening China-Africa dialogue, and enhancing mutual trust. At that 

meeting, China also doubled its commitments for financing infrastructure 

and other development in Africa to $20 billion, from the $10 billion 

commitment that it announced in 2009; expanded duty-free treatment for 

certain African exports to China; and reiterated use of the China-Africa 

Development Fund, which was established in 2006 to fund up to $5 billion 

in Chinese firms’ investments in Africa in sectors such as agriculture, 

infrastructure, and natural resources. According to an article from the 

Centre for Chinese Studies in South Africa, the South African president’s 

critical statements about aspects of China’s presence in Africa made at 

the 2012 FOCAC showed Africans taking a greater stake in shaping the 

However, U.S. officials said that China’s participation in the 

Fourth High-Level Forum on Aid Effectiveness in Busan, South Korea, in 

November 2011, along with 100 other countries that also are not OECD 

members, reinforced support for the 2005 Paris Declaration on Aid 

Effectiveness and represented a significant recognition of China’s role in 

development assistance. China’s 2011 policy document states that 

Chinese experts working on construction projects will adopt the same 

standards of living as experts in the recipient country. In addition, China’s 

2006 African Policy states that the government supports continued 

financing for Chinese enterprises’ investment and business engagement 

in Africa. Scholars and U.S. officials have also said that China actively 

uses its financing and assistance activities to facilitate opportunities for 

Chinese firms.

 

38China is a participant in the 2005 Paris Declaration on Aid Effectiveness, in which donor 

and partner countries agreed to improve aid effectiveness through results-oriented 

assistance and donor coordination, among other principles. However, U.S. officials noted 

that China had a nonbinding role in the Paris Declaration and therefore cannot be held 

accountable to other donors. 
 

Page 18 GAO-13-199 Sub-Saharan Africa

dialogue with China, in contrast to previous FOCAC sessions.39

Figure 2: Key Chinese Government Announcements at the Forum on China-Africa Cooperation (FOCAC), 2000-2012

In 

addition, in a speech delivered before the start of the 2012 FOCAC, 

Chinese Premier Wen Jiabao spoke about unresolved issues in China’s 

relationship with Africa, including the need to diversify trade and 

investments and increase technology transfer. Figure 2 presents a 

timeline of key FOCAC announcements in 2000 through 2012.

 

39M. McDonald, “After FOCAC: Have China-Africa Relations Finally Turned a Corner, or 

Was FOCAC V Simply More of the Same?” African East-Asian Affairs/China Monitor

(2012). 
 

Page 19 GAO-13-199 Sub-Saharan Africa

Both U.S. and Chinese trade in goods with sub-Saharan Africa increased 

from 2001 through 2011, with Chinese trade increasing faster and 

surpassing U.S. trade in 2009. Imports of crude oil have dominated both 

countries’ trade with sub-Saharan Africa. U.S. government aid in the form 

of grants increased from 2001 through 2010, and U.S. government loans 

to support U.S. exports and investments increased from 2001 through 

2011; data on Chinese government grants and loans to sub-Saharan 

Africa are limited. Data for 2007 through 2011 suggest that U.S. foreign 

direct investment flows to the region were larger than China’s.40 Mining, 

including petroleum extraction, was the top investment sector in subSaharan Africa for both countries.41

China overtook the United States as sub-Saharan Africa’s largest trading 

partner in 2009. The United States’ and China’s total trade in goods with 

sub-Saharan Africa increased each year from 2001 through 2011, except 

in 2009 when total trade declined during the global economic crisis (see 

fig. 3).42

 

40According to OECD, foreign direct investment is the ownership by a foreign person or 

business of 10 percent or more of the voting equity of a firm located in the host country. 

Foreign direct investment flows provide information for foreign direct investment activity 

within a given period of time, while foreign direct investment stock indicates the level of 

foreign direct investment at a given point in time.

During that year, China’s trade declined by less than the United 

States’, and China overtook the United States as sub-Saharan Africa’s 

largest trading partner. For the United States, growth in imports 

accounted for 80 percent of growth in total trade from 2001 through 2011; 

for China, growth in imports accounted for 56 percent of growth in total 

trade for the same period. China’s exports overtook U.S. exports in 2003, 

with the value of China’s exports almost triple the level of U.S. exports in 

2011.

41Petroleum includes oil (crude and refined) and petroleum products (e.g., jelly and 

waxes). 

42Total trade in goods is defined as imports plus exports. In 2011, trade with the United 

States and China represented an estimated 31 percent of sub-Saharan Africa’s total trade, 

while sub-Saharan Africa represented 3 percent of total trade for both the United States 

and China.

Data Show Growth in 

U.S. and Chinese 

Trade with SubSaharan Africa since 

2001, but Data on 

China’s Grants, Loans, 

and Investments Are 

Limited

U.S. and Chinese Trade in 

Goods with Sub-Saharan 

Africa Increased from 2001 

to 2011
 

Page 20 GAO-13-199 Sub-Saharan Africa

Figure 3: U.S. and Chinese Total Trade, Imports, and Exports of Goods to SubSaharan Africa, 2001-2011
 

Page 21 GAO-13-199 Sub-Saharan Africa

Notes: Total trade in goods is defined as imports plus exports. Trade data are shown in nominal 

values. Changes in values over time are due in part to changes in the prices of traded goods, such as 

substantial increases in the price of oil. Data for Chinese imports have been adjusted to exclude 

imports of a category of goods labeled “special transactions,” for consistency with figures reported by 

the IMF’s Direction of Trade Statistics and the World Trade Atlas. 

Natural resources have constituted the bulk of U.S. and Chinese imports 

from sub-Saharan Africa. In 2011, petroleum and petroleum products, 

primarily crude oil, accounted for 81 percent of the value of U.S. imports, 

while ores, metals, and minerals accounted for 9 percent. By comparison, 

petroleum and petroleum products, almost exclusively crude oil, 

accounted for 59 percent of the value of Chinese imports, while ores, 

metals, and minerals accounted for 32 percent.43 As figure 4 shows, U.S. 

and Chinese imports of petroleum and petroleum products, as well as 

Chinese imports of ores, metals, and minerals, from sub-Saharan Africa 

have increased since 2001.

44

 

43Examples of U.S. imports of ores, metals, and minerals are platinum and diamonds. 

Examples of Chinese imports of ores, metals, and minerals include iron ore and copper.

44For example, in 2001, 68 percent of U.S. imports of goods from sub-Saharan Africa 

were petroleum and petroleum products and 14 percent were ores, metals, and minerals. 

In 2001, 61 percent of Chinese imports were petroleum and petroleum products and 19 

percent was ores, metals, and minerals. 

Crude Oil and Other Natural 

Resources Have Dominated 

U.S. and Chinese Imports of 

Goods from Sub-Saharan Africa
 

Page 22 GAO-13-199 Sub-Saharan Africa

Figure 4: U.S. and Chinese Imports of Goods from Sub-Saharan Africa, 2001-2011

Notes: Import values are shown in nominal dollars. Data for Chinese imports have been adjusted to 

exclude imports of a category of goods labeled “special transactions,” for consistency with data 

reported by the IMF’s Direction of Trade Statistics and the World Trade Atlas. 

The majority of U.S. imports from sub-Saharan Africa enter the United 

States without tariffs under AGOA. In 2011, imports under AGOA were 

approximately 70 percent of the total value of U.S. imports from subSaharan Africa.45 Petroleum imports, primarily from Nigeria and to a 

lesser extent from Angola, constituted almost 92 percent of AGOA 

imports, while two categories of goods—transportation equipment and 

textiles, apparel, leather and footwear—were the primary nonpetroleum 

AGOA imports (see fig. 5).46

 

45In 2011, an additional 3 percent received duty-free treatment under GSP. According to 

USTR, goods from certain countries can also enter duty free under other U.S. trade 

provisions. 

46Transportation equipment represented nearly 4 percent, and textiles, apparel, leather, 

and footwear represented nearly 2 percent of imports under AGOA in 2011. From 2001 to 

2011, the value of nonpetroleum U.S. imports under AGOA increased 322 percent, from 

about $1 billion to $4.3 billion. 
 

Page 23 GAO-13-199 Sub-Saharan Africa

Figure 5: U.S. Imports of Goods from Sub-Saharan Africa under AGOA, 2001-2011

Note: Import values are shown in nominal dollars. 

Almost all Chinese imports from least developed countries in Africa enter 

China without tariffs.47

 

47In contrast to the list of sub-Saharan African countries eligible for AGOA trade 

preferences, China’s list of eligible countries includes only least developed countries. For 

example, in 2012, 40 sub-Saharan African countries were eligible for AGOA while 30 subSaharan African countries were eligible for China’s trade preferences.

In 2003, China announced that some commodities 

from least developed countries in Africa would be given duty-free status. 

By 2007, according to a report by the World Trade Organization that cited 

Chinese officials, 98 percent of the total value of Chinese imports from 
 

Page 24 GAO-13-199 Sub-Saharan Africa

least developed countries, including sub-Saharan African countries, was

exported to China duty free.48

Chinese exports to sub-Saharan Africa increased more rapidly than U.S. 

exports from 2001 through 2011. The value of U.S. exports tripled during 

this period, from $6.8 billion to $20.3 billion, while the value of Chinese 

exports grew by a factor of nearly 13, from $4.4 billion to $56.3 billion. 

The largest category of U.S. exports to sub-Saharan Africa by value was 

machinery and transport equipment; the largest categories of Chinese 

exports were manufactured goods and machinery and transport 

equipment (see fig. 6). The United States and China generally exported 

different types of machinery and transport equipment: motor vehicles and 

civil-engineering equipment were key U.S. exports, while ships and 

telecommunications equipment were key Chinese exports. In 2011, U.S. 

and Chinese exports of machinery and transport equipment to subSaharan Africa represented 41 percent and 40 percent, respectively, of 

the value of the two countries’ total exports to sub-Saharan Africa, with 

China’s exports of machinery and transport equipment almost triple the 

value of the United States’. China’s largest category of exports was 

manufactured goods—for example, cotton fabrics and footwear—

representing 49 percent of the value of its exports. 

 

48See World Trade Organization, Trade Policy Review Body, Trade Policy Review: Report 

by the Secretariat—China, WT/TPR/S/199 (2008). 

Chinese Exports of Machinery, 

Transport Equipment, and 

Manufactured Goods Exceeded 

U.S. Exports of Goods to SubSaharan Africa 
 

Page 25 GAO-13-199 Sub-Saharan Africa

Figure 6: U.S. and Chinese Exports of Goods to Sub-Saharan Africa, 2001-2011

Note: Export values are shown in nominal dollars. 

In 2011, the United States imported more than $1 billion in goods from 

each of eight sub-Saharan African countries, and China imported more 

than $1 billion in goods from each of nine countries. The United States 

and China each imported more than $1 billion in goods from Nigeria, 

Angola, South Africa, the Republic of the Congo, and Equatorial Guinea. 

The United States also imported more than $1 billion in goods from 

Gabon, Chad, and Côte d’Ivoire, while China imported more than $1 

billion in goods from the Democratic Republic of the Congo, Zambia, 

Sudan, and Mauritania.49

 

49South Africa is sub-Saharan Africa’s largest economy and represented 13 percent of 

U.S. imports in goods from sub-Saharan Africa and 23 percent of China’s imports in 2011.

United States and China Have 

Several Common Trading 

Partners in Sub-Saharan Africa, 

but China’s Reach Is Greater 
 

Page 26 GAO-13-199 Sub-Saharan Africa

Figure 7: U.S. and Chinese Imports of Goods from Sub-Saharan Africa, by Value of Imports and Country of Origin, 2011

With respect to exports, the United States exported more than $1 billion in 

goods to each of 4 countries in sub-Saharan Africa in 2011, whereas 

China exported at a similar level to 10 countries (see fig. 8). Both 

countries exported more than $1 billion in goods to South Africa, Nigeria, 

Angola, and Ghana.50

 

50South Africa received 34 percent of U.S. exports of goods to sub-Saharan Africa and 24 

percent of Chinese exports to the region in 2011.

In addition, China exported more than $1 billion in 

goods to Benin, Kenya, Tanzania, Togo, Liberia, and Sudan.
 

Page 27 GAO-13-199 Sub-Saharan Africa

Figure 8: U.S. and Chinese Exports of Goods to Sub-Saharan Africa, by Value of Exports and Destination, 2011
 

Page 28 GAO-13-199 Sub-Saharan Africa

Estimates on U.S. trade in services indicate that the United States had a 

surplus in trade in services with sub-Saharan Africa from 2006 through 

2011.

51 U.S. imports of services, excluding travel and passenger fares,

averaged about $2.6 billion per year, and U.S. exports of services 

averaged about $9.1 billion per year.

52 The largest service sectors for 

U.S. imports were business, professional, and technical services; travel 

and passenger fares; and financial services. The largest service sectors 

for U.S. exports were business, professional, and technical services and 

travel and passenger fares.53

 

51Trade in services refers to the buying and selling of intangible products and activities; 

examples of trade-in-services sectors include tourism, financial services, and 

telecommunications. Contracted activities, such as construction and consulting services, 

are also examples of trade-in-services activities. United States does not publish trade-inservices data for sub-Saharan Africa. However, BEA provided underlying tabulations from 

BEA and other sources that we used to estimate U.S. trade in services with sub-Saharan 

Africa. When BEA provided ranges of estimates for sectors of services such as business,

professional, and technical services, we used the higher values to calculate estimates of 

total trade in services, including imports and exports of services. Therefore, the averages 

we report represent the higher values in underlying tabulations from BEA and other 

sources and our analysis of BEA’s survey data. See appendix I for examples of these 

other sources. 

Illustrating that business, professional, and 

technical services was a top sector for U.S. exports of services, data on 

contracts financed by the World Bank in sub-Saharan Africa from 2001 

through 2011 show that most of U.S. firms’ contracts were for consulting 

52Our estimate of U.S. imports of services from sub-Saharan Africa does not include 

imports of travel and passenger fares, because regional sub-Saharan Africa data were not 

available for this category. However, U.S. imports of travel and passenger fares averaged 

$3.2 billion per year for 2006 through 2011 for all of Africa and averaged $1.2 billion for 

Angola, Ghana, and South Africa. 

53From 2006 through 2011, annual U.S. imports averaged at least $1 billion for business, 

professional, and technical services; at least $1.2 billion for travel and passenger fares; 

and $250 million to $400 million for financial services. Because data on U.S. imports of 

travel and passenger fares were unavailable for sub-Saharan Africa, the $1.2 billion 

includes only data for Angola, Ghana, and South Africa as a minimum level of U.S. 

imports for travel and passenger fares. During the same period, annual U.S. exports 

averaged at least $2.7 billion for business, professional, and technical services and $1.7 

billion for travel and passenger fares.

U.S. Trade in Services with 

Sub-Saharan Africa Is 

Estimated to Exceed $11 

Billion per Year, but Data 

on China’s Trade in 

Services with the Region 

Are Unavailable
 

Page 29 GAO-13-199 Sub-Saharan Africa

services and that these services accounted for 72 percent of the 

combined value of the U.S. firms’ contracts.54

We were unable to obtain comparable data for China’s trade in services 

with sub-Saharan Africa, in part because China does not publish regional 

or country-specific data.55 However, according to experts and U.S. 

officials, China has been active in providing construction services. In 

addition, the data on World Bank–financed contracts show that most of 

Chinese firms’ contracts were for construction services and that these 

services accounted for 91 percent of the combined value of the Chinese 

firms’ contracts.56

 

54Services provided by U.S. firms under World Bank–funded contracts represent a small 

fraction (less than 1 percent) of annual U.S. trade in service exports to sub-Saharan 

Africa. However, World Bank contracts represent one of the few instances in which data 

are available for examination of potential competition between U.S. and Chinese firms. 

According to the World Bank, the contract data include only contracts reviewed by World 

Bank staff prior to award, which constitute about 40 percent of total World Bank 

investment lending. In addition, the nationality of a firm reflects the country in which it is 

registered, although the firm’s parent may be headquartered in another country. 

Figure 9 illustrates the data on World Bank–financed 

contracts with firms from the United States, China, and other countries in 

sub-Saharan Africa. 

55China’s Ministry of Commerce publishes data on trade in services and also provides 

data on trade in services to the UN Service Trade database. These data include exports 

and imports globally and by sector but not by country. The Ministry of Commerce’s data 

also include the number of Chinese workers abroad for all of Africa, Angola, Nigeria, and 

Sudan, providing an indicator of the magnitude of service exports to Africa and these 

countries (see supplemental report GAO-13-280SP for a discussion of the number of 

Chinese workers in Angola). The United States does not publish comparable data for 

American workers abroad. 

56Construction contracts represented 55 percent and consulting contracts represented 21 

percent of the total value of World Bank contracts for sub-Saharan Africa. 
 

Page 30 GAO-13-199 Sub-Saharan Africa

Figure 9: World Bank–Financed Contracts Won by Firms from the United States, China, and Other Countries in Sub-Saharan 

Africa, 2001-2011

Notes: According to the World Bank, data shown include only contracts reviewed by World Bank staff 

prior to award. In general, these types of contracts constitute about 40 percent of total World Bank 

investment lending. In addition, the nationality of a firm reflects the country in which it is registered, 

although the firm’s parent may be headquartered in another country.

a

Firms from at least 135 other countries won World Bank contracts, with firms from Ghana, Nigeria, 

Senegal, and Tanzania winning the largest numbers of contracts. 

b

Other contracts primarily represent contracts for goods such as transportation equipment, medical 

equipment and products, and information technology equipment. 
 

Page 31 GAO-13-199 Sub-Saharan Africa

U.S. government development assistance, predominantly grants, to subSaharan Africa increased from $1.4 billion in 2001 to $9.2 billion in 2010 

(see fig. 10).57 This increase was driven primarily by growth in health 

assistance, resulting in part from the authorization of the President’s 

Emergency Plan for AIDS Relief in 2003.58

 

57OECD defines official development assistance as those flows to countries and territories 

on the OECD’s list of official development assistance recipients and to multilateral 

development institutions that are provided by official agencies, have the promotion of 

economic development and welfare of developing countries as their main objective, and 

are concessional and convey a grant element of at least 25 percent. According to U.S. aid 

data reported to OECD, U.S. development assistance to sub-Saharan Africa since 2008 

has consisted of grants only. Between 2001 and 2010, less than 1 percent of annual U.S. 

development assistance to sub-Saharan Africa consisted of concessional loans for 

developmental purposes.

In 2010, health assistance and 

humanitarian aid were the largest categories of development assistance 

in sub-Saharan Africa.

58Pub. L. No. 108-105. Through this program, the U.S. government has supported global 

HIV/AIDS prevention, treatment, and care.

U.S. Government Grants 

and Loans to Sub-Saharan 

Africa Have Increased 

since 2001, but China Does 

Not Publish Data on Its 

Financing
 

Page 32 GAO-13-199 Sub-Saharan Africa

Figure 10: U.S. Government Development Assistance to Sub-Saharan Africa, 2001-

2010

Note: Amounts of aid represent commitments and are shown in nominal dollars. Data for 2011 were 

not available. 

The Chinese government does not regularly report data on its 

development assistance to sub-Saharan Africa.59 However, a white paper 

describing the Chinese government’s foreign aid policy, published by the 

Information Office of China’s State Council for the first time in 2011, 

states the value and type of development assistance provided 

worldwide.60

 

59The United States and other developed countries that are members of the OECD report 

aid data annually to the OECD, which makes this information publicly available. China is 

not an OECD member and does not report such data, although some nonmember 

countries, such as certain countries in the Persian Gulf, do report aid data to the OECD. 

According to the white paper, between 1950 and 2009, the 

60Information Office of the State Council, People’s Republic of China, “White Paper: 

China’s Foreign Aid.” 
 

Page 33 GAO-13-199 Sub-Saharan Africa

Chinese government provided $38.8 billion globally in grants, interest-free 

loans, and concessional loans as foreign aid, with the type of assistance 

varying by the scale of the project.61 The white paper states that Chinese 

government grants are primarily for social welfare projects such as 

schools, hospitals, and water-supply projects; technical cooperation; and 

emergency humanitarian assistance, while the Chinese government’s 

interest-free loans are primarily for construction of public facilities. The 

paper also states that the Chinese government’s concessional loans are 

primarily for large and medium-sized infrastructure that generates 

economic and social benefits. An expert in China–Africa relations 

estimated that the Chinese government provided a total of about $6 billion 

in aid, including grants and concessional loans, to all of Africa between 

2001 and 2009.62

U.S. government loans and related financing to support U.S-made 

products and firms’ investments in sub-Saharan Africa increased from 

2001 through 2011. U.S. Ex-Im’s and OPIC’s combined commitments, 

totaling more than $11.6 billion for this period, rose from an annual 

average of $858 million for 2001 through 2005 to $1.2 billion for 2006 

through 2011.63

 

61To support Chinese-made products and firms’ investments, the Chinese government 

also provides sub-Saharan African countries commercial loans that do not meet OECD’s 

definition of development assistance.

The commitments varied considerably over this period. 

As figure 11 shows, U.S. Ex-Im’s commitments ranged from $342 million 

in 2009 to about $1.7 billion in 2011, and OPIC’s commitments ranged 

from about $149 million in 2002 to $948 million in 2011. During this 

period, U.S. Ex-Im financing was largely concentrated in Nigeria, South 

Africa, Ethiopia, Angola, Kenya, and Ghana, which represented 89 

percent of Ex-Im financing committed for sub-Saharan Africa. For 

example, U.S. Ex-Im provided a direct loan of $806 million to a South 

African buyer for a U.S. firm’s engineering services and provided loan 

guarantees of $605 million in Ethiopia and $256 million in Angola for 

62See Deborah Brautigam, The Dragon’s Gift, app. 6. Dr. Brautigam calculated the 

Chinese government’s estimated foreign aid using information from Chinese government 

sources, interviews, and extrapolations based on these sources.

63From 2001 to 2011, U.S. Ex-Im authorized about $ 7.2 billion in financing, including 72 

percent for loan guarantees and loans, 23 percent for insurance, and 5 percent for

working capital. During the same period, OPIC authorized approximately $3.3 billion in 

financing, including 70 percent for project financing, such as loans and loan guarantees, 

and 30 percent for insurance. 
 

Page 34 GAO-13-199 Sub-Saharan Africa

lenders’ financing to Ethiopian and Angolan buyers of aircraft.64

Figure 11: U.S. Government Loans and Related Financing Committed for U.S.-Made 

Products and U.S. Firms’ Investments in Sub-Saharan Africa, 2001-2011

OPIC 

committed its largest amounts of financing in the region for projects such 

as oil and gas extraction, electric power generation, local banks, and 

medical equipment sales.

Notes: Loans and other financing values are shown in nominal dollars by calendar year. In addition, 

these values are shown by calendar year, although U.S. Ex-Im and OPIC typically report data by 

fiscal year. 

a

OPIC may report data for some financing commitments, such as investment funds, only at the 

regional level. Data shown do not reflect OPIC investment funds for regional use in sub-Saharan 

Africa. OPIC’s net commitments of regional investment funds to sub-Saharan Africa in fiscal years 

2001 to 2011 amounted to $659.7 million. According to OPIC officials, because recipients of OPIC 

investment assistance may choose to invest in a set of countries, OPIC may initially lack information 

about the use of the assistance, such as the countries where such investments are made. In addition, 

according to OPIC officials, in countries with limited investment activity, business confidentiality 

agreements may prevent the disclosure of data that would reveal details of individual transactions. 

 

64In providing such guarantees, U.S. Ex-Im promises to pay the lender if the buyer 

defaults.
 

Page 35 GAO-13-199 Sub-Saharan Africa

The Chinese government does not publish data on its loans to subSaharan Africa.65 However, according to a World Bank study as well as 

host-government officials in our case study countries, the Chinese 

government provides financing such as loans for infrastructure projects 

that promote the use of Chinese companies and materials.66 In addition, 

Chinese officials have provided some general information on the 

government’s loans to all of Africa. In a July 2012 interview with official 

Chinese media, the president of China Ex-Im stated that in the last 7 to 8 

years, China Ex-Im completed about 600 projects and provided 

approximately $38 billion in loans for all of Africa. In contrast, U.S. Ex-Im 

authorized approximately $9.8 billion in loans and other financing for all of 

Africa in the last 8 years. In a May 2012 interview with official Chinese 

media, the vice president of China Development Bank’s China-Africa 

Development Fund stated that by the end of 2008, the fund had invested 

about $400 million in 20 projects in Africa.

Data on the United States’ and China’s investments in sub-Saharan 

Africa suggest that U.S. foreign direct investment flows exceeded China’s 

reported foreign direct investment flows from 2007 through 2011.67

 

65China is not a participant in the OECD Arrangement on Officially Supported Export 

Credits, an international agreement that governs various aspects of United States and 

other member countries’ officially supported export credits. The agreement seeks to 

increase transparency among participants. Major industrialized countries are participants 

in this agreement. However, some countries with substantial export credit activity—

including China and India—are not participants in the agreement. For more information, 

see GAO, U.S. Export-Import Bank: Actions Needed to Promote Competitiveness and 

International Cooperation, 

During 

this period, U.S. foreign direct investment flows to sub-Saharan Africa 

were $16.6 billion and Chinese reported foreign direct investment flows 

were $12.7 billion.

GAO-12-294 (Washington, D.C.: Feb. 7, 2012).

66See Vivien Foster et al. Building Bridges: China’s Growing Role as Infrastructure 

Financier for Africa (Washington, D.C.: International Bank for Reconstruction and 

Development/World Bank, 2008). 

67According to OECD, foreign direct investment is the ownership by a foreign person or 

business of 10 percent or more of the voting equity of a firm located in the host country. 

Foreign direct investment flows provide information for foreign direct investment activity 

within a given period of time, while foreign direct investment stock indicates the level of 

foreign direct investment at a given point in time.

Reported U.S. Investment 

in Sub-Saharan Africa 

Exceeded China’s 

Reported Investment for 

2007 through 2011
 

Page 36 GAO-13-199 Sub-Saharan Africa

Figure 12 shows reported annual foreign direct investment flows from the 

United States and China to sub-Saharan Africa in 2007 through 2011. 

According to experts, China’s foreign direct investment flows are likely 

underreported and have other limitations.68

 

68China’s reported foreign direct investment data represent official information published 

by the Chinese government and, despite their limitations, have been used in various 

reports, including those published by international organizations (such as IMF), 

government agencies, academic experts, and other research institutions, to describe 

China’s foreign direct investment activities in Africa. The data appear to capture, for 

example, the Industrial and Commercial Bank of China’s 2008 purchase of a 20 percent 

stake in South Africa’s Standard Bank for about $4.8 billion.

The U.S. foreign direct 

investment flows shown in figure 12 are less than actual flows, in part 

because data for some countries in some years are confidential and have 

not been released; however, the data that have been released are 

considered generally reliable for the years and countries to which they 

pertain. 
 

Page 37 GAO-13-199 Sub-Saharan Africa

Figure 12: Reported Flows of Foreign Direct Investment from the United States and 

China to Sub-Saharan Africa, 2007-2011

Notes: Although China has reported investment data since 2003, China did not include financial 

investment in its total investment data prior to 2007. According to experts, China’s foreign direct 

investment flows are likely underreported and have other limitations. U.S. foreign direct investment 

flows shown are less than actual flows, in part because data for some countries in some years are 

confidential and have not been released. Foreign direct investment values are shown in nominal 

dollars. 

As figure 12 shows, reported foreign direct investment flows to subSaharan Africa for the United States and China varied substantially during 

this period. For example, China’s foreign direct investment flows 

increased significantly in 2008, in part because of the Industrial and 

Commercial Bank of China’s purchase of 20 percent of South Africa’s 

Standard Bank for about $4.8 billion. Also, U.S. foreign direct investment 

flows increased significantly in 2009, reflecting about $5 billion in flows to 

Nigeria.

For both the United States and China, the top sector for foreign direct 

investment was mining. According to the BEA, from 2006 through 2011, 

the largest share of U.S. foreign direct investment stock was in mining, 

with a significant portion tied to crude-oil extraction; other major sectors 
 

Page 38 GAO-13-199 Sub-Saharan Africa

included finance and insurance, nonbank holding companies,69 and 

manufacturing.70 China does not publish data on foreign direct investment 

in sub-Saharan Africa by sector. However, according to the information 

office of China’s State Council, the top three sectors of China’s foreign 

direct investment stock in all of Africa by the end of 2009 were mining (29 

percent), manufacturing (22 percent), and construction (16 percent).71

According to experts, China’s data on foreign direct investment have 

several limitations that affect the reliability of these data.

• China’s foreign direct investments in sub-Saharan Africa are likely 

underreported, according to experts. Chinese firms set up 

subsidiaries, in places such as Hong Kong and the British Virgin 

Islands, that can be used to make investments in sub-Saharan Africa. 

Such investments are not captured by China’s data on foreign direct 

investment and may be a significant source of underreporting. In 

addition, many small and medium-sized enterprises may not register 

their foreign direct investments, which therefore may not be reflected 

in China’s data.

The flow data reported for China’s foreign direct investment are 

inconsistent with changes in the stock data, for reasons that are 

difficult to determine. For example, in 2008, China’s foreign direct 

investment flow to sub-Saharan Africa was reported to be $5.4 billion; 

however, the change in foreign direct investment stock from the end 

of 2007 to the end of 2008 was reported to be -$1.6 billion, suggesting 

a difference of $7 billion between the flow and stock data. According 

to an IMF working paper, these variations between flows and stock 

are difficult to explain solely as a result of annual variation in the 

valuation of the foreign direct investment stock.72

 

69According to BEA, these nonbank holding companies generally had U.S. parent 

companies in mining, utilities, manufacturing (primarily petroleum related), and nonbank 

finance and insurance. A holding company typically does not produce goods or services 

itself but instead exists to own assets of other companies, which may be located in 

countries other than the holding company’s. 

70These sectors, with the exception of finance and insurance, also dominated U.S. foreign 

direct investment from 2001 through 2005.

71According to data from China’s Ministry of Commerce, by the end of 2009, 88 percent of 

China’s total foreign direct investment stock in Africa was in sub-Saharan Africa.

72See Montfort Mlachila and Misa Takebe, “FDI from BRICs to LICs: Emerging Growth 

Driver?” IMF Working Paper, WP/11/178 (2011), 11.
 

Page 39 GAO-13-199 Sub-Saharan Africa

• China does not define foreign direct investment when reporting its 

data. However, the types of data China reports for its foreign direct 

investments (e.g., equity investment data, reinvested earnings data) 

are similar to data reported for U.S. foreign direct investment, which 

the United States defines on the basis of OECD’s definition of foreign 

direct investment.

Although data on U.S. foreign investments are not complete, these data 

are generally considered reliable. Because of confidentiality, BEA has not 

released data on certain U.S. foreign direct investments in some 

countries for certain years. Additionally, according to BEA, U.S. firms, like 

Chinese firms, may use subsidiaries in other locations to make 

investments in sub-Saharan Africa that are not captured in the U.S. data 

on foreign direct investments to sub-Saharan Africa. In addition, the U.S. 

data may not include smaller firms. According to BEA, U.S. foreign 

investment data are based on a benchmark survey conducted in 2009, 

covering the value of all U.S. foreign direct investment. Moreover, U.S. 

foreign direct investment data do not show inconsistencies between flow 

data and changes in stock data to the same extent as China’s data.

The United States’ and China’s patterns of engagement in our three casestudy countries reflect, to varying extents, broader trends in U.S. and 

Chinese engagement in sub-Saharan Africa as well as the two 

governments’ goals and policies in the region. Similar to patterns for subSaharan Africa overall, crude oil imports have dominated both U.S. and 

Chinese trade in goods in Angola, and U.S. firms’ total investments, 

driven by investments in the oil sector, have exceeded Chinese firms’ 

total investments in Angola and Ghana. Also, Chinese government 

loans—mostly to facilitate Chinese firms’ prominent role in infrastructure 

construction—have exceeded U.S. government financing in each of the 

case-study countries. Use of Chinese firms to implement projects funded 

through China’s loans and grants is consistent with China’s policy of 

mutual benefit in assisting African countries. U.S. officials expressed 

concern that some aspects of Chinese government loans, such as their 

lower cost and greater flexibility, may advantage Chinese firms over U.S. 

firms. However, direct competition between U.S. and Chinese firms in the 

case-study countries appears to be limited, although counterfeits 

manufactured by Chinese firms adversely affect U.S. firms’ sales and 

reputation, especially in Kenya among our case study countries. 

Reflecting the U.S. goal of promoting development, and in contrast to the 

Chinese government providing financing primarily as loans, the U.S. 

government has provided increasing amounts of grants for health and 

Angola, Ghana, and 

Kenya Illustrate 

Trends and Goals of 

U.S. and Chinese 

Engagement in SubSaharan Africa
 

Page 40 GAO-13-199 Sub-Saharan Africa

humanitarian assistance in one country, Kenya, as it has in sub-Saharan 

Africa broadly. Finally, host-government requirements, such as 

regulations on hiring local labor, influence Chinese and U.S. firms’ 

engagement in each case-study country.

As in other parts of sub-Saharan Africa, crude oil has accounted for most 

of U.S. and Chinese imports from Angola. Available data also show that 

U.S. firms’ investments have been concentrated in the oil sector and 

exceeded Chinese firms’ investments in Angola and Ghana, although the 

general nature of U.S. and Chinese investments in the sector differed. 

Kenya currently does not export oil, although some offshore and onshore 

oil exploration is under way.

Imports of crude oil dominated overall U.S. and Chinese trade in goods 

with Angola from 2001 through 2011.73

 

73In 2011, oil was also among the top categories of U.S. and Chinese imports from 

Ghana, although much smaller in magnitude than their imports from Angola. The absence 

of crude oil imports from Ghana prior to 2010 reflects the recent discovery and commercial 

production of crude oil in the country. 

In 2011, crude oil imports 

accounted for 86 percent of U.S. trade in goods with Angola and 90 

percent of China’s goods trade. Figure 13 shows U.S. and Chinese 

imports of crude oil from Angola, as well as their total respective trade 

with Angola, in 2001 through 2011.

Oil Imports Dominate U.S. 

and Chinese Trade with 

Angola, with U.S. Firms 

Investing Heavily in the Oil 

Sector in Angola and 

Ghana

U.S. and Chinese Imports
 

Page 41 GAO-13-199 Sub-Saharan Africa

Figure 13: U.S. and Chinese Crude Oil Imports and Total Trade with Angola, 2001-2011

Notes: Total trade is defined as imports plus exports. Trade data are reported in nominal values. 

Changes in values over time are due in part to changes in the prices of traded goods. 

Consistent with the overall trend for sub-Saharan Africa, oil was Angola’s 

primary export to the United States under AGOA. Since 2004, crude oil 

has constituted almost 100 percent of Angola’s exports to the United 

States under AGOA.74

U.S. firms’ investments in Angola have been predominantly in the oil 

sector, where they have greatly exceeded reported investments by 

Chinese firms. Although China does not publish data on its investments in 

 

74From 2004, when Angola became eligible to export goods to the United States under 

AGOA, through 2011, more than half of U.S. oil imports from Angola received duty-free 

treatment under that program. During the same period, approximately 41 percent of U.S. 

oil imports from Angola received duty-free treatment under GSP. In 2011, nearly 87 

percent of U.S. imports of oil from Angola received duty-free treatment under AGOA, while 

less than 3 percent of oil from Angola was imported under GSP.

U.S. and Chinese Investments
 

Page 42 GAO-13-199 Sub-Saharan Africa

countries by sectors, available data on U.S. and Chinese firms’ 

investments in Ghana show that U.S. firms’ investments, primarily in oil 

and other mining sectors, have also exceeded the total reported for 

Chinese firms. Figure 14 shows U.S. and Chinese firms’ cumulative 

reported foreign direct investments in Angola and Ghana. For Angola, 

data shown for both U.S. and Chinese firms’ reported foreign direct 

investments are from 2007 through 2011, the latest period for which 

comparable data are available. For Ghana, Chinese firms’ reported 

foreign investments are shown for 2007 through 2011; U.S. data are 

shown for 2010 to 2011, because BEA has not released confidential data 

on U.S. foreign direct investments in the country from 2007 through 2009.

Figure 14: U.S. and Chinese Firms’ Cumulative Reported Foreign Direct 

Investments in Angola and Ghana, 2007-2011

Notes: BEA did not release U.S. foreign direct investment data for Ghana from 2007 to 2009 for 

confidentiality reasons. According to experts, China’s foreign direct investment data are likely 

underreported. 

Available data showing the extent of U.S. and Chinese firms’ ownership 

of oil blocks in Angola and Ghana provide some indication of their 
 

Page 43 GAO-13-199 Sub-Saharan Africa

respective investments in the oil sector.75 According to these data, U.S. 

firms have invested both as operators and as nonoperators in the oil 

sector in Angola and Ghana, while Chinese firms have invested as 

nonoperators in Angola.76 As of 2012, U.S. firms acted as operators for 

11 of 49 oil blocks in Angola and for 2 of 17 oil blocks in Ghana.77 As 

operators, they may have a minority stake but are primarily responsible 

for activities including drilling, maintenance, and ensuring compliance with 

required rules and regulations.78 In addition, U.S. firms have purchased 

ownership interests in 5 oil blocks in Angola and 4 oil blocks in Ghana as 

nonoperators—that is, with a minority stake and no responsibility for 

operations. In contrast, Chinese firms have purchased ownership 

interests in 12 oil blocks in Angola as nonoperators. Firms from other 

countries —including Angola, Brazil, Denmark, France, Italy, Norway, and 

the United Kingdom, among others—also have operator and nonoperator 

roles in these oil blocks.79

 

75An oil block is a geographic area delineated by licensing authorities for oil exploration 

and production. The licensing authority grants exploration, production rights, or both, to an 

oil company or joint venture within the boundaries of the block, usually on an exclusive 

basis.

Figure 15 presents information on U.S. and 

Chinese firms’ investments in oil blocks in Angola and Ghana.

76According to a report by the U.S. Department of Energy’s Energy Information 

Administration, Angola’s national oil company, Sonangol, is the sole concessionaire and 

majority shareholder for oil and gas exploration and production in Angola and controls all 

petroleum industry activities. Sonangol works with foreign companies through joint 

ventures and production-sharing agreements. The Angolan government has plans under 

way to create a national oil agency that would act as regulator and concessionaire in place 

of Sonangol. Energy Information Administration, Country Analysis Briefs: Angola

(Washington D.C.: 2011).

77Information on ownership of oil wells is as of September 2012 for Angola and as of 

August 2012 for Ghana.

78Angola has been a large oil producer for decades and is a member of the Organization 

of Petroleum Exporting Countries, while Ghana has been an oil producer since 2011. 

Additionally, in Angola, large international oil companies generally operate the country’s oil 

wells; in Ghana, smaller independent oil firms operate the wells. 

79No single foreign firm dominates Angola’s oil sector, because the Angolan government 

generally distributes ownership stakes among multiple companies.
 

Page 44 GAO-13-199 Sub-Saharan Africa

Figure 15: Numbers and Types of U.S. and Chinese Firms’ Investments in Oil Blocks in Angola and Ghana as of 2012

Notes: An operator is generally the oil company that engages in drilling, service, and other 

operations; an operator has primary responsibility for maintaining well operations and ensuring 

compliance with required rules and regulations. A nonoperator generally has an ownership stake, 

similar to a minority and noncontrolling interest. 

a

In addition to U.S. firms, other firms, including firms from Angola, Brazil, France, Denmark, and the 

United Kingdom, operate Angola’s 49 oil blocks. 

b

In addition to U.S. firms, other firms, including firms from Bermuda, Italy, Nigeria, and the United 

Kingdom, operate Ghana’s 17 oil blocks. In one oil block, one U.S. firm had an operator role and 

another U.S. firm had a nonoperator role. 

U.S. oil companies have an operator role in several oil blocks in Angola 

and Ghana because of the superior technological capability and 

management expertise required for complex offshore oil exploration and 

production operations, according to representatives from major oil firms 

and U.S. agency officials. In contrast, Chinese firms generally lack the 

technology and capacity to manage offshore oil operations.80

 

80According to the Department of Energy, one Chinese national oil company recently 

launched its first deepwater drilling rig in the South China Sea. Additionally, Chinese 

national oil companies are gaining deepwater management experience as nonoperators 

and operators in other sub-Saharan African countries including Nigeria, Gabon, Equatorial 

Guinea, and Cameron, according to the Department of Energy.

However, as 
 

Page 45 GAO-13-199 Sub-Saharan Africa

nonoperators, Chinese firms can acquire project management experience 

by participating in decision making for oil well operations, according to a 

representative from another large oil firm.

Chinese firms have been willing to pay high prices to acquire ownership 

interest as nonoperators in Angola. According to a representative from a 

large U.S. oil company, in some instances Chinese firms have been 

willing to pay much higher prices than U.S. firms to purchase ownership 

interests, in part because Chinese firms are not answerable to 

shareholders and because they receive support, including financing, from 

the Chinese government. For example, the representative said, in 2008, 

no U.S. firm could match a Chinese firm’s offer of $1 billion in “bonus” 

funds to purchase partial ownership in an oil block in Angola.81 According 

to a representative from another large U.S. oil firm, Chinese firms do not 

consider the cost and profitability of their oil sector purchases in the same 

manner as Western firms, because Chinese state-owned firms may view 

these purchases as a means of meeting the Chinese government’s 

strategic objective of securing oil supply.82

Available data indicate that Chinese government loans to the 

governments of all three case-study countries—primarily for infrastructure 

construction by Chinese firms—have exceeded U.S. government loans. 

The Chinese government has also provided a small amount of grants, 

mostly for construction projects. The tying of loans and grants to the use 

of Chinese firms is consistent with China’s policy of seeking mutual 

benefit in assisting African countries with infrastructure development; 

however, U.S. officials are concerned that China’s loans may 

disadvantage U.S. firms. In addition to financing from the Chinese 

government, funding from other donors, including the United States, has 

supported Chinese firms’ infrastructure construction projects.

 

81Oil companies typically offer “bonuses” in addition to royalty fees to acquire ownership 

rights in oil blocks.

82China’s national interest in securing oil supplies has led the Chinese national oil 

companies to invest throughout the world, according to the Department of Energy.

The Chinese Government 

Has Provided More Loans 

Than the U.S. Government, 

Primarily for Construction 

by Chinese Firms
 

Page 46 GAO-13-199 Sub-Saharan Africa

Available data indicate that Chinese government loans and related 

financing to Angola, Ghana, and Kenya have exceeded U.S. government 

loans and related financing.83 As figure 16 shows, Chinese government 

credit lines to Angola from 2002 through 2011 exceeded U.S. loans and 

related financing by more than $11 billion, Chinese government loans to 

Ghana from 2006 through 2011 exceeded U.S. loans and related 

financing by more than $2.4 billion, and Chinese government loans to 

Kenya from July 2009 through June 2012 exceeded U.S. government 

loans and related financing by more than $77 million.84 Chinese 

government loans and related financing were primarily for infrastructure 

projects, such as construction of roads, rail, hospitals, schools, housing, 

and water and energy infrastructure, to be implemented by Chinese firms, 

including state-owned firms.85

 

83In addition to loans, China has committed credit lines in some cases. A borrower draws 

funds from a credit line, incurring a loan. U.S. government agencies such as U.S. Ex-Im

and OPIC provide loans as well as loan guarantees and insurance. 

U.S. officials observed that China’s 

infrastructure construction addresses a key need in Africa. In contrast to 

Chinese loans and related financing, U.S. government loans and related 

financing generally have supported private-sector and host-government 

purchases of U.S. exports, including aircraft and machinery, through U.S. 

Ex-Im, as well as investments in loan portfolios, geothermal energy, and 

medical equipment through OPIC. U.S. agencies such as U.S. Ex-Im and 

OPIC offer loans and related financing for specific transactions intended 

to increase U.S. exports or benefit U.S. firms’ investments.

84We obtained data on China’s loans to Angola from information published by the Angolan 

Ministry of Finance and from a U.S. official. Other sources corroborated data on China’s 

total lending and provided some additional information about its loans to Angola. 

Additionally, we obtained information about China’s loans and grants to Ghana and Kenya 

from documents published by the Ghanaian and Kenyan governments. Data on China’s 

loans were available for different time periods in each of the case-study countries. China 

does not publish country-specific data on its loans and grants. 

85A joint study by the World Bank and the Chinese government states that China’s stateowned enterprises and government are closely connected and that Chinese state-owned 

enterprises are more likely to receive preferential access to bank finance, privileged 

access to business opportunities, and even protection against competition. See World 

Bank and Development Research Center of the State Council, People’s Republic of 

China, China 2030: Building a Modern, Harmonious, and Creative High-Income Society. 

Chinese Government Loans 

Exceed U.S. Government Loans 

and Benefit Chinese Firms
 

Page 47 GAO-13-199 Sub-Saharan Africa

Figure 16: Available Data on U.S. Government and Chinese Government Loans and Related Financing Commitments for 

Angola, Ghana, and Kenya

a

Data on Chinese government loans and related financing for each country were available only for the 

indicated periods. Although data on U.S. government loans and related financing are available for 

prior years, U.S. government commitments are shown only for the indicated periods. 

b

U.S. government commitments include loans and related financing such as loan guarantees and 

insurance. Chinese government commitments include credit lines as well as loans. In Angola, China 

committed credit lines, from which a borrower can draw funds, incurring a loan. 

c

The Ghanaian government published data on China’s loan commitments as of September of each 

year in its annual budget documents for 2006 through 2011. Available budget data did not include 

China’s $3 billion loan to Ghana signed in December 2011. We have included the $3 billion loan with 

previous loan commitments because this financing represents China’s most significant loan package 

to Ghana. 

d

U.S. government and Chinese government loans and related financing commitments are presented 

for Kenya’s fiscal years, from July 2009 through June 2012, because data for China were only 

available for this period.

The government of China has generally committed loans and credit lines

to support Chinese firms’ infrastructure construction in the three casestudy countries through high-level agreements with each country’s 

government. For example:
 

Page 48 GAO-13-199 Sub-Saharan Africa

• Angola. The Chinese government’s commitments of about $12 billion 

in credit lines to the Angolan government in 2002 through 2011 have 

driven much of Chinese firms’ engagement in the country, according 

to U.S. and Angolan officials.86

• Ghana. The Chinese government signed a $3 billion loan agreement 

with the Ghanaian government in December 2011 for 12 eligible 

infrastructure projects to be implemented primarily by Chinese firms,87

according to Ghana’s finance ministry.88

• Kenya. The Chinese government’s commitments of about $480 million 

in loans, mostly for infrastructure construction, between July 2009 and 

June 2012 were generally provided under agreements between the 

Chinese and Kenyan governments. According to Kenyan finance 

ministry officials, these agreements identified Chinese firms that 

would implement loan-financed projects.

Chinese government loans and related financing for projects in Africa 

have enabled Chinese firms to establish and expand operations within the 

region. For example, according to officials from an Angolan 

nongovernmental organization (NGO), Chinese state-owned enterprises 

and, later, Chinese private-sector firms began operating in Angola after 

the Chinese government agreed to provide loans to the Angolan 

government following the conclusion of the country’s civil war in 2002. 

According to Kenyan officials, China’s investments in Kenya have 

increased, in part because some Chinese firms that initially came to 

Kenya to work on Chinese government–financed projects have diversified 

into other sectors.

 

86Comprehensive information on disbursement of China’s credit lines and loans to Angola 

is not available. However, data published by the Angolan Ministry of Finance indicates that 

as of June 2008 about 30 percent China’s credit lines of $2 billion in 2004 and $2.5 billion 

in 2007 were disbursed. 

87U.S. officials said that they questioned how much of China’s $3 billion loan commitment 

to Ghana in December 2011 will be disbursed. Although disbursement information for this 

loan is not yet available, data published by Ghana’s Ministry of Finance and Economic 

Planning for the construction of the Bui hydroelectric dam indicate that as of September 

2011, almost $129 million (70 percent) of the nearly $185 million committed by the 

Chinese government had been disbursed since 2008.

88In 2006 and 2011, the Chinese government also committed about $353 million to the 

Ghanaian government for several projects, including dam construction, communication 

infrastructure and systems, and electrification. 
 

Page 49 GAO-13-199 Sub-Saharan Africa

In addition providing loans, the Chinese government has also provided 

small amounts of grant assistance, primarily for infrastructure such as 

hospitals, government buildings, and sports stadiums that were built by 

Chinese firms. For example, China committed almost $39 million in grant 

funding to Kenya from July 2009 through June 2012 for construction 

projects including roads, a sports stadium, and a hospital, according to 

Kenyan government reports on donor funding. In 2011, China committed 

$15 million in grants for the construction of Ghana’s Ministry of Foreign 

Affairs’ building, according to Ghanaian government budget reports.89

U.S. officials from several agencies expressed concerns that some 

aspects of Chinese government loans—their lower cost, greater flexibility, 

and lack of transparency—may advantage Chinese firms over U.S. firms.

• Lower cost. Our analysis of information on specific Chinese 

government infrastructure loans to Angola, Ghana, and Kenya 

showed that borrowers’ costs for these loans have generally been

less than borrowers’ costs for U.S. government loans to Angola and 

Kenya, and, to a lesser extent, to Ghana (see app. II for more 

details).90 The Chinese government loans that we analyzed generally 

required a lower repayment over time, in terms of net present value, 

than would a U.S. government loan for a similar project.91

 

89No published information is available regarding China’s grants to Angola.

For 

example, compared with China Ex-Im’s and China Development 

Bank’s November 2009 loans of $6 billion and $1.5 billion, 

respectively, to Angola, the repayment required for a hypothetical U.S. 

Ex-Im loan to Angola at the same time and of the same size would be 

greater because of factors such as higher fees (7.62 percent up-front 

fees for the U.S. Ex-Im loan vs. 0.25 percent fees for the China Ex-Im 

and China Development Bank loans) and a shorter repayment period 

90In addition, our analysis of information on specific Chinese government infrastructure 

loans to Angola, Ghana, and Kenya showed that these loans are more costly than World 

Bank loans to Ghana and Kenya, but not to Angola.

91Because U.S. Ex-Im did not offer loans for the construction sector during a similar period 

as the Chinese loans, U.S. Ex-Im provided us terms for hypothetical loans for the 

construction sector for the same country, on the same date, and of the same magnitude 

as the Chinese government loans.

U.S. Officials Are Concerned 

That Chinese Government 

Loans May Disadvantage U.S. 

Firms
 

Page 50 GAO-13-199 Sub-Saharan Africa

(5 years for the U.S. Ex-Im loan vs. 15 years for the China Ex-Im loan 

and 8 years for the China Development Bank loan).92

• Greater flexibility. China’s loans may provide more flexible terms for 

the use of local content such as labor and materials, making them 

more attractive to host-country governments. U.S. Ex-Im finances the 

purchase of goods originated and shipped from the United States and 

also finances U.S.-provided services. In addition to financing U.S. 

exports, U.S. Ex-Im may in some cases provide financing for local 

costs, such as local labor and materials, up to 30 percent of the 

contract value of the export.93 U.S. Ex-Im authorized more than $70 

million for local costs in Ghana between 2001 and 2011, equal to 

about 10 percent of its export financing for Ghana. Under its recent $3 

billion loan agreement with Ghana, China agreed to finance 60 

percent Chinese content and up to 40 percent Ghanaian content, 

according to a senior Ghanaian government official.94

• Lack of transparency. U.S. officials and others noted that, in general, 

the Chinese government’s engagement with African countries lacks 

transparency. According to U.S. officials, in some cases the lack of 

transparency regarding aspects of Chinese government loans, such 

as their amount, terms, and purpose, may limit the U.S. government’s 

ability to provide competitive loans to support the purchase of U.S. 

exports, thus affecting U.S. firms’ ability to compete with Chinese 

 

92We obtained information about loans such as the amount, interest rate, maturity, and 

repayment period. When we could not obtain information about specific loan terms, such 

as the disbursement periods and the commitment fees for China’s loans to Angola and 

Kenya, we made assumptions on the basis of comparable loans’ terms or as appropriate. 

The repayment value of loans can differ on the basis of each loan’s interest rate, maturity,

and other fees. According to U.S. Ex-Im officials, U.S. Ex-Im’s fees reflect risk of the 

borrower’s defaulting on the loan and are based on country risk, the risk classification of 

the borrower, the terms of the loan, and the disbursement period. 

93Under OECD rules, U.S. Ex-Im can provide up to 30 percent financing for local costs for 

medium- and long-term transactions if these expenses are related to the U.S. exporter’s 

scope of work and if the U.S. exporter has demonstrated that local cost support is 

available from a competitor export credit agency or that private market financing of local 

costs was difficult to obtain for the transaction. Between 2001 and 2011, U.S. Ex-Im 

committed more than $70 million for financing local costs in Ghana and committed an 

additional $1.2 million in Nigeria. Information on large Chinese government loans 

indicates that China requires between 60 and 70 percent Chinese content. 

94Chinese content includes materials made in China as well as Chinese labor to 

implement projects in the host country. 
 

Page 51 GAO-13-199 Sub-Saharan Africa

firms’ costs of products and services. For instance, according to U.S. 

Ex-Im officials, absence of information on the cost of China’s loans 

may prevent U.S. Ex-Im from offering competitive loans for U.S. 

exports and may thus disadvantage U.S. firms interested in exporting 

their goods and services. According to agency officials, U.S. Ex-Im 

adheres to OECD rules, which in rare cases allow a participant export 

credit agency to match a non-OECD participant’s financing terms and 

conditions, if there is evidence or specific information about the nonOECD country’s financing offer. However, according to U.S. Ex-Im, 

such information is typically difficult to obtain from the borrower, who 

is the potential beneficiary of the better terms. Moreover, because the 

Chinese government is generally not transparent in its lending 

practices, according to U.S. Ex-Im officials, it is difficult to obtain 

specific information on China’s financing terms and U.S. Ex-Im can 

rarely use this OECD provision.95

Funding provided by other donors, such as the World Bank and the 

United States through MCC, has supported construction projects for 

which Chinese firms have competed in the case-study countries.96 For 

example, according to data on World Bank-funded contracts in the three 

case-study countries, Chinese firms won about $455 million in contracts 

for construction projects.97

 

95In one instance, according to U.S. Ex-Im, it was able to obtain information to match 

China’s loan offer for a rail project in Pakistan in 2010. 

In Ghana, the only one of our three case-study 

countries to qualify for an MCC compact, Chinese firms won about $112 

million in contracts (22 percent of overall MCC-Ghana contract dollars) for 

construction projects. Chinese firms are also heavily engaged in 

construction contracts for the African Development Bank in Kenya, 

96MCC signed a 5-year, $547 million agreement or compact with Ghana that began in 

2007. The MCC compact provided grants to fund agriculture, transportation, and rural 

services projects, including the construction of postharvest infrastructure such as a cargo 

center and packhouses, upgrades to a major highway and other roads, and improvements 

to the rural electrification infrastructure.

97Construction projects accounted for 89 percent of overall contract dollars won by 

Chinese firms for World Bank-funded projects.

Other Donors Have Also 

Financed Construction by 

Chinese Firms
 

Page 52 GAO-13-199 Sub-Saharan Africa

according to one donor official.98

 

98According to a report published by the World Bank in 2008, Chinese firms won more 

than 30 percent, by value, of construction contracts financed by the World Bank and 

African Development Bank in Africa from 2004 through 2006, making Chinese firms more 

successful than contractors of any other nationality. Furthermore, since 1999, China’s 

construction sector has seen annual growth of 20 percent, making China the largest 

construction market in the global economy. See Vivian Foster et al., Building Bridges: 

China’s Growing Role as Infrastructure Financier for Africa (Washington, D.C.: 

International Bank for Reconstruction and Development/World Bank, 2008).

Figure 17 shows examples of Chinese 

firms’ construction projects in Angola, Ghana, and Kenya.
 

Page 53 GAO-13-199 Sub-Saharan Africa

Figure 17: Examples of Construction Projects Implemented by Chinese Firms in Angola, Ghana, and Kenya
 

Page 54 GAO-13-199 Sub-Saharan Africa

Chinese firms are competitive in the construction sector in part because 

their business practices keep construction costs low, according to officials 

from U.S. and host-country governments and other donor organizations. 

For example, Chinese firms house workers near project sites and 

maintain long work days. According to some host-government officials, 

because Chinese firms are engaged in infrastructure development in 

other parts of Africa, their cost of moving materials and equipment to new 

project sites may be lower than that of other firms. An official from a donor 

organization in Kenya noted that Chinese firms have bid below estimates 

developed by independent engineers who assessed costs for donorfunded projects.

U.S. and Chinese firms and products largely operate in different, 

noncompeting sectors in the three case-study countries, aside from their 

operations in the information and technology sector. U.S. and Chinese 

firms also face limited competition in part because U.S. firms are less 

willing to conduct business in some areas of sub-Saharan Africa, citing 

factors such as business risk and market size. In addition, counterfeits 

manufactured by Chinese firms adversely affect U.S. firms’ sales and 

reputation in Kenya.

U.S. and Chinese firms and products generally operate in different 

sectors, with the exception of the information and communications sector, 

according to officials from U.S. agencies and U.S. firms in the three casestudy countries. For example, U.S. officials in Angola noted that U.S. 

firms are active primarily in the oil and gas sector, while Chinese firms are 

active in the construction sector.99

Data on World Bank– and MCC-funded contracts illustrate U.S. and 

Chinese firms’ operations in noncompeting sectors. In all three caseSimilarly, U.S. officials and hostgovernment officials in Ghana stated that U.S. firms are generally more 

engaged in higher-technology sectors, while Chinese firms are most 

active in infrastructure construction. Moreover, according to Commerce 

officials, anecdotal evidence suggests that U.S. firms are choosing not to 

compete for projects such as major infrastructure construction for which

they perceive competition with Chinese firms to be extremely difficult.

 

99Although Chinese firms have invested in Angola’s oil sector, they have done so in a 

nonoperator role. In contrast, U.S. firms have an operator role in several oil blocks in 

Angola.

Competition between U.S. 

and Chinese Firms and 

Products Has Been Limited

U.S. and Chinese Firms 

Generally Operate in Different 

Sectors
 

Page 55 GAO-13-199 Sub-Saharan Africa

study countries, U.S. firms won a small share of the combined value of 

these donor-funded contracts, primarily for consulting services, while 

Chinese firms won a much larger share of these contracts’ combined 

value, primarily for construction services. In Ghana, the only case-study 

country to qualify for an MCC compact, no U.S. firms bid on MCC 

contracts for construction projects, according to officials who oversaw 

MCC contracts in Ghana, while Chinese firms won about $112 million in 

contracts (22 percent of overall MCC contract dollars), all for construction 

projects.100 Similarly, in all three countries, Chinese firms won a large 

share of World Bank–financed construction contracts but won a very 

small share of consulting contracts.101

 

100Portuguese firms won the highest amount of MCC construction contracts in Ghana, by 

nationality, with a total of almost $114 million in contracts. Ghanaian firms were the top 

contractor by nationality overall, with a total of $192 million in contracts. 

Figure 18 shows World Bank–

financed contracts won by U.S. and Chinese firms, as well as firms from 

other countries, in Angola, Ghana, and Kenya from 2001 to 2011.

101Services provided by U.S. firms under World Bank-funded contracts represent a small 

fraction (less than 1 percent) of annual U.S. trade in service exports to Angola, Ghana, 

and Kenya. However, World Bank contracts represent one of the few instances where 

data are available for examination of potential competition between U.S. and Chinese 

firms. According to the World Bank, the data include only contracts reviewed by World 

Bank staff prior to award, which comprise about 40 percent of total World Bank investment 

lending. The nationality of a firm reflects the country where it is registered, although the 

firm’s parent may be headquartered in another country. 
 

Page 56 GAO-13-199 Sub-Saharan Africa

Figure 18: World Bank–Financed Contracts with U.S., Chinese, and Other Firms in Angola, Ghana, and Kenya, 2001-2011

Notes: According to the World Bank, the data shown include only contracts reviewed by World Bank 

staff prior to award. In general, these types of contracts constitute about 40 percent of total World 

Bank investment lending. The nationality of a firm reflects the country where it is registered, although 

the firm’s parent may be headquartered in another country. 

a

Firms from at least 52 other countries won World Bank contracts, with firms from Angola, Ghana, 

and Kenya winning the most contracts. 

b

Other contracts primarily include contracts to provide goods such as transportation equipment, 

medical equipment and products, and information technology equipment. 

Data from Commerce provide some evidence that European firms have 

been U.S. firms’ primary competitors for host-country government 

contracts in our case-study countries. From August 2002 to February 

2012, U.S. firms requested assistance from Commerce’s Advocacy 

Center in competing for 47 host-government contracts for goods and 

services in Angola, Ghana, and Kenya. Chinese firms competed for 9 of 

these contracts, mostly in Ghana and Kenya, for telecommunications, 

computers and information technology, and transportation services (see 

fig. 19). French, German, and British firms competed with U.S. firms for 

more of the contracts and in more sectors, including oil and gas, energy 

and power, aerospace, and telecommunications, than did Chinese firms.
 

Page 57 GAO-13-199 Sub-Saharan Africa

Figure 19: Nationality of Firms Competing for 47 Angolan, Ghanaian, and Kenyan Government Contracts, 2002-2012

Notes: Data shown are for 47 contracts for which U.S. firms requested Department of Commerce 

advocacy assistance in August 2002 through February 2012. Firms from France, Germany, and the 

United Kingdom competed with U.S. firms for the largest numbers of contracts. 

U.S. and Chinese firms’ competition in information technology and 

telecommunications was particularly noted by U.S. officials and U.S. firms 

in Kenya, although it is unclear whether this competition directly affects 

U.S.-made exports to these countries. For instance, a senior official at a 

large U.S. information and communications technology firm noted that 

Chinese firms are innovating and adapting quickly to local markets, such 

as in Kenya, where a Chinese firm in this sector has established one of 

Kenya’s largest training centers.102

 

102In addition, according to the U.S. firm official, both the Chinese government and 

European governments are more active than the U.S. government in combining 

government and business interests to take advantage of large telecommunications 

projects in countries such as Kenya.

In addition, trade data indicate that 

China’s exports of telecommunications equipment to Kenya rose from 
 

Page 58 GAO-13-199 Sub-Saharan Africa

$0.5 million in 2001 to $122 million in 2011. However, the extent to which

direct competition from Chinese firms affects U.S.-made exports is 

unclear, in part because multinational corporations headquartered in the 

United States operate and export globally. For example, according to a 

representative of a U.S. firm that manufactures telecommunications 

equipment, because most of its products are manufactured outside the 

United States, competition from Chinese telecommunications firms does 

not affect its U.S.-made exports.

Competition between U.S. and Chinese firms may be limited in part by 

U.S. firms’ hesitation to conduct business in parts of sub-Saharan Africa, 

owing to factors such as business risk and market size. According to U.S. 

and host-country officials, U.S. firms are less willing than Chinese firms to 

risk investments in sectors other than oil and gas because U.S. firms are 

concerned about risks associated with conducting business in the region, 

such as corruption and a lack of economic and political stability. For 

example, according to a senior representative from a U.S. firm in Kenya, 

the business environment in Kenya, and in East Africa broadly, lacks the 

regulatory and structural framework to which U.S. firms are accustomed. 

U.S. firms prefer limited risk and moderate growth, whereas Africa overall 

is a higher-risk and higher-growth market, according to the U.S. firm 

representative. In addition, U.S. and Ghanaian officials stated that 

markets such as Ghana are often too small to be cost-effective for U.S. 

firms’ operations and that these firms are therefore unwilling to invest. In 

contrast to U.S. firms, Chinese firms are more willing to be flexible in 

commercial dealings—for example, collaborating with local businesses—

and to take on business risk, according to business representatives and 

U.S. officials in Kenya and Ghana. Some officials stated that this 

willingness results in part from Chinese government financing, which 

helps offset risks that other firms must face independently and which 

eases decision making in the absence of accountability to shareholders.

Counterfeit goods and related products from China have adversely 

affected U.S. firms’ sales and reputation, especially in Kenya among our 

case-study countries.

103

 

103According to a March 2012 draft report by the Kenyan Association of Manufacturers, 

counterfeiting includes the violation of trademarks, industrial designs, geographical 

indications, copyright, and related rights. Kenyan Association of Manufacturers, The Study 

to Determine Severity of the Counterfeit Problem In Kenya as It Affects Industries and 

Impact of Proliferation of Counterfeit Products from Other EAC Partner States And Far

East Countries Into the Kenyan Market, draft report (March 2012). 

According to a 2012 study by the Kenyan 

Business Risk and Market Size 

Limit U.S.-Chinese Competition

Chinese Counterfeits Have 

Negatively Affected U.S. Firms 
 

Page 59 GAO-13-199 Sub-Saharan Africa

Association of Manufacturers, counterfeit goods primarily from China, 

especially in the energy, electronic, and electrical components sectors, 

have negatively affected the sales and reputation of U.S. firms and others 

with operations in Kenya.104 For example, a representative of a U.S. firm 

that manufactures batteries in Kenya noted that an influx of counterfeit 

and substandard products, mainly from China, caused the U.S. firm’s 

business to decline and that over time the firm has decreased the number 

of its employees in Kenya from 800 to 300.105 In some cases, Chinese 

products, although of poorer quality, also mimicked the U.S. firm’s 

product branding and color schemes, according to a former senior 

executive of this U.S. firm. The former executive noted that although the 

U.S. firm successfully litigated in Kenyan courts against this trademark 

infraction, the penalty was too lenient to have a deterrent effect on the 

Chinese manufacturers. In another instance, a representative of a large 

U.S. firm with regional headquarters in Kenya stated that the Chinese 

theft of intellectual property, in general, is one of the biggest challenges 

that U.S. firms face in Africa.106 To combat Chinese counterfeits, the U.S. 

embassy in Kenya has sponsored several public-education programs, 

and the U.S. government is providing technical assistance to Kenya’s 

Anti-Counterfeit Agency, established in 2010.

 

104The Kenyan Association of Manufacturers report on counterfeits notes that counterfeit 

products result in a loss of revenue for manufacturers in Kenya as well as for the Kenyan 

government. The report cited a senior Kenyan official’s statement that Kenyan 

manufacturers incur a net loss of more than $40 million and that the Kenyan government 

loses about $80 million in tax revenue annually as a result of counterfeit products. 

According to manufacturers interviewed for that report, about 30 percent of electrical 

components and electronics (e.g., motors, generators, switchgears, and batteries) are 

counterfeits and are primarily from China. See Kenyan Association of Manufacturers, The 

Study to Determine Severity of the Counterfeit Problem.

105Trade data indicate that China’s exports of batteries (including rechargeable batteries 

and parts) increased from $15 million in 2001 to $48 million in 2011.

106Although China and African countries have initiated efforts to combat counterfeits and 

protect intellectual property rights, the success of these efforts is unclear, according to 

Commerce officials.
 

Page 60 GAO-13-199 Sub-Saharan Africa

Similar to overall U.S. aid trends for sub-Saharan Africa, and in keeping 

with the U.S. goal to support development in the region, the U.S. 

government has provided generally increasing amounts of development 

assistance, predominantly grants, to Kenya, primarily driven by health 

and humanitarian assistance (see fig. 20).107 From 2001 to 2010, the 

United States committed almost $4 billion in development assistance to 

Kenya.108

 

107According to U.S. aid data reported to OECD, concessional loans constituted less than 

0.1 percent of U.S. aid to Kenya from 2001 through 2010. The United States has not 

committed any loans as aid to Kenya since 2008. 

108During the same period, the United States committed about $1.6 billion in development 

assistance to Ghana as part of an MCC compact starting in 2007. This assistance differed 

from U.S. assistance to Kenya in its focus on infrastructure and agriculture projects. For 

more information on MCC-funded projects in Ghana see the supplemental report

GAO-13-280SP. Compared to Kenya and Ghana, the United States committed a smaller 

amount of aid to Angola—about $804 million—during the same period because the United 

States discontinued humanitarian assistance to Angola. 

U.S. Government 

Engagement in Kenya 

Illustrates Strong Focus on 

Aid
 

Page 61 GAO-13-199 Sub-Saharan Africa

Figure 20: U.S. Development Assistance Committed to Kenya, 2001-2010

Note: Data are reported in nominal dollars. 

U.S. aid to Kenya also included assistance for building trade capacity. 

From 2001 to 2011, about 96 percent of U.S. imports from Kenya under 

AGOA consisted of apparel, textiles, leather, and footwear (see fig. 21). 

AGOA’s “third-country fabric” provision has enabled Kenya to increase its 

apparel exports generally, according to U.S. and Kenyan officials, and 

Kenya has become one of the largest sub-Saharan African exporters of 

nonpetroleum goods to the United States under AGOA. U.S. and Kenyan 

officials pointed to the positive employment effects in Kenya associated 

with apparel exports under AGOA. However, they also noted AGOA’s 

limited success in enabling Kenya and other sub-Saharan African 

countries to manufacture the textiles and fabrics that form the input for 

apparel manufacturing. Kenya and Ghana obtain fabrics mostly from 
 

Page 62 GAO-13-199 Sub-Saharan Africa

China and other Asian countries to manufacture apparel for export to the 

United States, according to U.S. officials in these countries.109

Figure 21: U.S. Imports from Kenya under AGOA, 2001-2011

 Chinese 

exports of textile and fabrics to Kenya grew during this period from $40 

million in 2001 to $347 million in 2011.

Note: Data are reported in nominal dollars. 

 

109According to U.S. officials in Kenya, about 90 percent of Kenya’s apparel exports are 

made of imported fabric. Specifically, about half of the imported fabric is from China 

(mostly woven fabrics) and Taiwan (mostly higher-end fabrics), and the remainder is from 

India and Pakistan (mostly knits from both countries).
 

Page 63 GAO-13-199 Sub-Saharan Africa

Limited available data suggest that, in contrast to U.S. aid, China’s aid as 

grants to Kenya was relatively small.110 Moreover, U.S. officials stated 

that projects supported by China’s grants—primarily infrastructure 

projects—are different from those supported by the United States in 

Kenya. Nevertheless, according to USAID officials, China’s funding of 

infrastructure projects, through loans and grants, complements the U.S. 

government’s focus on aid for poverty reduction. U.S. officials and other 

donors further observed that although China is invited to donor meetings, 

it does not actively coordinate its projects with other donors, preferring 

instead to work with host-country officials directly.

Host-government requirements regarding foreign firms’ use of local 

content—including employment of local workers—and expectations of 

foreign firms’ exercising corporate social responsibility have influenced 

the United States’ and China’s respective engagement in the case-study 

countries.

Local content. Host-governments’ local content requirements—which 

include employing local workers, partnering with domestic firms, and 

using local materials—have influenced U.S. and Chinese firms’ 

engagement in these countries. For example, the Angolan government’s 

requirement that foreign firms take local firms as partners has posed 

some challenges for U.S. firms, while the Ghanaian and Kenyan 

governments’ strict requirements that foreign firms hire local workers 

have resulted in Chinese firms’ hiring more local workers for construction 

projects in these countries.

• Angola. According to a 2012 report from State, for companies set up 

by national or foreign investors, the Angolan government limits the

number of foreign employees to 30 percent of the workforce, 

effectively requiring that Angolans constitute 70 percent of the 

workforce.111

 

110Comprehensive data on China’s grants to Angola, Ghana, and Kenya are not available, 

in part because China does not publish country-specific aid data. The United States and 

other developed countries that are members of OECD are required to report aid data 

annually to OECD, which makes this information publicly available. China is not an OECD 

member and does not report such data.

In the petroleum sector, in addition to hiring local 

111U.S. Department of State, 2012 Investment Climate Statement–Angola (Washington 

D.C.: 2012).

Host Governments Have 

Influenced U.S. and 

Chinese Engagement
 

Page 64 GAO-13-199 Sub-Saharan Africa

workers or sourcing local products, oil service companies may meet 

Angola’s local-content requirements by partnering with local Angolan 

firms.112 According to U.S. officials, Angola’s local-content 

requirements impede U.S. firms’ ability to voluntarily choose their 

business partners. U.S. officials also noted that Angola’s local-content 

requirements have raised concerns for some U.S. firms related to 

their responsibilities under the U.S. Foreign Corrupt Practices Act, 

which outlaws payments to foreign government officials to assist in 

securing or retaining business opportunities. According to U.S. 

officials, given the intertwining of Angolan private and government 

interests, complying with Angola’s local content requirements could 

put U.S. companies in a position of having to partner with unknown, 

and potentially corrupt, entities. For instance, in one case a U.S. firm 

reported its partnership with an Angolan firm to U.S. officials after the 

U.S. firm became aware of links between the local firm and a senior 

Angolan government official, according to a U.S. official and 

information released by this firm. The Chinese government negotiated 

a lower local content requirement for Chinese firms implementing 

Chinese government–funded infrastructure projects, according to an 

Angolan NGO and reported statements by the former Chinese 

ambassador to Angola. According to these sources, the Chinese 

government’s agreements with the Angolan government allow 

Chinese firms to use up to 70 percent foreign labor, and no less than 

30 percent Angolan labor. However, these sources stated that 

Chinese firms generally were unable to meet the requirement to hire 

30 percent of the workforce locally, in part because of a lack of skilled 

local workers in the years following Angola’s civil war.

• Ghana. According to a 2012 report from State, Ghana’s local content 

rules consist of a local-employment requirement for the retail sector. 

However, Ghana issues work permits for foreign workers in proportion 

to the size of the foreign firm’s investment.113

 

112The petroleum sector in Angola is subject to revised local content regulation, according 

to State. A 2008 decree by the Angolan government requires oil companies to first seek 

Angolan employees to fill any vacant position prior to seeking expatriate appointment, 

which must first be authorized by the Ministry of Petroleum.

Moreover, according to 

U.S. officials, strong unions and greater public sensitivity to hiring 

practices limit the hiring of non-Ghanaian workers. Data from Ghana’s 

113U.S. Department of State, 2012 Investment Climate Statement—Ghana (Washington 

D.C.: 2012). This report also notes that Ghana requires foreign investors to have local 

partners in only a few sectors—fishing, insurance, and the extractive industries.
 

Page 65 GAO-13-199 Sub-Saharan Africa

Ministry of Roads indicate that Ghanaian workers constitute the 

majority of workers hired by Chinese firms for construction projects.

• Kenya. Although the Kenyan government does not directly specify a 

minimum requirement for local employment, it encourages 

investments in sectors that create local employment, according to a 

2012 report from State.114

Corporate social responsibility. The Ghanaian and Angolan 

governments require firms in extractive industries, such as oil and other

mining, to exercise corporate social responsibility by supporting 

philanthropic activities in the communities where they operate. For 

example, in the oil and diamond sectors, contracts with the Angolan 

government spell out the commitments companies must make to invest in 

infrastructure and social services to benefit local communities, such as 

building schools, equipping hospitals, or funding microcredit programs, 

according to State’s investment climate report. Despite differences in U.S. 

and Chinese firms’ roles in Angola’s oil sector, where U.S. firms are 

mostly operators of oil blocks and Chinese firms are nonoperators, both 

contribute funds for community projects. Specifically, while U.S. and other 

oil companies in operator roles are held responsible for these activities, 

oil companies in nonoperator roles, such as Chinese firms in Angola, also 

contribute funds toward these philanthropic activities, according to a 

representative from a large western oil firm.

Additionally, the Kenyan government 

restricts the number of work permits for expatriate workers in foreign 

firms, according to officials from the Kenyan Private Investment 

Authority. As a result of these requirements, Kenya has restricted the 

number of Chinese workers, which has led to Chinese firms’ hiring 

more local workers, according to U.S. and Kenyan government 

officials.

In addition to influencing U.S. and Chinese engagement, the 

governments of Ghana and Kenya have enhanced the transparency of 

Chinese government financing in their countries by publishing information 

 

114U.S. Department of State, 2012 Investment Climate Statement—Kenya (Washington 

D.C.: 2012).
 

Page 66 GAO-13-199 Sub-Saharan Africa

about the scale, terms, and use of Chinese loans and grants.115

Specifically, the Ghanaian government published the terms, such as the 

interest rate and fees, of its $3 billion loan agreement with China 

Development Bank and publishes annual budget reports that include 

information on the amount of Chinese government loans and grants for 

specific projects. Similarly, the Kenyan government annually publishes 

data on specific projects funded by the Chinese government.116

Assessing the implications of China’s economic engagement in subSaharan Africa involves considerable challenges for U.S. policymakers. 

One such challenge is the limited availability of reliable information. While 

it is clear that China’s economic engagement in the region has grown 

rapidly over the past decade, with China surpassing the United States as 

sub-Saharan Africa’s leading trading partner, information on key aspects 

of that engagement is lacking. For example, unlike most global economic 

powers, China does not publish comprehensive data on its foreign 

assistance, or government-sponsored loans to the region. Our case-study 

analysis shows that additional information can, to some degree, be 

obtained by collecting available data on specific countries, but these data 

do not fully eliminate information gaps.

In 

contrast, the Angolan government has published limited information on 

Chinese government loans. Specifically, the Angolan Ministry of Finance 

website lists projects as of 2008 that were funded through Chinese 

government credit lines issued in 2004 and 2007, but it has not published 

data on the terms of Chinese government credit lines and loans.

The information we obtained shows that, while both the United States and 

China are substantial oil importers from sub-Saharan Africa, their 

involvement across the region has differed in other respects. For 

example, the United States’ emphasis on providing development 

assistance has been in contrast to China’s active pursuit of increasing 

economic engagement through large-scale loans to governments for 

 

115As a member of OECD’s Development Assistance Committee, the U.S. government 

annually reports its data in disaggregated format for public reporting. Additionally, the 

OECD Arrangement on Export Credits requires participants such as U.S. Ex-Im to notify, 

consult with, and share information with other participants if U.S. Ex-Im offers loans on 

terms more generous than what the agreement specifies. 

116The Kenyan government annually publishes reports on donor funding committed for the 

upcoming fiscal year. We were able to obtain these reports published from 2009 through 

2011.

Concluding 

Observations
 

Page 67 GAO-13-199 Sub-Saharan Africa

infrastructure projects, often involving the use of Chinese contractors. 

Available information from Angola, Ghana, and Kenya suggests that U.S. 

and Chinese firms generally operate in different and noncompeting 

sectors: U.S. firms are more concentrated in higher-technology areas, 

including petroleum exploration and production, and Chinese firms more 

concentrated in infrastructure. Increases in Chinese technological 

capacity could affect U.S. and Chinese commercial engagement in some 

sectors of sub-Saharan Africa in ways that are not easily known at this 

time.

Although not in direct response to China’s engagement, the United States 

has recently elevated the importance of U.S. commercial engagement in 

its sub-Saharan Africa strategy, calling for increased trade and 

investment in the region. This reprioritization of U.S. goals reflects this 

region’s prospects for economic growth as well as the perspective that 

advancing U.S. interests can benefit from a stronger integration of 

commercial goals with diplomatic engagement. Any increases in U.S. 

commercial engagement will take place in the context of policies that 

govern the ways in which the U.S. government can work to promote 

commercial interests, during a period of tight government budgets, and—

as viewed by many U.S. firms—in the high-risk and high-cost business 

environments of many sub-Saharan African countries.

We sent a draft of this report for review and comment to the Departments 

of Commerce, Defense, Energy, State, and the Treasury and to MCC, 

OPIC, USAID, U.S. Ex-Im, the U.S. Trade and Development Agency, and 

USTR. We received technical comments from Commerce, Energy, State, 

Treasury, OPIC, U.S. Ex-Im, and USTR, which we incorporated as 

appropriate. In addition, we sent relevant sections of the draft report to 

the World Bank, which also provided technical comments that we 

incorporated as appropriate.

We are sending copies of this report to the appropriate congressional 

committees; the Secretaries of Commerce, Defense, Energy, State, and 

the Treasury; the Chairman of U.S. Ex-Im; the Administrator of USAID; 

the United States Trade Representative; the Acting Director of the U.S. 

Trade and Development Agency; the Chief Executive Officers of OPIC 

and MCC; and other interested parties. The report also is available at no 

charge on the GAO website at http://www.gao.gov. 

Agency and ThirdParty Comments
 

Page 68 GAO-13-199 Sub-Saharan Africa

If you or your staff members have any questions about this report, please 

contact me at (202) 512-3149 or gootnickd@gao.gov. Contact points for 

our Offices of Public Affairs and Congressional Relations may be found 

on the last page of this report. GAO staff who made key contributions to 

this report are listed in appendix III.

David B. Gootnick,

Director, International Affairs and Trade
Appendix I: Objectives, Scope, and 

Methodology

Page 69 GAO-13-199 Sub-Saharan Africa

Our objectives were to (1) examine U.S. and Chinese goals and policies 

for sub-Saharan Africa; (2) examine the United States’ and China’s trade, 

grants and loans, and investment activities for sub-Saharan Africa;1

To review U.S. and Chinese goals and policies with respect to subSaharan Africa, we reviewed U.S. government policies, plans, and 

legislation; publicly available Chinese government policies; and 

statements from U.S. government officials.

and 

(3) compare aspects of the United States’ and China’s engagement in 

selected case-study countries—Angola, Ghana, and Kenya.

To examine the United States’ and China’s engagement with subSaharan Africa, including our case-study countries, we analyzed available 

data on U.S. and Chinese trade, grants and loans, and investments from 

2001 through 2010 or 2011. To the extent that data were unavailable for 

this period, we used data for the most recent 3- to 5-year period available. 

To identify the best available data sources and any data limitations, we 

interviewed U.S. government officials and experts in Washington, D.C. 

We met with officials from the U.S. Agency for International Development 

(USAID); Departments of Commerce, Defense, Energy, State, and the 

Treasury; Export-Import Bank of the United States (U.S. Ex-Im); 

Millennium Challenge Corporation (MCC); Office of the U.S. Trade 

Representative (USTR); Overseas Private Investment Corporation 

(OPIC); and U.S. Trade and Development Agency. We also met with 

host-government officials, the World Bank, nongovernmental 

organizations (NGO), U.S. firms, business associations such as the 

Corporate Council on Africa and U.S.-Angola Chamber of Commerce, 

and experts from think tanks and academic institutions. We analyzed 

information on U.S. programs and funding from Commerce, MCC, OPIC, 

U.S. Ex-Im, and USAID. To describe China’s engagement, we also 

assessed publicly available information from Chinese ministries, such as 

the Ministry of Commerce; the World Bank; the International Monetary 

Fund (IMF); the World Trade Organization; and scholarly literature. The 

information on foreign laws in this report is not a product of our original 

analysis but is derived from interviews and secondary sources.

To compare in greater depth aspects of the United States’ and China’s 

engagement in sub-Saharan Africa, we conducted case studies of 

 

1

We did not include security issues within the scope of this study. 

Appendix I: Objectives, Scope, and 

Methodology 
Appendix I: Objectives, Scope, and 

Methodology

Page 70 GAO-13-199 Sub-Saharan Africa

Angola, Ghana, and Kenya. We selected these countries on the basis of 

an assessment of the levels, types, and intersection of the United States’ 

and China’s engagement in trade, grants and loans, and investment 

activity in each country; the three countries’ geographic diversity; and 

input from U.S. government officials and relevant experts. These case 

studies are meant to be illustrative and are not generalizable.

• To obtain data on the United States’ and China’s trade in goods, we 

accessed the United Nations (UN) Commodity Trade database by 

means of the Department of Commerce’s Trade Policy Information 

System. This database provides data for comparable categories of 

exports and imports of goods for the United States and China. For 

data on U.S. imports under the African Growth and Opportunity Act, 

we used Commerce’s Trade Policy Information System. Although 

comparable data for trade in services were not systematically 

available for the United States and China, we cite relevant examples 

for services provided by U.S. and Chinese firms, using World Bank 

and MCC data on contracts for projects funded by these organizations 

in sub-Saharan Africa and using available data for U.S., Chinese, and 

other firms’ bids for host-government contracts from Commerce’s 

Advocacy Center. We also present our estimates of U.S. trade in 

services, based on tabulations from Commerce’s Bureau of Economic 

Analysis (BEA) and other sources, including the Census Bureau. 

BEA’s trade-in-services data for several categories of service—travel 

and passenger fares, transportation, education, and “other” private 

services—are based on data from various sources.2 We used data on 

the number of Chinese laborers in Angola, from China’s Ministry of 

Commerce and from a news report citing the former Chinese 

ambassador to Angola, as an indicator of China’s service exports.

• To obtain data on the United States’ grants and loans, we used data 

from USAID, U.S. Ex-Im, and OPIC. To obtain data on China’s grants 

and aid, we used data from China’s foreign aid policy and China 

scholar Deborah Brautigam. For country-specific data on China’s 

grants and loans, we used data provided by U.S. government officials 

 

2

For example, to estimate travel and passenger fares, BEA uses data on passenger 

numbers collected by the Department of Homeland Security and tabulated by 

Commerce’s International Trade Administration. To estimate numbers of students from 

sub-Saharan Africa countries who are studying in the United States and numbers of U.S. 

students studying in these countries, BEA uses data based an annual survey of accredited 

U.S. institutions conducted by the Institute for International Education.
Appendix I: Objectives, Scope, and 

Methodology

Page 71 GAO-13-199 Sub-Saharan Africa

and academic scholars and data published by host governments.

• For data on U.S. firms’ investments, we used BEA data that we 

obtained directly from BEA. For Chinese firms’ investments, we used 

data from China’s Ministry of Commerce, China’s National Bureau of 

Statistics, the information office of China’s State Council, and Haver 

Analytics, as well as information on China’s data from the IMF and 

academic experts. For U.S. and Chinese firms’ investments in the oil 

sector in Angola and Ghana, we used data published by the 

governments of Angola and Ghana, with updates from the U.S. 

Department of Energy.

To ensure comparability, and given challenges in determining appropriate 

deflators for some data, we used nominal rather than inflation-adjusted 

values for U.S. and Chinese trade, grants and loans, and investments in 

sub-Saharan Africa. All of our information sources reported nominal data 

in U.S. dollars. All percentages noted in this document are rounded to the 

nearest number. We have noted data limitations as appropriate, such as 

limits in the availability of data on China’s grants and loans and likely 

underreporting of its investment data. Overall, we determined that the 

data presented in this study are generally reliable for the purposes for 

which they are used. To assess the reliability of data, where possible, we 

cross-checked the data with other sources, conducted checks on the data 

for internal consistency, and consulted with U.S. officials and experts.

• We determined that trade-in-goods data for the United States and 

China were generally reliable for comparing trends over time as well 

as composition of trade. U.S. trade-in-services data represent broad 

estimates rather than precise values: values for certain services are 

extrapolated at the country level from broader data (e.g., travel 

service data are based on multiplying the number of travelers for a 

country with data on average expenditures for travelers and average 

passenger fees for the region), while values for other services (e.g., 

business, professional, and technical services) are calculated from a 

range of estimates based on survey data. In instances where the 

volume of trade for that service was presented as a range, we used 

the highest value to estimate the volume of trade for that service. 

China’s trade-in-services data comprise data for Chinese imports and 

exports to the world, are not disaggregated by region or country, and 

cannot be compared with the U.S. data for sub-Saharan Africa and 

case-study countries. China’s data also include data on the number of 

Chinese laborers in Africa and a few African countries, including 

Angola. The United States does not have comparable data on U.S. 

workers in Africa and in countries like Angola.
Appendix I: Objectives, Scope, and 

Methodology

Page 72 GAO-13-199 Sub-Saharan Africa

• In the absence of comparable U.S. and Chinese trade-in-services 

data, we analyzed data for contracts funded by the World Bank and 

MCC as well as data from Commerce’s Advocacy Center on hostgovernment contracts. Although these data represent a small share of 

services activity in the region, they provide insights into the degree of 

competition between U.S. and Chinese firms for the projects 

represented. We found that the data for contracts funded by the World 

Bank are generally reliable. We utilized data from MCC largely to 

provide information on the nature and extent of U.S. and Chinese 

firms’ engagement in Ghana, and found the data to be generally 

reliable for that purpose. Commerce’s Advocacy Center data were for 

a limited number of cases (47) where U.S. firms requested the 

agency’s assistance in bidding for host-government contracts. 

Because these data included the nationality of other firms bidding on 

a host-government contract, we used this information to determine the 

extent to which Chinese firms or firms of other nationalities were 

competing with U.S. firms on these contracts. We did not use these 

data to determine the nationality of the winner for these contracts, 

because the data generally did not identify the nationality of the 

bidder.

• We determined that U.S. development assistance data are generally 

reliable for showing the trend and composition of aid to sub-Saharan 

African countries over time. We also determined that data from U.S. 

Ex-Im and OPIC are generally reliable to present trends and 

aggregate amounts by year, and we present these data with 

appropriate caveats. Since China does not publish aid data, we used 

the best available estimates of China’s aid to Africa, produced by 

expert Deborah Brautigam. We did not independently verify Dr. 

Brautigam’s data but obtained an understanding of the methodology 

she used to construct her estimates. We were unable to verify the 

reliability of data published by host-government ministries, but where 

possible, we asked for input from knowledgeable U.S. government 

officials. We have attributed to the appropriate sources information on 

Chinese government loans to the case-study countries and, to the 

extent possible, checked this information for consistency among the 

sources.

• To compare borrowers’ costs for loans from the Chinese government 

with borrowers’ costs for loans from other lenders, we analyzed data 

on loans provided by the Chinese government, the U.S. government, 

and the World Bank for similar sectors to the same countries for 

comparable periods. We obtained information on specific loans from 

U.S. officials, host-government officials and documents, the World 
Appendix I: Objectives, Scope, and 

Methodology

Page 73 GAO-13-199 Sub-Saharan Africa

Bank, the Organization for Economic Cooperation and Development 

(OECD), an online source for the London Interbank Offered Rate (see 

www.fedprimerates.com), and an expert on China-Angola relations.3

 

3

See Lucy Corkin, “Angolan Political Elites’ Management of Chinese Credit Lines,” in 

Marcus Power and Ana C. Alves, eds., China and Angola: A Marriage of Convenience?

(Capetown, South Africa: Pambazuka Press, 2012), 45-67.

We collected publicly available information from the World Bank and 

verified loan terms with World Bank officials. To compare loans by 

U.S. and Chinese government agencies and the World Bank to the 

governments of Angola, Ghana, and Kenya, we collected and 

analyzed information on the terms of the loans (i.e., date of the loan 

agreement, face value of the loan, interest rate, repayment period, 

grace period, disbursement pattern, and fees). Chinese government 

loans included loans by the Export-Import Bank of China (China ExIm) and the China Development Bank supporting Chinese exports of 

goods and services. For these loans, we identified the borrowing 

country, the date of the loan agreement, the sector (primarily 

construction), and the face value, as benchmarks for collecting similar 

information for U.S. and World Bank loans. For U.S. government 

loans, we used information on U.S. Ex-Im loans that support U.S. 

exports of goods and services. Because U.S. Ex-Im did not provide 

loans for the construction sector to host governments during a similar 

period as the Chinese loans, we asked U.S. Ex-Im to provide 

hypothetical loan terms for loans that it might have offered for the 

construction sector on the same date and of the same magnitude as 

the Chinese government loans. We also collected information on the 

only two loans that U.S. Ex-Im provided to the government of one of 

our case-study countries, both of them to the government of Ghana, 

since 2001. For World Bank loans, when possible, we selected loans 

with publicly available information from the World Bank on loan terms 

and that were given for the construction sector during a similar period 

as the Chinese government loans. Because we could not find World 

Bank loans for the construction sector given in a similar period in 

Angola and Ghana, we used loans for the agriculture sector in Angola 

that included an infrastructure construction component and for the oil 

and gas sector in Ghana. To calculate the present value of the loan 

and repayment, we collected historical data on OECD’s differentiated 

discount rate. Using this information, we calculated the loan’s present 

value—that is the present value of future disbursements to the 

borrower, and we calculated the present value of future repayments to 

the lender for the life of the loan. We then used the ratio of the present 
Appendix I: Objectives, Scope, and 

Methodology

Page 74 GAO-13-199 Sub-Saharan Africa

value of repayment to the present value of the loan to calculate the 

loan’s grant element—that is, the loan’s concessionality.4 Where 

necessary, we made assumptions to complete the calculations. For 

example, we assumed a disbursement period of 8 and a half years for 

China Ex-Im’s November 2009 loan to Angola. We based this 

assumption on information from Angola’s Ministry of Finance 

regarding a 2004 loan from China, which indicated that almost 50 

percent of the loan had been disbursed as of 2008, about 4 and a 

quarter years after the loan agreement. Extrapolating this rate, we 

assumed that the loan would be fully disbursed 8 and a half years 

after the loan agreement. The IMF provides an online tool to calculate 

the grant element of the loan; however, we used a different 

methodology that allowed us to directly incorporate factors including 

the date of the loan, which affects the discount rate used to calculate 

the grant element. Using the IMF calculation tool could result in 

different calculations of the loans’ grant elements.

• To identify patterns in, and to compare, U.S. and Chinese foreign 

direct investment, we report U.S. and Chinese data on foreign direct 

investments while noting their limitations. First, data on U.S. foreign 

direct investments in several countries were unavailable because of 

confidentiality concerns. Second, while both the United States’ and 

China’s foreign direct investment to sub-Saharan Africa may be 

underreported, experts have expressed particular concern regarding 

China’s data. U.S. and Chinese firms set up subsidiaries in places 

such as Netherlands and the British Virgin Islands, which can be used 

to make investments in sub-Saharan Africa that are not captured by 

U.S. and Chinese data on foreign direct investment. Experts state that 

this could be a significant source of underreporting for China’s data. In 

addition, U.S. and China’s data may not include foreign direct 

investments from all firms. An IMF working paper expressed particular 

concern regarding foreign direct investments from China’s small and 

medium-sized firms that are not captured in China’s data.5

 

4

The higher the grant element, the more concessional the loan and the less the borrower 

has to repay relative to the amount borrowed. As a reference, donors who are OECD 

members define official development assistance to include loans for developmental 

purposes with a grant element of at least 25 percent.

For U.S. 

data, according to BEA, U.S. data on foreign direct investments are 

based on a benchmark survey conducted in 2009, BEA’s most 

5

See Montfort Mlachila and Misa Takebe, “FDI from BRICs to LICs: Emerging Growth 

Driver?” IMF Working Paper, WP/11/178 (2011), 12.
Appendix I: Objectives, Scope, and 

Methodology

Page 75 GAO-13-199 Sub-Saharan Africa

comprehensive survey of U.S. foreign direct investment; this survey 

covers the value of all U.S. foreign direct investment and is the basis 

on which data for other years are compiled. Third, the flow data 

reported for China’s foreign direct investment are inconsistent with 

changes in the stock data; according to the IMF working paper, these 

variations between flows and stock are difficult to explain.6 U.S. 

foreign direct investment data do not show such levels of 

inconsistencies between the flow data and changes in the stock data. 

Fourth, China does not define foreign direct investment when 

reporting its data. However, the types of data included by China in its 

foreign direct investments (e.g., equity investment data, reinvested 

earnings data) appear similar to data reported for U.S. foreign direct 

investment, which the United States defines on the basis of OECD’s 

definition of foreign direct investment.7

We conducted meetings in Washington, D.C., and fieldwork in Angola, 

Ghana, and Kenya, including meetings with officials from U.S. agencies; 

host-government ministries (e.g., those responsible for finance, foreign 

affairs, roads and urban development, energy, trade, and investment); 

U.S. businesses (representing sectors such as transportation, 

telecommunications, oil and gas, financial services, and agriculture); 

other donors; and nongovernmental organizations (e.g., think tanks, 

academic institutions, and advocacy organizations). We were unable to 

Despite these limitations, 

various reports, including those published by international 

organizations such as the IMF, government agencies, academic 

experts, and other research institutions, use China’s reported 

investment data to describe China’s foreign direct investment 

activities in Africa. And despite U.S. foreign direct investment data 

being suppressed for some countries and some potential 

underreporting, we determined the U.S. foreign direct investment data 

to be reliable for reporting general patterns, when limitations are 

noted. Data on China’s foreign direct investment by sector are 

reported by an official Chinese government source, and we have 

attributed these data as such. We have appropriately attributed data 

on U.S. and Chinese firms’ investments in the oil sector in Angola and 

Ghana and have checked these data for consistency across sources 

to the extent available.

 

6

Mlachila and Takebe, “FDI from BRICs to LICs: Emerging Growth Driver?”

7

According to the OECD, foreign direct investment is the ownership by a foreign person or 

business of 10 percent or more of the voting equity of a firm located in the host country.
Appendix I: Objectives, Scope, and 

Methodology

Page 76 GAO-13-199 Sub-Saharan Africa

meet with Chinese government officials, despite our requests in Africa 

and in Washington, D.C.

We conducted this performance audit from November 2011 to February 

2013 in accordance with generally accepted government auditing 

standards. Those standards require that we plan and perform the audit to 

obtain sufficient, appropriate evidence to provide a reasonable basis for 

our findings and conclusions based on our audit objectives. We believe 

that the evidence obtained provides a reasonable basis for our findings 

and conclusions based on our audit objectives.
Appendix II: U.S. and Chinese Government 

Loans to Angola, Ghana, and Kenya 

Page 77 GAO-13-199 Sub-Saharan Africa

Our analysis of information on specific Chinese government loans to 

Angola, Kenya, and Ghana showed that these loans are generally less 

costly and more concessional than U.S. government loans to Angola, 

Kenya, and, to a lesser extent, Ghana. Our analysis also shows that 

these Chinese government loans are more costly than specific World 

Bank loans to Ghana and Kenya.1

To compare Chinese government loans with U.S. government and World 

Bank loans, we identified U.S. government and World Bank loans that 

were similar in agreement date, size, sector, and borrowing country. 

These factors affect a loan’s interest rate, other associated fees, and 

duration. Because U.S. Ex-Im did not offer loans for the construction 

sector to the host government during a similar time period as the Chinese 

government loans, we obtained loan terms from U.S. Ex-Im for 

hypothetical loans for the construction sector on the same date and of the 

same magnitude as the Chinese government loans.2 In instances where 

we could not obtain information about specific terms, we made 

assumptions based on the terms of comparable loans. We then 

compared Chinese government loans with those of the U.S. government 

and the World Bank based on the terms of the loans, such as their face 

value, interest rate, upfront fee, and repayment period, to calculate the 

loan’s degree of concessionality or grant element, defined as the present 

value of future disbursements less the present value of future repayment 

(see table 3).

3

 

1

The World Bank offers different types of loans to Angola compared to Ghana and Kenya. 

A positive difference between these two values indicates a 

grant element—a percentage of the loan that does not have to be 

repaid—and a negative difference indicates a negative grant element—a 

percentage of the loan that must be repaid in addition to the present value 

of the loan. The IMF provides an online tool to calculate the grant element 

of the loan; however, we used a different methodology that allowed us to 

2

For the World Bank loans, we were unable to find loans of similar magnitude to the 

Chinese government loans. We were also unable to find loans that contained construction 

projects for Ghana with publicly available terms. 

3

In addition, we used information and assumptions regarding the disbursement period, 

disbursement pattern, grace period, the discount rate, commitment fees, repayment 

pattern, and agreement date to calculate the present value of the loan and of future 

repayment. For example, to discount future disbursement and repayment, we use the 

OECD’s differentiated discount rate. This rate, recommended by the OECD to calculate 

the concessionality of loans for determining tied aid, is based on the official lending rates 

of OECD export credit agencies and a specified margin.

Appendix II: U.S. and Chinese Government 

Loans to Angola, Ghana, and Kenya
Appendix II: U.S. and Chinese Government 

Loans to Angola, Ghana, and Kenya 

Page 78 GAO-13-199 Sub-Saharan Africa

directly incorporate factors including the date of the loan, which affects 

the discount rate used to calculate the grant element. Using the IMF 

calculation tool could result in different calculations of the loans’ grant 

elements than those shown in table 3.

Table 3: Comparison of Selected Chinese Government Loans with U.S. Government and World Bank Loans to Angola, Ghana, 

and Kenya

Lender

Agreement 

date 

Face 

value, 

dollars in 

millions

Interest 

rate, 

percent 

Up-front 

fee, 

percent

Maturity, 

years 

(Repayment 

period, 

years)

Present 

value of 

loan,a

dollars in 

millions

Present 

value of

repayment,a

dollars in 

millions

Difference 

between 

present and 

repayment 

values, 

dollars in 

millions 

(Grant 

element, 

percentb

) 

Angola

China November 

2009

$6,000 3.22% 0.25% 28.5 (15) $4,879 $4,064 $815 (17%)

China November 

2009

1,500 2.52 0.25 13 (8) 1,432 1,236 196 (14)

United 

Statesc,d

November 

2009

6,000 2.48 7.62 5.5 (5) 5,930 6,022 -91 (-2)

World Banke November 

2009

30 3.20f None 34 (25) 24 21 3.2 (13) 

Ghana

China December 

2011

1,500 3.74 0.25 28.5 (15) 1,262 1,240 22 (2)

China December 

2011

1,500 3.64 0.25 21.5 (10) 1,262 1,244 18 (1)

United 

Statesc December 

2011

1,500 2.45 10.15 15 (10) 1,356 1,360 -4 (-0.3)

World Banke April 2011 38 0f none 35 (25) 34 18 16 (48)

Kenya

China July 2011 45 2.00 0.25 35.5 (20) 38 27 10 (27)

United 

Statesc July 2011 45 3.51 17.37 15 (10) 41 46 -6 (-14)

World Banke May 2011 300 0f none 40 (30) 263 131 132 (50)

Source: GAO analysis of information obtained from U.S. officials, host governments, the World Bank, OECD, www.fedprimerates.com, 

and Lucy Corkin.

Notes: Italics indicate loans with a negative grant element—that is, loans whose present value of 

repayment exceeds its present value. While not listed in the table, each loan’s commitment fee and 

disbursement period were used in the calculations of present values of the loan and repayment and 

of grant element. Face value and present values of the loan and repayment are reported in nominal 

values. London Interbank Offered Rates are drawn from www.fedprimerates.com. Lucy Corkin is an 
Appendix II: U.S. and Chinese Government 

Loans to Angola, Ghana, and Kenya 

Page 79 GAO-13-199 Sub-Saharan Africa

expert in China-Angola relations. See Lucy Corkin, “Angolan Political Elites’ Management of Chinese 

Credit Lines,” in Marcus Power and Ana C. Alves, eds., China and Angola: A Marriage of 

Convenience? (Capetown, South Africa: Pambazuka Press, 2012), 45-67. 

a

The present value of the loan reflects the present value of future disbursements of the loan. The loan 

is generally disbursed in increments over time. 

b

The grant element measures a loan’s degree of concessionality. 

c

We assumed a hypothetical U.S. government loan, because the U.S. government had not made a 

loan to the host government for the construction sector during the same period as the Chinese 

government loan. The sector and the period when the loan is made affect the interest rate and other 

fees associated with that loan. 

d

U.S. Ex-Im did not make any long-term loans to the Angolan government during this period, 

according to U.S. Ex-Im officials. This hypothetical loan is a medium-term loan with shorter 

disbursement and repayment periods. 

e

For World Bank loans, we used the terms in the agreement (e.g., agreement date vs. effective date) 

for consistency with our calculations for U.S. and Chinese government loans. For the World Bank 

loan to Angola, according to World Bank officials, while the loan was initially negotiated at a 4.2 

percent interest rate, the applicable interest rate was 3.2 percent when the agreement was signed. 

f

The World Bank charged a service fee of 0.75 percent in addition to the interest rate. 

Our analysis indicates that the Chinese government loans to Angola, 

Ghana, and Kenya that we analyzed were generally more concessional 

than were hypothetical loans that U.S. Ex-Im might have offered. For 

example, two Chinese government loans to Angola in November 2009, 

for $6 billion and $1.5 billion, had estimated grant elements of 17 and 14 

percent, respectively. In contrast, a loan that U.S. Ex-Im might have 

extended for the same time period would have had an estimated grant 

element of -2 percent, given U.S. Ex-Im terms that would apply to Angola. 

Because of higher upfront fees and a shorter repayment period, the 

repayment on the U.S. Ex-Im loan would have been higher than the 

repayment on the Chinese government loan.4 By comparison, a World 

Bank loan to Angola in November 2009 had an estimated grant element 

of 13 percent, less concessional than the Chinese government loan but 

more concessional than the U.S. Ex-Im loan.5

 

4

Higher fees would not always result in a less concessional loan, if offset by other factors 

including lower interest rates. 

Two December 2011 

Chinese government loans to Ghana and a July 2011 Chinese 

government loan to Kenya also had higher degrees of concessionality 

than hypothetical U.S. government loans to those countries. Table 4 

shows the terms, present values of the loan and repayment, and grant 

5

As a reference, according to the OECD, official development assistance includes loans 

for developmental purposes with a grant element of at least 25 percent. To determine 

whether a loan qualifies as official development assistance, a 10 percent discount rate is 

used to calculate the concessionality of the loan.
Appendix II: U.S. and Chinese Government 

Loans to Angola, Ghana, and Kenya 

Page 80 GAO-13-199 Sub-Saharan Africa

element for additional U.S. and Chinese government loans to Angola and 

Ghana.

Table 4: Additional U.S. and Chinese Government Loans to Angola and Ghana

Lender

Agreement 

date 

Face 

value, 

dollars in 

millions

Interest 

rate, 

percent

Upfront 

fee, 

percent

Maturity, years 

(Repayment 

period, years)

Present 

value of 

loan,b

dollars in 

millions

Present 

value of

repayment,b

dollars in 

millions

Difference 

between 

present and 

repayment 

values, dollars 

in millions 

(Grant 

element, 

percentc

) 

Angolaa

China March 2004 $2,000 2.61% 0.25% 25.5 (12) $1,585 $1,149 $436 (27%)

China July 2007 500 6.61 0.25 13 (7) 485 492 -7 (-1)

September 

2007

2,000 6.74 0.25 28.5 (15) 1,529 1,583 -54 (-4)

Ghanad

United 

Statese October 2006 15 4.44 5.94 15 (15) 15 15 1 (4)

United 

States

June 2008 358 4.45 20.26 16 (10) 300 331 -32 (-11)

Source: GAO analysis of information obtained from U.S. officials, host governments, the World Bank, OECD, www.fedprimerates.com, 

and Lucy Corkin.

Notes: Italics indicate loans with a negative grant element—that is, loans whose present value of 

repayment exceeds their present value. While not listed in the table, each loan’s commitment fee and 

disbursement period were used in the calculations of present loan value, present repayment value, 

and grant element. Face value, present loan value, and present repayment value are reported in 

nominal values. London Interbank Offered Rates are drawn from www.fedprimerates.com. Lucy 

Corkin is an expert in China-Angola relations. See Lucy Corkin, “Angolan Political Elites’ 

Management of Chinese Credit Lines,” in Marcus Power and Ana C. Alves, eds., China and Angola: 

A Marriage of Convenience? (Capetown, South Africa: Pambazuka Press, 2012), 45-67. 

a

U.S. Ex-Im did not make any loans to the Angolan government during this period, according to U.S. 

Ex-Im officials, and therefore U.S. Ex-Im did not provide terms for hypothetical loans that could be 

compared with Chinese government loans. 

b

The present value of the loan reflects the present value of future disbursements of the loan. The loan 

is generally disbursed in increments over time. 

c

The grant element measures a loan’s degree of concessionality. 

d

These U.S. government loans to Ghanaian government represent the only two loans that U.S. Ex-Im 

has provided to a government of one of our case-study countries since 2001. 

e

According to U.S. Ex-Im, this loan was part of a tied-aid transaction in which U.S. Ex-Im provided a 

$7.8 million grant in addition to the loan shown. The terms shown represent only the loan component 

of this transaction. According to U.S. Ex-Im, this tied-aid transaction represented the only such

transaction with a sub-Saharan African country since 2001. 
Appendix II: U.S. and Chinese Government 

Loans to Angola, Ghana, and Kenya 

Page 81 GAO-13-199 Sub-Saharan Africa

Differences in each loan’s interest rate; upfront fee; maturity, which 

includes the repayment, grace, and disbursement periods; and 

commitment fee drive the differences in the grant elements.

• Interest rate. For loans of similar time periods, the Chinese 

government loans charged higher interest rates than the U.S. 

government loans. Moreover, except in Angola, the World Bank 

charged much lower interest rates than both the U.S. government and 

the Chinese government. Higher interest rates increase repayments, 

decreasing the loan’s grant element. Interest rates can vary 

depending on the borrowing country, sector, repayment period, and 

economic and political conditions, and other factors. For example, 

U.S. Ex-Im sets its interest rates on the basis of a minimum interest 

rate required by OECD that, in turn, is based on the U.S. Treasury 

bond rate, the loan repayment period, and the sector. According to 

U.S. Ex-Im officials, the Chinese government loans’ interest rates 

reflect the risk of the borrower’s defaulting on the loan and the cost of 

the funds, whereas the U.S. government loans’ interest rates reflect 

only the cost of the funds.

• Up-front fee. U.S. Ex-Im loans follow the OECD rules for minimum 

exposure fees and carry substantially higher up-front fees than the 

Chinese government and the World Bank’s loans.6 Higher up-front 

fees increase repayments, decreasing the loan’s grant element. 

According to U.S. Ex-Im officials, the up-front fee reflects the risk of 

the borrower’s defaulting on the loan and is based on country risk, the 

terms of the loan, and the disbursement period. U.S. Ex-Im officials 

stated that, in contrast, the Chinese government loans’ up-front fees 

do not include the risk of the borrower’s defaulting on the loan and are 

similar to a transaction fee; instead, the loans’ interest rates reflect the 

risk of the borrower’s defaulting. According to U.S. Ex-Im officials, 

U.S. Ex-Im generally allows the borrower to pay the up-front fee as 

the loan is disbursed and generally provides a loan for the up-front fee 

that allows the borrower to repay the fee over a period of time.

• Maturity. A loan’s maturity includes the repayment, grace, and 

disbursement periods. Only interest payments are made during the 

grace and disbursement periods, whereas both interest and principal 

repayments are made during the repayment period. The Chinese 

 

6

U.S. Ex-Im also calls the upfront fee the exposure fee.
Appendix II: U.S. and Chinese Government 

Loans to Angola, Ghana, and Kenya 

Page 82 GAO-13-199 Sub-Saharan Africa

government loans have longer repayment periods than the 

hypothetical U.S. government loans; the World Bank’s loans have the 

longest repayment periods by far. Moreover, the Chinese 

government’s and World Bank’s loans offer grace periods, whereas 

the U.S. government loans do not. Longer repayment and grace 

periods allow for deeper discounting of future repayments, increasing 

the loan’s grant element. Longer repayment and grace periods, which 

increase the loan’s maturity, may also increase the discount rate used 

to calculate the present value of the loan and repayment, generally 

increasing the grant element. The disbursement period varies by loan, 

with longer disbursement periods decreasing both the loan and 

repayment value but generally increasing the grant element. Almost 

all of the loans in tables 3 and 4 are not disbursed fully at the onset of 

the loan but instead are disbursed over a period of time, sometimes 

over many years. U.S. government loans are disbursed as goods and 

services are delivered. Most of the Chinese government loans are 

used to fund infrastructure projects. According to experts, like U.S. 

government loans, the loans are disbursed as the Chinese firm 

implements the infrastructure project. In addition, the Chinese 

government loans are disbursed to the project’s contractor, almost 

always a Chinese firm, keeping the loans’ funds between the Chinese 

bank and the Chinese contractor.

• Commitment fee. The commitment fee for Chinese government loans 

is 1 percent, while the commitment fee for U.S. government and 

World Bank loans is .5 percent.7

 

7

World Bank officials review and approve the level of the commitment fee annually. 

Commitment fees, which are charged 

on the amount of the loan that is not disbursed, increase the 

repayments, decreasing the loan’s grant element. The impact of 

commitment fees grows with longer disbursement periods.
Appendix III: GAO Contact and Staff 

Acknowledgments

Page 83 GAO-13-199 Sub-Saharan Africa

David Gootnick, (202) 512-3149 or gootnickd@gao.gov

In addition to the contact named above, Celia Thomas (Assistant 

Director), Fang He, Farhanaz Kermalli, and Mona Sehgal made key 

contributions to this report. Gezahegne Bekele, Ming Chen, Lynn 

Cothern, David Dornisch, Mark Dowling, Philip Farah, Etana Finkler, 

Bruce Kutnick, Reid Lowe, Marc Molino, Mary Moutsos, and Jeremy 

Sebest provided technical assistance.

Appendix III: GAO Contact and Staff 

Acknowledgments 

Contact

Staff 

Acknowledgments

(320909)
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