In a grocery store in Cape Town, Korean instant noodles and ice cups sit alongside local biltong. “The younger generation is observing on social media, and has now created a demand for, these items,” observed Zaynab Hoosen, Senior Africa Analyst at Pangea Risk, of her home town.

It’s a retail revolution spurred by cultural curiosity, and it stands as a microcosm of newfound Asian investment strategies in Africa. From aid-driven investment during the mid-twentieth century to construction and development projects in the 2000s and 2010s, it appears that capital is now being deployed with the vast African consumer market and manufacturing capabilities in mind. And, with benefactors beyond China and their notorious Belt and Road Initiative (BRI).

Trade between Asia and Africa likely exceeded $400 billion in 2024, with China-Africa trade alone reaching $295.56 billion. Africa’s trade deficit has only dropped slightly, and demand for raw materials like gold, copper, coffee, and cocoa has risen: the numbers demonstrate that the trade relationship between China and Africa remains the most significant Asia-Africa partnership to watch as it continues to expand. However, China is not all of Asia, and raw commodity extraction is not all of Africa. 

“Two overlapping forces have really driven the surge in Asian investment into Africa,” Hoosen explained in an interview with Trade Finance Global (TFG). “On the one hand, there’s Africa’s own fundamentals, which offer fast opportunities for investors. Africa’s economy is the fastest growing after Asia, and it has a rapidly growing population as well as vast mineral reserves.” 

But external pressures matter equally: “a wider trend of trade fragmentation between Asia and the US,” she noted. American protectionism, with aggressive decoupling from China, India, and other major Asian economies, has kindled South-South trade and elucidated characteristics of the two continents that were for decades hidden under a somewhat colonial narrative that Africa existed as a ‘gold mine’. 

From white elephants to “small and beautiful”, China recalibrates

In the aftermath of the 2007-2009 global financial crisis, the Chinese government rolled out a four trillion yuan ($580 billion) stimulus package into the local economy. Its overcapacity of construction materials (both in coal and steel and in a skilled worker base) set it for exponential growth; but to fuel this, a steady supply of raw materials was required. Here, the BRI investment strategy was born.

China’s BRI, announced in 2013 by Chinese President Xi Jinping, was unprecedented in modern history both in terms of scope and scale, compared in academia only to the Economic Recovery Act of 1948, or the Marshall Plan, to restore the infrastructure of postwar Europe. Both plans have been criticised as a tacit strategy for spreading a sphere of influence and reliance under the guise of development – development which seemingly neglects environmental, social, and governance (ESG) factors. 

Between 2013 and 2023, the ten-year timeframe of the BRI’s first phase, projects in Africa have come under scrutiny for deforestation and habitat destruction, displacement of local communities, disregard for worker safety, and water pollution. Beijing was not perceived in Africa as a home of lagresse, but rather viewed with scepticism.

Past infrastructure megaprojects – highways and railways financed through sovereign debt – often proved fiscally unsustainable. Though a ‘debt-trap’ argument undermines the tactful manner in which many African countries have actually managed their debt, it is estimated that 60% of BRI participant countries suffer financial distress.

But the character of Chinese investment has changed markedly. “China is now moving from mega projects to what it’s now called ‘small and beautiful’ projects, that are more bankable and also more modest in value,” Hoosen explained. 

The new approach emphasises renewable energy installations and smaller-scale projects led by private firms like East Hope Group and Longi Green Energy. “These projects are more fiscally manageable, but at the same time, more aligned with the host country’s priorities,” including environmentally, Hoosen noted. 

Recent projects hold smaller values under $50 million, as opposed to large-scale loans over $500 million, and can be financed through blended capital, spreading risk beyond sovereign balance sheets while continuing to develop infrastructure. Notably, they are more favourably received by local populations.

China remains the dominant Asian investor in Africa, with foreign direct investment (FDI) stock of $42.11 billion in 2023 and infrastructure financing since 2000 totalling approximately $182 billion. In the first half of 2025 alone, Africa attracted $39 billion in BRI projects. South Africa hosts $5.8 billion in Chinese FDI, followed by the Democratic Republic of Congo with $3.9 billion and Nigeria with $2.6 billion.

All roads lead to Africa

The most profound difference in recent years is the refreshed attention which other major Asian economies have paid to the continent. An interesting trend that Hoosen picked up on is the propensity to invest with the relative countries’ priorities in mind. 

Singapore, for instance, held $20 billion in FDI stock across Africa in 2023. Consumer goods companies like Tolaram and Olam have established substantial operations in West Africa, particularly Nigeria. Trading giant Trafigura participates in the Lobito Corridor. Enterprise Singapore has actively marketed Africa’s demographics as opportunities for private firms. The focus for Singapore has historically been on human capital development and skill building, and its approach to Africa is no different.

Similarly, Japan’s $9 billion FDI stock reflects its characteristically cautious approach, with approximately half concentrated in South Africa’s automotive sector. At the ninth Tokyo International Conference on African Development in August 2025, Japan pledged $5.5 billion in co-financing with the African Development Bank (ADB). Sumitomo Corporation’s stake in Safaricom Ethiopia carries 10-year political risk coverage from the African Trade Insurance Agency, with additional reinsurance from Japan’s Nippon Export and Investment Insurance: double buffers of this sort make riskier markets palatable.

India’s $13 billion in African FDI spreads across telecommunications, mining, and consumer markets. Bharti Airtel has committed over $10 billion across 14 countries, while companies like Tata and Godrej operate in automotive, IT, and household goods. Like Singapore, India frequently channels investment through Mauritius to access bilateral investment treaty protections. With a vast diaspora and as the world’s second-largest telecommunications market, India’s approach to Africa stands as an extension of its domestic priorities.

Extraction becomes integration

Colonial nineteenth-century Africa existed in the mind of their European colonists as a fairground for extraction, at the expense of the local population, and to the detriment of the local population and its long-term prosperity. 

The most consequential shift moves beyond who invests to how they invest. “Critical minerals are a major focus, not only for Asia, but for the entire world right now,” Hoosen said. “While many countries are seeking to diversify their supply chains away from an overreliance on China, they also need to realise that in Africa, it cannot only focus on extraction as it has in the past.”

Africa holds nearly a third of global mineral reserves. Its quantities of cobalt, copper, lithium, and other materials will be the “building blocks of a new era”, as the Secretary-General for the United Nations Conference on Trade and Development (UNCTAD) Rebeca Grynspan described. 

Projects that generate local employment and economic activity face lower risks of nationalisation. “When investing in certain logistics corridors, for example, there’s more of an effort now to spur economic activity along the corridor itself instead of just extracting the mineral from the mine and taking it to the port,” Hoosen explains. The approach “softens that narrative of this extraction without beneficiation for the broader population itself.”

Resource nationalism poses persistent risks to foreign investors. Tanzania, the Democratic Republic of Congo (DRC), and more recently Mali, Burkina Faso, and Niger have introduced mining laws; while looked on favourably by local populations, many of whom are embroiled in military coups, these tend to put foreign mining investors off. 

“When it is contributing to something broader, then just only that mine, only that extraction, then it seems as a win-win for more people,” Hoosen argues. Governments can demonstrate tangible benefits to voters, reducing political pressure to renegotiate terms or seize assets.

Frameworks towards risk management of Africa’s political and economic risks have grown increasingly sophisticated among Asian investors. “Insurance is the first layer,” Hoosen explained. “There’s also the Multilateral Investment Guarantee Agency (MIGA), which is the World Bank’s insurance arm that companies often use. Then, export credit agencies (ECAs) like Sinosure, Korea Exim Bank, and India Exim Bank, are another layer to underwrite loans and projects.”

Blended finance arrangements spread risk across multiple institutions. India Exim Bank’s $640 million line of credit to Mozambique financed power transmission infrastructure, while Indonesia Eximbank and Afreximbank established a $100 million facility to de-risk trade flows. 

“Sometimes this can be a mix of concessional capital, for example, from the ADB or other multilateral institutions,” Hoosen noted. “This spreads the risk from solely sovereign and country-based risk towards concessional multilateral institutions as well.”

Joint ventures with local partners manage regulatory risks. Bharti Airtel structured its expansion through local partnerships, while Chinese miners in Zambia and the DRC increasingly take minority local partners. Many Indian and Singaporean investors route funds through Mauritius to access bilateral investment treaty protections. “This adds legal protection because then if there is ever a dispute with the government that they are operating in, then they don’t necessarily have to go for international arbitration,” Hoosen explained.

The demographic dividend

Africa’s population will double to 2.5 billion by 2050, creating both a vast consumer market and a youthful workforce. Korean products proliferating in Cape Town reflect patterns across the continent. “There’s this growing population, growing younger population, specifically, that are more digitally connected than before,” Hoosen observed. 90% of African retail sales are currently carried out through unofficial channels, like open-air markets and kiosks, posing huge potential for Asian investors to develop more formal channels. 

This is not to say that infrastructure-related projects will fall away, but rather, will be carried out with a longer-term focus on benefitting African consumers.

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Chinese high-value shipments to Africa have grown by 25% within the first eight months of the year; shipments to the US fell by 15.5% in this period. This could be demonstrative of a relationship stimulated by disjuncts to conventional relationships, but investment patterns reveal it’s not a temporary fix. Asian investors want commercially viable projects delivering returns while supporting sustainability goals, particularly as climate transition demands reshape global energy markets.

Asian investors “no longer see 100% benefit in aid dependency, because that’s more short-term,” Hoosen summarised. “There’s more of a long-term view now.” It’s led to an evolution from aid-driven/ sovereign-sovereign relationships to private sector-led investment; to a sophistication of risk management frameworks (insurance, blended finance, local partnerships, legal safeguards).

Crucially, South-South trade and investment have shifted seismically from notches on a tightening belt to a sprawling, vibrant, multifaceted, and multi-industry approach. The nineteenth-century colony-colonist dynamic seems entirely foreign as Asia and Africa sit front and centre of a new world order.