Investments in renewable energy are increasing rapidly in sub-Saharan Africa. The overall purpose of this paper is to explore to what extent and under what conditions these investments are producing economic co-benefits in terms of spillovers and linkage development effects. One peculiarity of Africa's renewable-energy sector is the rapid increase and likely future growth of Chinese involvement in large-scale renewable-energy infrastructure projects. Insights from other infrastructure, utility and resource-extraction sectors in sub-Saharan Africa suggest that China is pursuing a specific Chinese model of investments characterised by enclave characteristics and including finance, turnkey project development and the importation of labour and equipment from China. Hence our focus in this paper is to determine to what extent economic co-benefits are created when renewable-energy projects are developed by Chinese investors. To do this, we undertake an in-depth analysis of three Chinese renewable-energy investment projects in hydro, wind and solar PV, based on primary data. Overall, we find evidence of ‘bounded benefits’. On the one hand, we can identify some newly created jobs, linkages generated with actors in local systems of production and training activities involving local staff. On the other hand, the extent of these benefits is very limited. Overall, the results suggest that policymakers should be wary of overly optimistic expectations when it comes to assessing the co-benefits of renewable energy projects in the context of scarce pre-existing capabilities. However, the adoption of pro-active strategies and the implementation of carefully designed policies can increase the local economic co-benefits.
Bibliographical noteFunding Information:
An early version of this paper was presented at the ‘Latecomer Development in a Greening World Conference’ at DIE, Bonn in June 2018. We appreciate comments from Tilman Altenburg and Anna Pegels (DIE) as well as to Tyeler Matsuo and Tobias Schmidt (ETH) on this occasion. In addition, we are grateful to Martin Bell of SPRU for very useful discussions on ‘project anatomy’ and to our discussants, Rob Byrne (SPRU) and Anna Kingiri (ACTS), for useful discussions during the IREK workshop in Nairobi, January 2019. In addition, Hubert Schmitz (IDS) and Peter Kragelund (RUC) provided incredibly useful comments on the paper, which helped to improve it a lot. Finally, we are grateful to two very tough reviewers at World Development and to the Danish Ministry of Foreign Affairs for financial support (grant DFC 14-09AAU).
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- Economic co-benefits
- Infrastructure projects
- Investment-centred global value chains
- Renewable energy