Chinese firms are changing how they operate across Africa — and the implications go far beyond roads and railways. A new continent-wide report reveals that 60% of Africa-focused investment vehicles (IVs) are still domiciled outside the continent, meaning the profits and taxes from these funds largely bypass African financial systems.
The “Study on Africa as a Jurisdiction for Domiciliation of Investment Vehicles”, released in 2025 by the Collaborative for Fund Domiciliation in Africa (CFDA), MEDA, and the Africa Impact Investing Group, urges African policymakers to strengthen domestic financial hubs so that investment vehicles, including those led by Chinese and multinational firms, can be locally anchored.
“It is time to enhance Africa’s competitiveness and increase capital mobilization through strategic investment vehicle domiciliation,” said Dr. Dorothy Nyambi, President and CEO of MEDA. “Transforming the investment landscape for African-owned and women-led investment vehicles will strengthen MSMEs that drive inclusive growth.”
The Problem: Africa’s Missing Capital Base
Most foreign investors — including Chinese corporations — still register their African operations in Mauritius, Luxembourg, or the Cayman Islands to avoid regulatory hurdles, double taxation, and currency risks.
While this approach offers efficiency, it also drains Africa’s tax revenues and reinvestment potential.
The result:
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Local small businesses and startups lose access to capital.
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Job creation slows because value chains remain externally controlled.
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Governments struggle to track or tax fund activity.
This dynamic explains why Chinese investors, despite driving Africa’s infrastructure boom, often deliver fewer long-term financial benefits than expected.
👉 Related reading: Investment Opportunities in Uganda: Oil, Agriculture, and Renewable Growth
The Shift: From Infrastructure to Financial Integration
Over the past five years, Chinese investment in Africa has quietly evolved. Instead of relying solely on state-backed loans and construction contracts, Chinese companies are now:
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Creating joint ventures with African entrepreneurs.
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Participating in private equity and venture capital funds targeting tech, logistics, and renewable energy.
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Establishing regional headquarters in Nairobi, Lagos, and Accra.
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Partnering with African banks to expand mobile payments and digital trade.
This marks a strategic pivot — from being contractors to becoming equity stakeholders in Africa’s economic transformation.
“We’re seeing a second wave of Chinese engagement,” notes CFDA analyst Josephine K. Njoroge. “It’s less about exporting construction labor and more about embedding financial capital — creating African-registered vehicles that can recycle profits locally.”
👉 See also: The End of AGOA: How the U.S.–Africa Trade Deal Collapse Shifts Power Toward China
Spotlight: Ghana, Kenya, Rwanda, and Nigeria Lead the Reform Push
The report identifies Ghana, Rwanda, Nigeria, and Kenya as emerging financial hubs that could attract fund domiciliation from both Chinese and African investors.
Ghana is piloting tax incentives for funds that domicile locally.
Rwanda has established the Kigali International Financial Centre (KIFC) to rival Mauritius.
Nigeria and Kenya are developing frameworks that simplify registration and lower costs for local fund managers.
Together, these reforms could unlock billions in trapped capital currently routed offshore — money that could finance local manufacturing, clean energy, and SME growth.
👉 Explore further: Kenya and the EAC: Building East Africa’s Trade Backbone
Implications for the African Diaspora
For the African diaspora, this transformation offers a new path for participation. Locally domiciled funds mean diaspora investors can:
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Channel capital directly into African-led venture funds and startups.
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Benefit from transparent governance and stable returns.
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Support regional development goals under the AfCFTA.
Diaspora bonds and digital investment platforms can connect global Africans to the new financial infrastructure emerging on the continent — particularly in Ghana, Rwanda, and Kenya, where reforms are underway.
👉 Read next: Diaspora Investment Pathways
Policy Takeaways
If Africa wants to retain more value from both Chinese and Western investment, it must:
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Build robust, transparent financial centers.
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Streamline fund registration processes.
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Offer tax incentives for locally domiciled investment vehicles.
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Encourage ESG and women-led funds to attract sustainable capital.
The next frontier of Africa’s growth won’t be in the roads or ports themselves — but in where the profits are booked and reinvested.
👉 See related analysis: The African Diaspora: Driving Africa’s Global Transformation (2025 Edition)
Conclusion: China’s Evolving Role in Africa’s Financial Future
The narrative of “China in Africa” is no longer just about building bridges — it’s about building balance sheets.
As Chinese firms adapt from contractors to capital partners, Africa faces a critical choice:
either remain a destination for investment, or become a home for investment vehicles.
If more funds — Chinese, diaspora, and domestic alike — are domiciled within Africa’s borders, the continent could finally capture the full cycle of its economic value creation.
