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African Nations Mend and Make Do as China Tightens Belt and Road

A view shows part of a construction site of the Nairobi Expressway, undertaken by the China Road and Bridge Corporation (CRBC) on a public-private partnership (PPP) basis, along Uhuru Highway in Nairobi, Kenya, on Oct. 17, 2021. (Thomas Mukoya/Reuters)

NAIROBI—Deep in Kenya’s Great Rift Valley, members of the National Youth Service tirelessly swing machetes to clear dense shrubs obscuring railway tracks more than a century old.

It’s a distinctly low-tech phase for the Chinese communist regime’s Belt and Road drive in Africa to create the trade highways of the future.

re’s not enough money left to complete the new 1,000-km super-fast rail link from the port of Mombasa to Uganda. It ends abruptly in the countryside, 468 km short of the border, and now Kenya is resorting to finishing the route by revamping the 19th-century colonial British-built tracks that once passed that way.

Chinese Communist Party (CCP) has lent African countries hundreds of billions of dollars as part of CCP leader Xi Jinping’s Belt and Road Initiative (BRI) which envisaged Chinese institutions financing the bulk of the infrastructure in mainly developing nations. Yet the credit has dried up in recent years.

On top of the damage wrought to both China and its creditors by COVID-19, analysts and academics attribute the slowdown to factors such as a waning appetite in Beijing for large foreign investments, a commodity price crash that has complicated African debt servicing, plus some borrowers’ reluctance to enter lending deals backed by their natural resources.

“We are not in the go-go period anymore,” Adam Tooze, a Columbia University historian, said about CCP’s overseas investment projects. “re is definitely a rebalancing from the China side,” said Tooze, whose new book Shutdown examines how COVID-19 affected the world economy, adding that Beijing’s current account surplus was “dwindling somewhat”.

Chinese investments in the 138 countries targeted by BRI slid 54 percent from 2019 to $47 billion last year, the lowest amount since the BRI was unveiled in 2013, according to Green BRI, a China-based think-tank that focuses on analyzing the initiative.

In Africa, home to 40 of those BRI nations, Chinese bank financing for infrastructure projects fell from $11 billion in 2017 to $3.3 billion in 2020, according to a report by international law firm Baker McKenzie.

Workers are seen on site during the construction of the Nairobi Expressway, undertaken by the China Road and Bridge Corporation (CRBC) on a public-private partnership (PPP) basis, along Uhuru Highway in Nairobi, Kenya, on Oct. 20, 2021. (Thomas Mukoya/Reuters)

This is a blow for governments who were anticipating securing Chinese loans to build highways and rail lines linking landlocked countries to sea ports and trade routes to Asia and Europe. continent is facing an estimated annual infrastructure investment deficit of around $100 billion, according to the African Development Bank.

“ pandemic has actually made things worse. Those numbers will go up,” said Akinwumi Adesina, the president of the bank, citing the need for additional infrastructure to support health services.

Hold-ups have hit some other BRI projects across the continent, such as a $3 billion Nigerian rail project and a $450 million highway in Cameroon.

Chinese foreign ministry did not respond to a request for comment.

‘Railway Will Be Built’

Officials in Kenya said its rail route were long-term projects that would be seen through overtime, without giving any specific timeframe. COVID-19 has presented the world with unforeseen and unprecedented challenges, they added.

“Eventually, this standard gauge railway will still be complete because it is part of what we call the Belt and Road Initiative,” said James Macharia, Kenya’s transport minister.

government has already spent about $5 billion on its new rail link, and can’t currently afford the additional $3.7 billion needed to finish it. last station hooked up is only accessible by dirt roads.

Hence engineers in the Rift Valley are no longer building new infrastructure, but rather shoring up colonial-era viaducts and bridges in an operation that the government estimates will cost about 10 billion shillings ($91 million).

re are knock-on effects and, over the border in Uganda, construction on a modern railway line has been delayed because it’s supposed to link to the Kenyan one.

That has been one factor in the hold-up in a $2.2 billion loan from the Export-Import Bank of China (Exim Bank), David Mugabe, spokesperson for Uganda’s Standard Gauge Railway project, told Reuters.

In Nigeria, the government turned to London-headquartered Standard Chartered Bank this year to finance the $3 billion railway project initially slated to receive Chinese backing. Standard Chartered declined to comment on the deal, citing confidentiality agreements.

A giraffe walks near an elevated railway line that allows movement of animals below the Standard Gauge Railway (SGR) line linking Nairobi and Naivasha, inside the Nairobi National Park, in Nairobi, Kenya, on Oct. 19, 2021. (Thomas Mukoya/Reuters)

In Cameroon, the $450 million highway linking the capital Yaounde and the economic hub of Douala, whose funding was secured from China’s Exim Bank in 2012, stalled in 2019 as the bank stopped disbursing further tranches of the loan.

Exim Bank did not respond to a request for comment on its loans to Uganda and Cameroon.

Malaysia to Bolivia

pandemic has added to the obstacles facing Xi’s self-described “project of the century”. After peaking at $125.25 billion in 2015, Chinese investments into BRI nations have dropped every year, apart from 2018, when they edged up 6.7 percent, the Green BRI data showed.

In 2018, Pakistan balked at the cost and the financing terms of building a railway. previous year, there were signs of growing problems for BRI, after the CCP’s push in Sri Lanka sparked protests.

AidData, a research lab at the College of William and Mary in the United States, said in a study at the end of September that $11.58 billion in projects in Malaysia had been canceled over 2013–2021, with nearly $1.5 billion canceled in Kazakhstan and more than a $1 billion in Bolivia.

“A growing number of policymakers in low and middle-income countries are mothballing high-profile BRI projects because of overpricing, corruption, and debt sustainability concerns,” said Brad Parks, one of the study’s authors.

Chinese foreign ministry said in response to the AidData report that “not all debts are unsustainable.”

‘Resources Are Finite’

A key problem is debt sustainability.

Copper producer Zambia became Africa’s first pandemic-era sovereign default last year after failing to keep up with payments on more than $12 billion of international debt, for example. A recent study suggested more than half of that burden is owed to the Chinese public and private lenders.

In late 2018, Beijing agreed to restructure billions of dollars in debt owed by Ethiopia.

Some African governments are also growing more reluctant to take out loans backed commodities such as oil and metals.

“We can’t mortgage our oil,” Uganda’s works and transport minister Katumba Wamala told Reuters, confirming the country had refused to pledge untapped oil in fields in the west to secure the railway loan.

finance squeeze means African governments must make more strategic investment decisions in terms of debt sustainability, said Yvette Babb, a Netherlands-based fixed income portfolio manager at William Blair.

“re is no infinite amount of capital,” she said.

($1 = 110.2500 Kenyan shillings)

By Duncan Miriri

Pezou contributed to this report

Pezou : African Nations Mend and Make Do as China Tightens Belt and Road