Premier Li Keqiang made headlines during his eight-day trip to Africa this month by promising that China will increase aid to the continent by US$12 billion and by predicting that bilateral trade will double to US$400 billion and cumulative Chinese investment quadruple to US$100 billion by 2020.
The premier also pledged in a speech to the World Economic Forum in Nigeria that China will help connect cities across the continent by road, by air and very much by rail. This is likely to have great significance for Africa’s long-term development since the lack of transport infrastructure is a severe impediment to growth.
The Chinese leader pointed out in his speech that Africa covers 23 percent of the world’s land area but only accounts for 7 percent of the world’s railways, with 13 countries having no railways at all.The Infrastructure Consortium for Africa, created by the G8 in 2005, estimates that poor roads, railways and harbors add 30 to 40 percent to the cost of goods traded among African countries.According to Deloitte, lack of infrastructure has resulted in a low level of trade. Africa, it says, accounts for 12 percent of the world population but generates only 1 percent of global GDP and only 2 percent of world trade.
So a coordinated effort to upgrade the continent’s transport infrastructure is very much welcomed, not only by Africans but by all countries that trade with them, since it will lower costs and shorten delivery times.
A signing ceremony for a US$3.6 billion dollar railway linking Nairobi, the Kenyan capital, to the port of Mombasa – a distance of slightly more than 600 kilometers – was held on May 11 during Premier Li’s visit to Kenya.
Kenyan President Uhuru Kenyatta said that once the project is completed, “the costs of moving our people and our goods across our borders will fall sharply.” Freight costs could drop by 60 percent.
Work on what is known as the Standard Gauge Railway is scheduled to begin October 1, China’s national day, and take 42 months to complete. The agreement was signed by Li Ruogu, president of China Exim Bank, which will provide 90 percent of the financing, and Henry Rotich, Treasury Secretary of Kenya, which will be responsible for the remaining 10 percent.
But the significance of the accord goes well beyond Kenya. This was reflected in the presence at the signing ceremony of the presidents of Uganda, Rwanda and South Sudan, as well as a minister from Burundi, since the Nairobi-Mombasa rail line represents only the first phase of a project that is meant to serve those countries as well.
Completion is tentatively scheduled for 2020 but financing for the overall project, which will cost many billions more, has not been finalized although a memorandum of understanding between several East African countries and the African Development Bank on project funding has been signed.A statement by the Kenyan government said: “The Standard Gauge Railway project inaugurates a new phase in East Africa’s transport history. It offers the prospect of efficient, reliable and inexpensive rail transport for both passengers and freight on a previously unprecedented scale.”
The rail links will stretch about 3,200 kilometers and are expected to dramatically improve the position of Kenya and other East African countries as a regional economic hub. The plan is that the rail line will eventually serve Kampala in Uganda, Kigali in Rwanda, and Bujumbura in Burundi, with a branch to Juba in South Sudan, Africa’s newest country.
Li, well aware of African criticism of Chinese behavior, asserted that Chinese firms will have to transfer skills to local workers and will abide by local rules and respect local customs.
This project, while ambitious, is but one of many with which China is involved in Africa. This month, China Railway Construction Corp. also signed a US$13.1 billion deal to build a high-speed railway in Nigeria, another country on the premier’s itinerary, China Daily reported.
China is by no means the only party involved in funding railway infrastructure in Africa. The World Bank has approved US$300 million for railway infrastructure in Tanzania.
China’s support for transport infrastructure in Africa is to be applauded even as oil and minerals continue to be among its major interests. After all, Africa’s natural resources can be exported to China more easily if infrastructure is modernized. But, in the long term, Africa itself is likely to be the biggest beneficiary of such modernization.
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