‘BEIJING HAS SO FAR WITHHELD THE $4.9 BILLION NECESSARY FOR THE THIRD PHASE OF KENYA’S SGR WHICH CONNECTS NAIVASHA WITH THE UGANDAN BORDER’
to the NGO Save the Elephants, during the construction of the first phase of the SGR 10 elephants were killed. In response to these concerns, designers added wildlife corridors and raised section of the line to facilitate animal movement.
The biggest criticism, however, is the fact that the Chinese-funded SGR projects are part of China’s Belt and Road Initiative. This infrastructure project, billed as a 21st century Silk Road, is a belt of overland corridors and maritime routes connecting over 60 countries and expecting to cost over $1 trillion. Critics believe it constitutes a form of economic imperialism, as Chinese firms are often given construction contracts instead of local companies.
Furthermore, China has offered many countries loans so they can fund these large-scale construction projects. A 2018 report by the Center For Global Development found that eight countries – including Kenya and Ethiopia – are at serious risk of not being able to repay their loans. This has led to worries that China could use debt-trap diplomacy in order to gain strategic concessions over territorial disputes, or silence on human rights violations.
This negative publicity has had an adverse effect.
“The Chinese are adopting a more cautious approach to their debt exposure in Africa because of increased noise around its sustainability and potential default,” explains Piers Dawson, investment consultant at Africa Matters Ltd.
Beijing has so far withheld the $4.9 billion necessary for the third phase of Kenya’s SGR which connects Naivasha with the Ugandan border, which is a big blow to Kenya’s infrastructure development plans. Furthermore, the Kenyan project has also been dogged with rumours of governmental corruption.
IMPROVING AFRICA’S INFRASTRUCTURE FOR THE FUTURE
However, none of the above changes the fact that, so far, the SGR railways lines in Africa have improved infrastructure, created jobs, and cut journey times. While the railway lines themselves might not offer a high ROI, they do act as catalysts for economic development within the country.
According to a study by Project Insight, Africa’s growth projects are hampered by poor infrastructure. Improving its quality and quantity to match those of the best performing countries could improve GDP by around 2.6 percent year on year.
Furthermore, as Africa continues to develop its infrastructure, it will learn from previous projects. Tanzania, for example, began rebuilding its railway network after Kenya and Ethiopia. Instead of sourcing funding from China for its network, the country
According to the Ethiopia-Djibouti Railway Share company, it would have formerly taken around 75 freight trucks to transport the amount carried by a single train, and the journey would have taken three days as opposed to 11 hours.
received loans from the Export Credit Bank of Turkey, and a $1.5 billion 20year loan from Standard Chartered Bank. It is also working with the Africa Trade Insurance Agency on a plan for the firm to provide a ‘credit wrap’, insuring sovereign bonds and other international financing structures.
In the time of COVID-19, infrastructure is more important than ever, helping economic recovery and keeping supply chains moving. With the right loan conditions and management, Africa’s SGR railways represent a real opportunity for growth and development on the continent.
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