African countries repair and implement as China tightens Belt and Road

Deep in the Great Rift Valley of Nairobi-Kenya, members of the National Youth Division constantly shake machetes to remove the dense shrubs that obscure the tracks over a century ago.

This is clearly a low-tech stage for the Chinese Communist Party administration to promote the Belt and Road Initiative in Africa and build future trade highways.

There is not enough money left to complete the new 1,000km ultra-high speed rail link from Mombasa Port to Uganda. Suddenly ending in the countryside 468 km from the border, Kenya is now trying to complete the route by refurbishing a 19th-century colonial British railroad track that once passed the road.

The Chinese Communist Party (CCP) has reached hundreds of billions of African countries as part of the Xi Jinping Belt and Road Initiative (BRI), a CCP leader who envisioned the Chinese Communist Party to fund most of the infrastructure of developing countries. I lent out a dollar. But in recent years, credit has been exhausted.

Analysts and scholars have found that in addition to the damage done by COVID-19 to both China and its creditors, the declining willingness to make large-scale foreign investments in Beijing and commodities prices that have complicated debt repayment in Africa. It lists deceleration due to factors such as the collapse of. Borrowers are hesitant to enter into lending transactions backed by natural resources.

“We are no longer in the go-go period,” said Adam Tooze, a historian at Columbia University, about CCP’s foreign investment projects. “There is definitely a rebalance from the Chinese side,” said Tooze of the new Shutdown, which looked at how COVID-19 affected the global economy, and Beijing’s current account surplus is “slightly declining.” Added.

China’s investment in 138 BRI-covered countries fell 54% from 2019 to $ 47 billion last year, according to GreenBRI, a China-based think tank focused on initiative analysis. I did.

In Africa, home to 40 of these BRI countries, China’s bank lending to infrastructure projects was $ 11 billion in 2017 to $ 3.3 billion in 2020, according to a report by Baker McKenzie, an international law firm. Has decreased to.

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

This is a blow to the government, which was hoping to secure a Chinese loan to build a highway and railroad connecting landlocked countries and seaports and trade routes to Asia and Europe. According to the African Development Bank, the continent faces an estimated annual infrastructure investment deficit of approximately $ 100 billion.

“The pandemic really made things worse,” said bank president Akinumi Adesina, citing the need for additional infrastructure to support medical services.

The stagnation has hit several other BRI projects across the continent, including the $ 3 billion Nigerian railroad project and the $ 450 million highway in Cameroon.

The Chinese Ministry of Foreign Affairs did not respond to requests for comment.

“Railway is built”

Kenyan officials said the rail route is a long-term project that can be seen through overtime without giving a specific time frame. They added that COVID-19 brought an unexpected and unprecedented challenge to the world.

James Machalia, Minister of Transport of Kenya, said:

The government has already spent about $ 5 billion on the new rail link and can’t afford the additional $ 3.7 billion needed to complete it now. The last connected station can only be accessed on dirt roads.

Therefore, Rift Valley engineers are no longer building new infrastructure, but are reinforcing colonial viaducts and bridges with operations that the government estimates will cost about 10 billion shillings ($ 91 million).

Construction of modern railroads has been delayed due to the knock-on effect, which is to cross the Ugandan border and link to Kenyan railroads.

David Mugabe, a spokesperson for the Uganda Standard Gauge Railroad Project, told Reuters that this was one factor in the stagnation of $ 2.2 billion in loans from the China Export-Import Bank (Exim Bank).

In Nigeria, the government turned to London-based Standard Chartered Bank this year. finance The $ 3 billion rail project was initially planned to be backed by China. Standard Chartered Bank refused to comment on the transaction because of its nondisclosure agreement.

Standard gauge railway
Kirin walks on October 19, 2021 in Nairobi National Park, Nairobi, Kenya, near the Elevated Railroad Line where animals can move under the Elevated Railroad (SGR) Line connecting Nairobi and Naivasha. (ThomasMukoya / Reuters)

In Cameroon, the $ 450 million highway connecting the capital Yaoundé and Douala’s economic hub was funded by Exim Bank in China in 2012, but in 2019 as banks stopped paying more loans. It was stagnant.

Exim Bank did not respond to requests for comment on loans to Uganda and Cameroon.

From Malaysia to Bolivia

The pandemic has been added to the obstacles facing Xi’s self-proclaimed “Project of the Century”. After peaking at $ 125.25 billion in 2015, China’s investment in BRI countries has declined each year, except in 2018, when it rose 6.7%, according to Green BRI data.

2018, Pakistan Barked With railroad construction costs and funding terms. Last year, after the CCP, there were signs that the BRI problem would grow. push Triggered a protest in Sri Lanka.

AidData, a research institute at the University of William and Mary in the United States, said: study At the end of September, a $ 11.58 billion project in Malaysia was canceled between 2013 and 2021, nearly $ 1.5 billion in Kazakhstan and more than $ 1 billion in Bolivia.

“In low- and middle-income countries, more and more policy makers are stopping the hottest BRI projects because of concerns about high prices, corruption and debt sustainability,” said Brad Parks, one of the authors of the study. I am.

“Not all debt is unsustainable,” the Chinese Foreign Ministry said in response to AidData’s report.

“Resources are finite”

A key issue is debt sustainability.

For example, copper producer Zambia has not caught up with over $ 12 billion in international debt payments, making it the default for Africa’s first pandemic era sovereign last year. According to a recent survey, more than half of the burden lies with public and private lenders in China.

In late 2018, Beijing agreed to restructure Ethiopia’s multi-billion dollar debt.

Some African governments are also reluctant to take out loan-backed goods such as oil and metals.

Uganda’s Minister of Transport Katumba Wamara told Reuters that “oil cannot be mortgaged,” and the country promises undeveloped oil in western fields to secure rail loans. I confirmed that I refused.

Fiscal pressure means that the African government must make more strategic investment decisions regarding debt sustainability, said Ibet Bab, William Blair’s Dutch-based fixed income portfolio manager.

“There is no infinite capital,” she said.

($ 1 = 110.2500 Kenyan shilling)

Duncan Milliri

The Epoch Times contributed to this report