The Chinese presence in the continent of Africa has been growing since the beginning of this millennium. With the launch of the Belt and Road Initiative, over 42 African countries signed MOUs in transport and industrial development sectors. The lack of infrastructure within the continent is still seen as an impediment to growth. However, the multiple investments made by China in these nations have encouraged progress and facilitated the inclusion of African countries within the global competition.
In this article, we mainly focus on the BRI’s role in developing transportation systems in the continent and exploring future opportunities for trade with the region. This article will also address the concerns regarding the scepticism of Chinese intervention in the area, and finally, hear from our own member about the need to grow business eastwards.
(Pic Credit: The Economist Intelligence Unit)
Belt and Road Initiative Arrives in Africa
The initial investments under the program were made in the East-African region, which would serve as access points to enter the continent, especially for the incoming trade from the East. Since then, numerous projects have sprouted, growing westwards through the continent. The focus of these projects has been the sectors of transport and power, including rail, roadways, highways, seaports, energy, water supply and sanitation. Some of the early successful projects were Mozambique’s Maputo-Katembe bridge and Algeria’s Cherchell Ring Expressway.
In Djibouti, one of the biggest recipients of the BRI investment has seen the construction of a seaport and two airports. Along with these, the Addis Ababa-Djibouti Railway Project also helped to connect the countries. With Egypt, China has held a long-standing relationship that was thoroughly leveraged through the BRI. One of the most critical projects within the countries’ MOUs was the growth of the Chinese industrial zone along the Gulf of Suez (Tianjin Economic-Technological Development Area). This SEZ has assisted in the establishment of many Chinese companies at the hub of global trade and logistics.
Other rail and roadway projects include the Mombasa-Nairobi Railway Project, which significantly contributed to the Kenyan economy and the Abuja-Akuna railway line in Nigeria, the first standard gauge line. Uganda also benefited through the construction of the Entebbe-Kampala Expressway. Apart from the transport sector, Chinese investment has also aided countries like Sudan to sustain their oil and agricultural industry. Other plans in the region include constructing power plants, seaports, strong railways, irrigation dams, solar power plants and more.
Concerns Around the Belt and Road Initiative in Africa
Many African nations are still identified as developing in terms of economic factors. There is a severe shortage of infrastructural amenities preventing development from reaching within its folds. Some African nations are also under authoritarian systems or face political instability and threats of violence through extremist groups. These situations also contribute to the lack of development, especially since there is a severe lack of internal investments. Therefore, the cause and effect of the condition are complementary and can be tackled only through intervention.
The BRI acts as that economic intervention that many developing nations in Africa welcomed with open arms. The infrastructural projects under these MOUs boosted the economies of many of these nations. They allowed them to grow their trade capacities within the continent and with other foreign countries. At the same, concerns were looming with regards to the BRI. After the failure of payments by the Sri Lankan government for the Hambantota port, granting a 99-year lease to Chinese authorities, many developing countries in Africa feared the same fate.
However, African nations administered better systems to keep checks and balances and spread the cost of these developments. Djibouti is a prime example of undertaking the costs of BRI flawlessly. Simultaneously there is an interest in spreading the burdens of the cost regionally; for instance, the Mombasa-Nairobi railways will now extend over to Uganda. African nations have also learnt from countries like Myanmar to install high-level committees to examine the costs of these projects before approving them. The BRI comes with its advantages and disadvantages and leveraging the opportunities while avoiding the traps is necessary for weaker economies within the continent.
Looking Eastwards
Essentially, the Belt and Road Initiative opens the opportunity for business in Africa to trade and partner with those in the East. The BRI also offers the prospect to logistics companies to develop their rail freight departments and partnerships with Chinese logistics companies and others in far eastern nations.
As a part of the New Silk Road Network, Freight Consult Ghana Limited has taken a decisive step in engaging with Chinese companies. In an interview with the company’s Managing Director, Abdulai Pangasur, last year, we learnt that many European contractors end up taking projects, even when those projects are based in Africa. Freight Consult Ghana expresses that “…the scope of business is huge and forwarding companies like ours are open to all kinds of businesses across various industries such as construction, road projects, breakbulk cargo, etc.” They add that their aim is to develop strong and strategic partnerships with Chinese logistics companies. Freight Consult also expresses the necessity of developing rail transport in Africa, as it will not just improve infrastructure but also support the Intra African market. Therefore, as the BRI enters the continent, it would open avenues for African companies to get that business.
Read More:
https://odi.org/en/insights/making-the-belt-and-road-initiative-work-for-africa/
https://media.africaportal.org/documents/Leveraging_the_BRI__for_Africas__Industrialisation_.pdf
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