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Africa Faces Some Risks with China’s Investments

Passengers disembark upon arrival in a Mombasa-to-Nairobi train launched to operate on the Standard Gauge Railway (SGR), May 31, 2017.
Passengers disembark upon arrival in a Mombasa-to-Nairobi train launched to operate on the Standard Gauge Railway (SGR), May 31, 2017.
African Countries Face Some Risks with China's Investment
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The Nairobi-Mombasa Railway opened in May 2017. At the time, the railway project – which was financed by China – was Kenya’s largest infrastructure project. The 440 kilometer line brought some immediate benefits. It provided President Uhuru Kenyatta with a major achievement as he prepared for his successful presidential campaign for reelection. It cut travel time across the country in half. And it made goods less costly to ship.

However, by last August, administrative issues became a problem. People were having difficulties buying tickets online and on the day of travel. Some people are concerned that the project was completed too quickly.

In time, these problems eased, but other issues received attention.

The China-Africa Research Initiative (CARI), a group at Johns Hopkins University in Maryland, suggested that Kenya paid too much for the railway. It cost Kenya $4 billion to build and may take more than 20 years before the transportation line pays for itself.

In addition, environmental activists worry about what the rail line will do to some of Kenya’s national parks.

The Nairobi-Mombasa Railway is one of several large infrastructure projects in which China is investing.

About six railways in Africa have been launched in recent years. In addition to that, many other projects – including bridges, dams, roads and power centers – have been started. These projects appear to help all parties involved.

But, critics say these projects lack necessary vetting and are not open business processes. Some experts are concerned that the drive by African governments to industrialize might not have the results they hope for. They say the infrastructure could result in overpriced and underused projects that do little to increase economic growth or help local communities.

China’s involvement in Africa

China has been involved in infrastructure development in Africa since the 1960s. China’s first major project was the Dar es Salaam to Kapiri Mposhi line between Zambia and Tanzania. The so-called TAZARA line was built for $400 million. It is still in operation, although it faces maintenance issues and labor strikes at times.

In recent years, China has shifted its projects from West African countries that are rich in resources, such as Nigeria and Angola, to Eastern African developing economies, such as Kenya and Ethiopia.

China’s infrastructure involvement in Africa is part of a long-term strategy of soft power. The most recent developments are part of Chinese President Xi Jinping’s “Belt and Road Initiative.” The goal is to link Europe and Asia, as well as East Africa, through billions of dollars in transportation infrastructure projects.

China’s effort creates ties and export markets for Chinese goods and labor. It also helps develop links to natural resources. And, the distant projects help spread Chinese technology and protect China’s foreign assets against risk.

How Africa gains…and loses

Yunnan Chen is a doctoral student at Johns Hopkins University. He said China can quickly help launch big projects for African countries seeking economic development and industry.

Over the short term, African countries gain from jobs and the transfer of skills and technology.

However, there are risks. Experts agree the Chinese-supported projects bring value to African countries. But this value can hide unfairness and corruption. This means that projects may be larger than needed. They may not be driven by real demand, but their size helps China and its economy, valued at $11 trillion dollars. That is about five times larger than the economy of all of Africa.

Without competitive bidding, the public cannot know if African countries are paying too much for their infrastructure projects. Experts are concerned that the projects will take many years to pay for themselves and provide an investment return, or profit.

There are other concerns, too. These include worries over environmental damage and harmful effects on local communities. Chen of Johns Hopkins notes that the Nairobi-Mombasa railway goes through national park lands. That could be harmful to those natural areas and to the countries’ wildlife.

The Standard is one of Kenya’s largest news organizations. It has reported that Chinese nationals have not treated Kenyan workers fairly.

Kenya Railways has launched its own investigation into claims of mistreatment shortly after reports by The Standard.

Can the situation be improved?

Uwe Wissenbach and Yuan Wang are researchers with the China-Africa Research Initiative. They say social and environmental studies should be done before projects are started to understand the possible effects they could have. These, they say, are either not done or not carefully carried out.

Some experts say African countries need to be more open about doing business to protect their current and future investments in infrastructure.

Chen says Chinese companies do have policies to deal with social and environmental issues. But he said a lot of the success of these policies depends “on the capacity of the host government and the host institution.” He said there have to be enough government officials in place for countries to enforce their own laws.

Wissenbach and Wang have recommended that officials study the situation and communicate the long-term economic results with the public.

David Shinn is a professor of international affairs at George Washington University in Washington, DC. He said African countries carry a lot of the risk, while China gets the biggest gains.

He said China wins by making the loan.

Then, he added, “Most of the material that goes into the project will be manufactured in China. So, Chinese companies are making a profit on that. There are two or three wins for China … one win for Kenya and Ethiopia, being that they get a railway built that no other country is offering to build for them.”

I’m Dorothy Gundy. And I’m Mario Ritter.

Salem Solomon reported this story for VOA News. Mario Ritter adapted it for VOA Learning English. Kelly Jean Kelly was the editor.


Words in This Story

infrastructure –n. the basic equipment and structures needed for a country or area to operate properly

achievement –n. something that has been done or reached through effort, a major result

vet –v. to check to make sure something is acceptable

strategy –n. a long-term plan to reach a large goal

soft power –n. to gain cooperation without using force or threats

institution –n. an established organization

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