China funds railways to link across East Africa
Near Africa’s horn on the easternmost part of the continent, a shiny new electric railway runs alongside an old abandoned track through both arid desert and green highlands.
Some 750 kilometres long, the $4 billion line opened in October and links landlocked Ethiopia to the coast in Djibouti.
It was partly funded and built by Chinese companies, just like the other planned lines it could soon link up with neighboring Sudan and Kenya — where the first part of a new $13bn Kenyan railway linking Mombasa to Nairobi is taking shape.
The sprawling network is planned to continue into South Sudan, Uganda, Rwanda and Burundi, as part of transnational efforts to connect countries within East Africa.
This could transform how goods and people move, and the increased number of lines is expected to boost trade in countries like Kenya, says Kuria Muchiru, Advisory Partner, East Africa, at PwC in Kenya.
“Because we probably have about 4,000 trucks everyday making the trip up from Mombasa into Nairobi, and some go further on,” adds Muchiru.
The ports are where the magic happens, with 90% of African imports and exports conducted by sea which can be an issue for trade coming into landlocked countries.
“The new lines will have access to the ports and be able to almost offload directly onto the train and then straight onto inland locations,” Muchiru says.
Billions in loans
The new lines are part of the so-called LAPPSET rail project and the EAC Rail Sector Enhancement Project, also called the East African Railway Masterplan, and managed by the East Africa Community (EAC) — an intergovernmental organization run by Burundi, Kenya, Rwanda, South Sudan, Tanzania, and Uganda — together with consulting company CPCS.
But railways don’t come cheap and African countries are borrowing heavily from China to scrape the funds together.
In the 10 year period between 2004 and 2014, African countries borrowed nearly $10 billion for railway projects from China, facilitated by the China Export Import Bank (Exim), according to researchers by SAIS China Africa Research Initiative at Johns Hopkins School of Advanced International Studies (SAIS-CARI).
Why does China invest so enthusiastically?
China sees the railways as an investment opportunity which also creates an export market for their booming steel and construction industries, says Deborah Brautigam, Professor of International Political Economy and Director of SAIS-CARI.
“They have overcapacity in China. They have steel that they want to use. They’ve got experienced companies that know how to build railways.”
But it’s not without risks, and whether the loans will be fully repaid remains to be seen, she adds.
“That’s still a question mark.”
However, while countries often dream big, not all projects make it past the planning stage, according to Brautigam.
Looking at larger projects, five railways have materialized so far, with the Tazara railway — which links Tanzania and Zambia — being the first to be completed back in the seventies.
The other four projects are in Ethiopia, Nigeria, Kenya and Sudan, says Brautigam.
The West not as keen
The US and other western countries have financed some railways and other infrastructure projects across the continent, but they haven’t been as keen to invest as China, partly due to a fear that the African countries won’t keep up the maintenance, Brautigam says.
“[They] have put some money into these railways but not very much. They really haven’t wanted to finance them.”
“They felt, and probably rightly, that these governments were not doing a good job with what they had already,” she adds.
So are these new East African railway projects feasible? Andrew Grantham, Editor at Railway Gazette International who covers railway developments in the area, says that as long as there are funds and political will, there are no technical hurdles to expect.