Bridges and ports made in China
Since 2008, Chinese banks and contractors have been the prime force in
African infrastructure, and the trend will only continue as competition
from other Asian players heats up
Chinese construction companies have been a force in African infrastructure for the last 50 years, building stadiums and the Tanzania-Zambia rail-road. With the pace of projects started in 2009 continuing, Beijing’s contractors will double the work completed within the last 50 years by about 2012. Having built 2,000 km of railways and 3,000 km of roads since the 1960s, a single deal sealed in September in the Democratic Republic of Congo will match the previous amount and link far-flung parts of the country together, enabling the transport of goods and people.
Almost every piece of infrastructure of national and continental importance is being built by construction companies from Asia. In 2008, the World Bank announced that China had become the largest financier of African infrastructure, the only country willing to put its billions of dollars behind African roads and airports. Two-thirds of the countries in Africa have received or are receiving Chinese-backed infrastructure, and countries like Angola and DRC are set to have their transportation infrastructure transformed by Beijing.
In 2009 alone, companies from China signed on to build more than $3bn in dams in Ethiopia and a $1.9bn dam in Mozambique. Chinese state-owned construction companies like CITIC and China Railway, which are building the east-west highway in Algeria, and dam-builder Sinohydro would not be expanding their African operations without the financing and the diplomatic clout that Beijing brings.Ahead of the Fourth Forum on China-Africa Cooperation (FOCAC) in Egypt in early November, analysts argued that Chinese finance for African projects would lag behind investors’ interests due to the lagging effects of the global slowdown and the heightened interest of Chinese construction companies. However, Chinese premier Wen Jiabao announced a further $10bn in concessional loans which will largely be used for Chinese companies to carry out the desired infrastructure projects of their African partner governments.
Algeria’s east-west highway is a 1,216-km link between Annaba in the
north-east and Tlemcen in the north-west, costing more than $11bn
and built by Chinese and Japanese companiesChinese contractors are building dams worth more than $3bn – i
ncluding Genale Dawa III, Chemoga-Yeda and Gibe IV – which will
generate thousands of megawatts in the next five yearsChinese companies are building about 2,500 km of railroads to link the
south-eastern mining regions of the Democratic Republic of Congo to ports
in the west. The rails could be linked to Chinese-built tracks in Tanzania
and Angola to create a path between eastern and western AfricaChina National Petroleum Corporation is building a 60,000 barrel
per day (bpd) refinery in Chad, in addition to a pipeline and
20,000 bpd refinery in NigerChinese construction companies are leading a $280 port expansion
project in Nouakchott and are also targeting Lamu in Kenya
where a $4bn deal is under discussion
Not to be left out in the cold, contractors from Seoul, Delhi and Tokyo have also lined up billions of dollars worth of deals to provide the roads, ports and airports for Africa’s economic transformation. Asian firms are bringing new competition to bidding rounds, targeting investment in areas that builders from the West ignored or found too costly.
Seeing that China is delivering on huge projects, other Asian countries are trying to get in on the planning stages, helping to develop integrated plans in electricity and water management. One of the latest entrants into the arena of African infrastructure is India’s state-owned Water and Power Consultancy Services, which is keen to develop water management plans and projects in Ghana, Zambia and Zimbabwe, which could then by financed by donors and the World Bank. South Korean companies have recently entered the master-planning business, with Cameroon as their first target. On 10 September, Chung-Suk Engineering, the Korea Port ?Engineering Corporation, the Korea Rail Network Authority and the Korea Transport Institute were contracted to begin work.
Other Asian investors play to their technological strengths. Singaporean company Hyflux has a virtual monopoly on desalination plants in North Africa, having signed contracts in June to build two plants in Libya, at Benghazi and Tripoli, worth about $449m. The firm has projects of a similar value in Algeria which it landed in April 2008.
Despite the negative attention that the Chinese presence attracts, the Chinese government has shown itself to be somewhat concerned with the growing focus on renewable technologies. A deal signed in September by the government in Addis Ababa and HydroChina Company will have Beijing finance the construction of wind farms at Adama and Mesobo Harena.
At Egypt’s FOCAC, the China-Africa Development Fund (CADF), which has struggled to find projects, announced that it would pursue new means to finance African infrastructure. CADF’s managing director Zhou Chao said that it would “encourage” the formation of public-private partnerships to develop new infrastructure projects. This does not mean that the preferred Chinese financing mechanism of mortgaging future resources against infrastructure contracts is likely to stop.