The Belt and Road Initiative (BRI) from China is providing Africa with infrastructure such as roads and railways, but also creating a burden of debt.
NAIROBI, KENYA —
Over 150 nations, particularly in Africa, have agreed to participate in China’s decade-old Belt and Road Initiative, also referred to as the BRI. Although the massive undertaking has successfully improved transportation and infrastructure in numerous impoverished countries, it has also burdened some with significant debt.
One instance of this is in Kenya, where the Standard Gauge Railway (SGR) was launched six years ago. Kenyan authorities praised it as one of the largest and most prosperous domestic infrastructure initiatives since the late 1800s.
The duration of travel from Mombasa to Nairobi previously took approximately 10 hours, but currently only requires five to six hours.
“According to Denis Ombuna, a businessman who recently took the train to the Syokimau Nairobi Terminus, interviewing while using this mode of transportation is a time-saving option.”
Dickson Okong’o, another passenger, expressed dissatisfaction with the uncomfortable seats in economy class. However, he acknowledged the train as a safe means of transportation and praised the beautiful scenery. He shared, “On my journey today, I spotted an antelope, an elephant, and a zebra… I usually have to tune into Nat Geo [TV] to see them.”
The country of Kenya took out a loan of $5 billion from China in order to construct railway systems linking the cities of Mombasa and Nairobi, as well as Nairobi and Naivasha.
These lines are a key aspect of the foreign policy of Chinese leader Xi Jinping. The project, which encompasses infrastructure, trade, and telecommunications on a global scale, aims to link Kenya with Uganda, Rwanda, and South Sudan.
According to Victor Kimosop, an economist from Kenya, the positive aspect is that it serves as a structure for various forms of transportation such as goods and cargo.
Kimosop suggested that certain aspects of the project could have been approached in an alternative manner.
“I hope the individuals in charge of SGR had considered the repayment plan,” he expressed. “It is a significant investment project with a repayment period of 20-30 years, which is quite ambitious. Additionally, our development model and compensation system can make the project very costly and prone to corruption.”
While being built, the project faced opposition from other critics concerned about its potential effects on wildlife. In particular, a section of the railway runs through Nairobi National Park.
On Friday, Kenya Deputy President Rigathi Gachagua told a local radio program that when President William Ruto travels to China later this month, he will ask Beijing for an additional $1 billion loan to complete other stalled road construction projects. Ruto’s plan will also include a request to lengthen the maturity periods of existing loans.
According to David Sacks, a member of the Council on Foreign Relations in New York, African countries were considered ideal participants in BRI due to various factors.
The population of Africa is increasing rapidly and there is a demand for more infrastructure in the continent. China believes it has the necessary experience and knowledge to provide roads, railways, and ports that African countries are seeking. From China’s point of view, Africa is an attractive location because it can secure resources for its manufacturing industry. Many valuable minerals such as copper and cobalt can be found in Africa.
Ethiopia and Zambia, among other countries, have approved large-scale Chinese infrastructure projects. However, Zambia is facing challenges due to the resulting financial obligations. It was the initial nation to default on its debt during the global health crisis.
Zambian President Hakainde Hichilema recently met with his Chinese counterpart to discuss restructuring the country’s loan with China.
The Western world has expressed disapproval towards China’s practice of loaning money to impoverished nations, and insists that prompt action must be taken to ease the burden of unsustainable and unmanageable debt for these countries.
“It is in China’s best interest to take prompt action on debt,” stated Janet Yellen, the Secretary of the Treasury for the United States, earlier this year. Yellen also emphasized that postponing necessary debt treatments would result in higher costs for both borrowers and creditors. This would also have a negative impact on the economic fundamentals of borrowers and ultimately lead to a greater need for debt relief.
Sacks stated that the belief that China deliberately seeks to trap countries in debt is oversimplified. He pointed out that numerous nations joined the BRI during a period of strong economic growth and were not anticipating tougher times.
The initial impact was the COVID-19 outbreak, which severely damaged worldwide economic progress and significantly affected developing countries. The second was the conflict in Ukraine. For African nations, who heavily rely on imports for food and oil, there has been a significant increase in prices for these commodities.
A recent research conducted by Boston University revealed that China’s loans to Africa have decreased to the lowest point in the past twenty years. Experts suggest that although the Belt and Road Initiative (BRI) will continue, China may be shifting towards making smaller investments.