By Duncan Miriri
NAIROBI (Reuters) – Deep in Kenya’s Great Rift Valley, members of the National Youth Service tirelessly waves machetes at clear dense bushes die blackout railway lines more than a century old.
It is a clear lowtech phase for China’s Belt and Road drive in Africa for the . to create trade highways of the future.
there is not enough money left until complete the new 1,000 km super-fast rail connection from the port of Mombasa to Uganda. It ends abruptly in the countryside, 468 km short of the border, and now Kenya is resorting to ending the route by the 19th-century colonial British-built tracks die ever passed that way.
China has loaned Africa countries hundreds of billions of dollar as part of President Xi Jinping’s Belt and Road Initiative (BRI), which foresaw that Chinese institutions would fund the bulk of the infrastructure in mainly developing countries. Yet the credit has dried up up in recent years.
On top of of the damage to both China and its creditors from COVID-19, analysts and academics attribute the slowdown to factors such as declining appetite in Beijing for large foreign investment, a commodity price crash That has complicated African debt services, plus the reluctance of some borrowers to enter into credit agreements die supported by their natural resources.
“We are not in the go-go period no longer,” said Columbia University historian Adam Tooze, over China’s overseas investment projects. “There is definitely a rebalancing from China side’ said Tooze, whose… new book Shutdown investigates how COVID-19 affected the world economy, adding that Beijing’s current the surplus in the account “shrunk somewhat”.
Chinese investments in the 138 countries target of BRI dropped met 54% from 2019 to $47 billion last year, the lowest amount since the unveiling of the BRI in 2013, according to Green BRI, a in China-based think tank die focuses on on analyze the initiative.
In Africa, home up to 40 of die BRI countries, Chinese bank financing for infrastructure projects fell from $11 billion in 2017 up to $3.3 billion in 2020, according to a report by international law firm Baker McKenzie.
This is a blow for governments who anticipated securing Chinese loans to build highways and railways die being enclosed by land countries to seaports and trade routes to Asia and Europe. The continent is facing an estimated annual investment shortfall in infrastructure of about $100 billion, according to the African Development Bank.
“The pandemic has actually made things worse. Those numbers go upsaid Akinwumi Adesina, the president of the bank, citing the need for extra infrastructure to support healthcare.
having mugged hit some other BRI projects over the whole continent, like a $3 billion Nigerian rail line project and a $450 million highway in Cameroon.
China’s Ministry of foreign affairs did not respond to a request for comment.
Beijing officials have said the two sides have a mutually beneficial and cooperative relationship and that loans are provided openly and transparently.
“When providing interest-free and concessional loans, we take full account met the debt situation and repayment capacity of The receiver countries in Africa, and work in agreement with the law,” Zhou Liujun, vice chairman of China International Development Cooperation Agency told reporters: in the end of October.
Another Chinese official, who declined are called because they are not authorized to met the . to speak media, said Beijing always intends to gradually implement BRI to manage debt default risks by countries of projects.
‘RAILWAY BEING BUILT’
Civil servants in Kenya said the rail route was long-term projects die would be seen through over time, without specifying a specific time frame. The COVID-19 has presented the world with unexpected and unprecedented challenges, she added.
“Eventually this is standard railway will still be complete because it is a part of what we call the Belt and Road Initiative,” said James Macharia, Kenya’s transport minister.
The government has already spent about $5 billion on to be new rail connection, and can not currently pay the extra $3.7 billion die is needed to finish the. The last station addicted up can only be reached via unpaved roads.
hence engineers in the Rift Valley are no longer building new infrastructure, but rather support it up colonial era viaducts and bridges in an operation die the government estimates will cost about 10 billion shillings ($91 million).
There are knock-on securities and, over the border in Uganda, construction on a modern railway has been delayed because it is supposed to connect to the Kenyan one.
That was one factor in the spaciousup in a $2.2 billion loan from the Export-Import Bank of China (Exim Bank), David Mugabe, spokesman for Uganda’s Standard Gauge Railway project, Reuters told Reuters.
In Nigeria, the government this turned to the in London-based Standard Chartered Bank: year to fund the $3 billion railroad project https://www.reuters.com/article/nigeria-railway-funding-idUKL5N2OE43A was initially slated to get Chinese support. Chartered by default declined until comment on the deal, citing confidentiality agreements.
In Cameroon, the 450 million . highway dollar die the capital Yaounde met the economic center connects of Douala, whose financing was obtained from China’s Exim Bank in 2012, stalled in 2019 as the bank stopped met paying out further tranches of the loan.
Exim Bank did not respond to a request for comment on are loans to Uganda and Cameroon.
MALAYSIA TO BOLIVIA
Zhou Yuyuan, Senior Research Fellow at the Center for West Asian and African Studies at the Shanghai Institutes for International Studies, said the COVID-19 crisis had strained both Chinese credit institutions and African finances.
In future, he added, Beijing would probably encourage more Chinese business investment in the continent, to the . to fill role of state-supported funding. “Once the pandemic is over over, Africas economy probably recover,” he said. “That could… drive Chinese business investment.”
The pandemic has added to the obstacles facing President Xi described himself as “project of the century“. After peaking at $125.25 billion in 2015, Chinese investments in BRI countries have fallen every time year, apart from 2018, when they were sharp up 6.7%, according to the Green BRI data.
In 2018, Pakistan https://www.reuters.com/article/us-pakistan-silkroad-railway-insight-idUSKCN1MA028 opposed the cost and the financing terms of building a railway. The previous year, there were signs of growing problems for BRI, after China’s push in Sri Lanka https://www.reuters.com/article/us-sri-lanka-china-insight-idUSKBN15G5UT sparked protests.
AidData, a research laboratory at the College of William and Maria in the United States, said: in a study https://www.reuters.com/world/china/china-belt-away-plans-loss-momentum-opposition-debt-mountain-study-2021-09-29 at the end of September die $11.58 billion in projects in Malaysia was cancelled over 2013-2021, with nearly $1.5 billion cancelled in Kazakhstan and more than $1 billion in Bolivia.
“A growing number of policy makers in low and middle incomes countries shut down high-profile BRI projects because of overpriced, corruption and debt to care over sustainability,” says Brad Parks, one of the authors of the study.
The Chinese Ministry of Foreign Affairs said: in response to the AidData report that “not all debt is unsustainable”, adding that the BRI had “consistently maintained the principles” since its launch of shared consultation, shared contributions and shared benefits”.
‘RESOURCES ARE FINISH’
AN key problem is debt durability.
Copper producer Zambia became Africa’s first sovereign default from the pandemic era last year after not keeping up with payments on more than $12 billion of international debt, for example. A recent study suggested: more then half of die last owes to Chinese public and private lenders.
At the end of 2018, Beijing agreed in to restructure billions of dollar in debt owed by Ethiopia.
Some African governments are also growing more reluctant to take out loan-backed commodities such as oil and metals.
“We can’t pawn our oil”, Uganda’s works and transportation minister Katumba Wamala told Reuters, confirming the country had refused to commit to untapped oil in fields in west to secure the railroad loan.
The financial tightness means African governments must make more strategic investment decisions in terms of debt sustainability, said Yvette Babb, a in Netherlands established fixed income portfolio manager at William Blair.
“There Is No Infinite” amount of capital,” she said.
($1 = 110,2500 Kenyan Shillings)
(Additional reporting by Joe Bavier in Johannesburg, Elias Biryabarema in Kampala, Kevin Yao and Ella Cao in Beijing; Editing by Katharine Houreld, Karin Stohecker and Pravin Char)
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