China injects momentum into Africa's infrastructure boom
NAIROBI — Chinese engagement is helping create an infrastructure boom across Africa, giving rise to a motley of mega-projects that create jobs and boost economic growth while cushioning an economic slowdown the region faces.
In its latest World Economic Outlook released Tuesday, the International Monetary Fund (IMF) forecast the sub-Saharan Africa's economy will only grow 2.6 percent in 2017, well below its global growth forecast of 3.5 percent.
The subdued growth outlook for the region is largely because of ugly data registered in the region's two biggest economies that account for about half of regional output. The report said in 2016 growth in South Africa grew only 0.3 percent while the Nigerian economy contracted 1.5 percent amid low international oil and commodity prices. The IMF predicted only a modest 0.8-percent growth for both countries this year.
However, behind the seemingly bleak outlook, there is a silver lining in terms of the diversity in some other African countries keen to invest heavily in infrastructure projects to boost growth, often with China's involvement.
Thanks to a more diversified economic structure and infrastructure investment binge, East Africa's largest economy Kenya has maintained a growth rate of around 6 percent.
In Kenya, a standard-gauge railway (SGR) stretching about 480 km and linking its capital Nairobi with Mombasa port is changing the country's landscape with brightly-colored trains and shiny modern stations. The project, due to be launched in less than two months, is constructed by a Chinese firm and sources most of its funding through concessional loans from a Chinese State-owned bank.
Kenya Investment Authority CEO Moses Ikiara predicted the completion of the first phase of the SGR would greatly increase the speed at which freight moves and cut the cost of freight transportation by up to 40 percent. Due to lower logistics costs, Ikiara said companies can produce at more affordable costs.
Kenya Railways Corporation managing director Atanas Maina said in a signed article published recently in local media that the railway will promote the development of many industries, including agriculture, mining, manufacturing, energy and tourism, and drive the formation of towns along the line, create jobs and bring higher income for workers.
In recent years, other major projects with heavy Chinese presence have included the Addis Ababa-Djibouti railway launched in October 2016. It offers a vital route to sea for landlocked Ethiopia; Last April, the 680-meter Kigamboni Bridge, the first of its kind in east and central Africa, was also launched to better connect Tanzania's largest city Dar es Salaam to the Kigamboni district across the Kurasini creek. Both Ethiopia and Tanzania have been among African countries reporting high economic growth.
The IMF earlier this month also cited an infrastructure boom in the small Horn of Africa nation Djibouti, which seeks to become a transshipment hub in East Africa.
Djibouti's growth is estimated to have reached 6.5 percent last year. The country also targets medium-term growth of 7.5-10 percent per year through infrastructure investment. The IMF noted Chinese investors are financing many of the projects including railway, port, and a water pipeline connecting to Ethiopia.
Data from China's Ministry of Foreign Affairs show China has built more than 5,000 km respectively of railways and roads for Africa through its aid and financing. The country also helped train more than 160,000 local people.
At present, accelerating the development of infrastructure in energy, transport and ICT sectors has become a wide consensus among African countries in driving economic growth, but financing has been a huge challenge. Africa requires Chinese soft loans and grants to support infrastructure development.
"I regard Chinese engagement with Africa as really transformational both in trade, investments and infrastructure development, there has been positive impact on Africa's growth trajectory," Lemma Senbet, executive director of the African Economic Research Consortium, told Xinhua in an interview.
Senbet said China has eclipsed traditional African allies in the West to become the leading source of foreign direct investment in the continent, and African countries should seek China's involvement as they embark on economic diversification, regional integration and strengthening of political institutions.