In 1975, China built the $500 million Tanzam Railway from Dar es Salaam in Tanzania to Kapiri Mposhi in Zambia, the single longest railway in sub-Saharan Africa. Forty years later, China helped build the first light railway on the continent in Addis Ababa, Ethiopia, which opened in October 2015.
In April 2016, the China-Africa Research Initiative (CARI) at the Johns Hopkins University School of Advanced International Studies (SAIS) released its exclusive database of Chinese loans to Africa (2000 to 2014). One of our biggest discoveries was that Chinese loans on the continent mostly go toward building connective infrastructure – roads, railways, and power lines – rather than pursuing natural resources via the petroleum or mining sectors.
Dissecting the Data
Previously, the Rand Corporation, AidData, and Fitch Ratings produced data on Chinese loans to Africa, but in trying to confirm their data, we found many problematic errors. Most frequently, these organizations failed to check whether a project mentioned in a media report actually received funding. This led them to significantly overstate the number and value of Chinese loans. After scouring sources ranging from Chinese government reports to African newspapers in French, Arabic, and Portuguese, and drawing on our network of official sources in Africa, we revealed our own rigorously cross-checked figures, which lead to a number of conclusions.
First, China is only somewhat politically motivated when loaning to African countries. Indeed, recipients must follow the One China policy: the three countries that recognize Taiwan — Burkina Faso, Sao Tome and Principe, and Swaziland — received no loans. But there is little indication that loans are targeted toward client states. Although both Sudan and Zimbabwe are potential client states, only Sudan shows up on the list of the top 10 African recipients of Chinese loans.
Second, we found scarce evidence that Chinese loans are mainly purposed to access natural resources. While the top recipient of Chinese loans was resource-rich Angola, the next recipient was resource-poor Ethiopia, where almost 90 percent of loans went to connective infrastructure in transportation, communication, and power.
Finally, Chinese loans are building the continent. From 2000 to 2014, almost 50 percent of Chinese loans financed the two biggest sectors: transportation (receiving $24.2 billion of loans) and energy (mainly electric power) with $17.6 billion. Roads and railways made up just under 80 percent of loans in transportation. Hydropower, power lines, and gas pipes made up slightly over 80 percent of loans in energy. Taking a closer look, we found that the biggest Chinese loan-financed infrastructure project was Phase I of Kenya’s Mombasa-Nairobi Standard Gauge Railway, funded by $3.6 billion of loans. The second largest project was the aforementioned Addis-Djibouti Railway, funded at $2.5 billion. In addition, there is an important distinction on the construction sites of these projects: our data shows that foremen and technicians are generally Chinese but the workers are African, contrary to popular belief.
A Chinese Approach to African Needs
In sub-Saharan Africa, where only 16 percent of roads are paved and 24 percent of people have access to electricity, a lack of connective infrastructure hinders economic prosperity. Appropriately, the Program for Infrastructure Development (PIDA) under the African Union’s New Partnership for Africa’s Development (NEPAD) prioritizes “regional and continental infrastructure” in its 30 year strategy.
The need for connective infrastructure in Africa is evident, even for the Chinese. Without roads to transport construction equipment or electricity to power manufacturing factories, Chinese contractors’ projects, which originally had big hopes, often don’t materialize. One reason our estimate of Chinese loans is lower than that of others is because we do not count rumoured projects that were later cancelled or never materialized due to obstacles (including infrastructural ones).
In fact, out of the 1,246 reports of Chinese loan financing to Africa that we analyzed in our database, a significant number did not materialize. In the transport sector, only 47 percent of 233 total projects (worth $49.8 billion) ever materialized. The rest turned out to be mistakes, rumors, cancellations, or “inactive,” meaning an agreement was signed more than five years ago, but the project is still not in implementation. Similarly, in the energy sector, only 61 percent of 221 total projects (worth $30 billion) materialized.
Despite a number of presentations and plethora of opinions, one clear message emerged from the next steps for the rail network in England event, held at the Royal Society. While the challenges of capacity and passenger satisfaction are not to be underestimated, the opportunities that a growing industry provides are to be embraced, for this is an unprecedented, and yes complex, time.
As the industry grows and passenger numbers boom, on the face of it rail is in pretty robust health. And while that holds true to a certain extent, the question that has to be asked is; how do you increase capacity and ensure the industry keeps pace with a fast-moving, technology-savvy populace?
In effect, that is what the next steps for the rail network in England seminar attempted to answer, at least in part.
With Crossrail moving ahead and Royal Assent for High Speed 2 expected by the end of the year, there’s certainly no shortage of infrastructure projects to grab the headlines. To this add Crossrail 2, enthusiastically described as another antidote to London’s anticipated population growth and the added strain this will put on public transport.
Yet while these large and expensive schemes stir opinion among the general public, not just rail insiders, other more regulatory matters are just as important. Take the Shaw Report as an example. Led by Nicola Shaw, Chief Executive of HS1, this will study the long-term future shape and financing of Network Rail. Shaw is expected to report in time for Chancellor George Osborne’s budget.
While those at the Royal Society were understandably wary of pre-empting the report, it holds true that whatever is proposed is unlikely to be business as usual. Some have suggested devolving more power to regional route managers, while others, such as Labour’s shadow transport secretary Lilian Greenwood, have warned against “more fragmentation and more privatisation”.
The digital railway
Any potential changes to Network Rail’s structure and financing, and the development of Crossrail and HS2, as well as electrification plans, mean that rail travel and the overall network will look and feel very different in the next 20 to 30 years.
This also includes digitisation – highlighted as part of the cure for capacity problems. The Digital Railway project is trying to drag underlying systems into the modern era; Network Rail chief executive Mark Carne has insisted “the alternative of persisting with 19th century signalling technology in the 21st century cannot be right”.
“We must do something to unlock the capacity of the existing 20,000 miles of track – and that is the Digital Railway,” he added.
Not to mention unlocking passenger connectivity. Wi-Fi and mobile phone connections are all too often seen as the exception, not the norm. If the track is going digital, passengers will, it is hoped, see a change in their daily commute or cross country trip, too. Again it’s a challenge, but also an opportunity.
The challenge is in finding and harnessing the necessary skills to pull this off. Government estimates say that 10,000 new engineers are needed for improvements to the existing network, but with digitisation emerging, the skill set could change.
The National Training Academy for Rail, opened in October and part funded by the government, houses digital signalling equipment, a de-constructed train and a virtual reality and 3D simulation room – tools used to train the next-generation. That’s an opportunity to showcase the industry to a whole new audience.
Complex and a little daunting at first? Yes, but only those who evolve and adapt survive. The landscape is full of challenges and opportunities.