Construction works on Phase 2A of the Kenya's standard gauge railway at
Suswa. China Communications Construction Company are the contractors.
PHOTO | GEORGE SAYAGIE | NMG
China will this week host a forum where development projects for the next three years will be discussed.
African
leaders are going to Beijing for the Forum on China-Africa Co-operation
(FOCAC) Summit, hoping to get financing for their mega infrastructure
projects.
The summit themed "China and Africa: Towards
an Even Stronger Community with a Shared Future through Win-Win
Cooperation," is meant to link the Belt and Road Initiative with the UN
2030 Agenda for Sustainable Development, the AU’s Agenda 2063 and
individual countries' development plans.
But it comes
at a time when some African countries are grappling with an external
debt burden and a trade balance favouring Beijing.
Credit
rating firms and global financial institutions have been advising
against taking out further loans, instead recommending fiscal
consolidation to arrest the ballooning debt.
Kenya, for
instance, had taken over $5 billion from China as at the end of March
2018 while Uganda owed China $1.6 billion. Kenya’s National Treasury has
recently been under pressure to slow down the growth of public debt,
with the International Monetary Fund raising its concerns.
Even then, East African Presidents Paul Kagame of Rwanda — who
is also the African Union chairman — Yoweri Museveni of Uganda and Uhuru
Kenyatta of Kenya are expected to attend the summit and seek financing
for their joint infrastructure projects, particularly the standard gauge
railway.
Kenya is looking to complete the second last
phase of the line and Uganda will be inking a deal for its first phase
from Malaba to Kampala. Rwanda is also angling to start financing
discussions for the Isaka to Kigali stretch of the line from Tanzania.
But
the East African Community partner states are going to Beijing without a
common position on a proposed EAC-China trade pact, for which China has
been negotiating since 2016, and which Kenya has opposed.
In
May, Kenya rejected the China-EAC economic trade agreement, arguing
that it was protecting its manufacturing sector from China’s cheaper and
more efficient producers.
Chris Kiptoo, Principal
Secretary for International Trade, said China already accounts for 25
per cent of Kenya’s import bill under the current common external tariff
structure of zero per cent, 10 per cent and 25 per cent for raw
materials, intermediate goods and final goods respectively.
“This
means that China is likely to even get a larger share of Kenya’s market
once we enter into a free trade arrangement,” Mr Kiptoo said,
explaining Nairobi’s opposition of the deal.
China-Africa trade
Data
shows that China-Africa trade amounted to $170 billion in 2017, a 14.1
per cent increase upon the 2016 figures. China’s exports to Africa grew
by 2.7 per cent to $94.74 billion, while its imports rose by 32.8 per
cent to $75.26 billion.
The meeting will also review
the progress of the outcomes of the Johannesburg summit, during which
President Xi Jinping announced 10 major co-operation plans to promote
industrialisation and agricultural modernisation in Africa. He announced
a $60 billion funding package to African countries, some of which is
yet to be fully implemented.
African Union Commissioner
for Trade and Industry Albert Muchanga will take stock of the
infrastructure development, industrialisation and peace and development
programmes, and agree on the priorities for the coming years.
In
2015, President Xi Jinping under the China-Africa infrastructure plan
promised to fund the establishment of five transportation universities
in Africa. This, he said, would help African countries in infrastructure
planning, design, construction, operation and maintenance, particularly
in the sectors of railways, roads, regional aviation, ports,
electricity and telecommunications.
This, however is
yet to be fully actualised, even though Kenya and Ethiopia, which have
recently launched new railways built with support from Beijing, have
seen a strong funding and revamping of their respective railway
institutes and curriculum to align them modern railway realities.
One
of the biggest contentious issues between African countries and China
has been on trade and in the three-year plan, Beijing had promised under
the China-Africa Trade and Investment Facilitation Plan to carry out 50
trade programmes to improve Africa’s capacity for internal and external
trade and investment.
China also said it would
negotiate free trade agreements with countries and regional
organisations and increase the import of African products.
However,
this has failed. Aside from Mauritius, no other African country has an
Free Trade Agreement with China. Beijing is also yet to finalise any
economic partnership agreement with the continent’s economic blocs.
Industrialisation plan
Under
the China-Africa Industrialisation plan, Beijing promised to build or
upgrade a number of industrial parks and set up regional vocational
education centres and schools for capacity building.
China
also pledged it would train 200,000 technical personnel and provide
40,000 training opportunities for Africans in China. The Asian giant has
come through with several new industrial parks in Ethiopia and Senegal,
with an upgrade to an existing one in Rwanda.
Another
pledge that Beijing has fulfilled from its 2015 summit is expanding the
renminbi settlement and currency swap operations with African countries,
a pledge under its financial plan. In the past three years.
Nigeria,
South Africa and Zimbabwe have led the push to adopt the yuan as an
alternative settlement currency, with other countries including Kenya
promising to follow suit.
In May, African central
banks, under the Macroeconomic and Financial Management Institute of
Eastern and Southern Africa, (MEFMI) a regional establishment with
members including EAC countries supported the introduction of the yuan
as a reserve currency.
“As it is, almost all African
countries have loans or grants from China, so it would make economic
sense to repay in yuan,” said MEFMI spokesperson Gladys Siwela-Jadagu
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