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
Chinese contractors have taken centrestage in the implementation
of infrastructure projects in Africa, as funding by the continent’s
development finance institutions shrinks.
However, investment in social sectors such as health and education remained low, according to the report Africa Construction Trends (2018) by consultancy firm Deloitte.
The
report, released last week, shows that East African governments fund
only 12.9 per cent of their projects in the region, with China and
international financiers funding 25.9 per cent and 20.1 per cent
respectively.
Top five countries by number of projects
Number of projects
Value ($ bn)
51.9
Algeria
20.0
40.0
60.0
46.0
Egypt
79.2
41.0
Kenya
38.2
38.0
Ethiopia
19.1
37.0
South Africa
49.5
32.0
Algeria
51.9
“The significant role played by China in
advancing funding for infrastructure development in East Africa speaks
to the importance of the region as a touch-point for China’s Belt and
Road Initiative,” the report says.
The initiative is
Beijing’s multibillion-dollar Marshall Plan that seeks to strengthen
Chinese global dominance through investment in infrastructure around the
world worth more than $1 trillion.
President Xi
Jinping has a grand plan to connect Asia, Africa and Europe through mega
projects. The initiative involves infrastructure development and
investments.
From Southeast Asia to Eastern Europe and Africa, the initiative
connects 71 countries that account for half the world’s population and a
quarter of global GDP.
So far Chinese companies have secured more than $340 billion in construction contracts along the Belt and Road.
The initiative was launched by President Xi Jinping in September and October 2013 during visits to Kazakhstan and Indonesia.
Sectors
According
to the report, 33 per cent of the 482 projects tracked this year were
built by Chinese companies and 24 per cent by local contractors.
However,
large-scale investment in social development and education projects
remained low, at 0.1 per cent each across the continent.
The
majority of the infrastructure projects were in the transport sector
(38.6 per cent), followed by real estate (22.8 per cent), energy and
power (13.7 per cent) and shipping and ports (7.5 per cent).
According
to the report, the transport sector, valued at $107 billion,
represented 22.7 per cent of the continent’s total spend on large
construction projects, with governments and China being the two
significant funders of the sector.
The report notes
that although African governments continue to fund the largest share of
projects, particularly in the transport sector, the Chinese influence on
the continent is increasing with 19 per cent of the projects being
funded by China (close to one in every five projects) followed by
international development finance institutions with (13.7 per cent), and
private domestic firms with (10.6 per cent).
China is
the most prolific (and single country) builder of projects, constructing
160 (33.2 per cent) projects this year, up from 85 last year.
The majority of Chinese construction also falls within the transport sector.
The majority of Chinese construction also falls within the transport sector.
Other
single-country builders include Italian firms, although they are some
way behind with 21 projects (4.4 per cent), followed by French firms
with 15 projects (3.1 per cent).
East Africa has the
largest number of projects at 139 (29 per cent) and North Africa
accounted for the largest share of projects in terms of value, at 31.5
per cent ($148.3 billion).
Egypt has the most projects at 46 (9.5 per cent of projects on
the continent) as well as the most projects by value at $79.2billion (17
per cent of the continent’s value), more than South Africa and Nigeria.
According
to the report, African governments own 364 projects (75.5 per cent),
followed by private domestic firms (9.3 per cent).
Firms
headquartered in China own 3.3 per cent of Africa’s infrastructure
projects, followed by firms in Australia (2.5 per cent), and the Middle
East (2.5 per cent).
According to the report, the total
number of projects in East Africa rose by 96 per cent between 2017 and
2018, with high value projects such as Kenya’s Konza Technology Park and
Tanzania’s Bagamoyo megaport boosting the region’s infrastructure
agenda.
Kenya has the largest number of projects in
East Africa, with 41 projects valued at $38.2 million, followed by
Ethiopia with 38 projects valued at $19.1 million.
The transport sector in East Africa’s accounts for 45.3 per cent
of all projects in the region and 26.6 per cent of their dollar value.
Energy
and power projects account for a significantly lower share of projects,
at 18 per cent in number and 21.1 per cent in value terms.
According to the report, the transport and energy sectors are critical to the EAC’s development strategy.
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