Chinese nationals working on the second phase of Kenya’s SGR. Local
manufacturers say projects funded by Chinese loans are increasing
imports of Chinese raw materials and labour. PHOTO | AFP
Kenya and other African countries could reap net benefits from
Chinese investment, but that favourable outcome hinges on whether host
countries adopt effective oversight and accountability mechanisms,
according to a US Defence Department think tank.
Borrowers
should realise that Chinese infrastructure loans are primarily intended
to extend Beijing's political influence and military reach, cautioned
the analysis by the Washington-based Africa Centre for Strategic
Studies.
China's $900 billion One-Belt One-Road (Obor)
initiative, which now helps finance 1,700 infrastructure projects in
more than 60 countries, “is first and foremost a Chinese geopolitical
project designed to advance China's grand strategy,” the Africa Centre
said.
That strategy aims to establish China as a “great
power,” militarily as well as economically within the next three
decades, adds the analysis prepared by Africa Centre research associate
Paul Nantulya.
“The challenge for Africa is in
establishing where its interests converge with China’s, where they
diverge, and how areas of convergence can be shaped to advance African
development priorities.”
The Ksh320 billion ($3
billion) Mombasa-Nairobi standard gauge railway, financed by Chinese
lenders, serves as a “flagship Obor project” in East Africa and ranks as
the biggest investment in Kenya since Independence, the think tank
said.
Along with China-financed projects in neighbouring countries,
the Kenya railway could boost the East African Community's annual
exports by $192 million, according to a study by the United Nations
Economic Commission for Africa.
Offloading excesses
But
the standard gauge railway is producing economic deficits for Kenya as
well as potential benefits, the Pentagon think tank points out.
It
points to a World Bank finding that Kenya's economic competitiveness
was waning due to the large volume of Chinese exports to neighbouring
Tanzania and Uganda.
This sharp increase in exports of
Chinese materials can be seen as an “offloading of Chinese excess
capacity in Africa,” said Mr Nantulya's report.
“In the
past decade,” his paper notes, “Tanzania and Uganda’s imports from
China increased by as much as 60 per cent, while those from Kenya grew
by four and six per cent, respectively, over the same time period.”
“Kenyan
manufacturers have blamed their country’s declining market share of
industrial products on Chinese firms, which they also accuse of
importing raw materials from China and hiring Chinese labour,” adds Mr
Nantulya.
Kenya's heavy indebtedness to China for the
railway project has prompted speculation that the port of Mombasa could
fall to Chinese control as a result of contingency stipulations in the
lending agreement, the Africa Centre notes.
What happened in Sri Lanka and Pakistan could also occur in Kenya, the study suggests.
“In
2017, Sri Lanka handed over Hambantota port to Chinese state-owned
companies on a 99-year lease after defaulting on an infrastructure loan.
Pakistan handed over Gwadar port on a 40-year lease in an arrangement
where the Chinese partner also retained 90 per cent of its revenues.”
Kenya should seek to protect its national interests by making its deals with China more transparent, the study urges.
“The
opaque nature of many Obor negotiations prevents public and private
sector scrutiny. Beijing is sensitive to how host nations perceive it.
When the public is aware, vigilant and active, Obor negotiators can
become more responsive to local demands. The lessons of Hambantota and
Gwadar suggest that when accountability and oversight are absent, the
risks of unfavourable agreements, and ultimately default, increase,” the
study says.
No comments:
Post a Comment