BRIDGING AFRICA’S INFRASTRUCTURE GAP THROUGH STRONG SINO-AFRICA COOPERATION By Tunji Adeniyi

www.gpereview.com

September 24, 2018.

Background:

Historically, the West constituted Africa’s friend in politics and socio-economy. This is
understandable due to the evil called colonisation; and subsequent political independence and
sovereignty granted by the West to most African States. Though the West granted political
independence, they still control, largely, our economic independence. At least, they want to
control our speed of development through well-crafted polices, economic theories, institutions
and political designs, also aimed at protecting their economic interests. Consequently, any
friendship that seeks to change the status quo, like the Sino-Africa cooperation, is not viewed
constructively by the West.

Friendship is a two-way relationship, whereby, the distance between two friends are equal,
viewed from either end. Africa has been with the West for a long time, but resources flow to
Africa has been disproportionate, unfortunately. The cumulative effect of this is evident in
lopsided human, infrastructural and environmental development. Very strong indices of these
are evident in the huge infrastructure deficit, and the very low human development index, a
narrow measure of which is the poverty incidence. Poverty has become native to Africa.

The infrastructure and welfare amenities needed by Africa can be purchased in US Dollars,
Euro, Pound Sterling, or Renminbi. Infrastructure, or better still, economic welfare does not
know the colour of currency. It, therefore, does not matter who provides the needed finance for
the infrastructure needed to close the yawning gaps across Africa, provided it comes at
acceptable and sustainable terms and quality. Africa which currently constitutes about 16.6%
of the world population, also deserve to live well like their counterparts across the globe. As
good neighbours, the rest of the world should support Africa to overcome its barriers to
development. After all, if you want to sleep with your two eyes closed, especially, if you want
to meet your goat at its stake the following morning, then ensure that your neighbour does not
go to bed hungry.

For global peace, security and harmony, the rest of the world should invest in Africa. The time
is now, before Africa unleashes its poor, jobless, hungry and youthful population on the rest of
the world, particularly the West. Otherwise, the current migration to ‘seek reparations’ and all
manners of global malpractices are only a child’s play. It is on this note that the growing Sino-
Africa cooperation is very welcome; and should be encouraged and developed for the equitable
and mutual benefits of all stakeholders.

Top Ten Sino-Africa Mega Projects Transforming the Continent in 2018
· Djibouti Railway, Ethiopia and Djibouti.
· Tanzania-Zambian Railway, Tazara, Tanzania and Zambia.
· Lobito-Luau Railway, Angola.
· Abuja-Kaduna Railway, Nigeria.
· Mombassa-Nairobi Railway, Kenya.
· Algeria East-West Highway, Algeria.
· New Cairo, Egypt,
· Special Economic Zone, Congo Brazzaville
· Modderfontein New City, South Africa.
· Lagos-Calabar Coastal Railway, Nigeria.


The Issues:

There has been a plethora of issues around the recent cordiality between Africa and China. Let
us examine some the very important ones so as to enable stakeholders hold informed view,
make informed decisions or pursue informed policy directions that will produce equitable and
mutual benefits to our peoples.

(a) The Opinion of the West: The position of the West is biased, as they are only seeking to
protect their economic interests now and in the future. In the past when the West had so much
capital resources to spare, they neglected to invest enough or develop Africa for about a century
of colonisation and post-colonisation friendship. Instead, they preserved Africa in the natural
state as their source of primary unprocessed raw materials and mineral mine fields. They
imposed restrictive, or is it punitive, tariff barriers that made value-added processing of
Africa’s primary products uncompetitive in their markets. Consequently, Africa’s producers of
coffee and cocoa, who do the more onerous farm work, get less than 10% of the global market
value of coffee and chocolate. While the coffee taster in the West earns up to $50,000.00, the
coffee farmer in Ethiopia or Kenya earns an insignificant proportion of that.

Now that a new bed-fellow, China, has shown up, and the West is out of pocket and cannot
compete with China, it is natural for the disadvantaged, in the current struggle for the resources
of Africa, to come up with indirect justification for their inaction in the past and the lack of the
desired muscle to respond to China’s very prominent in-road into Africa today. As China
continues to grow and integrate into the rest of the global economy, Africa should establish
structures and policy framework to properly receive and domesticate Chinese investments for
the benefit of her people.

Besides, it is shear hypocrisy for the West to criticise China’s involvement in Africa when
China’s direct investment across all the sectors of US economy in 2017 was in excess of US$25
billion apart from their holding of US$1.17 trillion in Treasury Bonds and several other small
direct investments valued less than US$100million per transaction, which have not been
included. China’s direct investment in Europe in 2017 was US$79 billion. In the UK, it was
US$9.5billion in 2016 alone and a cumulative of US$28.7 billion from 2001 to 2016.
Furthermore, to better harness Chinese investment, the UK government and UCL (University
College, London) launched a UK-China Infrastructure Academy to support the UK-China
infrastructure alliance.

Meanwhile, before the West makes available its ‘Rolls Royce’, they should leave us to ride in
the ‘Toyota’ supplied by China. However, the ‘Toyota’ should come with genuine spare-parts,
good after-sales garage and assembly plant with robust technology transfer programme manned
by competent and committed professionals.

Of course, that is not to say that the great expectations of Chinese investments do not come
with growing concerns. These are probably even more relevant to the West, that is already
infrastructure-rich or that have alternative funding sources, than to Africa. Africa should be
more interested in the socio-economic impact than in the geopolitical dimensions of Chinese
investments. If and when the West provides better alternatives, Africa will make the better
choice.

(b) Africa’s View of China and Chinese: Africa’s experience with Chinese investments have
been reported with mixed feelings. The key sources of worry are that their operations are less
than transparent, often self-centred and produces sub-standard outcomes. Furthermore, they
have bad indigenous employee relations, sometimes tending to racism. All of these can be
remedied, however, in prior specifications and enforceable agreements between both parties.

(c) China’s view of Africa: In a study conducted by SACE (Sino Africa Centre of Excellence)
Foundation in 2014 on Chinese Business Perception Index (BPI) in Kenya, and by extension
Africa, the Chinese business community identified the following significant obstacles to
business in the order of importance: (a) corruption (b) crime rate (c) obtaining work permit (d)
tax rate (e) tax administration (f) customs and trade regulations (g) inadequately skilled
workforce (h) court system and (i) electricity. These factors will feature across Africa with
minor variabilities only in the ranking.

(d) Debt Trap: Another major criticism is that China is forcing Africa into a debt trap. This
cannot be correct as the investments and / or loans are not offered at gun-point. The USA is
probably more under Chinese debt trap than any African country if viewed from the lens of
debt capacity measurement indices. In the current USA-China tariff face-off, one joker China
hopes to deploy against the USA is its investment in the US Treasury Bond, where China holds
US$1.18 trillion (about 6%) as at June 2018. This is aside from FDIs in almost all the sectors
of the US economy.

African countries should, however, adopt best practices in debt procurement that will ensure
sustainability and keep the ratios of annual debt-service to annual revenue, in particular, within
acceptable or optimal limits. Of course, this should apply to debts from all sources - domestic,
or foreign; and Chinese or otherwise. In this regard, and given Africa’s current debt profile,
only very low interest, and long-term debts that conserve debt-service capacity and debt
sustainability is acceptable. Better still, we need more of investments and hybrids like PPPs,
BOTs, etc. than outright debt.

(e) Loan Purpose and Africa Infrastructure Deficit: Loans are not bad in themselves if they are
sustainably procured and used strictly for purposes of creating value and opening up future
opportunities capable of generating more than enough cash flow or economic value for
repaying the loans, and not for present consumption. Consequently, African countries should
be disciplined enough to limit loan purposes to infrastructural investments capable of
generating sustainable socio-economic returns and advancement opportunities for the longterm
benefits of the people. Therefore, any burden arising from any new loan will be
economically justifiable.

Back-of-the-envelope, Africa’s infrastructure investment deficit is put at about US$22.4
trillion by 2030 in order to meet the UN sustainable development goals. According to the
Global Infrastructure Outlook published in July, 2018, by the Global Infrastructure Hub, 10
African countries of Morocco, Tunisia, Egypt, Ethiopia, Senegal, Guinea, Côte d’Ivoire,
Ghana, Benin and Rwanda would need about $2.4 trillion by 2040 if they are to keep pace with
economic growth. However, only $1.4 trillion of it is likely to be delivered, leaving a projected
deficit of US$1trillion. $415 million of the $1trillion shortfall will be required by year 2030.
By extrapolation, the 54 African countries would have a shortfall of about US$22.4 trillion by
2030.

The list of physical infrastructures need in Africa is endless. However, some of the very critical
and already identified or prepared ones are as follows:
Table1: Some pipelines of Africa’s projects.
Serial
No
Project Country Amount / cost
1 Mambila hydroelectric power project Nigeria $5.8 billion.
2 Konza Technology City Kenya $14.5 billion.
3 Inga 3 dam project DR Congo Revised since 1950s
4 Bagamoyo Port Tanzania 10 billion.
5 Standard Gauge Railway Project Kenya Mombassa-
Nairobi=US$3.27b*
Nairobi-
Naivasha=US$1.5b
Naivasha-
Kisumu=US$3.7b.
6 Huge (4.5GW) solar park Tunisia
7 New Administrative Capital Egypt
8 Grand Ethiopian Renaissance Dam Ethiopia US$4.8bn
9 Modderfontein New City South Africa US$8 billion.
10 Nacala corridor rail and port project Mozambique US$5 billion.
11 Lekki Deep Seaport Nigeria US$1.2 billion
12 The LAPSSET Corridor Program. Kenya US$13b billion.
Serial
No
Project Country Amount / cost
13 13. Pinnacle Towers Kenya US$200 million.
14 Rabat Bouregreg Tower Morocco US$375 million.
15 Mombassa Port Expansion Kenya US$350million.
16 Lamu -Isiolo Road. Kenya US$610 million.
17 Kenya -Tanzania Highway. Kenya-
Tanzania
US$751.3 million.
18 East - West Road Nigeria US$4.75billion in 2011.
19 Second Niger bridge Nigeria US$1-2billion.
20 New Airport Terminal in Lagos, Abuja,
Kano & Port Harcourt
Nigeria US$500 Million in 2014
*Executed. **Moving cost

Source: Various Countries’ Capital Plans

The challenge is for these and other critical projects to be well-prepared and prioritised for
investment. The terms of the investment should be very well negotiated. In any bilateral or
multilateral engagements (including investment) what is not negotiated is not offered. Hence,
loan or investment amount, tenor, interest rate, suppliers of equipments, expertise, labour and
all the frequently contested issues should be agreed and well-documented upfront. A very
strong control, monitoring and evaluation team should also be agreed and installed.

(f) Balancing global development for global social security, peace and harmony: The world
has become a global village. Development disparity across the world are known and new
happenings become known on real-time basis. Globalisation has been aided by internet of
things (IoT) mobile telephony and the accompanying ease of communication. Even the poor
now knows his oppressors. That partly accounts for the upsurge in migration even at the
greatest of risks. That is why the West and other developed world should rally round and
support the development of Africa and the other under-developed world, this time not via
unsustainable donations, but through more enduring economic models that offer equitable
mutual benefits for all.

Let whoever has the capital invest in Africa and reap the benefit of his return on capital, but in
return let Africans benefit from decent employment, economic welfare, and brighter future
economic opportunities. After all, all that the migratory youthful African population is seeking
from the West is gainful employment that has eluded them in the continent despite our vast
underdeveloped potentials locked up in minerals and natural resources, where they have not
been unjustifiably transferred to develop other geographies.
Consequently, the only sustainable panacea to the global problems of migration, poverty,
insurgency, terrorism, food insecurity, etc, that can bring long term sustainable peace is an even
development of the global economy. Rather than criticise, let the West step up their
engagement with Africa and join China to invest in Africa’s infrastructure, industrialisation,
agribusiness value chains and in the extractive industries to promote global peace and harmony.

(g) Language barrier: A critical factor in the opacity, misgivings and distrust of Chinese
operation in Africa revolves around language barrier. Africa and China should pursue a
programme of cultural integration that will entrench mutual understanding, mutual trust and
mutual confidence.

(h) Project preparation, prioritisation, negotiation and implementation: A critical issue which
had militated against the achievement of the intended service or desired welfare delivery of
previous infrastructure loans either from the West or China is poor project planning -
identification, design, preparation, prioritisation, implementation, monitoring and review. The
consequences of these are: cost overruns, schedule delays and benefit shortfalls (Flyvbjerg,
Bent, 2014) and under-specification. Other consequences are abandoned projects, communal
restiveness, etc. There are several abandoned projects dotting the surface of Africa. A major
one in Nigeria is the Ajaokuta Steel Project on which government is said to have expended
about $8billion (including salaries), but will still need to expend another $500million if the
project has to see the light of the day.

In order to avoid the common problems of cost overrun, overtime and under-specification often
associated with major projects financed in any which way, Africans should be more internally
focused to block the inroads of such problems. We should shun corruption in all its
ramifications and focus professionally on projects from identification through design,
prioritisation, negotiation, implementation, supervision, control, monitoring, and evaluation.
We should build a masterplan and pipelines of prioritised projects. Project preparation should
specify realistic time schedules, quality of delivery required, sources of manpower and
materials, local content, environmental impact assessment (issues and remedies) professionally
determined loan types, loan sources, loan tenors, interest rates, collateral, etc.

The terms of agreements should be stated in clear and unambiguous manners. They should be
negotiated professionally to include clauses on: project management, standards, insurance,
indemnity, maintenance and sustainability, community relations, contract enforcement and
arbitration within the African nation involved.

(i) Indigenous Manpower: Africa is blessed with talents that can design, prepare, negotiate and
implement good and successful projects either in the public service, private sector or in the
diaspora. The major problems of good project preparation, negotiation and delivery are
corruption, and political and optimism biases.

However, two African countries (Botswana and Rwanda) seem to have overcome, largely, the
malaise of political and optimism biases. Botswana’s transformational leadership embraced
administrative reforms aligned to global best practices. The focus of leadership and
administration is good, transparent, citizen-centric (‘customer-oriented’) effective, resultoriented,
open, democratic, disciplined, performance-driven, result accountability, customer
satisfaction and feedback and accountable leadership. Like in Botswana, Rwanda’s
transformational leadership also executed public sector reforms. They conducted a national
skills audit in 2008 and upgraded skill development to fill the gaps, putting square pegs in
square holes; and round pegs in round holes. Rwanda built a result-accountability public

service and private sector-led economy.

Bibliography:

1. Adeniyi, A. 2012. Best Practices in Wealth and Job Creation: Lessons from Africa and
Beyond. Being Text of paper Delivered at the 3rd African Governance, Leadership and
Management Convection “Towards Sustainable Wealth and Job Creation: Challenges and
Opportunities for Africa, Mombassa, Kenya, August 5-9.
2. Africa Development Infrastructure. 2018. Top 10: Africa Infrastructure Projects in 2018
The Chinese Mega Projects Transforming theContinent. YouTube.
3. Bent Flyvbjerg, 2014, "What You Should Know about Megaprojects and Why: An
overview," Project Management Journal, vol. 45, no. 2, April-May, pp. 6-19,
DOI:10.1002/pmj.21409.
4.Bent Flyvbjerg, 2017, "Introduction: The Iron Law of Megaproject Management," in Bent
Flyvbjerg, ed., The Oxford Handbook of Megaproject Management (Oxford: Oxford
University Press), Chapter 1, pp. 1-18; URL for print version: http://bit.ly/2bctWZt.
5. Business Sweden in Nairobi. 2017. The Infrastructure Sector in Kenya. Fact Pack.
6. CCE News. 2017. Top 14 Ongoing MegaProjects in Africa. December 24.
7. Deloitte. 2017. The Deloitte ConstructionReport 2017.
8. Global Infrastructure Hub. 2018. Global Infrastructure Outlook.
9. John Seaman, Miguel Otero-Iglesias, and Mikko Huotari. 2018. Sizing up Chinese
Investments in Europe. How can Europe strike the right balance between security and
economic openness? The Diplomat, March 1.
10. Matti Siemiatycki, 2015. Cost Overrunson Infrastructure Projects: Patterns, Causes,and
Cures IMFG perspectives. No 11. University of Toronto. Ontario. Canada.
11. Natasha Akpoti. 2018. Special Report: Ajaokuta Steel Company, Presented to theHouse
of Representatives and The Acquisition Plot. Nigeria.
12. Oyebade, Wole. 2018. Uneasy Silence Over $500million New Terminals at Lagos,Abuja
Airports. The Guardian, August 22.
13. SACE Research Hub. 2014. Business Perception Index Kenya: Chinese Companies’
Perception Survey of Doing Business in Kenya, 2014.
14.The American Enterprise Institute and the Heritage Foundation. 2018. Chinese
Investments in the US Data Sheet. China Global Investment Tracker.
15. UK-China Infrastructure Academy. 2016. UCL Lunches UK-China Infrastructure
Academy. Available at: http://www.ucl.ac.uk
16. World Bank. 2017. Kenya Infrastructure Finance / PPP Project.