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Published: 6:00pm, 23 Jun, 2020
When Chinese President Xi Jinping hosted African leaders at last week’s China-Africa Summit, he singled out Kenya’s Standard Gauge Railway, a multibillion-dollar Chinese-funded Belt and Road Initiative project, for helping to move cargo during the coronavirus pandemic.
Xi congratulated Kenya’s President Uhuru Kenyatta for ensuring the uninterrupted flow of cargo from the Port of Mombasa on the Kenyan coast into the East African hinterland via the Standard Gauge Railway (SGR), which first started operating in 2017. Kenya’s decision, he said, had helped keep trade flowing in the region despite freight restrictions required by Covid-19 containment measures.
But the rail project has faced one setback after another, and the latest could have major implications on its future and any other projects that may follow. On Friday, a Kenyan appellate court declared the rail contract between Kenya and the China Road and Bridge Corporation (CRBC) illegal.
The Court of Appeal, which handles cases arising from the decisions of the High Court in Kenya, ruled that state-owned Kenya Railways had failed to comply with – and violated – the nation’s laws “in the procurement of the SGR project”.
Kenyan activist Okiya Omtatah and the Law Society of Kenya, an association of practising advocates, brought the suit in 2014 in a bid to stop construction of the SGR. They argued the railway was a public project that should have been subject to a fair, competitive and transparent procurement process.
Instead, they said, the contract was single-sourced without being put up for tender, despite the burden of loan repayments falling on Kenyan taxpayers.
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Under pressure to pay its debts amid the coronavirus pandemic, which has ravaged the economy, the Kenyan government has been forcing importers to use the train. But truckers and importers have resisted, saying it is more costly to use the rail than trucks.
Last year, SGR made US$136 million in revenues from cargo and passenger services. But this month, Kenya’s parliament disclosed that Kenya Railways had not paid US$380 million in management fees to Africa Star Railway. The Chinese embassy in Nairobi confirmed that Africa Star Railway had not been paid part of the fees but “appreciated the efforts that the Kenya government has made to clear the pending payments”.
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https://twitter.com/KittySn52889207/status/1269468024743944192?s=19
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Excerpts:
https://www.reuters.com/article/us-kenya-railways-idUSKBN1ZL1JK
Some Kenyans say Chinese-built railway leaves them in the dust
KIU, Kenya (Reuters) – The soporific buzz of bees fills the abandoned train station at Kiu, a two-hour drive from Kenya’s capital Nairobi. Rusting rail sleepers lay on the grass outside; a slender snake slithers away after footsteps disturb his sunbaked snooze.
A new Chinese-built rail track lies about 500 meters away from the old colonial-era railway station, which closed down in 2012. But the new high-speed trains thunder through without stopping; Kiu is just a dusty blur glimpsed through the window.
Residents of this eastern Kenya town serving 6,000 people, feel bereft without their station and the old railway line, which they depended on to get to work, or the nearest hospitals. Traveling by road is a slow and costly alternative.
Opened in 2017, the new $3.3 billion railway is part of China’s “One Belt, One Road” initiative, a multi-trillion dollar series of infrastructure projects upgrading land and maritime trade routes between China and Europe, Asia and Africa.
The new railway sliced travel times in half for passengers and cargo traveling between the capital Nairobi and the port city of Mombasa. The non-express service takes just over four hours to make six stops but only runs once a day, a steep reduction from the 46 stops of the old service that ran twice a day.
“This new railway is just for the rich. We do not benefit,” said Thomas Mutevu, a welder in Kiu.
He used to commute to work in Nairobi by train every day, he said. But now the train no longer stops and it is too far and expensive by road, he has stopped commuting. Other Kiu residents who work in Nairobi now only come home at weekends, he added.
State-run Kenya Railways said the new line has boosted local travel. Passengers surged to 1.765 million in the year to June 2019, up from 1.239 million in the year to June 2018, as people who used to travel by road or air opt for the new train.
Cargo was up to five million tonnes last year, although some businesses complain they are being forced to use the new line.
https://www.reuters.com/article/us-kenya-railways-idUSKBN1ZL1JK
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Excerpts:
Bloomberg
China’s Built a Railroad to Nowhere in Kenya
Beijing is withholding the $4.9 billion needed to finish the project, once a flagship for Xi Jinping’s Belt and Road initiative.
By David Herbling and Dandan Li
July 19, 2019, 11:00 AM GMT+8
Gleaming concrete sleepers run across a new railway bridge in Kenya, the latest stretch of a Chinese-built line from the coast all the way to Uganda.
Only, it doesn’t quite reach the border. Instead, the railroad ends abruptly by a sleepy village about 75 miles west of the Kenyan capital, Nairobi, the tracks laid but unused.
Construction of what was intended to be a flagship infrastructure project for Eastern Africa was halted earlier this year after China withheld some $4.9 billion in funding needed to allow the line’s completion. Beijing’s sudden financial reticence appeared to catch the governments of Kenya and Uganda off guard: Both may now be forced to reinstate a colonial-era line in a bid to patch the link and boost regional trade.
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The reason for China’s attack of cold feet may lie in the project’s high profile. Chinese state media repeatedly used the Mombasa-Nairobi Standard Gauge Railway (SGR) project as a showcase for President Xi Jinping’s Belt and Road Initiative. But with concerns rising globally that Belt and Road was loading poorer nations with unsustainable debt, Xi signaled in April that Beijing would exert more control over projects and tighten oversight.
That extra rigor is beginning to be felt worldwide. A planned light-railway system that was the most high profile belt and road project in Kazakhstan is on hold after the collapse of a local bank that handled Chinese funds. In Zimbabwe, a giant solar project hit a funding shortfall after the Export Import Bank of China backed out of providing financing due to the Zimbabwean government’s legacy debts, RWR Belt and Road Monitor reported this month. Kenya’s line may be next.
The Chinese “are adopting a more cautious approach to their debt exposure in Africa,” said Piers Dawson, a consultant at London-based investment consultancy Africa Matters Ltd. He cites “increased noise around its sustainability and potential default.”
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“China has its own issues it’s dealing with, including perceptions that it is ‘trapping’ many of its Belt and Road partners by drowning them in debt,” said Jacques Nel, an economist at NKC African Economics. China’s government has “put the brakes on its external expansion plans, or has at least become more focused on the viability of projects due to its own corporate debt concerns,” he said.
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Beijing’s tighter scrutiny of Belt and Road projects comes as China shifts the program away from low-cost loans onto a more commercial basis involving its private sector. Clearer rules for state-owned enterprises and building overseas auditing and anti-corruption mechanisms were among other steps floated by officials at the time of the Belt and Road Forum in April.
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Excerpts:
https://qz.com/africa/1634659/ethiopia-kenya-struggle-with-chinese-debt-over-sgr-railways/
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Excerpts:
https://thediplomat.com/2019/01/the-chinese-railways-remolding-east-africa/
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Excerpts:
https://www.latimes.com/world/asia/la-fg-china-africa-ethiopia-20170804-htmlstory.html
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