China’s Investment Drive and Africa’s Disjointed Infrastructure

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China’s Investment Drive and Africa’s Disjointed Infrastructure

The Lagos-Ibadan train line joins a list of disjointed infrastructure projects taken up on the African continent by Chinese firms.

China’s Investment Drive and Africa’s Disjointed Infrastructure

Nigerian President Muhammadu Buhari, left, shakes hands with Chinese Premier Li Keqiang before their meeting at the Diaoyutai State Guesthouse in Beijing, Wednesday, Sept. 5, 2018.

Credit: Parker Song/Pool Photo via AP

At Alagomeji, a suburb in Lagos, there is a towering new building housing the Lagos-Ibadan train project. This building is perhaps the most visible testament to the much touted and very aggressive China-Nigeria relationship. Barring any unforeseen problems, the train trip takes travelers smoothly from Alagomeji in Lagos to Ibadan in Oyo state.

Studying this project in isolation, this is great infrastructure. On paper, the train line, which connects Lagos to Abeokuta then to Ibadan, helps reduce the strain on the already heavily tasked Lagos-Ibadan expressway and offers an alternative for residents and travelers looking to beat the historic traffic jams on the roadways. But in reality, this new train line is largely inaccessible to the public while also not operating in the way public utilities are intended to operate.

The Lagos-Ibadan train line joins a list of disjointed infrastructure projects taken up on the African continent by Chinese firms financed through generous loans by the Chinese government. Despite the Nigerian government touting the success of the train line as showing the potential for more infrastructural development, there is a general sense of inaccessibility.

Outside of Lagos, where the train line ends, the two train stations in Ibadan are largely inaccessible by road. Patrons of the train system have complained about being unable to get out of the station except due to the generosity of the staff of China’s Civil Engineering Construction Company and their project vehicles, which are able to maneuver the off-road conditions.

But worse, the cost of the trains is twice the cost of road travel. From a purely financial point of view, there is hardly any incentive to make use of the trains in Nigeria, where the economic outlook gets grimmer by the day.

The train line, funded mostly by a loan from China, is one of many infrastructure projects financed by China as a part of its Belt and Road Initiative (BRI). The BRI had an initial $1 billion infrastructure development fund to help build roads and enabling infrastructure in order to develop trade on the African continent. To this end, there are reportedly over 10,000 Chinese-owned firms and construction companies valued at over $2 trillion operating in Africa. In 2017, Chinese firms won around 50 percent of the African continent’s engineering, construction, and procurement contracts. The next year, Chinese funding made up a quarter of the more than $100 billion in pledges and commitments toward infrastructure and related development.

China is accused of dangerous business practices, particularly setting “debt traps” for developing countries. But there are much deeper conversations about problems with Chinese investments and loans on the African continent. China has pitched itself as an accelerator for growth through infrastructure as it looks to form new partnerships all around the world. Combined with a lack of economic savvy on the part of leaders on the continent, this has led to several deals that look like great ideas when examined at face value, but reveal deep-seated flaws upon deeper inspection.

A huge part of the problem is the metrics for good governance in African countries. In a country with bad roads and a terrible power supply, politicians campaign on infrastructure projects and not necessarily policy that will ensure better governance. As a result, China is helping keep a rather mediocre leadership in power through its loans and leaving future African leaders and nationals to deal with the potential economic fallout from such terrible deals.

The Lagos-Ibadan train line is a nostalgic rehashing of old infrastructural projects. Decades ago, it was possible to move from Lagos to Kaduna by train. Romanticized ideas of old Nigeria are talking points in the political and election process. The Lagos-Ibadan train line is just a phase of the old Lagos-Kaduna train line.

But this is not the first time there has been “incomplete” or unnecessary infrastructure on the continent funded by China.

As deal sweeteners, China has provided kickbacks to African leaders they have been courting. These kickbacks have come in the form of vanity projects like multibillion-dollar office buildings for the presidents of Uganda and Mozambique. These projects are unnecessary and the heavy costs are kept on the books for future African generations to deal with. These infrastructure projects are seen as big wins for Africa-China relations. But the economics means that the local communities are not served in the infrastructure development process.

For governments around the world, infrastructure spending is a way to put money back in the hands of citizens through new jobs while still providing necessary infrastructure for their communities. To this end, local companies are hired and the value chain from top to bottom sees an injection of money into the economy. But the Lagos-Ibadan rail line, like other China-funded projects in Africa, puts money back into the hands of Chinese construction firms. Chinese companies bring in their own talent and workers from China, import the raw materials from China, and have even been accused of breaking labor laws, from worker remuneration to work-hour violations.

In recent times, the government of China has intertwined its BRI with the African Continental Free Trade Area (AfCFTA). As it stands, China is sub-Saharan Africa’s biggest and most visible trade partner. Today, we are seeing a subtle bundling of the AfCFTA with the BRI, which is problematic on several fronts. China’s BRI is about selling infrastructure development to aid trade for the new world Beijing hopes to continue partnering with. But, in its current form, the AfCFTA is a very underdeveloped piece of policy.

“At its best, the AfCFTA is aspirational about a pan-Africanist agenda. Everybody signed onto something without creating rules on trade. The infrastructure part of the [trade] agreement got everyone excited without looking to understand the long term ramifications,” Chukwuemeka Okocha, a Nigerian civil servant, told The Diplomat.

Africa has a trade and trade mechanism problem. By focusing on building better trade partnerships as well as developing comparative advantages in local industries, perhaps African countries would reap the benefits of the AfCFTA ahead of China.

At its current form, the AfCFTA does not do enough to help African nations build the capacity needed for industrialization and the development of a middle class. A liberal opening of all African economies to each other – and to Chinese firms taking over local production in African countries – does more damage than good to the continent’s already fragile economies.

Protectionism, although antithetical to the spirit of the AfCFTA, is what several African countries need at the moment, especially as there is a need to develop capacity and expertise while providing enabling environments for small and medium enterprises and industries to thrive.

It is important to question the trajectory of Nigeria-China relations and particularly the secretive nature of the partnership. Nigeria has a heavy trade imbalance with China. In 2019, Africa’s trade deficit with China was over $17 billion due to the nature of African markets, in which exports are dominated by primary goods. This deficit has basically shifted Africa’s economic dependence from its older colonial partners to China.

To casual observers, the Nigerian train service has been revamped thanks to the relationship between Nigeria and China. But just a few hundred meters away from the new structure built for the Lagos-Ibadan train line is the old Ebute Metta train junction, which is home to Iddo-Ijoko line. It still employs the old trains, which are at least 40 years old. For patrons of the Iddo-Ijoko line, nothing has changed. The trains are the same old trains, filled to the brim with passengers standing for the almost two-hour ride, sometimes hanging by the door and on the roof.

“Nobody goes Lagos to Ibadan by train. It is easy to go by road. It is cheaper,” Bola Adenekan, a trader in Lagos island, explained. “If the government wanted to make life better, make Lagos work by train to reduce the stress on the roads, Iddo to Ijoko is a cash cow. The trains are always full and there is no space, people always stand.”

Now Nigerians are waiting to see if the government will offer any subsidies for the Lagos-Ibadan train line, further pouring money into an impractical project. At home in Lagos, people are questioning China’s long-term goals both in Nigeria and on the African continent at large.