When talking about China’s ambitious Belt and Road Initiative (BRI), few people connect it to Africa. Yet African countries are part of this too: as of September 2019, 40 of 55 African countries had signed some sort of memorandum of understanding or other agreement on the BRI.
The BRI focuses on the development of large infrastructure projects, and many African countries hope to use this opportunity to fill their own infrastructure gap. But this comes with challenges. There are many examples of projects, even before the BRI, that have turned into ‘white elephants’ – too large, too expensive, not viable or simply not well planned, and out of proportion with their value or usefulness.
Last month, ODI held an event on ‘Financing the future of the Belt and Road in Africa’ as part of our work under the DFID-ESRC Growth Research Programme. Drawing on discussions from and reflections on this event, I suggest three ways in which African countries can avoid making strategic mistakes and maximise their benefits from the BRI.
1. Plan infrastructure strategically
One of the major constraints to economic development is not having good quality and the appropriate infrastructure. While roads and railways connecting production sites, power plants and industrial parks can make countries more attractive for investment, thus creating jobs and transforming their economies, this is not true of all infrastructure.
Take one example from Uganda. With support from the Chinese government, Uganda has built or is building many infrastructure projects that are crucial for its economy, including the Karuma and Isimba hydropower stations and several industrial parks. But the project that is more often associated with the BRI in Uganda is the Kampala–Entebbe expressway that connects the capital city with the country’s main airport.
While the expressway helps to ease traffic congestion and reduce airport transit times, one might ask: is this the best way to spend almost $500 million? How does the road contribute to the development of the Uganda’s productive capacity? The resources used for the expressway might have been better spent on projects that can unlock economic transformation and generate long-term gains, rather than on something to make urban dwellers’ lives a bit more comfortable. Each infrastructure project approved by the government of Uganda should fit strategically into the country’s national development plan, its blueprint for development.
2. Think about the regional dimension of infrastructure projects
We are used to thinking about infrastructure at the national level – a dam in country A, the industrial park in country B. Yet many infrastructure projects are regional by nature, and can affect economic activities and livelihoods in more than one country: a road or a railway may traverse many borders and a hydropower plant can affect countries downstream.
However, BRI projects that have a clear regional nature have so far been negotiated at the national level. The Standard Gauge Railway, which aims to link the port of Mombasa through Nairobi, then on to Uganda and beyond, is clearly conceived as a regional project. Despite this, it has been discussed mostly bilaterally, with the Chinese government holding separate talks with the Kenyan and Ugandan governments.
There are reasons for holding these talks bilaterally. The railway is built in stages, starting with Kenya and then moving on to Uganda, and therefore it is understandable that some discussions are held separately. Plus, the more partners there are at the table, the longer the negotiations will take. But if the African governments involved – especially those of smaller countries – want to make sure the deal works for them, they need to push for joint negotiations. Working as a region may give African countries better negotiating positions vis-à-vis China.
3. Learn from other countries
The BRI now has a global outlook, but it originated as a vision to connect countries in China’s neighbourhood. Asian countries have more experience in dealing with Chinese-supported infrastructure projects and African countries could learn something from them.
Cambodia and Myanmar, in particular, have adopted a strategic approach to the BRI. Cambodia's approach focuses on the borrowing aspects. The country has developed a conservative debt management strategy, borrowing only under specific conditions (e.g. only to finance productive infrastructure, and only at very concessional rates). This makes the government confident that Cambodia will not be in trouble because of excessive borrowing. A similarly conservative debt management approach could help African countries avoid a proliferation of ‘white elephant’ projects that break the bank.
Myanmar, meanwhile, has developed a stringent screening process for proposed BRI projects. Each proposal is examined by a high-level committee, led by top figures in government, who are responsible for making sure that approved projects fit into Myanmar’s own development plans. The government is also creating a ‘project bank’ to screen all potential infrastructure projects (BRI or otherwise) and select those deemed worthy of pursuit.