#China to Re-negotiate #African #Railway Agreements

By John Mark

In a post-Coronavirus economy,China may be forced to re-negotiate some BRI projects across Africa including ambitious railway agreements in Nigeria, African biggest economy.

China recovering from the Covid-19 scenario is facing pressure from home to focus on national unity and economic growth at home including sustainance of the Communist Party in power.

In President Xi Xinjping’s new agenda ,the Belt and Roads Initiative was placed as number nine, prompting reviews that the entire initiative may be subject to review depending on the fallout of the post-Coronavirus recession.

The impact of confrontation with the United States and the worldwide economic downturn are predicted as unavoidable reasons why the BRI may not proceed as conceived pre-coronavirus. Even as Beijing promised to sustain the BRI, officials in Beijing are increasingly hinting of likely project review of many infrastructural agreements especially those that are yet to take off.

Beijing is also reported to be priotising BRI projects in the 14 countries surrounding it while in Africa,there are signals that many railway projects may be re-negotiated while others may be dropped completely.

Projects on which Beijing will proceed to finance may also witness more due diligence than before to avoid what officials called creditors’ trap and the Kenyan mistakes.

While it all appears gloomy, the China Development Bank however promised to provide support to coronavirus-hit Belt and Road Initiative-related companies.

The bank,according to Xinhua news agency, will provide low-cost financing, special foreign exchange liquidity loans for companies involved in Beijing’s massive infrastructure project.

The support is however noted to be limited ,hinting of likely low capacity of BRI companies to execute large scale infrastructural projects especially in non-strategic countries.

Checks showed that Nigeria may be more hard hit in her railway projects which has so far relied heavily on Chinese funding. Projects that may be halted or re-negotiated according to checks include Ibadan-Kano;Abuja – Lokoja-Itakpe;Kaduna-Kano among others. Lagod-Ibadan SGR is however expected to be fully completed as the job execution is already more than 80 percent.

Speaking to Railway Business on the development,the Director,African Railway Roundtable, Olawale Rasheed said the slowing down of the BRI projects is expected due to the Covid-19 pandemic, even as he noted that re-negotiation of old agreements is clearly inevitable.

According to him,”China has domestic strategic issues to face for now and Africa can expect a slow down of BRI for a year or more. But BRI wont be cancelled because of its geo-economic importance.Many projects are likely to be dropped because the money is simply not there”,he said.

Speaking on options before African nations,the ARR director said “It is now time for African leaders to become more innovative in project design and financing. The ease route to Beijing is drying up and African leaders must now do the hard work of mobilising internal and external investment for infrastructural ambitions.

“Africa must open up the railway sector for private investment. Let the private sector comes in. Repeal those laws barring private firms from investing in railways.Liberalise the sector. Let government focus on regulations . In Nigeria today,a 1959 railway law is still in operation. The law bars private operators from investing and operating railways.

“The National Assemblies across Africa should reform the railways law to mobilise private capital. That is the critical path. We cannot wait any longer for Beijing. See what Tanzania did with innovative financing of her railways. The same thing with Ethiopia after initial two major rail projects with China”,he noted.

Olawale Rasheed however opined that in the long run ,China cannot afford to ditch her African partners, adding “Beijing has invested so much. There may be delay but total break is not on the table. But expect a more shrewd China “,he concluded.

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