Uganda unplugs from China railway project – DW – 01/19/2023

The project has been stalled for years, but now Uganda wants to breathe new life into a standard gauge railway (SGR) linking its capital Kampala with neighboring Malaba in Kenya and eventually the Indian Ocean.

“The standard gauge railway will provide mass transit – reliable, fast, with a one-day turnaround time from Mombasa,” David Mugabe, in charge of communications for the project, told DW.

This railway line is part of a more extensive planned network of SGR lines designed to connect the coastal and land-locked countries of East Africa as part of a pan-African infrastructure project.

A carriage for the Standard Gauge Railway (SGR) project is unloaded at the Dar es Salaam port in Tanzania on November 25, 2022 (Photo Erici Boniface / AFP)
Tanzania’s first phase of the country’s SGR is set to come into effect later this yearPicture: ERICKY BONIPHACE/AFP

The China Agreement was terminated

Last week, Uganda officially terminated a $2.2 billion (€2 billion) contract with the China Harbor Engineering Company (CHEC) after China’s Exim Bank refused to provide funding.

“The Chinese have been awarded a lot of contracts in the country: hydropower projects, road construction projects,” Ugandan journalist John Kibego told DW.

“In this case if they fail to implement at the agreed time or if the conditions imposed are not favorable to the government, it is okay if the government wants to change things,” Kibego stressed, adding, “Government serves the citizens. Whenever the government mis-negotiates, the burden falls on the citizens.

Turning to Turkey

China’s de facto monopoly on infrastructure projects in the country may diminish. “The government is negotiating with new, Turkish partners,” said project spokesman David Mugabe.

“An MoU has been signed with the aim of moving towards a final agreement. And this includes both technical and financial preparations.”

Turkey is increasingly expanding its presence on the African continent. According to Yunus Turhan, an expert on Turkish-African relations at Hasi Bayram Veli University in Ankara.

More than 1,500 [Turkish] Companies have invested at least 70 billion dollars in the continent, Turhan told DW.

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But it’s not just private businesses that have tried to tap into Africa’s potential. “In the last twenty years there has been a complementary process in which Turkey has been greatly aligned with Africa,” said Turhan.

“Turkey has opened embassies in more than forty African countries, Turkish Airlines now flies to sixty African destinations, and Turkish scholarship programs invite Africans to study in Turkey,” Turhan said, adding that Turkey is now booming in terms of hard power in Africa. And combined with soft power.

A Chinese engineer inspects railway tracks at an inland container depot in Naivasha, Kenya on January 15, 2020 (Photo: Xinhua/Wang Teng)
Chinese companies are carrying out many projects in this region. Now the tide may be turning.Image: Wang Teng/Xinhua/Image Alliance

Turkey’s footprint in Tanzania

Yapi Merkezi is one of the most important Turkish companies to set foot in Africa. Arguably the single largest foreign investment by a Turkish company was the standard gauge railway built by Yapi Merkezi in Tanzania.

In Uganda, the company built an important road that, as journalist John Kibego pointed out, received much praise from citizens and politicians. It is in this logic that Yapi Merkezi has been earmarked to take over the first phase of the Uganda Standard Gauge Railway, regional media reported.

“Turkish companies have done a good job in terms of quality, there is no doubt that they will complete the work on time and provide the best quality,” Kibego said.

The company is known for taking a different approach to financing, with European export credit agencies playing a major role – an approach useful for Kampala after China’s reluctance to fund the project.

China’s Role in East African Projects

The various phases of the so-called Northern and Central Corridors of the East African SGR effort may have a lot to do with the role China is playing in the respective projects.

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The Central Corridor has made significant progress since the first of four of the project’s six phases was awarded to Yapi Merkezi in 2017. The Dar es Salaam-Morogoro line will open in the coming months as the first tests last year proved successful. A second section connecting Morogoro to central Tanzania and then the capital Dodoma is in its final stages.

Last December, Tanzanian President Samia Suluhu Hassan oversaw the signing of the project’s sixth phase, the last to be launched and one of two involving Chinese firms. Construction will be completed in 2026, though more projects are planned to take the railway to Rwanda and Burundi and the Democratic Republic of Congo.

The first freight train of the Standard Gauge Railway arrives at the Naivasha Inland Container Depot in Kenya on December 17, 2019 (Photo: Wang Teng/Xinhua/Image Alliance)
The Kenya Standard Gauge Railway terminates at Naivasha. Kampala and Kisangani are yet to be connected.Image: Wang Teng/Xinhua/Image Alliance

Addressing doubts about whether the $10-billion loan was worth it, President Suluhu stressed that the project would only pay for itself in the long term. “Today’s pain is tomorrow’s gain for Tanzanians,” Suluhu said. “After the completion of the SGR, Tanzania will be in a better position to utilize its strategic geographical locations to facilitate cross-border trade,” the president said.

Although the Northern Corridor, which is expected to run through Kenya and Uganda, is several years ahead of its operation, the line, which starts at the port of Mombasa and now ends in Naivasha, 90 kilometers (75 mi) northwest of the capital Nairobi, has no clear plan. Continuity so far.

“In Kenya, increased spending on mega projects has been attributed to political cartels capturing strategic project pipelines,” James Shikwati, founder of the Interregion Economic Network (IREN Kenya), told DW. “This may not necessarily be the case in Tanzania.”

China is pulling the strings in Kenya

Furthermore, the prestige of the Mombasa-Nairobi-Naivasha line, unlike its Tanzanian equivalent, is still Chinese-managed, based on an agreement to repatriate cash flows to China for repayment. Kenyan debt.

To further guarantee a steady flow of money, Mombasa is committed to the use of SGR for import and export transportation of goods through the port. However, the deal was canceled by Kenyan President William Ruto – a move warmly welcomed by the lorry drivers, but met with suspicion and anger by the Chinese partners.

An engineer measures tracks at the site of the Centennial Meter Gauge Railway's central railway line rehabilitation project in Tanzania (Photo: Xinhua/Image Alliance)
When all else fails, centuries-old colonial lines may still be at workImage: Xinhua/Image Alliance

A remedy from colonial times

With China as their only partner and their economies battered by the years of the coronavirus pandemic, Kenya and Uganda are partnering to rehabilitate old meter-gauge railway (MGR) lines dating back to colonial times. The MGR link from Kampala to Malaba will open next month, while the Kenya line was already reopened last year.

By far the cheapest bet is the narrow gauge tracks built a century ago. They can do the work of connecting countries with Rwanda, Congo and South Sudan faster than Tanzania’s railways can reach those markets. But they were not designed to carry the same loads as the new standard gauge railways.

In the long run, the SGR will pay off, said economist James Shikwati. And while acknowledging that debt is exploding along the Kenya-Uganda line, he points out that “debt is not necessarily a bad thing if channeled to the right purpose of catalyzing development.”

This article was originally written in German


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