Monday, 24 June 2013

China-Japan Rivalry in Africa hots up

Mombasa's Southern By-pass: Beneficiary of
the Sino-Japanese  financial rivalry
THE EMERGING CHINA –JAPAN RIVALRY in Africa heating up. Both nations have upped their act from being contractors in Africa to being major project financiers. And Africa is relishing every moment of this rivalry for it is gaining in a big way. Her long held development dreams are hedging closer to reality as both countries open their purses to Africa.

The rivalry is not very old just about a year or two in the making but it seem like a game changer. A total of US$72 billion has been offered to Africa as development assistance. Although Japan has been a development partner in several African countries for a long time, she appears to have changed her strategy to a bare knuckled face-off with China.

In the process, Japan which previously operated within the auspices of OECD appears to have shifted gears to BRICS. BRICS, which is emerging as a major economic bloc in the world, has increased its trade with Africa to $340 million in 2011 and is expected to rise to $500 million by 2015.

Thika superhighway in Kenya:
Build by Chinese funded by GOK/AfDB
Africa, the second fastest growing region in the world after East Asia is rich in natural resources. According to the United Nation Economic Commission for Africa, UNECA, Africa is the potential economic pole. Being rich in resources, especially energy related, Africa is attracting lots of interest and its resilient economic growth amidst misery in the west, has investors sitting up to take note.

Apart from its natural wealth, Africa’s population is an asset of envy to the rest. Africa has a young and growing population which also well educated. The continent is lifting an estimated 15 million people from poverty and into middle class every year. That means that it a potential market for everything in the near future. And both Japan and China are setting themselves up for a piece of the action ranging from resource wealth to future market for their products.

Both China and Japan have offered huge chunks of money in development aid to the continent in the last one year. Last year, China offered US$20 billion over the next three-years to fund infrastructure development in the continent. Japan went one better by offering US$32 billion to Africa. And there are indications that China has upped the stakes to US$42 billion.

The money targets development of Africa’s infrastructure -Dams, irrigation systems, water supplies, roads, rail roads, airports, sea ports, etc. And Africa is targeting transport links to ease intra-Africa trade.  Lack of transport links is a major bottle neck to intra-Africa trade which now stands at 11 per cent of the Volume of trade in the continent.

 Africa is readying itself to partake of this largesse. In East Africa for example, several projects are already on the table eyeing this largesse. Among the first projects off the bloc for the Japanese Largesse is the 930km Eldoret-Juba road whose construction is expected to early next in 2014. The road will boost trade between Kenya and South Sudan. 

The road, which is an extension of the northern corridor which runs from the Mombasa Port in Kenya to Bujumbura in Burundi will cost an estimated US$1.03 billion. Studies show that upgrading the road to bitumen standard will ease the cost of transporting cargo from Mombasa to Juba which currently stands at US$4.33 per kilometer and thus make import affordable in South Sudan, Africa’s youngest nation.
Kigamboni Bridge in Dar-Es-Salaam Tanzania:
Build by Chinese Funded by Tanzania government

This link comes hot on the heels of the completion of the Isiolo- Moyale- Addis-a- Baba road which is also an extension of the northern Corridor. This highway was funded by the Africa development Bank at a cost of US$360 million. These roads will also link to the proposed Lamu Port-South Sudan Ethiopia transport corridor, LAPPSET 

LAPSSET is also likely to gain from the Sino-Japanese financial muscle rivalry. Already, japan Toyota Tsusho, has been awarded the contract to build a 200km long oil pipeline from Juba in South Sudan, to the Lamu port in Kenya. The project will cost US$3 billion. Since there are proposals to extend the pipeline to Uganda and Ethiopia the cost could rise to US$5 billion.

China has also offered Africa US$42 billion to finance development project that would enhance economic productivity. Among the projects on the table gunning for the Chinese largesse is the second Mombasa- Nairobi railway line at a cost of US$2 billion. Another potential gainer is the US$650 million green field terminal at Jomo Kenyatta international Airport in Nairobi, Kenya.

Tanzania is also said to be eyeing this money to develop infrastructure. Potential beneficiaries are likely to be the Bagamoyo port and other transport infrastructure.

The new Largesse is an addition to funds that have already been committed for various other infrastructure projects. For instance, Kenya has already bagged a US$20 million to dualise Nairobi’s Ngong Road. There are also funds to build the Mombasa Southern by-pass also from Japan.

China has not lagged behind and has already committed US$200 million for the Nairobi’s Southern by-pass.
China has in the past five years or so been a contractor building projects funded by such financiers as the Africa development bank or the governments in Africa. By the year 2011 Chinese Contractors had business worth US$45 billion in Africa. Some of the projects in east Africa include; the Thika Super highway in Kenya and the eastern and northern by-passes also in Kenya.

 In Tanzania Chinese contractors are building the Kigamboni Bridge In Dar-Es-salaam the commercial city. The bridge over the Indian Ocean connects Kigamboni, a Dar-es salaam suburb which has the potential to become a resort city. The project is funded by the Tanzanian Government and its social security arm, NSSF.


In Uganda, a Chinese contractor has won a US$ 600 million tender to construct the 750 MW Karuma Hydro power dam. The project is funded by the Uganda government.

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