The Media, "Chinese debt trap diplomacy" , and Zombie ideas

The new Railway hardware: Project
inundated with graft claims

 The Media in Africa is increasingly becoming the purveyor of falsehoods. It sees graft in every development project in Africa even without an iota of evidence.  Take for instance the Supreme Court of Kenya, SOCK, ruling two weeks ago that acquitted the Kenya Railways Corporation, KRC, of any wrongdoing in the procurement of the contract to construct the Standard Gauge Railway, SGR.

 The Court ruled that the Corporation was implementing a directive of the Executive, which by Law, is allowed to initiate development projects in Kenya.  The Corporation did not initiate the project, and therefore, could be guilty of contravening either the procurement law or the Constitution of Kenya. This is another Landmark ruling by the SCOK.

The Court found that the implementing agency, the Kenya Railways Corporation, was enforcing instructions by the Executive since the acquisition of the contract was a Government- to -Government deal. G-to-G deals are lawful in Kenya, the court ruled.

The Railway line, Kenya’s largest infrastructure project since independence, had generated a lot of heat with allegations of graft flying left, right and Centre.

The grievance was that the project contractor was single-sourced
, without any international competitive bidding as required by Law. This is the basis on which the Lower Courts, both the High Court and the Court of Appeal, found the contract contravened the Law and the Constitution.

This matter is now settled. The executing agency, Kenya Railways Corporation, did not initiate the project but the Executive did. The executive ruled the Court, acted within the Law in negotiating the project with the Chinese Government.

 However, the ruling is not the gist of this piece. The negative spin on the ruling in the Media is our focus. “Get on the gravy train,” asserted the Weekly Review, a publication of the Nation Media Group, in bold Print. It went to claim that the ruling “plays into the hands of deal Makers.”

The ruling raises an issue regarding the theory and practice of procurement Law. Does it apply in all instances or are there instances where the Law can legally be discarded? International Competitive bidding is required to ensure that the country gets value for money. However, this requirement applies only where there are other equally competent bidders for the project.  What if there are no competitors for a project? In terms of the Railway line, China is a far more competitive builder of High-speed Railroads compared to countries in the West. 

However, this truth does stop the Media's negative spin.  A good example is the rumor coming out of the Office of Controller and Auditor General that the country had mortgaged Kenya Ports Authority’s assets to get the SGR loan.

Kampala -Entebe Expressway.
Also faced claims of graft

Granted. The government did not make the contents of the contract public. It, therefore, bore some of the blame for its bashing.

The idea that a government can mortgage a national asset is a zombie idea. Government debt is concrete that is why new governments inherit debt from their predecessors.  It is thus surprising that a zombie idea keeps coasting around.

Back to our point.  In reality, KPA was not a signatory of the loan between the government of Kenya and China’s Exim Bank. Neither was KRC. The borrower of the loan is the Kenya Government.  However, a commercial take-or-pay contract between KPA and KRC was attached to the loan contract. The contract between KPA and KRC required the former, being the only supplier to KRC, to transport 40 percent of its freight through the SGR. In case of failure to supply the target quantity, KPA was to pay KRC for the revenue shortfall. The purpose of this contract was to raise the bankability of the SGR project.

 Despite being a dead idea, the Media in Kenya, Uganda, and Zambia went to town with it, bashing the governments for pledging strategic assets in exchange for Chinese finance. Zambia allegedly pledged assets of the Zambia Broadcasting Corporation in exchange for a loan to upgrade Kenneth Kaunda Airport, while Uganda allegedly gave away Entebbe Airport.

This nonsense narrative is hinged on an equally dead “China Debt trap diplomacy” narrative coined in the West in a bid to scare Africa from collaborating with China. China has proven a reliable development partner in Africa who are efficient executors.

If the “debt trap diplomacy” does not scare, the vilification targets government officials with allegations of corruption, of receiving kickbacks for approving Chinese-funded projects. However, China is not the only government to enter into  G-to-G deals in Africa, in Kenya in particular.  There were projects given to Engineering firms in the West that flopped. 

In Kenya, three G-to-G projects with Western Governments were aborted. Among these is the expansion of the Mombasa Highway to a toll road on a PPP basis.  The contract was given to Betchel Engineering of the US in 2016. After years of inactivity, Betchel walked out of the project.

 Vinci Highways SA, which won the contract to build the $1.6 billion Rironi- Nakuru- Mau summit highway project in Kenya on PPP terms in 2018 also aborted. For years, Vinci held on to the project but made no headway. The contract was terminated this year. Other firms whose contracts were stillborn include; CMC Di Ravenna, of Italy, and Grupo Isolux Corsan, of Spain, both of which went bankrupt during the tenancy of their contracts.

The collapse of these contracts debunks the myth of deal-making and corruption. That two of the three firms ended up bankrupt points to the real reason why the Chinese firms succeed in Africa. They have access to finance which Western engineering firms do not have. Therefore, the availability of funds, rather than graft, is the Achilles heel for Civil Engineering firms in the West.