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(Citizen, Tanzania) East Africa Borrows Over $29bn From China

Posted by: Biniam Tekle

Date: Thursday, 18 October 2018

http://www.thecitizen.co.tz/

East Africa Borrows Over $29bn From China



By Allan Olingo News@tz.nationmedia.com

Nairobi — Tanzania has borrowed the least from China for infrastructure among the major economies of East Africa, with a debt of $2.348 billion in 10 years.

East African economies have in the past 10 years borrowed $29.42 billion to grow their transport, communication, manufacturing and energy sectors, with Ethiopia and Kenya taking the highest amounts.

The latest data from the China-Africa Research Initiative (Cari) at John Hopkins University shows that Ethiopia owes Beijing $13.73 billion, followed by Kenya at $9.8 billion. Uganda owes $2.96 billion and Tanzania $2.34 billion.

Rwanda, South Sudan and Burundi owe China the least amounts -- $289 million, $182 million and $99 million respectively.

Tanzania's energy sector remains the top financed sector funded by Chinese money, at $1.16 billion.

Dar es Salaam, which has not taken up any Chinese debt under President John Magufuli, has received $552 million for its communications sector.

The region's economies are now spending almost eight per cent of their revenues to service these loans, which analysts say are becoming a burden, especially given that their impact is yet to be seen on the growth.

Cari director Deborah Brautigam said that the risk for the African borrowers relates to the projects' profitability.

"It is always important to look at whether these projects will generate enough economic activity to repay these loans, as opposed to being seen as merely ribbon-cutting opportunities," Ms Brautigam said.

Mega projects

The bulk of the monies, according to research by The EastAfrican, went into the transport sector, followed by power, communications and manufacturing.

Ethiopia's biggest intake of the Beijing loans was in 2013, coinciding with the launch of its joint standard gauge railway project with Djibouti.

Addis took up more than $6.62 billion from Beijing for its mega projects, which also included the setting up of manufacturing zones.

The data also shows Kenya's new railways line accounted for the highest debt intake from Beijing at $3.7 billion in 2014.

China Exim Bank has been the go-to financier for the region's governments, giving out more than $16.3 billion.

The China Development Bank advanced East African economies more than $6.9 billion, while other Chinese lenders are currently owed $6.1 billion, data shows.

In terms of sector funding, Ethiopia invested the bulk of its funds in the transport sector ($4.37 billion), which was used for both the Addis Ababa light railway project and the Addis-Djibouti 700km railway. This was followed by communications at $3.16 billion and power projects at $2.54 billion.

Its manufacturing sector, which supports its fledging special industrial zones, including the Eastern Industry Zone and Huajian International Shoe City, received $2.02 billion.


"China gave priority to infrastructure and has promoted Africa's sustainable development through these loans, which have been used for infrastructure construction, energy and the manufacturing industry," said Liu Qinghai, a visiting researcher at Cari and head of the Centre for African Economic Studies at the Institute of African Studies at Zhejiang Normal University.

Kenya's transport sector took in $5.55 billion, largely driven by the new railway line from Mombasa to Naivasha.

Nairobi also took a $597 million loan for its power projects, including the $135 million for the 55 MW solar power plant in Garissa funded by the China Exim Bank.

South Sudan has received $158 million for its transport sector to date, and a further $24 million for its energy projects.

Uganda, on the other hand, has seen its energy sector receive the highest funding from Beijing, at $1.92 billion, while its transport sector has absorbed $762 million.

Rwanda's China debt for transport amounts to $151 million. 

Read the original article on Citizen.

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