Thursday, 31 March 2016

Engines of development

Despite pressure from the doom-sayers amid the commodity price crash, some big battalions in Africa are fighting back with ambitious new projects that could create growth and jobs – if they go ahead. Most significant is the US$5.42 billion deal between Kenya and the China Communications Construction Company (CCCC) to extend the railway from Naivasha to Malaba on the Ugandan border. In December, China had agreed to lend Kenya $1.5 bn. for a new railway from Nairobi to Naivasha in the fertile Rift Valley.

China's support for regional power and transport projects, such as the Kenya-Uganda railway, points to a change of strategy: as an increasingly diversified economy and at the centre of the region's economic integration plans, Kenya could become a major hub for Chinese trade with Africa. The project follows China’s big investment in Ethiopia's power sector. Both initiatives are establishing China as a builder of much needed infrastructure rather than just a neo-colonial buyer of primary commodities.

Another project announcement this week is more off-piste: the embattled commodity giant Glencore promises to invest $1.1 billion in its Mopani copper mine in northern Zambia over the next two years, despite cutting back production across the region as prices fell. Like Beijing’s railway, there is a commercial logic to Glencore’s plans: it has already invested $3 bn. in the mine and to mothball it indefinitely would represent an unsustainable loss.

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