WHEN Kenyan President Uhuru Kenyatta laid the foundation stone for the country’s biggest post-independence infrastructure project late last year — a high-speed railway line from the port at Mombasa to Nairobi — he said the scheme would define his political legacy.
But it was not long before the storm clouds gathered over the contract and, just a few weeks later, two probes had been launched into the costs, the legality of the procurement process and the ethics of the deal.
The project is 85% funded by the Export-Import Bank of China, which made it a condition that construction be executed by China Road & Bridge Corporation, a company debarred by the World Bank for fraud relating to a contract in the Philippines.
Critics claim the project is overpriced. Cost estimates rose from $2.5bn to $3.8bn after it was decided that China would supply rolling stock and locomotives, a decision that was not subjected to a bidding process.
Questions have been raised about China being both player and referee — doing the feasibility study, designing the project, determining the cost and offering the finance on the condition that a Chinese company gets the construction contract.
The existing line serving the 470km route is a narrow-gauge line built by the colonials. It is slow and inefficient because of age, neglect and lack of maintenance, which has driven the bulk of regional freight to the nearby highway, itself hardly an efficient transport link.
Kenyatta, who inherited the project from the previous regime, sees it as a key driver in his plan to stimulate regional integration and trade. He says the new railway will reduce freight costs to eight US cents a tonne per kilometre, from the present 20c.
Kenyatta has vociferously defended the deal with China, as have his officials, who say it is a government-to-government affair, which allows it to bypass the normal procurement channels.
The head of Kenya’s Treasury claimed China was approached about the deal only after years of negotiations with other funders failed to secure the required financing. But China Road & Bridge Corporation has been active in building infrastructure in Kenya for some time.
Some Kenyan commentators say the political noise surrounding this issue is not so much about the contract as such, but is part of a broader battle among factions in the new ruling alliance for the opportunity to broker multibillion-dollar Chinese-funded infrastructure projects.
The theory goes that government officials and high-level business people linked to them, who lost out in this behind-the-scenes battle for a slice of the rail contract pie, are encouraging those shouting loudest about ethical problems related to it.
There is yet another theory about why the Kenyan government has allowed itself to be so manipulated by China — competition for regional superiority. If Kenya does not accept the Chinese money, could it be diverted to another regional project that would compete with Kenya for business? China’s pledge to fund a multibillion-dollar port in Bagamoyo, Tanzania, a stone’s throw from Mombasa, has already rattled the Kenyans.
But what seems to be really on trial here is China’s style of doing business in Africa.
African governments’ preference for Chinese funding is obvious in the number of deals they have done.
But a widely held assumption in Africa that China’s deals come without conditions is wrong. They are negotiated in such a way as to create new frontiers for Chinese labour, capital, materials and contract fees.
A Deloitte report last year said the bulk of funding for African projects commissioned by mid-2013 came from China — $43.6bn compared to $43.4bn from development finance institutions. In turn, Chinese companies are earning a rising share of project fees.
The Kenya railway saga highlights the fact that Africa’s sorely needed infrastructure may be being built, but the price might be higher than bargained for.
Ordinary citizens are mostly unaware of such rarified deals. Whether it was internal political battles or genuine concern about ethics that raised a flag on the Kenya project is not important. What is important for Africa’s future is that this engagement is being interrogated and debated, unlike most of the continent’s dealings with China.
• Games is CEO of business advisory Africa @ Work.