Infrastructure: Japan, China go head to head - African Business Magazine
Infrastructure: Japan, China go head to head

Infrastructure: Japan, China go head to head

According to the Infrastructure Consortium of Africa, the cost of goods traded in Africa is 30-40% higher than it should be because of shortcomings in transport infrastructure. Such problems also stymie trade between neighbouring African states, which continue to rely on trade with much more distant markets.

In a recent report, Andre Pottas, the advisory leader for sub-Saharan Africa at Deloitte said: “The world is eager to do business with Africa, but finds it difficult to access African markets, especially in the interior, due to poor infrastructure.”

However, improvements are on the way, in the form of a wave of transport projects that are being developed across the continent. As we discuss later, Beijing has agreed to fund the construction of a new East African railway to connect

Mombasa and Lamu with the wider region. Yet this is not the only jumbo project on the table. In May, China Civil Engineering Construction Corporation signed a $13.1bn contract to develop railways in Nigeria. However, similar deals have been signed between Beijing and Abuja over the past few years to little effect.

The government of Japan has signed an agreement to provide $232m out of the $300m needed to redevelop the Port of Nacala in Mozambique’s Nampula Province.

Moreover, few details of the planned projects have been announced. In a speech at the World Economic Forum in Nigeria in May, Chinese Prime Minister Li Keqiang even went so far as to pledge to help create a modern, high speed pan-African railway network in order to transform the continent’s economic fortunes. China is not the only source of investment. The government of Japan has signed an agreement to provide $232m out of the $300m needed to redevelop the Port of Nacala in Mozambique’s Nampula Province, where the Japanese International Cooperation Agency is particularly active.

Tokyo is already financing the construction of the second container terminal at Mombasa, as the Japanese government seeks to provide some competition to China’s growing influence in Africa.

The funding will take the form of a $32m donation and $200m low interest loan. Nacala is being developed to handle coal exports from the emerging Moatize Basin mining sector in Tete Province. However, a container terminal is also planned for the site that will serve much of central-southern Africa. The work will be undertaken by Japanese firm Penta-Ocean Construction Company.

Lay down your heart
Even in the port sector, Japan must compete with Chinese influence. Most recently, Beijing announced that it would help to fund the development of the Port of Bagamoyo in Tanzania. Bagamoyo was the main port on the mainland during Zanzibari rule and was famous as a slaving port. Its name means ‘Lay down your heart’ or ‘Give up hope’ in Swahili.

The new port will be located just north of Dar es Salaam and will be connected to the Central Line Railway and the Tanzania Zambia Railway (Tazara). In addition, a massive area of 22,000 hectares has been set aside around the project, which will be used for Tanzania’s biggest industrial park and which could be supplied with natural gas from recent finds offshore southern Tanzania. There is little scope for such a venture in Dar es Salaam itself because of the lack of spare capacity in what is now a city of 4m people.

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