China Railway Construction Corporation Ltd (CRCC) has signed two construction deals in Africa worth a total of $5.5 billion. These projects will help promote expansion of the country’s presence across the continent while making its firms more competitive globally, and more critically tighten China’s grip on Africa’s infrastructure economy.
The civil engineering construction unit of CRCC will be tasked with building the $3.5 billion intercity railway line in Nigeria’s south-western Ogun state, a settlement for many of the country’s top industries. In addition to this, the Chinese firm also signed a $1.93 billion deal to build a residential construction project in Zimbabwe.
In August 2014, The railway company completed the construction of Angola’s longest railway line the Benguela. The line stretches for 1,304 km–between Lobito (Benguela) and Luau (Moxico) in the East of Angola. The construction contract involved rebuilding 67 stations and will hold a capacity to move 20 million tons of cargo per year. The Angolan authorities estimated that the Railway Line would have around 50 trains running on it per day and will make it possible to transport four million passengers.
Meng Fengchao, the board chairman of CRCC, told Xinhua news agency that the deals were a stepping stone towards the “going global” strategy of China’s railway firms. This though is just part of its grand scheme to corner the continent’s infrastructure economy for itself, and fend off growing competition from key global players like Europe, US, and India.
Over the last decade, China has moved aggressively to secure government projects across Africa. It has sealed numerous deals to construct roads, rails, airports, stadiums and commercial real estate properties. The Asian powerhouse is currently developing the $58 billion ECOWAS rail-line that will connect Nigeria, Benin, Togo and Ghana to Cote’ D’ Ivoire. Once completed, the line would allow the largest container ships to focus on a smaller number of large ports, while efficiently serving a larger hinterland. It is also building the new international terminal of the Murtala Mohammed Airport in Lagos, the busiest in West Africa.
The US, having failed to mount a solid challenge against China for Africa’s infrastructure goldmine, is keen to carve a niche for itself. It has identified the continent’s power deficit as a huge future cash cow. This was evident in President Obama’s $7 billion Power Africa Initiative launched in the summer of 2013, and the subsequent foray of General Electric (GE), the US’s biggest power firm, into Africa. GE has already pumped over $2 billion into Nigeria’s power sector, and is keen to make bolder investments as the continent.
All of these though seem too little to late as China tightens its grip on the lucrative sector. China has sunk more than $200 billion into Africa since 2001, and has had over 2000 of its companies set up camp within the continent. This is by the largest commitment by a single country to Africa ever. It is more than double the $98 billion poured into Africa by the US. But China is not keen to rest on its laurels. Its recent donation of an Olympic stadium to Ivory Coast suggest it is keen to secure more contracts from African governments. These will mostly come from the continent’s desire to improve its infrastructure.