In recent years, China’s involvement in infrastructure development across the globe has captured the attention of international observers. Nowhere is this influence more evident than in East Africa, where countries like Kenya and Uganda have become recipients of substantial Chinese investment in infrastructure projects.
These developments, while promising economic growth and connectivity, have also raised questions about the long-term implications for local economies and the national sovereignty of both countries. China has invested an estimated USD 5.6 billion in infrastructure projects in Kenya and USD 2.5 billion in Uganda since 2013.
Kenya: The East African Economic Powerhouse
Kenya, often considered the economic powerhouse of East Africa, has experienced a remarkable transformation in its infrastructure landscape, largely fueled by Chinese investments.
One of the most prominent projects is the Standard Gauge Railway (SGR), connecting the port city of Mombasa to Nairobi and beyond. Completed in 2017, this railway has significantly enhanced cargo transportation efficiency, reducing travel time and costs. It’s worth noting that 90% of the funding for the first phase of the SGR came from China, totaling around USD 3.2 billion.
Beyond railways, Chinese investments have extended to roads, energy, and telecommunication projects in Kenya. The Nairobi Expressway, a major highway project, aims to further reduce transportation time between the Jomo Kenyatta International Airport and the capital. Additionally, the China Road and Bridge Corporation (CRBC) is involved in multiple road projects across the country namely, the Lapsset Corridor and link highway between Kenya and South Sudan.
Furthermore, in the energy sector, Chinese companies have invested in renewable energy projects, including solar and wind farms, contributing to Kenya’s efforts to diversify its energy mix.
Uganda: Bridging Gaps in Infrastructure
Uganda, while having a less developed infrastructure compared to Kenya, has also witnessed China’s involvement in bridging critical gaps. The Entebbe-Kampala Expressway, funded by China Exim Bank, has significantly improved the connectivity between the capital city and its international airport. This project not only enhances transportation but also supports Uganda’s ambitions to become a regional trade hub.
Hydropower development is another area where Chinese investment has left its mark in Uganda. The Isimba and Karuma hydropower projects, largely funded by Chinese loans and constructed by Chinese companies, aim to address the country’s energy deficit and stimulate economic growth. These projects collectively add hundreds of megawatts to Uganda’s power grid, potentially transforming its industrial landscape.
Benefits and Concerns
The influx of Chinese investments in infrastructure across East Africa has undoubtedly brought about tangible benefits. Enhanced transportation networks reduce trade costs, stimulate economic activity, and attract foreign investment. Improved energy infrastructure boosts industrialization and raises living standards.
For instance, the SGR in Kenya has significantly reduced the time and cost of transporting goods between Mombasa and Nairobi, positively impacting businesses and consumers alike.
However, some concerns come with these partnerships. One major concern is the debt associated with these projects. Many of these infrastructure ventures are funded through loans provided by Chinese financial institutions. While these loans often come with favorable terms, there is a risk of overleveraging for the recipient countries, potentially leading to debt dependency and compromised sovereignty.
Moreover, there have been criticisms regarding the lack of transparency in project execution and environmental considerations. Some projects have faced allegations of inadequate environmental impact assessments and labor disputes. Striking a balance between development and sustainability is crucial to ensure the long-term viability of these projects.
China’s involvement in infrastructure development in Kenya and Uganda showcases the complex interplay between economic growth, foreign investment, and national sovereignty.
While these projects offer promising prospects for economic development and connectivity, it’s essential for both countries to carefully manage their debt, ensure transparency in project execution, and prioritize environmental sustainability.
International cooperation can play a significant role in addressing these challenges. Partnering with other countries and organizations can provide diversified sources of funding and expertise, reducing dependency on a single foreign investor. Additionally, local governments should actively engage with their populations, addressing concerns and seeking feedback to ensure that the benefits of these infrastructure projects are shared widely.
China’s infrastructure investments in East Africa, particularly in Kenya and Uganda, have reshaped the economic and transportation landscapes of these nations. While reaping the benefits of improved connectivity and enhanced energy infrastructure, these countries must strike a delicate balance between economic development and safeguarding their national interests for a prosperous and sustainable future.
Written by: Dr. Hagan Sibiri, Senior Research Fellow, ACCPA