Brad Sherman and Susannah Chapman
Brad Sherman and Susannah Chapman
This chapter illustrates how Chinese financing and contractors have created a new development option for African governments seeking to deliver infrastructure megaprojects. It provides a study of the Standard Gauge Railway built by Kenya with Chinese assistance under the Belt and Road Initiative (BRI) between 2014 and 2017 – a project previously assessed as non-viable by the World Bank. The chapter emphasizes the ability of the Kenyan government to set up a powerful centralized organizational structure to overcome governance challenges and coordinate work with the Chinese contractor to successfully deliver the railway. However, opacity and ballooning land-acquisition costs suggests that rent-seeking has inflated the cost to taxpayers, echoing several previous international corruption scandals in Kenya. At the level of the private sector, Kenyan agency was partly visible in vested interests opposing the project, partly in successful lobbying to access the closed procurement markets of the Chinese contractor. One of the most frequently raised issues regarding developing countries’ engagement with the BRI is (over)indebtedness, and in this case Kenya has developed a fiscal instrument to repay the Chinese loans. China’s follow-up trade and investment in East Africa is believed to be a major element of the rationale for the rail project, although concrete measures to achieve this are still lacking and regional connectivity is limited. Data on this will have to be analysed in the next decade or so. The case suggests that a centralized approach in African government engagement with the BRI can deliver projects for a reasonable (albeit inflated) cost, while development benefits and socio-economic change require active management beyond the temporary governance model to organize project delivery.
China’s proposal of the Belt and Road Initiative (BRI) in 2013 has proven to be a milestone event. It is the first country-driven initiative after the US-led Marshall Plan of 1948 to attract considerable attention among stakeholders worldwide, including states, private-sector actors, academics, and national and international institutions. This chapter explores the BRI’s interface with multilateral development banks (MDBs), primarily the World Bank Group, the European Bank for Reconstruction and Development, the Asian Development Bank, the Asian Infrastructure Investment Bank, the New Development Bank and the European Investment Bank. These six MDBs signed a historic joint Memorandum of Understanding with China on 14 May 2017 (China-MDBs MOU) to support the BRI. After an introductory section, the chapter discusses the BRI’s cooperation with various sectors, including MDBs. It then analyzes the China-MDBs MOU and the responses from these MDBs, and shows that through the MOU China is contributing to global governance with MDB support by promoting connectivity networks and sustainable development. It also discusses how the MDBs’ BRI-related projects, programs, and other activities relate to their economic development mandates. The chapter summarizes the varied approaches taken by these MDBs, and assesses whether other, complementary approaches could also be taken to support the BRI. It then provides recommendations for how these MDBs can move forward in maintaining their support for the BRI to promote economic growth and strengthen international cooperation and global governance. It also discusses how China can increase MDBs’ support for the BRI and gain further support for it through international organizations like the United Nations Development Programme. A final section draws the chapter’s conclusions.