Bonus: One Belt, One Road, Part 3

the single gage at the standard gage railway. So this railway goes from Mombasa, which is why we started our journey there to Nairobi, and it's meant to open up the passage of goods and people because there's a cargo line and there's a passenger line going between the two. Now, there has been a rail line there before, but that was built many many decades ago, um and it's not not not in a very good shape. There is also a road that gets between the two cities as well.

But how far are we talking the rail itself? Is that under just under five kilometers? And what sort of cost, how much money is involved? It cost to three point eight billion to build that particular line um and most of it was financed by a loan from Eggs and Bank, the Chinese Chinese Export Import Bank rather was funded by a loan. And what does it do? I mean, you know it connects obviously the capital Nairobi with mombast of the port Narrobi being inland, so I mean you can

see obviously those benefits. Is Nairobi an industrial base or an export you know, an export base? What's what's how does it? How does it benefit? Well, there is a fair bit of manufacturing around Nairobi. In Kenya, for example, there are the biggest cities which are Nairobi and Bassa. There isn't a lot of manufacturing necessarily outside of that.

You know. What they're hoping but with this line is to make the tub the passage of goods faster than between the port between Nirobi going in and out, a lot of stuff is actually coming in from the port um. But also eventually to increase those lines going beyond Nairobi further up towards the border of Uganda, and that would also open up manufacturing possibilities elsewhere in towns which are

further away. For example Nabasha, which is outside of um It's on online between Nairobi and the border of Uganda. Um you could set up manufacturing plants. There would be a lot easier, of course than to get your goods in and out. So that should hopefully open up both manufacturing and trade in Kenya, and so it is the idea to expand this line into Uganda and bordering countries. Well.

There has been a grand plan for many years now among African nations, especially at East African nations, to build rail network that will all join up and again with the same idea that they're going to have better connectivity, which means better trade both people and cargo being able to move around and therefore really help these economies to grow.

But due to many reasons including for example, governments changing, changing their minds, not getting along with each other, politics, and also money, so lack of funding in some places, this hasn't really happened and they are trying again still to try and make some of these lines be built and therefore get this connectivity that they've wanted for such a long time. One of the business businessmen who has interviewed spoke a bit about execution or the difficulty of

executing and and bottlenecks. Now what was the point that he was making and how does the br initiative how would it overcome those issues? So there were in one part they were talking about the teething problems they've been having with this particular line. So previously, businesses have put their goods on to a train which is very slow, or onto trucks going between one Baston and Nairobi and that would take maybe eight, ten twelve hours to get

there because the roads themselves aren't that good either. Now what they've done is the government has essentially pushed businesses, forced them to use the new rail line, the SDR. It's offered them subsidies to do so, because what's happening is you still need trucks at either end to get the goods off the train and two ways be and so these are some issues which eventually should be ironed out,

so you need the infrastructure around them exactly. But I think these are seen as fairly short term issues because eventually they will be sorted out. But of course it's hurting businesses right now. Now. You mentioned Excellent Bank, which was which is the bank that is funding most of

this project. It seems to me listening to once again to some of the people speaking on the on the episode, that there's an argument that's sort of a debate about whether these projects are going to be economically viable, with one guy was saying that he really can't see how it's ever going to be economically viable, and then you spoke to another businessman I think, who was saying, well, you know, once these projects are in place, they're going

to actually spare economic development and that will in turn pay for itself. Can you just tell us a little bit more about what you're hearing or what you heard when you were in Kenya about the viability of these projects. Is it still a debate or is it falling in one way or another. It's still somewhat of a debate, But I do think that many people do think that

this is a very expensive piece of infrastructure. So and also because this is just the first part of the line, there will be parts beyond this, as I mentioned, which are already in the process of being built that the government has borrowed for as well to build to the next part of the line. There as a loan from Exam Bank as well for eight of that cost of that. The next part of the line, how much is that

I can't remember. Over a billion definitely, and then then the next part of the line after that, it's going to be in another three point eight billion. And what's actually happened is because there's been more pressure on the government because of concerns about the ability to pay back these loans. There's one arm of the of the railway that again leads towards um the Ugandan border, which the

Kenyan government had actually agreed would be another loan. But they've gone back to China now and said, actually, can half of that actually be come as a grant not alone? And they've tried to renegotiate. Now it hasn't been decided

yet whether China will let that happen. But things are beginning to change as the Belton Road Initiative rules out, Governments across the world, not just in Africa, are becoming a little bit more aware about the financing issues, about indebtedness um sort of these concerns which have been raised by various policymakers and economists, and then revisiting exactly what the terms of the deal might be now of course, when for some of it it's too late because the

loans have already been made. But for things which haven't happened yet, there is still a chance to reprocess, like we've seen very publicly obviously in Malaysia exactly. One other point that was made was was you interviewed a woman who is the chief executive. Yes, the crop line, that's right, and and and she was making the point that she's worried that African leaders have seen the whole African continent go to China. But at the same time she says

that there's a lot to learn from China. Now what was she talking about there? I think she was referring to business business practices, um, in terms of efficiency execution. The Chinese have come in and many business leaders have said, well, actually China get things done. They get things sounds quickly, they get things done pretty much, you know, as there was supposed to. So that's one thing that actually they can look at. On innovation of something else that came

up I thought was interesting. Yes, learning known any things, taking on board new ideas as well, and ways to do things simple things like manufacturing exactly. Um. But of course you know when you let another a competitor, potential competition that there are risks as well. Um you know, she talked about let in the African leadership, letting the

content go to China. I think in that she was referring to basically not having strict enough checks and balances against a for example, the rail line itself of the financing for that, but also in her particular industry, how ways that the government could protect her industry better. So she, you know, is an agro chemicals and she is in agriculture.

It's a huge part of the Kenyan economy, and I think she is voicing her opinion that there should be more done by the government to protect them in the face of more imports coming in from outside because of course, whether you know better links trade links, trades coming in

as well as out, So there is that threat. But one of the one of the points another one of the people you spoke to, I think it was a It was a man who was in charge of a company that made edible oils, and he was talking about how there's an opportunity for Africa to become a much more important food exporter, given the fact that not much of African food makes it to China these days. And it set me wondering about whether there are already in place a sort of China food excess arrangements or trade

deals between the African nations and China. Are there f t as in place? I think this is something that's the Afghan nations really want to try and hammer out. I'm unclear as to whether there are specific agreements in place, but this is something that some of them would like

to take advantage of if it should happen. But again, I think with many industries, they do feel that the governments are not giving them enough support export items out to other countries, China included, and they would like more support from the government to help them to do this, so, you know, perhaps as you say, special trade agreements or agreements helping them to roll out products into new markets.

I think there are a lot of manufacturers in Africa who are looking for new markets, not just within the continent itself, but outside, and they're searching for ways to do that, and I think they'd like a bit more help to try and do that, especially in the phase

of seeing potential competition coming in. Yeah. Another part of the program looks at the African Leaders Conference that took place in Beijing, earlier this year where Sun Ping was talking about how China may invest but it won't interfere in African politics or in the internal workings of African government. How much do you think that that is a selling point for African leads when they're looking at countries which are offering them up loans, because it's not just Africa,

is it. That's right. There's been a growing sensitivity um to what some see as China's reach its soft power as well into other countries. China is always maintained that it sees the Belton Road as a way of spurring economic development. It does not see it as a means

for political gain. But of course there are concerns because you know, when you have one country with a lot of power, because it has a lot of money, and often it's the biggest trading partner as well, then some will see concerns they're given the amount of power that China has. UM. China has become aware of these sensitivities. It's trying to reel back um the idea perhaps that it has so much reach or power into other countries. UM. And it has repeatedly said you know we are we're

when not into interfering in other nations. And this is a line that is I think it's had for a very long time, regardless of whether it's about the Belton Road initiative about anything else. But whether others believe it or not is another thing. Well, when you were there, did you have much sense that, you know, China was there on the ground, that there were Chinese people who

are controlling things, not on the superficial level. I think, Um, when you went to the train, most of the people, if at all, almost all of the people that you saw that they encountered in terms of yes, that's right, we got onto the str that from a bass back

to Nairobi, they were all Kenyans. But at the higher level, the company that runs actually operates the YESDR they got a ten ure um deal to run it is the Chinese company that built it, which is the China Reil and Bridge Corporation, which is a subsidiary of c C c C, which is one of the biggest state owned infrastructure builders in China or in the world possibly. And

then at the high levels it is the Chinese. But you may not see them on an everyday level, right right, because I mean, you know, years ago when China first went into Africa, you heard a lot of stories about China actually bringing in their own workers to build the projects. Any evidence of that going on, I didn't see any with my own eyes, but there's lots of controversy about that, So there's lots of stuff written about The controversies about

China is not all these companies. Rather, I'm not hiring enough locals. They're hiring a lot of Chinese workers who stay there. The Chinese workers don't live in the same places as the local workers do. They've treated differently. I didn't see any evidence of that myself, but then it wasn't something I was specifically digging out. And also, you

were looking at a completed project. Yes I was. There were still apparently workers there, but I was looking at something where people had already mostly finished building, or that is the part that we were at there, already finished building. Now the company will say that actually, you know, we employ a lot of locals. So until unless you know the actual numbers or you can actually compare what they're talking about, is difficult to know really where the truth lies,

which brings me to the transparency issues. Is there an issue about transparency with how these loans are set up with how these companies are organized. Can your ordinary Kenyon actually find out exactly what the terms are that have been agreed with China on a lot of these projects. Well, I think this is one of the issues that many critics have is that a lot of these deals as

loans are not as transparent as they should be. Now, for example, there was a case not in Kenya, but in Pakistan where Pakistan said, you know, we need to borrow the money. We might turn to institutions the World Bank for example, for that money, and China said, well, if you do that, then they threatened to reveal the

terms of its loans to Pakistan. Now, this is something which could which could have been politically embarrassing for the well the previous government suppose yes, So this is something where there has been a call for a lot more

transparency over the terms of these loans, exactly what they involved. Um. And of course there is also a lot of discussion and talk about how clean the deals actually are, you know, because if you don't really know what the deals are, what's been agreed, then everything under that is very murky.

I suppose the bottom line about all of this and and in particular, the Belton Road initiative and how it's been laid out in in Africa marks a complete sea change in the development model that we saw before in Africa, which was more of an AID based development model. How how is it is it is it true that there is a sea change has happened? Have we moved from

one model to another? I think probably things that Belton Road are getting a lot more coverage, So it does seem like, oh, we're moving from one mode to another. I think that there are still many other places and institutions helping with loans and offering money to African nations to build infrastructure projects and other things. Um, there are projects. For example, Tanzania is building its own real line and that's where the Turkish company doesn't have to be, you know,

from from China. Each nation can make their own decisions on what and how they're going to build. But um, there is probably an increasing move away from aid. But you know, when it comes down to it, as one of the businessmen said, vere More Shah here, the chairman of Vico. He said, in the past it was aid. Now many of the loans can there are the option of having loans which don't seem to have as many ties attached to it, which seems more attractive. But in

the end, what they need is investment. They just need the money. They need the money to build, because I can tell you now some of that infrastructure really needs upgrading. The roads fully jammed all the time, because the roads need a lot of that. But some of the fantastic picture is that we were looking at You've taken some very interesting footage of the old infrastructure, of the new infrastructure, and quite a lot of camels, a few camels in the market. It looked hot. How hot was it there

when you were doing you're surprised? I me, my battle was quite warm. There was woman sunny, but Airobi because it's quite actually quite chilly, and you'll see in some of the pictures people are wearing jackets and coats because it's not as a woman. Fact, when we first got there, Rish and I likened it to London in the autumn, not quite like sweltering Hong Kong. No, but my bats at me very warm and very sunny. Please thank you

very much indeed for talking to me. Next next time we're going to be talking about the fourth installment of the series. Which looks at what the b r I, the Built and Road Initiative, is doing in Europe and how the Europeans are responding. So I hope you'll come back and listen to that as well. I'm David Tweed. Thank you,