Both Chinese and African stakeholders are embracing new infrastructure financing models for road construction that both avoids adding to already high debt levels in some countries while reducing risk for Chinese creditors. The Public-Private-Partnership (PPP) model, long a favorite of U.S., European and Japanese governments, now appears to be catching on with the Chinese as well. Until now, China has favored state-to-state lending but new road projects in Uganda, Kenya and Mozambique, among others, reveal a willingness to experiment with new lending models.
Chinese-Built Toll Roads Are Becoming Quite Common in Africa
- KENYA: Each driver on the proposed Nairobi Expressway will be required to pay around $3 that will help to pay back the $608 million loan it took to build this new double-decker highway, which aims to reduce congestion in the Kenyan capital. The project is a PPP with China Road and Bridge Corporation. (CAPITALFM)
- MOZAMBIQUE: Beginning January 1 next year, drivers on National Road Number 6, which connects the Mozambican central port city of Beira to Machipanda, on the Zimbabwean border, will be required to pay between $11.10 and $83.60 in tolls on the 287km road as part of an effort to repay a $410 million loan to China’s Exim Bank. (MACAUHUB)
- UGANDA: The Ugandan parliament paved the way for tolls to be collected on expressways through Wednesday’s passage of the 2019 Roads Act. Beginning next month, drivers on the new Kampala-Entebbe Expressway will pay for the privilege to drive on this 49.5 km road that was built with a $467 million Chinese loan. (SOFT POWER NEWS)
WHAT’S NEXT: Chinese lenders, most notably officials from the China Exim bank, say that one of their key priorities for African infrastructure development going forward is to identify projects that are financially feasible and have clear pathways to recoup their loans. These toll roads exemplify this trend but privately, China Exim Bank officials say they’re encountering some difficulties with their African partners to identify projects that meet this new, higher standard criteria.
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