A decade ago, when Ethiopia’s late leader Meles Zenawi was planning 5,000km of standard gauge railway, the landlocked country was granted a $2.5bn loan by China Eximbank. That loan was tied to the construction of an 800km railway east-west between Addis Ababa, the capital, and the port city of neighbouring Djibouti. It would be built by Chinese engineers and use Chinese locomotives.
Then, in 2013, Ethiopia’s government entered into an engineering and procurement contract for another line. This one was intended to run about the same distance south to north, between the central town of Awash and Mekelle, capital of the now war-torn Tigray region. The contractor was Turkish construction group Yapi Merkezi, which helped broker $1.1bn of funding from Turkey’s Eximbank, Credit Suisse and European export credit agencies.
And the two lines now offer a chance to compare major pieces of infrastructure by Chinese and non-Chinese companies in the same African country.
“Both projects have had a bit of a bumpy road,” says Yunnan Chen, an expert on Chinese investments in Africa, and author of a policy brief on what she calls “railpolitik” for the China Africa Research Initiative at Johns Hopkins University. “There are always going to be teething problems.” Of the Chinese line in particular, she adds: “It was a completely imported piece of technology that was very well established in China, but Ethiopia has never built a standard gauge railway like this.”
Financing proved a big difference. When Ethiopia ran into problems servicing its debt due to a perennial shortage of foreign currency, the Chinese proved flexible, says Chen. By contrast, there were penalties built into the European loans for delayed repayment. In 2018, China granted Ethiopia a one-year moratorium on debt servicing. Abiy Ahmed, prime minister, subsequently negotiated an extension of the repayment period from 10 to 30 years.
But there was a price for such flexibility. While the Turkish project let Ethiopia choose its own project manager and gave it greater leverage in negotiating technology transfer, under the Chinese project it was obliged to hire China International Engineering Consulting Corporation and training “fell short of expectations”, observes Chen.
China offered to teach engineering students in Tianjin and Chengdu, but on-the-job training in Ethiopia was sacrificed to finish construction on time, local officials said. Post-construction training was better — with instruction in locomotives, driving, signalling and electrical engineering, says Chen. But this was hindered by language problems because few Chinese instructors spoke English.
Turkish group Yapi Merkezi, by contrast, used English as its working language, and trained 40 Ethiopian Railway Corporation staff on site, hiring many for the second phase.
Neither railway has gone entirely to plan, however. Yapi Merkezi completed its section of the line in 2019, but a second section from Wediya to Mekelle stalled for lack of finance.
The Addis-Djibouti line, completed in 2018, has been beset by power problems, partly because Ethiopia insisted it be electrified. As a result, Ethiopia’s industrial-zone exporters, put off by the sporadic service and high cost of getting goods the last mile on to the railway, have not used it as much as envisaged.
Aboubaker Omar Hadi, chair of Djibouti Ports and Free Zones Authority, says a lack of rolling stock is also hampering the railway’s success: “The cargo is there, the business is there, [but] the road is taking the bigger share, with 2,000 trucks in a day in and out.”
Some of this may be inevitable, Chen says. Still, she concludes, governments need to do better at integrating construction projects into their local economies. They also need to build their technical capacity and become more savvy about ensuring that, when the contractors pack up and go, countries are left with exactly what they expected.
Additional reporting by Andres Schipani in Djibouti
Source: Economy - ft.com
