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Kenya-Ouganda : Reprise du train chinois malgré la dette kenyane

by Omar Benali International
written by Omar Benali International

Kenya and Uganda Celebrate Railway Extension Amid Debt Concerns

KISUMU, Kenya (AP) – The presidents of Kenya and Uganda presided over a ceremony near their shared border Saturday, marking the completion of a long-delayed extension to a Chinese-built railway. While hailed as a potential economic catalyst for East Africa, the project is shadowed by concerns over Kenya’s mounting debt to China.

The Standard Gauge Railway (SGR) currently connects the port city of Mombasa to Nairobi and Naivasha in Kenya. The newly completed extension is intended to reach Kisumu, Uganda, with further phases planned to reach Malaba, a town on the Kenya-Uganda border. Officials estimate the line could reach Kisumu by June 2027.

Kenyan President William Ruto described the rail link as a “generation-defining project,” arguing it will significantly reduce logistics costs and boost competitiveness across East Africa. Ugandan President Yoweri Museveni echoed this sentiment, stating the railway would address inefficiencies within his country’s infrastructure, calling the current system “irrational and wasteful.”

However, the railway’s construction has come at a steep price. Kenya spends approximately $1 billion annually servicing debts related to the SGR, the majority of which were borrowed to finance the project. Last year, the railway generated roughly $165 million in revenue, despite strong growth in passenger and cargo numbers. A report by Kenya’s auditor general revealed over $260 million was lost to penalties and interest on late debt payments.

China lent Kenya $9.7 billion between 2000 and 2019, with approximately half of that funding allocated to the railway, according to the Chinese Loans to Africa Database by Boston University. Lending from China stalled between 2020 and 2023 as Kenya struggled with repayments, coinciding with a broader shift in China’s lending strategy towards Africa.

Kenya is now financing the new phase of the railway through future cargo taxes, partnering with Chinese transport firms for construction. The overall cost of the extension is estimated to exceed 500 billion shillings ($3.9 billion), according to Kenya’s Business Daily.

The railway extension is seen as crucial for strengthening trade links throughout East and Central Africa, potentially reaching landlocked nations like Uganda, Rwanda, South Sudan, and the Democratic Republic of Congo.

Despite the financial challenges, Ruto insisted his government has a sound financial plan for the project, emphasizing its potential to create jobs and alleviate road congestion.

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International

Afrique du Sud : Les constructeurs chinois et indiens bouleversent le marché automobile

by Omar Benali International
written by Omar Benali International

South Africa’s Auto Market Shifts Gears as Chinese, Indian Carmakers Gain Traction

Johannesburg, South Africa – South Africa’s automotive industry is undergoing a significant transformation, as consumers increasingly opt for more affordable vehicles, opening the door for Chinese and Indian manufacturers to gain a foothold. This shift is challenging established automakers from Europe, Japan, and the United States, and prompting a re-evaluation of local production strategies.

The changing dynamics are driven by weak economic growth and rising living costs, pushing South African buyers toward budget-friendly models. Chinese carmaker Chery, which entered the market in 2021, has rapidly become the second-largest car seller in the country, trailing only Toyota. The company markets vehicles under the Omoda, Jaecoo, and Jetour brands.

Indian manufacturers are also expanding their presence. Mahindra & Mahindra is increasing its production capacity within South Africa, while Tata Motors has returned to the market after a period of absence.

This influx of new competitors is impacting established players. Mercedes-Benz is reportedly considering sharing its assembly plant in East London with Great Wall Motor to maintain production levels. The plant currently exports C-Class sedans to the United States under the African Growth and Opportunity Act (AGOA), a program allowing duty-free access for certain African exports. However, potential trade tensions and policy changes could jeopardize this export access.

The South African auto industry faces broader pressures beyond increased competition. Rising production costs, sluggish domestic demand, and evolving global vehicle markets are all contributing to the challenges. Local production has steadily declined over the past two decades, with only approximately one in three cars sold in South Africa now manufactured domestically, a significant drop from the 56% recorded two decades ago.

Automakers are urging the government to implement policies that support local manufacturing and stimulate domestic market growth. The industry’s future hinges on navigating these complex challenges and adapting to the changing landscape.

The structural changes underway highlight a broader trend of lower-cost manufacturers gaining market share while traditional exporters grapple with new pressures. The situation underscores the importance of a stable trade environment and supportive government policies to ensure the long-term viability of South Africa’s automotive sector.

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