The Significance of “Belt and Road” for African Integration

By Engineer Wondimu Tekle Sigo

It was a good chance to visit the great nation-China. I visited China in 2011 and 2013 respectively for about ten days each, which is a very short time to explore such a big nation. However, in addition to Beijing I had an opportunity to visit Shanghai, Guangzhou, and Hangzhou. Due to my professional background, I visited also the “Three Gorges Dam” which is the world largest hydroelectric power station with 34 generators each with a capacity of 700 MW and in total 22,500 MW. In 2013 “Three Gorges Dam” visit was special for me because Ethiopia in 2011 has started to construct the 7th largest dam in the world called “Grand Ethiopian Renaissance Dam (GERD)”. The visit was aimed to get skill and knowledge to utilize for the construction management and operation of GRED. GERD have 16 generators and each planned to generate a capacity of 375 MW and in total 6000MW which is about one fourth of “Three Gorges” hydroelectric plant. The cost of GERD is estimated $4.5 billion. The project has been planned to construct completely by financial contribution and bond purchasing of the citizens and the government budget allocation. There is no any external body that is financing this huge project.

As “Renaissance” denotes that to “reviving again”, and the country chooses this name because Ethiopia was among one of the great ancient civilized nations similar to China before many years ago. Now the country is registering a rapid economic growth indicating that renaissance would be realized, which can be seen as symbol for other developing nations especially for African nations. This shows how things could be improved and achieved when government determine to intervene selectively in the market failure whenever required as China did in past several years. Here, as usual and everywhere anyone can understand how the People Republic of China allows the developing nations to share its experience similar to visiting the Three Gorges hydroelectric dam construction management and operation. The impacts of the Three Gorges hydropower electricity supply and other forms of energy infrastructure development are the results of China’s determination to wards growth and development.

Currently and fortunately, I have also got another chance to explore this great nation-China for third time due to long term study. From the previous observation and current opportunity it might be possible to explain the realty of China’s remarkable economic growth and development as well as it’s significant to African nations in general and to Ethiopia in particular. Infrastructures development helps as an engine for the development of the advanced economic nations. Even if China is still on a transition and emerging economy its infrastructural development contributes a lot for industrialization progress. As to my understanding and of course others are also shearing me that within only four decades China has transformed itself from a poor centrally planned economy to a middle-income and emerging market economy. This growth and development can be observed wherever anybody visits in the country except some very remote rural areas of China. China is also currently involving on global cooperation on infrastructure development through the Belt and Road Initiative(BRI), which aims to connect the world for development and prosperity. The BRIlikely to advance infrastructure construction plans and technical standard systems, pave for advancing the construction of global corridors, and form an infrastructure network phase bay phase linking all sub-regions in Asia, Africa and Europe. This initiative is more important for the African nations including Ethiopia for their vision of economic development and integration.

African-Union envisages a long-term transport vision in its agenda 2063, which is in line with the objective ofthe BRI. To mention some of the objective as reducing transport logistic costs for all modes of transport; improve and extend the connectivity of regions; promote transport infrastructure and services that are sustainable and friendly to the environment and communities. Hence, the BRIhas significance on AU’s 2063 agenda and development strategy of African nations. As per China vision and action plan for the BRI it goes beyond infrastructure construction including: countries along the Belt and Road to fully coordinate their economic development; endeavor to expand investment and trade facilitation, and eliminate investment and trade obstacles for the formation of a sound business environment within the region and in all related nations; promote cultural and academic exchanges, people to people exchanges and cooperation.

Africa has good potential of natural and human resources that needs to exploit and train to utilize as economic resources. During low stage of development it is obvious that most of the resource potential couldn’t be utilized. Therefore, first building infrastructure to increase existing resource utilization has an impact for economic development. Second, when development bounces to the upper stage it necessities new economic growth drivers, advanced infrastructure investments are required to prime the appearance of new industries and sectors that will further increase an economy. Even though most African nations now exist at low stage of development there are some nations that are indicating the possibility of economic development including Ethiopia. If they could strictly follow proper utilization of their potential economic resources with their economic strategies and policies they can achieve economic development.

In 2002, the industrial development strategy of Ethiopia was approved and its principle has been mainly emphasis on expansion of labor intensive industries, export led development, and promotion of agricultural-led industrialization. As per the government goal this industrial strategy refers to those which are primarily involved in the production of manufacturing goods. Even if the industrial strategy was put in place in the country it was very challenging to start the implementation phases. Off course, similar to other African nations Ethiopia has also some natural and human potential economic resources but there has been shortage of physical capital such as infrastructures. As it was seen from China experience at the first stages of economic zone establishment the country assessed foreign direct investment around the globe and utilized for its infrastructure development. Before ten years ago Ethiopia was also searching investors around the globe to utilize the opportunities of private sectors participation on the industrial process.

Due to long term relation the Chinese government through the Ministry of Commerce and Trade of China, “Eastern Industry Zone (EIZ)” was successfully established in 2007. The EIZ became a positive symbol of Chinese Government support to Ethiopia’s Industrial Development. Inside the industrial zone there are many manufactures from China such as Huajian shoes and Lifan motors. In addition to its revenue contribution, it creates a lot of job opportunities for the local people. Ethiopia’s EIZ is can be taken as the prime mover of country’s ambition to establish additional new industrial parks. Hence Bole-Lemi, Kilinto, Hawassa, Mekele, Compolcha, Adama, and Jimma industrial parks are established and start operation. Other industrial and agro-processing parks are also under-constructions. Several investors from China, India, and South Korea etc. are involving in sectors such as textile, garment and shoe production. As per the agreement between the government and the investors, almost 95 percent of the products are supplied to foreign market, and thereby enhance the nation’s currency earning capacity. Moreover, the firms use local raw materials such as animal skin as an input for their products. Therefore, from China’s foreign direct investment and technology transfer by establishing the first in its kind Easter Industrial Zone, Ethiopia benefited a lot.

In addition to that from China and other Asian countries experience industrialization to be realized, it needs to create enabling environment by providing infrastructure for the investors such as telecommunication, road, electricity, air transport, water supply service, and railway to facilitate their logistics management during importation and exportation as well as production process. Even if the current infrastructures are not sufficient and efficient, most of the industrial parks are located along key economic corridors but needs additional infrastructures especially for export facilities. Through “the Belt and Road Initiative” China’s Government has been also playing a major role for the development of Ethiopia’s infrastructure which have a direct influence for industrial development. Because of this intension China Government supports for the construction of Ethio-Djibouti Railway about 750km which connect to the sea port of Djibouti. Moreover, Bole international Airport Expansion which recently inaugurated, Addis Ababa-Adama Express High Way, Addis Ababa light Rail Ways, Adama I & II wind farm with total electric power generation capacity of 204MW and many other infrastructures development has been supported by China’s government.

China supports infrastructure development of Ethiopia through financial loan provision and involving on construction as well as management contract for operation on some of the infrastructures due to local skill limitation such as railway operation management until the locals could handle. This could be seen as technology spillover to Ethiopia and the supports are not only aims for Ethiopia’s local infrastructure development but also for regional integration Therefore, these show that China has been supporting Ethiopia before and after the BRI  in the industrialization process and infrastructure development of the country. In Africa in general and in East Africa in particular there are also many infrastructure projectsimplemented by Chinese government through the BRI. For example, the 470km Nairobi-Mombasa railway line which supposed to ultimately link the land-locked Ethiopia, Rwanda, South Sudan and Burundi to the Indian Ocean.

In summary, the BRI could help nations to jointly contribute and share benefits for promoting economic globalization and building human prosperity. Each nation should work hand in hand through belt and road initiative for better connectivity between regions and nations to capture opportunities that each location’s comparative advantage can offer. As China is taking a more active role on the global stage, it is an ideal position to partner with China for the developing nations to get lessons for their development. Infrastructure is always an essential part to increase nation’s growth potential. As the aim of “the Belt and Road” is believed to create markets, facilitate the flows of products, resources, and ideas active collaboration between each regions, nations and different stakeholders are should be considered as critical path. Sometimes the BRI has been seen as a treat and criticized by some developed nations. As we can see by our naked eyes in most developing nations including Ethiopia, the inadequacy of basic infrastructure such as electricity, water supply, roads, and ITC etc. are huge and this market failure should be fulfilled by different mechanisms. One option is to utilize the global initiative such as “the Belt and Road” which could facilitate financial resources as success solution for all parties participating in the intervention. Whatsoever or by whomever said the reality of “the Belt and Road” and other intervention of China in Africa is a goodwill and it is generating important economic development for the continent. To judge effect it is better to see the industrial zones and the infrastructure development supported by China in Africa in general and in Ethiopia in particular, which would speak more about the positive sign of the BRI. Therefore, the African countries engagement with China through “the Belt and Road” is about productivity, economic growth and development which are also in line with the AU’s vision in its agenda 2063 to integrate its nations.

(The author Wondimu Tekle is a PhD candidate in Peking University, China and Former State Minister of FDRE, Ministry of Water, Irrigation & Energy)