Belt And Road Initiative at 10: A Decade of Connectivity and Shared Prosperity

By Dr. Allawi Ssemanda

This month marks 10 years since Chinese President, Xi Jinping put forward the idea of the Belt and Road Initiative (BRI). In October 2013, President Xi who doubles as the Secretary General of Chinese Community Party (CPC) explained that the initiative then seen as restoration of the ancient maritime silk road would help in facilitating trade by easing movement of goods and services, and connecting the world through infrastructure development.

Today, from Latin America to Caribbean, Middle East to Asia, Africa to Europe, more than 150 countries and over 30 international organizations have signed up for the project. This means, more than a third of the world’s GDP and more than three-fourths of the countries in the world are part of the BRI. Such support is not a surprise; extensive consultation, joint contribution and emphasis on shared benefits are key principles of the BRI.

It is now clearer that BRI is a high-quality public good initiated by China, and jointly built by all participating partners. Its wide reception is a testimony; it is delivering high standard, sustainable and livelihood-enhancing projects to all people; treating all participating countries as equal partners, promoting economic integration and connection.

BRI has become a household name due to its contribution of connecting the world and easing trade and movement of goods and service resulting into investments of nearly one trillion USD, brought over 3000 cooperation projects, and created over 420,000 jobs in countries along the routes of the project with multiplier effect helping lift 40 million people out of absolute poverty.

Driving on the five Connectivities or “five Cs”; policy connectivity, infrastructure connectivity, trade connectivity, financial connectivity, and people-to-people connectivity, BRI has positively contributed to the well-being of humanity world-over. Recent empirical study shows that the BRI has significantly improved global trade and reduced costs involved. A World Bank (WB) study conducted in 191 countries, entitled “How Much Will the Belt and Road Initiative Reduce Trade Costs?concluded that BRI projects have made trade easier in BRI participating countries by “reducing shipment times and trade costs at country-sector level.”

Analysing trade figures from 191 countries (those that signed up for BRI and those in corridors of BRI projects), 1,818 cities for BRI economies only (cities from countries that signed up for BRI), the WB concluded that “for Belt and Road economies, the change in shipment times and trade costs will range between 1.7 and 3.2 percent and 1.5 and 2.8 percent, respectively.” Interestingly, the same study observed that even countries which did not sign up for BRI are benefiting. BRI projects world-over have seen “reduction in shipment time ranging between 1.2 and 2.5%,” and reduced “trade costs of up to 2.2%.” The study observed that in countries where BRI projects are located and or along the corridors, those countries gained the most with “shipment times along these corridors decline by up to 11.9% and trade gains by 10.2%”. While it notes that positive results of BRI projects “are magnified by policy reforms that reduce border delays and improve corridor management,” all is possible because BRI exist.

From Africa to Asia, to Europe, Middle East and Americas, under the Belt and Road Initiative, the economic cooperation between China and the rest of the world has by and large withstood the test of uncertain factors against the backdrop of the pandemic time and by all standards, it is safe to say BRI is still enjoying a good momentum of steady progress of enabling factors that are key for the world to enjoy shared prosperity.

Despite all the positive contribution of BRI, the project has been a target of the West especially the U.S. Strangely, without facts, Washington has consistently tried to promote narrative of the so-called debt trap and claims of lack of transparency from Chinese side on financing of BRI projects. However, critics claims remain baseless as different studies from independent bodies and researchers continue to rate the project positively. For example, while critics accused BRI of carrying risks, a World Bank study entitled; “Belt and Road Economics: Opportunities and Risks of Transport Corridors” concluded that there are more benefits for BRI participating countries and the entire world and that risks involved were minimal compared to benefits.

In Africa for example, projects under the BRI have greatly contributed to both social and economic growth of a number of countries. A study by the Africa Policy Institute found that, under BRI, a number of modern infrastructure projects in the Horn of Africa (HoA) and other parts of the continent increased, contributing to thousands of employment opportunities and other multiplier effects. The study also highlights Kenya’s modern Standard Gauge Railway (SGR) connecting Mombasa and inland port of Naivasha funded under BRI. Ethiopia-Djibouti standard gauge railway which connects the landlocked Ethiopia to Djibouti port is also credited for improving transport in the region. The project is already showing greater signs of sustainability with the 752.7-km railway line credited for contributing over 86.13 million U.S. dollars in revenue in 2021, which was up by 37.5% if compared to 2020 revenue collections.

In Uganda, infrastructure connectivity is visible with Kampala-Entebbe Expressway, (KEE) the country’s gateway to the rest of the world being operational. the completion of KEE cut commuting route between the country’s capital, Kampala and Entebbe international airport from a two-hour long drive within long queues of traffic jam to just 30 minutes. This is not to mention other projects funded under the same arrangements such as expansion of Entebbe International Airport, two hydropower mega projects; Isimba and Karuma among others.

Aside, critics of BRI on account of what they call putting more funds into infrastructure project should recognise that developing countries are faced with challenges of infrastructure funding. According to the African Development Bank (ADB), to meet her infrastructure funding deficits which is key for the continent to plan for its growing population and replace their ageing infrastructure, annually, the continent needs between $130-170 billion. This means; countries need allies willing to help in funding their infrastructure projects which BRI is exactly doing.

WB study “Why We Need to Close the Infrastructure Funding Pag in Sib-Saharan Africa” contends; if the region shrinks its infrastructure funding gaps, the region’s GDP per capital will grow by 1.7%. In otherwards, by implementing BRI in the region, China is already supporting Sub-Saharan African countries GDP growth by 1.7%. Should we castigate China or BRI for such because the U.S or a few politicians in Western capitals are “worried” or because they have refused to understand that BRI is a global public good? My answer is a resounding No.

As Bent Flyvbjerg, a Danish professor taught us; “Infrastructure is the great space shrinker, and power, wealth and status increasingly belong to those who know how to shrink space.” Now that BRI is with here, we should embrace it to improve infrastructure in our respective countries as we strive with allies like China to build a community of shared future for mankind in the new era of win-win cooperation.

Allawi Ssemanda, PhD is Executive Director the Development Watch Centre and Senior Research Fellow at Sino-Uganda Research Centre

Seven Years of China’s Belt and Road Initiative: How are Developing Countries Benefiting?

By Ssemanda Allawi.

In 2013 – seven years ago, Chinese president Xi Jinping gave a set of speeches where he announced the proposal of the now famous Belt Road Initiative (BRI). Xi delivered the first speech about BRI during his visit in Kazakhstan, elaborating his desire and vision of restoring the ancient silk road which offered routes from Peoples Republic of China, through Central Asia to the far Europe. In October, 2013 during his speech to Indonesian parliament, president Xi announced his maritime silk road concept to Indonesians to facilitate trade and ease movement of goods and services.

In the seven years of the project’s implementation, BRI has registered considerable achievements seeing over 29 International Organisations and over 71 countries sign or joining it. This means that more than a third of global GDP and more than two thirds of world’s population are part of the project!  This means that upon completion, the project will make the world’s largest market easy to access and traverse on both road and sea which are key in transportation and mobility of goods and services.

However, this is not without critics especially from some parts of western world with the U.S leading critics of the project with claims such as lack of transparency from Chinese authorities especially its financing while others branding the project is part of what they call China’s debt diplomacy.

However, research indicates that claims of lack of data on funding of the projects are largely wrong as a number of studies and research work  have given a clear view  of funding of this project.

Critics of China and BRI project in particular have often claimed the project is too expensive and will see developing countries fall in what they call China’s “debt diplomacy” with some western capitals branding the project Beijing’s debt trap. Many of critics have always cited Sri Lanka’s Hambantota which was leased to a Chinese firm for 99 years to help repay the country’s debts. The claims that Hambantota port was seized by China are also ambiguous considering the current state of the port if compared to how its state before the Chinese firm invested in it.

Washington has also been very critical of BRI project and generally China’s funding of infrastructure development in different parts of the world claiming that many of Beijing’s clients are  pariah states

However, some of these claims seem to be political with Washington screed of China’s growing relations with the rest of the world which they see as one way of antagonising U.S’ strategic interests. A case in point is citing Beijing’s growing relations with African state of Djibouti. In 2018, U.S’ top military commander in Africa, Marine General Thomas Waldhauser told U.S’ House Armed Services Committee that China’s state-owned China Merchants Port Holdings owning shares in Djibouti’s meant that U.S military could face “significant” consequences. Djibouti is one of many countries China considers part of its Belt Road Initiative.

In regard to Beijing’s infrastructure assistance going to undemocratic states, this is largely wrong. Most of Beijing’s borrowers are democracies with countries such as South Africa, Tanzania, Brazil, Kenya, and Tanzania. Other democratic countries that that have benefited from China’s infrastructure loans include United Kingdom (UK). China is a major investor in UK’s Hinkley Point Nuclear power plant in Somerset.

Therefore, despite critics of BRI, it can be argued that the project so far is a success. Indeed, in 2019, a study by World Bank entitled; “Belt and Road Economics: Opportunities and Risks of Transport Corridors” analysed transportation projects along the BRI routes and concluded that benefits to recipient countries and the entire world would benefit from the project. In Kenya for example, as a result of Belt Road Initiative project, the country built a 470 km railway line from Kenya’s capital, Nairobi to the coastal city of Mombasa which shortened travel time from 10 hours to five, created over 46,000 jobs and helped the country’s GDP by 1.5%.

Despite the study reporting more cases of policy impediments than infrastructure impediments – such as customs delays, bureaucracy, red tape, imports tariffs and corruption which increase trade costs, the study is a proof that BRI will play a significant role toward both social and economic development of the world.

From the above and findings of this study, it is evident that improving investment climate is a key complementary when it comes to supporting and investing in infrastructure sector. This can be realised through deep trade agreements such as the proposed Africa Continental Free Trade (AfCFTA). On Global scale, agreements such as BRI, AfCFTA and the recently reached trade liberalisation agreement between China and ASEAN, Australia, South Korea, New Zealand and Japan can help to eliminate tariffs which sometimes are barriers of trade.

Therefore, critics of infrastructure development should not look at infrastructural development in lenses of competition but rather putting in place facilities to aid trade. In particular, those criticising BRI branding the project a debt trap or debt diplomacy should reconsider their exaggerated claims. For example, countries that do borrow funds from China have also on many occasions borrowed from the so-called traditional donors or World Bank, IMF as well as other private bond holders. This means these countries diversify their sources of finances and thinking that they are beholden to China is ignoring key and glaring facts.

However, whereas it is very hard to present facts of the so-called debt diplomacy, there are genuine concerns when it comes to debt sustainability especially to African countries. However, these concerns should not only be tied to borrowing from China but rather all relevant lenders. This is because, unlike domestic debt, foreign debt has to be serviced using exports and this way, there are clear limits that point at how much borrowing developing or poor countries may take and continue to thrive.

In addition, the impact of Covid-19 pandemic on global economies feared to cause recession has should serve as a warning that many developing countries may find it hard to sustain their debts. Almost all countries that were projected to continue with a positive economic growth curve before covid-19 now are IMF analysis shows these countries projections were negatively impacted by covid-19 which has caused negative impact on countries exports and affected their GDP growth and hence, raising questions if these countries can sustain their debts. Indeed, many of China’s clients in Africa are in debt distress.

Early this year, China joined G20 in offering developing countries debt relief as a way of helping countries affected by Covid-19 pandemic recover. Among countries to benefit from this plan include 40 from sub-Saharan region. Despite this effort, debt moratorium alone may not be a magic bullet for Africa and other developing countries. Debt restructuring or write-downs. The challenge is that such arrangements often are done through the Paris Club of which China is not a member. However, if China wants to write-down debts on some African countries and developing countries in general, it can since it has done it before

On the other hand, the US announced a new development finance institution, also known as U.S. Development Finance Corporation (USDFC) to compete with China in offering infrastructure funding to development countries.  Though this is a positive development, this initiate alone will not bring swiping changes. Most of developing countries prefer to use Chinese funding when it comes to infrastructure funding. Though they may look generous, traditional funders and their multinational banks prefer to fund sectors such as administration, social services and the so-called democracy promotion instead of funding the much-needed infrastructure programs. For example, at first 70% of World Bank’s funding went to infrastructure but has been reducing to recently 30% despite huge funding gaps in infrastructure sectors in developing countries.

It is important to note that developing countries are still faced with shortage of funding especially in infrastructure projects which are key for development. A study by World Bank and McKinsey Global Institute found that funding for infrastructure projects such as transport and electricity is lacking, noting that to ensure a socially inclusive development by 2030, there is need to spend more than $3.3 trillions annually of which 60% of this must go to developing countries in Africa. African Development Bank (ADB) on the other hand estimates that to meet demands of their growing population, replace aging infrastructure, African countries must spend between $130-$170 billion annually on infrastructure. Also, a 2017 study by World Bank “Why We Ned to Close the Infrastructure Gap in Sub-Saharan Africa” suggested that if these countries reduce funding gaps for infrastructure, the region’s GDP per capital will grow by 1.7% and hence. All the above shows that any infrastructure assistance to developing countries should not be underestimated and hence, the view that BRI project is a positive initiate for developing countries world over.

In conclusion therefore, as studies have indicated, BRI project has more benefits if compared with challenges it may bring. Instead of critiquing the project largely to Geo and Global politics, China’s critics especially the U.S should back the project and where possible embrace and support new trade agreements such as AfCFTA to improve trade and investment climate in developing countries than only negatively criticising funders that fund developing countries projects. Also, the U.S may champion calls to reform the The Bretton Woods institutions and offer attractive alternative funding to developing countries, reduce their anti-China rhetoric and instead participate with China whenever there are efforts to offer debt relief.

Damaging Lies: Sri Lankan Port Deal With China not a ‘Debt Trap’

By Ssemanda Allawi and Ntende Trevor

Damaging lies: Sri Lankan port deal with China not a ‘debt trap’

In December 2017 Sri Lankan government agreed to lease their major southern port Hambantota which was built by Chinese, a development that caused discussion with several analysts inventing the so-called China’s debt diplomacy while others referred to it as China’s debt trap with some critics claiming that China forced Sri Lankan government into this deal after Sri Lanka failed to pay what critics described as Chinese huge loans.

Since then, China’s critics have always given Sri Lanka as an example arguing that the country was forced to lease its port to pay back Chinese loans, a claim that lacks facts.

Indeed, Sri Lanka’s ministry of Finance’s chair of Public Private Partnership Unit Thilan Wijenighe confirmed that $1.131 billion loan from China was not spent in funding Hambantota port related activities but Sri Lankan government used these funds to boost then failing state reserves as a preparation not to default paying external debts Sri Lanka owed to several western entities.

Put differently, before leasing of Hambantota port, China accounted to just 10% of Sri Lanka’s external debt of which most of these loans are concessional with a long-term payment plans, while the other over 40% of other borrowings was from other ‘traditional’ development partners like World bank and with a short time recovery which distressed Sri Lanka government as opposed to Chinese concessional loans.

In particular, the $1.31 billon China loaned Sri Lanka through Export-Import Bank of China, 90% of this loan was concessional at 2% interest rate and was meant to be recovered in 15 – 20 years. Therefore, it is not logical that to argue that Sri Lanka was forced to lease the port to pay its debt when the loan still had over ten years to be recovered.

Indeed, Sri Lankan government later explained that it was only for commercial reasons that Sri Lanka Ports Authority decided lease 70% shares of its Hambantota port to a Hong Kong based China Merchants Port Holdings since Sri Lanka Ports Authority alone would not manage to make the port realise set economic targets. At the time Sri Lanka Ports Authority decided to lease its majority shares, the port was operating in loses.

Cars parked at Hambantota port, Sri Lanka. Courtesy photo.

Figures from Sri Lanka Ports Authority shows that before its takeover, Hambontata was making losing over $80 million annually and since the deal to was made with China Merchants Port Holdings, the loss reduced by a half in a period of one year and the port has been consolidating its roll on-roll off (RoRo) business doubling the number of vehicles that go through it


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