Mahiga off to China to try to unlock mega-loans for SGR

17Dec 2017
The Guardian Reporter
Guardian On Sunday
Mahiga off to China to try to unlock mega-loans for SGR

THE Minister for Foreign Affairs and East African Cooperation, Ambassador Augustine Mahiga, is tomorrow expected to begin a four-day official visit to China, in a move analysts said was likely aimed at unlocking mega-loans from Beijing to build the government's flagship standard gauge railway (SGR)

THE Minister for Foreign Affairs and East African Cooperation, Ambassador Augustine Mahiga

The December 19-21 trip will be Mahiga's first official visit to China since being appointed to his position two years ago.

It could not be immediately established why it has taken this long for Mahiga to pay a visit to China, given the traditional "all-weather" bilateral ties between the two countries and China's deep pockets as the main financier of public infrastructure projects in Africa.

China has funded and built SGR projects in Kenya and Ethiopia, but Tanzania has failed thus far to get financing from the Asian giant, delaying implementation of the projects.

Mahiga, who is visiting Beijing at the invitation of Chinese Foreign Minister Wang Yi, is making the trip at a time when the Tanzanian government is struggling to get soft loans to build the SGR.

Diplomatic sources said Mahiga and Yi could potentially discuss plans for a possible state visit by President John Magufuli to Beijing “over the coming weeks and months” to facilitate talks with Chinese President Xi Jinping for the much-needed railway financing.

The government said in 2015 that it plans to invest a staggering $14.2 billion over the next five years to construct a state-of-the-art electric rail network.

Tanzania, like its neighbour Kenya, wants to profit from its long coastline and upgrade existing rickety railways and roads to serve growing economies in the land-locked heart of Africa.

The Tanzanian SGR projects include constructing a 2,561-kilometre railway line connecting Dar es Salaam port to Tanzania’s land-locked neighbours, Uganda, Rwanda and Burundi at a cost of $7.6 billion.

The government has already started building two sections of the SGR network from Dar es Salaam to Dodoma using its own financial resources after being unable to secure external concessional loans.

"This will be ... Mahiga's first official visit to China. During the visit, (Chinese) Foreign Minister Wang Yi will hold talks with him and they will exchange in-depth views on bilateral relations and other international and regional issues of mutual concern," China's foreign affairs ministry said in a statement yesterday.

"China and Tanzania enjoy traditional friendship. The relations between China and Tanzania have continued to develop steadily with fruitful outcomes of mutually beneficial cooperation in various fields in recent years."

China said it hopes Mahiga's visit will "further consolidate the traditional friendship between the two sides, promote greater development of the China-Tanzania comprehensive cooperative partnership and bring more benefits to the two peoples."

President Magufuli's office announced in July last year that the government had secured a $7.6 billion loan from China’s Export-Import Bank (Exim) to build the SGR.

China is yet to release the funds, raising concern that Tanzania's strong ties with the Asian nation could be waning.

"China was ready to give us a (concessional) loan at 1 per cent interest rate, with a repayment grace period of 20 years. Why did government opt for a Turkish loan at 9 per cent interest?" The leader of the opposition ACT-Wazalendo opposition party, Zitto Kabwe, said via Twitter last month. “How can we lose a friend like China?"

Several African countries have been borrowing heavily from China to scrape funds together to build modern railway networks.

In the 10-year period between 2004 and 2014, African countries borrowed nearly $10 billion for railway projects from China, facilitated by the China Export Import Bank (Exim), according to researchers by SAIS China Africa Research Initiative at Johns Hopkins School of Advanced International Studies (SAIS-CARI).

China sees the African railways as an investment opportunity which also creates an export market for their booming steel and construction industries, according to Deborah Brautigam, professor of international political economy and director of SAIS-CARI.

"They have overcapacity in China. They have steel that they want to use. They've got experienced companies that know how to build railways," she said.

But it's not without risks, and whether the loans will be fully repaid by the African nations remains to be seen, she adds. "That's still a question mark."