Why Chinese construction firms will remain the big builders in Africa

Chinese government financing has helped to drive exports of services to the continent but Chinese companies have another big factor in their favour – price, analysts say

A major shift in lending is under way, with commercial banks filling some of the gap left by Beijing’s official credit agency

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Price competitiveness makes many Chinese companies an attractive proposition in Africa, observers say. Photo: Xinhua

Published: 6:00am, 26 Apr 2021Updated: 6:00am, 26 Apr 2021

Price-competitive Chinese companies are expected to continue to dominate construction of Africa’s power dams, highways, ports and railways, even as China’s official export credit agency takes a more cautious approach to lending, observers say.

That outlook was reinforced earlier this week when state-owned China Communication Construction Company (CCCC) won a US$166 million contract to build a 453km (281-mile) road as part of a megaproject linking Kenya with Ethiopia and South Sudan.

The contract was signed less than a week after Kenya announced that a new seaport being built in Manda Bay in Lamu, on the Kenyan coast, by CCCC, would start operating in June. The company had won the contract to build the first three of 32 berths of the seaport for US$480 million.

China Merchants Group is also building and operating ports in Africa while technology giant Huawei, which dominates the continent’s telecoms equipment supplier market, is helping countries including Kenya and South Africa roll out 5G technology.

In all, China accounted for 31.4 per cent, 121 projects, of the infrastructure projects under construction in Africa last year, according to a report released last month by consulting firm Deloitte. In East Africa, half of the construction activity was undertaken by companies from China, again making it the biggest builder in the region.

W. Gyude Moore, a senior policy fellow at the Centre for Global Development and a former Liberian minister of public works, said much of the success Chinese companies had had in winning open bids over the last decade was linked to their competitive pricing, both in equipment and expertise.