Tuesday, 28 October 2014


If Africa is growing, why are conflicts escalating on the continent? In classical economic theory, growth is supposed to open up economic opportunities, stimulate economic and social empowerment, and thereby reduce tensions in society. Addressing inequality can be a win-win situation both for the powerful and powerless in society. It can create social harmony, mutual trust, and confidence between the haves and have-nots. It is a step towards a collective dream that another world – fairer and just – is possible and desirable for us all! In the oil-rich Bentiu district, in South Sudan, ethnic killings started late in 2013 and continued through to the early part of this year. Communal protests backed by politicians in Turkana in Kenya also flared up. Then Lamu on the Kenyan coast followed suit. After this, in Uganda’s Ntareke, Kasese and Bundibugyo districts in the Ruwenzori region, incidences of blood-letting occurred. And in early June the quiet capital of the East African Community (EAC), Arusha, experienced a bomb blast for the first time. Apparently all these outbreaks of violence have been explained variously as the results of ethnic cleansing, extremism, a rise in terrorism or age-old land disputes. But it is more than that; all these places have three things in common. Those three things are that they are rich in mineral resources – notably oil, gas, copper, cobalt, titanium, iron ore, nickel, uranium and rare earth metals. Bentiu is an oil hub. Turkana is also an energy nucleus. Pancontinental Oil and Gas, an Australian energy firm, announced in mid-June that oil and gas had just been discovered offshore in the Lamu basin.
The two main components of this grand infrastructure project are an 8,500km standard gauge railway and a port at Bagamoyo in Tanga region. Mwaporc is supposed to open up northern Tanzania, Burundi and DRCongo. There are massive deposits of copper and cobalt in the Ruwenzori region. The Uganda Investment Authority (UIA) claim that there are 4.1m tonnes and 5.5m tonnes respectively of proven copper and cobalt in the region. Arusha on the other hand can be said to be Africa’s gemstone capital, with rubies and the rare Tanzanite being found here. The second coincidence is that all these “trouble spots” stand along two major multi-billion-dollar transport corridors. The massive $75bn Mwambani Port and Railway Corridor (Mwaporc) is proposed to connect Tanzania’s Indian Ocean coastal town of Bagamoyo to the port of Banana in the Democratic Republic of Congo (DRC) on the Atlantic Ocean when complete.
Further north the Lamu Port – South Sudan – Ethiopia Transport (Lapsset) Corridor is a $24bn project meant to connect the Kenyan seaport of Lamu to the port city of Douala in Cameroon on the Atlantic coast, when complete. This corridor involves railway, fibre optic cable and road developments, airports and an oil pipeline. The initial phase is to have Lapsset reach Juba in South Sudan with railway, pipeline and road nodes to Addis Ababa, Ethiopia and Hoima in Uganda. These multi-billion-dollar infrastructure projects together with the mineral resources are not immune to backroom rivalries. According to Jaffar Shemanga, a businessman in Lamu, land values along the entire stretch of Lapsset have snowballed in the last five years. “An acre of land used to fetch Ksh10,000 ($114) in Magogoni where the port is located”. Shemanga says. “Today the same piece of land goes for $30,000.”
Local politicians and business interests are on one side of the internal rivalry. The other side of the rivalry is the external factors, with foreign countries using their local connections and partnerships also coming into play. And it is here where it gets interesting. China, Belgium, Canada, US, UK, France, Japan, India, Malaysia, Qatar, Oman, Thailand, Norway, Australia and the Netherlands are the main interested parties in this race for mineral resources and infrastructure contracts.One nation, however, stands out in terms of clinching the major deals and projects – China. And this is the third coincidence. In all these conflict- prone zones, the Chinese have significant investments.
In the last four years, the collective Chinese investment in the EAC region, including Ethiopia and South Sudan, has surpassed $80bn. These investments encompass areas from mining, farming, oil and gas to industries and infrastructure development. That the Chinese are in the region for the long haul is not in doubt.
A flip through the collective budgets of these countries explains why. The combined EAC budget stands at $50.44bn, which pales into insignificance with the amount of investment streaming in from Beijing. Kenya’s 2014-15 budget is $20.34bn, Tanzania’s stands at $12bn, Ethiopia’s $9.2bn, Uganda’s is $5.2bn while Rwanda and Burundi’s stand at $2.5bn and $1.2bn respectively.
Rwanda, Uganda, Somalia, Burundi, South Sudan, Ethiopia, Kenya and Tanzania are caught up in a bitter business war between Asia, the Middle East, Europe and North America.
China’s top leaders, President Xi Jinping and Premier Li Keqiang, have visited East Africa and between them sealed 48 business deals. Slightly more than a week after his ascendancy to the top of the Chinese leadership President Xi Jinping visited Tanzania and signed 16 trade, diplomatic and cultural deals in March 2013. The major deals he signed include the construction of the Bagamoyo port, which is the anchor of Mwaporc. To counter the Chinese, US President Barack Obama also visited Tanzania in October and launched the $7bn “Power Africa Plan”. 
But Obama’s move was too little too late. The Chinese footprint in East Africa cannot be wished away. This aspect came to the fore when China’s Premier Li Keqiang followed up President Jinping’s tour of the region. Before coming to Kenya, Premier Li had visited Ethiopia and signed 16 business pacts with Premier Hailemariam Desalegn.
When Keqiang landed in Kenya he signed 17 business agreements. The highlight of Keqiang’s visit to Kenya however was when he met the regional leaders in Nairobi. Uganda’s President Yoweri Museveni, Paul Kagame of Rwanda and Salva Kiir of South Sudan trooped to Nairobi, joining their host President Uhuru Kenyatta for the signing of the $13.8bn regional standard gauge railway deal that will link the Kenyan seaport of Mombasa to Uganda, Rwanda and South Sudan. 
On Lapsset, Presidents Kenyatta, Kiir and Museveni together with Ethiopia’s PM Desalegn have a deep interest as this corridor is expected to transport their countries’ oil from Turkana, Bentiu, Hoima and Elkuran oilfields, with the first shipment expected between 2016 and 2018. Already Kenya, Rwanda and Uganda, under the high-level tripartite infrastructure summits, have agreed to construct the 1,500km Hoima-Lokichar-Lamu oil pipeline.
International bids for the Lapsset oil pipeline that is expected to cost some $3.5bn have already been floated. The Chinese have started to stake their claim, as have the Japanese. On the Kenyan side, China Communications Construction Company (CCCC) has already won the tender for the $484m construction of the first three berths of the 32-berth Lamu port, and in Uganda they have a significant stake in the Hoima oil fields through the China National Offshore Oil Corporation (CNOOC).
The oil pipeline within the Lapsset Corridor is expected to transport oil drilled from the oilfields in Uganda, Kenya and South Sudan. CNOOC and China National Petroleum Company (CNPC) have significant oil stakes in both Uganda and South Sudan. Other companies eyeing Lapsset include France’s Total Oil and the UK’s Tullow Oil.
In Uganda alone, the Chinese have already invested heavily in oil, energy and infrastructure projects. At present they have sunk some $2.05bn into two hydroelectric power dams and another $2bn into the Kingfisher oil field, said to have some 3.5bn barrels of oil. According to the International Monetary Fund (IMF), Uganda is said to be among Africa’s top five nations, with the largest reserves of oil.
The others are South Sudan, Angola and Nigeria. That is not all. A Chinese consortium led by Tibet Hima Industry recently invested $175m in Uganda’s Kilembe copper mines in Uganda’s southern Ruwenzori district. Also to be accessed within the Ruwenzori region are vast amounts of cobalt. Rwanda’s coltan, casseterite, gold and tungsten are also factored in within the Mombasa railway and the Lapsset corridor scheme of things. Just as Kenya is pursuing the Mombasa-Kampala-Juba-Kigali standard gauge railway and Lapsset, Tanzania is now aggressively marketing Mwaporc and both countries have been lobbying the Chinese for support and financing.
Unlike Lapsset, the Chinese have been very enthusiastic about Mwaporc, perhaps given their decades-old ideological convergence that started in the early 50s through Tanzania’s first President Julius Nyerere. According to officials of the Tanzanian Ports Authority (TPA), the local excitement surrounding Mwaporc is that the new port is expected to handle some 20m containers a year as compared to the current 800,000 that the Dar es Salaam port handles. But is this the only benefit of a new port?
The Chinese have already committed some $500m to begin the port construction at Bagamoyo. A 65km railway will connect the Mwambani Port to the 1860km bi-national Tanzania-Zambia Railway (TAZARA) line that the Chinese constructed and completed in 1975. The Chinese have also been awarded the $1.2m gas pipeline construction from Mtwara to Dar es Salaam.  
To the Chinese, the construction of the new port is a gateway to accessing copper, uranium, gas, iron ore, precious stones and coal from Tanzania and Zambia. Mwaporc will further enhance access to timber and more natural resources from the DRCongo. Others eyeing Tanzania’s gas include Russia’s Gazprom, and Mubadala of the UAE. In the last five years, the US, China, UK, Russia, Australia, France, Iran, India and Japan have all been lobbying the Tanzanian government for exclusive uranium mining rights. Initially French uranium mining giant Areva, which has uranium mining rights in Arlit and Imouraren in Niger, OgoouĂ© in Gabon, Trekkopje in Namibia and Bakouma in Central African Republic (CAR), had expressed an interest in the Tanzanian mine.
In April last year Tanzania granted Mantra Resources, an Australian subsidiary of the Russian mining firm ARMZ, a licence to build and operate a uranium mining site on Mkuju River in Tanzania’s Selous Game Reserve. Tanzania is now set to join the top five global uranium producers. The narrative of communities that were previously good neighbours abruptly turning on each other is hard to define and appears too simplistic. It gets quite suspect with the ease of rapid media visualisation and interpretation. And why now, as the fortunes of natural resources beckon? Who wants the Chinese out of the region?

That there is intense rivalry to secure these resources and clinch the major infrastructure projects is not in doubt. This rivalry has both internal and external actors. And it is this aspect that is missing in the explanations given regarding the communal clashes within the region. Looking at the scale and mode of investment that the Chinese have within the East African region it is clear that these investments have been made from thorough due diligence and are of immense strategic value to the Asian dragon. Flipping through the Chinese investments across the East African region, an interesting pattern emerges. The Chinese interests are not isolated and they are resolutely focused. Their investments in energy and power generation are strapped to natural resources and are attached to infrastructure. 
In other words, all of the Chinese investments in the region are geared towards accessing natural resources easily and rapidly. Indeed, the fortunes of East Africa have benefited from the disruptive pace that the Asian economies have maintained over the last decade. The rivalry pitting Europe, Asia, Middle East and America against each other has been a boon to Eastern Africa but it has also bred some unsavoury realities. In December 2012, the then Tanzanian defence minister Shamsi Vuai Nahodha called on the government to strengthen its defence and security apparatus after the discovery of uranium and gas in Tanzania. According to Nahodha these more lucrative mineral resources meant that Tanzania was facing internal and external threats owing to its new-found wealth.

No comments: