Two Ethiopian projects show ‘railpolitik’ in action

Ten years ago, when late Ethiopian leader Meles Zenawi planned 5,000 km of standard gauge railway, the landlocked country got a $ 2.5 billion loan from China Eximbank. This loan was linked to the construction of an 800 km east-west railway line between Addis Ababa, the capital, and the port city of neighboring Djibouti. It would be built by Chinese engineers and would use Chinese locomotives.

Then, in 2013, the Ethiopian government signed an engineering and supply contract for another line. This one was intended to travel roughly the same distance from south to north, between the central city of Awash and Mekelle, capital of the now war-torn Tigray region. The contractor was Turkish construction group Yapi Merkezi, which helped negotiate $ 1.1 billion in financing from Turkish bank Eximbank, Credit Suisse and European export credit bureaus.

And the two lines now offer the possibility of comparing the main infrastructures of Chinese and non-Chinese companies in the same African country.

“Both projects have had a bit of a bumpy road,” says Yunnan Chen, an expert on Chinese investments in Africa and author of a policy brief on what she calls “railpolitik” for the Africa Research Initiative. China at Johns Hopkins University. “There will always be starting problems.” Regarding the Chinese line in particular, she adds, “It was completely imported technology that was very well established in China, but Ethiopia has never built a standard gauge railway like this.

Making connections: Chinese workers on the railway line between Djibouti and Addis Ababa © AFP via Getty Images

Funding has made a big difference. When Ethiopia encountered problems servicing its debt due to a continuing shortage of foreign exchange, the Chinese were flexible, says Chen. On the other hand, penalties have been incorporated into European loans in the event of late repayment. In 2018, China granted Ethiopia a one-year moratorium on debt service. Abiy Ahmed, Prime Minister, subsequently negotiated an extension of the repayment period from 10 to 30 years.

But there was a price for such flexibility. While the Turkish project left Ethiopia to choose its own project manager and gave her more influence in negotiating the transfer of technology, under the Chinese project she was forced to hire China International Engineering. Consulting Corporation and training “fell short of expectations,” Chen observes.

China offered to teach engineering students in Tianjin and Chengdu, but on-the-job training in Ethiopia was sacrificed to complete construction on time, local officials said. Post-construction training was better – with instruction on locomotives, driving, signaling and electrical engineering, Chen says. But this was hampered by language issues as few Chinese instructors spoke English.

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Turkish group Yapi Merkezi, on the other hand, used English as a working language and trained 40 Ethiopian Railways employees locally, hiring many for the second phase.

However, neither of the two railroads went fully as planned. Yapi Merkezi completed its section of the line in 2019, but a second section of Wediya in Mekelle was blocked due to lack of funding.

The Addis-Djibouti line, completed in 2018, has been plagued by electricity problems, in part because Ethiopia insisted it be electrified. As a result, Ethiopian exporters in the industrial zone, put off by the sporadic service and the high cost of getting goods the last mile to the railroad, did not use it as much as expected.

The electrified line from Djibouti to Addis Ababa
Rail and road: the electrified line between Addis Ababa and Djibouti © Alamy

Aboubaker Omar Hadi, president of the Authority of Ports and Free Zones of Djibouti, affirms that the lack of rolling stock also hinders the success of the railway: “The cargo is there, the business is there, [but] the road takes the largest share, with 2,000 trucks in one day. “

Some of it may be inevitable, Chen says. Yet, she concludes, governments must do better to integrate construction projects into their local economies. They also need to build their technical capacity and become smarter to ensure that when entrepreneurs pack their bags and leave, countries are left with exactly what they expected.

Additional reporting by Andres Schipani in Djibouti

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