Chinese rail contractors are consolidating their foothold in East Africa as part of a twin effort to improve the region’s connectivity and tap into its abundant reserves of strategic minerals.

Last week, a consortium of Chinese companies won a US$2.15 billion deal to build a railway line linking Tanzania’s main port of Dar es Salaam with Burundi’s nickel mines.
It was the third contract of its kind to be awarded to firms from China and will take 72 months to deliver, including a 12-month observation period. Financing is through a concessional loan from the African Development Bank.
Landlocked Burundi, with an estimated 185 million tonnes of nickel, is among 10 countries known to have important deposits of the metal – one of the critical minerals that are in high demand as the world rushes towards a green energy transition.

Masanja Kungu Kadogosa, director general of the Tanzania Railways Corporation, reaffirmed its commitment to the Standard Gauge Railway (SGR) project that will ultimately link Tanzania, Burundi and the DR Congo.At last week’s signing ceremony in Dar es Salaam, Kadogosa said that Kinshasa and Gitega were conducting a feasibility study for the proposed rail link between Musongati in Burundi’s southeast and Kindu, the commercial transport hub at the head of the Congo River system.

This includes the railway line from Mombasa on Kenya’s coast to Nairobi and an extension into the Rift Valley for US$5 billion, funded by China Exim Bank, and the US$4.5 billion link in Ethiopia from Addis Ababa to Djibouti, home to the first overseas Chinese military naval base.

But increasingly Chinese contractors are bidding for and winning projects that are not also being financed by money from China. These have included railway contracts worth about US$6 billion in Tanzania alone.

According to Aly-Khan Satchu, a sub-Saharan Africa geoeconomic analyst, the railway’s entire raison d’être is to connect East African minerals to global markets and it is being viewed as a significant “game changer”.

“Tanzania [and Burundi] are confirming the business case, something [Kenya’s] SGR has yet to do. Geo-economically speaking, Tanzania is attempting a railway leapfrog,” Satchu said.
And when it comes to such big ticket railway projects, “Chinese companies face very little competition on price and execution and probably are happy to see other players come to the party”.Tim Zajontz, a research fellow with the Centre for International and Comparative Politics at South Africa’s Stellenbosch University, said there were few non-Chinese competitors for the continent’s railway projects.

One exception is Turkish firm Yapı Merkezi, which was the contractor for the initial sections of Tanzania’s railway and is currently building Uganda’s rail link from its border with Kenya to the capital Kampala.
“A region-wide SGR network across East Africa is far from completion. This is why Chinese contractors are here to stay,” said Zajontz, who is also a lecturer in global political economy at the University of Freiburg.

Kenya’s SGR has been stalled since 2019, when China Eximbank pulled the plug on finance for the project’s extension to Malaba on Uganda’s side of the border over concerns about its commercial viability.

However, the new Chinese ambassador to Kenya Guo Haiyan has reaffirmed China’s commitment to supporting Kenya’s development agenda, “particularly through continued financial backing for the extension of the [SGR] from Naivasha to the Malaba border”.

According to Zajontz, the regional connectivity that has been at the heart of railway planning from the outset of Tanzania’s SGR project is likely to pay off now.

“Tapping into cargo markets in Burundi, Rwanda and Uganda will ensure future revenues for Tanzania Railways Corporation and boost cargo throughput at Dar es Salaam port,” he said.

Zajontz said the African Development Bank has directed more capital towards large-scale transport infrastructure in recent years, partly to fill funding gaps that have arisen from the more cautious lending of China’s policy banks.
However, this does not mean that China Exim Bank and China Development Bank have abandoned Africa’s railway markets, according to Zajontz, who is also co-editor of the book Africa’s Railway Renaissance: The Role and Impact of China.

“We are likely to see all kinds of financial arrangements in Africa’s ongoing ‘railway renaissance’, including sovereign loans, project finance and classical engineering-procurement-construction contracts without Chinese financial injections, as in the case of the Uvinza-Musongati segment,” he said.

Chinese companies missed out on the initial phases of Tanzania’s railway infrastructure when former president John Magufuli cancelled the initial tender process over “irregularities”. 

Between 2017 and 2019, Yapi Merkezi won tenders to build more than 700km (435 miles) of railway linking Dar es Salaam to Makutupora, in the heart of Tanzania, at a cost of more than US$3 billion.

Chinese firms made a comeback in 2021, when China Civil Engineering Construction Corporation and China Railway Construction won a US$1.3 billion contract for a 341km (212 miles) stretch linking the port city of Mwanza on the shores of Lake Victoria and the town of Isaka.

A year later, the state-owned China Civil Engineering Construction Corporation (CCECC) and its parent China Railway Construction Corporation (CRCC) jointly won a US$2.2 billion contract to build the 506km (314 miles) section of the SGR.
CCECC is also set to rehabilitate the 1,860km (1,156 miles) Tazara Railway that connects Zambia’s copper belt town of Kapiri-Mposhi to Dar es Salaam with US$1 billion in Chinese funding.

The railway was built by CCECC in the 1970s as a symbol of China-Africa friendship.