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Infrastructure blitz: Putting the horse before the cart

HERE they go again. African Development Bank President, Dr Akinwumi Adesina, has been in the news celebrating a $58 billion loan package for construction projects in the East and West of the African continent, the Abidjan/Lagos highway and a rail corridor connecting Tanzania, Burundi, DR Congo and Rwanda. On the drawing board are other mega infrastructure projects such as the Mambilla dam that will require humongous quantities of construction materials. Should we proceed by putting the cart before the horse?

These projects are foreign loan-financed and creditors gladly give Africa these loans because they benefit more despite the projects being sited in Africa. A cost-benefit analysis reveals why they can’t lose. Usually, factories located in countries where the loans are sourced provide cement, iron rods and steel. They provide the bitumen and asphalt plants and, until lately, the cement. Engineers, pseudo-engineers, technicians and upgraded low-skilled builders from these countries will be engaged for years executing these projects. That is of the $60 billion fee, $55 billion will remain in the creditor country.  Interest payments over a number of years in foreign currency is another benefit to the provider country. Meanwhile, the capital remains outstanding and must be paid in cash or in-kind, meaning long term expropriation of natural resources.

This writer is not anti-infrastructure, rather there are certain fundamentals that should be in place and there are questions to be answered before glossy projects are foisted on any country or continent. Questions as to how much trade is going on along the West African coast to justify a $15 billion expenditure? This leads to the egg-chicken question: should the trade come first, moving from potential trade to actual, or are proponents of the road saying the road will energise and stimulate the trade? Would the highway be tolled and would the payment be in convertible currency?

We should go to the ants and learn,  the Chinese being the ANTS. How has China done so well for itself in delivering infrastructure so much that apart from being manufacturers to the world they have become preferred builders to the world? To throw light on the Chinese way, let us inquire into how they have moved from no bullet train 15 years ago to the nation with the widest high-speed train network. France commissioned its first high-speed train into service in 1964. Japan followed in 1983; for 30 years China hardly had any. However, beginning in the 2000s and 2008 to be precise, China began and in 15 years had surpassed Japan and France in operational bullet trains! What was happening in those lag years?

The Chinese didn’t go high speed till they perfected creating wealth and moved hundreds of millions into the middle class. The middle class use the trains and pay economic fees, no need for much subsidy like the Abuja-Kaduna route. We, in Africa, are yet to acquire the skills to lift hundreds of millions out of poverty into the middle class. In China it wasn’t infrastructure first, it was double-digit gross domestic product growth first, then massive infrastructure acquisition followed.

In the lag years, China also acquired in-country, the technology for building the rail tracks and building the bullet trains themselves. They now lead in the highest speeds obtained by bullet trains. They learned, and probably stole, patents from the forerunners, adding their own flavour. They don’t depend on the Japanese or French to proceed further. We in Africa and Nigeria are forever dependent on foreigners for building, maintaining and running mediaeval infrastructure.

Infrastructure projects require humongous quantities of heavy materials that cost a lot to ship so the Chinese produced them in large quantities and are the leading producers of steel and cement by more than a mile. China produces 2.5 billion tonnes of cement, followed by India with 330 million tonnes. Nigeria, thanks to the likes of Dangote and Samad Rabiu, produces about 40 million tonnes and should do more. Any country or continent that ships in these heavy materials for infrastructure ends up with more expensive infrastructure delivered at a slower pace. However, once production of these construction materials is in place then an infrastructure blitz can begin.

China has gone on a worldwide infrastructure blitz to consume excesses from its steel and cement plants. To further mop up and create demand, they have engaged in extensive investments in real estate, building several new towns and cities. They are pursuing the Belt and Road Initiative to re-enact the old silk trade routes to Europe. Yes, let’s go to the ants and learn.

The Chinese are making an impact in software provision for soft infrastructure as well. Chinese brands are taking over the haulage of goods over long distances in Nigeria, we are seeing fewer traditional brands like Mack and Volvo. Same will apply to the rolling stock and cabins for the rail tracks and haulage along Abidjan/Lagos coastal road. Who is winning the cost-benefit analysis?

History has something to teach us about this lopsided development. The Chinese have a millennia-long history of undertaking large scale construction projects. They never stopped after the construction of the Great Wall. Before the Great Wall, they also constructed networks of water canals for transportation across the middle kingdom. Africans stopped building after the pyramids and we seem to have lost the desire to build megastructures ourselves.

We have to address this lack of propensity to build. We invite the Chinese to build stadiums and label them national stadiums or national theatres. Until our nationals build our monuments, let us name them for what they are—Chinese National Stadium or Austrian National Theatre.

The Central Bank of Nigeria has in the pipeline a N15 trillion Infrastructure fund, specifically for infrastructure acquisition. Much of its modus operandi is unknown. Is it going to provide seed money or bulk money for AfDB type projects or is it addressing matters differently? Is the InfraCorp fund going to help put the horse before the cart or do we continue to have the cart pull the horse?

The Infrastructure Corporation of Nigeria Limited should channel much of its initial investments not in finished infrastructure projects like Abidjan/Lagos highway but have in-country production of steel for rail tracks, iron rods, cement, quarries by investing in plants.  Making bitumen for asphalt readily available locally. Each of these plants should be ready to engage in global trade from the onset, a good example set by Dangote Fertiliser. With only these in place will the infrastructure blitz begin in Nigeria and Africa. Only with this approach will infrastructure acquisition become a wealth creation vehicle rather than a wealth depletion vehicle as explained by John Perkins in his revealing book, Confessions of an Economic Hitman.

As we get wiser, the new economic colonisers on the block, the Chinese, might not like it but we have to show them it’s a win-win situation. However, if they stall (since it doesn’t merge with their own plans of energising their economy) there are other competing axes Nigeria and Africa can turn to particularly the Germans, who have a Marshall plan for Africa. Wouldn’t an infrastructure blitz be a means of curbing the dangerous crossing of the Sahara and Mediterranean sea by frustrated African youths?

No doubt it would be proper for the fund to help build as well as deepen the building skills of these youths and our engineers ensconced in air-conditioned offices. Machine tooling and foundries to meet the fabrication of spares for these machinery must be in place with current technologies. Only the above can stop a large percentage of AfDB’s $58 billion bill from taking flight and remaining in Africa.

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