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The Chinese-built light rail network in Ethiopia’s capital is on the brink of collapse, with only a ͏‌  ͏‌  ͏‌  ͏‌  ͏‌  ͏‌ 
 
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February 2, 2023
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Africa

Africa
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Yinka Adegoke
Yinka Adegoke

Hi! Welcome to Semafor Africa where we dig into some of the biggest stories around the continent twice a week.

In light of the big upcoming elections coming up across Africa this year, it was interesting to peruse the latest Democracy Index from the Economist Intelligence Unit and find the main takeaway is that little has changed. For purely selfish reasons, we journalists prefer signs of a major change, in this case perhaps indicating some great leap forward in democratic values or even a significant backwards slide. But instead sub-Saharan Africa hasn’t moved.

By EIU’s metrics, the continent still has only one “full democracy” (Mauritius), six “flawed democracies”, 14 “hybrid democracies”, and 23 authoritarian democracies. That hasn’t changed in the last year. There was a slight upswing overall — with Angola and Niger among the world’s Top 10 most improved — but that was offset by Burkina Faso, where two military coups last year put it among the world’s worst performers.

Buy/Sell

➚  Buy: Moniepoint’s growing workforce. Nigerian payments company Moniepoint added more than 300 employees in 2022 to grow its staff numbers to over 900 people in six countries. Formerly called TeamApt, the company last year processed $100 billion in transactions and disbursed $1.4 billion in loans, according to its year in review report.

➘ Sell: Gokada’s layoffs. Logistics company Gokada cut 54 jobs in Nigeria this week, following a similar staff reduction in November. The company has reinvented itself after regulators banned motorcycle taxis in Lagos in February 2020, and the death of its founder, Fahim Saleh, in New York later that year. Current CEO Tosin Oni told TechCabal the layoffs were due to a “tough macro environment” in which “Nigeria has worsened economically.”

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The sum Kenya expects to receive from the World Bank and International Monetary Fund within months, according to its central bank governor. The disbursements should bolster the East African country’s foreign currency reserves which have fallen to the lowest level since 2015 and last week slipped below the statutory requirement of four months worth of import cover.

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Evidence

Food became less affordable in Ethiopia in 2022 than at any other period in the last decade, according to a Gallup survey. About two in three people surveyed said they could not buy the food they and their families needed. Before the civil war in the northern Tigray region started in 2020, just over half the population had that problem. Gallup’s Zach Bikus told Semafor Africa the spike could not be directly attributed to the war because COVID-19, a historic drought, and the war in Ukraine had each taken a toll. Today, an estimated 20 million people are food insecure in Ethiopia, according to the United Nations’ World Food Programme. Economic growth slowed to 4% in 2022 from an average of 9% between 2012 and 2021.

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Samuel Getachew

Ethiopia’s Chinese-built railway creates a $60 million headache

Reuters/Tiksa Negeri

THE NEWS

ADDIS ABABA, Ethiopia — The Chinese-built light rail network in Ethiopia’s capital is on the brink of collapse, with only a fifth of its trains still in service seven years after its launch.

Only eight of the line’s 41 trains are operational and the network requires a revamp that would cost more than $60 million, according to the Addis Ababa Road and Transport Bureau. Those funds would be needed for maintenance of the trains and tracks to be carried out by engineers brought in from China.

China is a major creditor to Ethiopia, which has turned to Beijing to fund various infrastructure projects. Addis Ababa owes China more than $13 billion, according to the China Africa Research Initiative at Johns Hopkins University.

In January, China signed an agreement to partially forgive Ethiopia’s debt. The Horn of Africa country’s aim is to become a middle-income nation by 2025 has been severely hampered by a two-year long conflict which devastated its northern region and displaced more than 2.8 million people.

SAMUEL’S VIEW

Addis Ababa’s light rail line is one of China’s signature infrastructure projects in Africa. But, with limited and dwindling resources, most of its trains switched from daily services to running on alternate days in September with delayed repairs. Fears are growing that all trains might be suspended indefinitely.

The 32-kilometer modern railway line, which connects the center of Addis Ababa with its suburbs, was funded by China Export-Import Bank and began operating in November 2015. Developers intended to provide a template to be emulated in other African nations. And it was hoped that the line would ease congestion in Ethiopia’s capital, which is held back by inadequate infrastructure.

Late last year, Exim Bank of China withheld a further loan of $339 million to Ethiopia due to the nation’s inability to pay its mounting infrastructure loans to the Asian nation, with many projects paused in the midst of foreign currency shortages and recurring conflicts.

The failure of the Addis Ababa train project raises the question of whether feasibility studies carried out ahead of the launch of such expensive projects are inadequate.

The Addis Ababa rail line was a poorly planned and executed project that went ahead for purely political reasons and was destined to fail, according to Alemayehu Geda, an economist at Addis Ababa University who has researched the China-Africa relationship.

“In Ethiopia, as well as in other African nations, we often show poor negotiation skills when we deal with such loans, as well as on our implementations later on,” he said. “In particular with the local light rail, they lack spare parts as well as foreign exchange to import parts and they need about $60 million to bring them to a certain standard.”

The fact that maintenance is only carried out by Chinese engineers also means knowledge and skills aren’t being transferred to locals, said Alemayehu, which means locals aren’t developing the expertise needed to fix problems and generate jobs.

ROOM FOR DISAGREEMENT

Eric Olander, editor-in-chief of the China-Global South Project, said it was a good idea to build the railway and criticism over its shortcomings are unwarranted.

“As African cities like Addis get bigger, it becomes ever more important to be able to move people around quickly and efficiently,” he said. “Getting the Chinese to build the railway line was the easy part, managing it for the next 50 plus years is already proving difficult and will serve as a critical test for the government.”

The failure of the rail network would “send a message to the markets that lending money to Ethiopia is a risky investment if they can’t effectively run the projects they have already built”, said Olander.

THE VIEW FROM LAGOS

The first phase of a Chinese-built light rail project in Lagos, Nigeria’s commercial capital, opened to the public last month. Construction of the Blue Line project began in 2010 and the first phase covers five stations spread across 13 kilometers.

Frederic Oladeinde, Lagos state commissioner for transportation, said the state government is partnering with the private sector to operate the rail network. Asked why Lagosians should expect the line to be a success, given the difficulties of similar projects in Nigeria’s capital, Abuja, and Addis Ababa, Oladeinde told Semafor Africa: “This will not be run by government. It will be run by train operators with experience — that’s the difference.”

— With Alexander Onukwue in Lagos

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One Good Text...with Yaw Nsarkoh

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Need to Know

🇿🇲 China wants development finance bodies and private lenders to be involved in restructuring Zambia’s debt, Bloomberg reports. The suggestion, which may see those institutions incur losses, has been rejected as unfeasible by the World Bank’s president David Malpass. It marks another point of difference between China and other members of the G20 Common Framework on resolving Zambia’s $17 billion debt crisis.

🇬🇳 Guinea’s military government said its Simandou iron ore project will restart in March after an eight-month hiatus. Discovered in 2002, the mine is one of the world’s largest untapped deposits of iron ore, and is split into blocks owned by different companies including Baowu, China’s state-owned iron and steel company. Guinea’s junta suspended the project last July to negotiate joint venture terms with Baowu and others. It hopes work will resume ahead of a March 2025 deadline for the mine to begin production.

🇳🇬 Shell, the energy giant, is being sued by nearly 14,000 people from two Nigerian communities in a London court. The claimants from riverine villages in the southern Niger Delta region allege that Shell’s operations caused severe pollution from spills that have devastated their fishing and farming activities, reports Britain’s Guardian newspaper. Shell is contesting the claims.

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Intel

Starlink’s first access glitch in Africa

Starlink, Elon Musk’s internet service, went live in Nigeria this week. But while prices for the starter kit and monthly subscription were advertised in the local naira currency, users could not pay with their naira cards. It has puzzled Nigerians eager to subscribe for the service that, according to one user’s test, could provide over 10 times faster internet speeds than existing services.

Space X/Flickr

Starlink registered an entity in Nigeria and directly engaged with the most senior officials at the Ministry of Communications and Digital Economy. Yet, the company may not operate like a normal Nigerian company. It collects payments in dollars rather than naira, which is akin to what Nigerians experience with other US consumer technology services like Spotify and Amazon. “I anticipated that the payment wouldn’t work since most Nigerian naira debit cards don’t work for foreign transactions,” Fisayo Fosudo, a popular YouTuber, told Semafor Africa of his Starlink payment experience.

Foreign companies in Nigeria have sometimes found it difficult repatriating revenues during periods of dollar scarcity, as was the case with some international airlines, including Emirates, late last year. Many digitally-native Nigerians like Fosudo are getting used to being charged for services in dollars. Customers can get a US dollar-denominated bank card for non-naira transactions by opening a domiciliary bank account. However, there have been enough complaints in the first week of Starlink’s availability to suggest many willing users will be excluded from accessing the service.

Netflix charges Nigerian customers in naira, so Starlink may yet change its method. At least one Nigerian payment company has been in talks with Starlink to potentially process the latter’s payments in naira, an executive involved in the conversation told Semafor Africa. Until then, satellite-based internet in Nigeria is only accessible in dollars.

Alexander Onukwue

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Staff Picks
  • It took 60 years but the gold-capped tooth of Patrice Lumumba, the anti-colonial hero, pan-Africanist, and DR Congo’s first democratically elected prime minister, finally made its 4,000-mile journey back home. The Financial Times magazine tells the story of how Lumumba’s tooth was found, his family’s quest to have it returned, and the gory details of his murder by Belgian and US operatives.
  • Kampala, Kigali and Addis Ababa are three of the world’s fastest changing cities in size, scale and development. A recently published book on urban development looks into why these three very different cities have evolved so rapidly. As The Conversation notes: “All three cities are undergoing an urban transformation that has little historical precedence in terms of speed or scale. They have become, for differing reasons, central to national, regional and in some senses even global, policy making.”
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Curio

Pope calls out plundering nations during DR Congo visit

Reuters/Luc Gnago

Pope Francis held a Mass attended by around a million people during his visit to DR Congo. The pontiff — the first to visit the country in 37 years — also issued a stern warning to wealthy nations that for centuries have extracted the country’s deposits of minerals including gold, copper and lithium. “Hands off the Democratic Republic of the Congo. Hands off Africa. Stop choking Africa: it is not a mine to be stripped or a terrain to be plundered,” Francis said in a speech. He did not specifically refer to atrocities committed by the Catholic church, notes the BBC.

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— Yinka, Alexis, and Alexander

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