WEBVTT - Bonus: One Belt, One Road, Part 3

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<v Speaker 1>Hello, everybody, Welcome to the third of Bloomberg's podcasts to

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<v Speaker 1>Accompany are Built a Road Initiative television series. I'm David

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<v Speaker 1>Tweed and with me in the studio is rosalind Chin

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<v Speaker 1>who produced the episode in Africa, in particular in Kenya.

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<v Speaker 1>You sort of use Kenya as your example for East Africa?

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<v Speaker 1>Is that right? Why did you choose Kenya? Correct? Well,

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<v Speaker 1>Kenya has a shiny example of the Bolton Road initiative.

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<v Speaker 1>China has invested China has invested money um in building

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<v Speaker 1>the single gage at the standard gage railway. So this

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<v Speaker 1>railway goes from Mombasa, which is why we started our

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<v Speaker 1>journey there to Nairobi, and it's meant to open up

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<v Speaker 1>the passage of goods and people because there's a cargo

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<v Speaker 1>line and there's a passenger line going between the two. Now,

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<v Speaker 1>there has been a rail line there before, but that

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<v Speaker 1>was built many many decades ago, um and it's not

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<v Speaker 1>not not in a very good shape. There is also

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<v Speaker 1>a road that gets between the two cities as well.

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<v Speaker 1>But how far are we talking the rail itself? Is

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<v Speaker 1>that under just under five kilometers? And what sort of cost,

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<v Speaker 1>how much money is involved? It cost to three point

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<v Speaker 1>eight billion to build that particular line um and most

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<v Speaker 1>of it was financed by a loan from Eggs and Bank,

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<v Speaker 1>the Chinese Chinese Export Import Bank rather was funded by

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<v Speaker 1>a loan. And what does it do? I mean, you

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<v Speaker 1>know it connects obviously the capital Nairobi with mombast of

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<v Speaker 1>the port Narrobi being inland, so I mean you can

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<v Speaker 1>see obviously those benefits. Is Nairobi an industrial base or

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<v Speaker 1>an export you know, an export base? What's what's how

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<v Speaker 1>does it? How does it benefit? Well, there is a

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<v Speaker 1>fair bit of manufacturing around Nairobi. In Kenya, for example,

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<v Speaker 1>there are the biggest cities which are Nairobi and Bassa.

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<v Speaker 1>There isn't a lot of manufacturing necessarily outside of that.

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<v Speaker 1>You know. What they're hoping but with this line is

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<v Speaker 1>to make the tub the passage of goods faster than

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<v Speaker 1>between the port between Nirobi going in and out, a

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<v Speaker 1>lot of stuff is actually coming in from the port um.

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<v Speaker 1>But also eventually to increase those lines going beyond Nairobi

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<v Speaker 1>further up towards the border of Uganda, and that would

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<v Speaker 1>also open up manufacturing possibilities elsewhere in towns which are

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<v Speaker 1>further away. For example Nabasha, which is outside of um

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<v Speaker 1>It's on online between Nairobi and the border of Uganda.

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<v Speaker 1>Um you could set up manufacturing plants. There would be

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<v Speaker 1>a lot easier, of course than to get your goods

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<v Speaker 1>in and out. So that should hopefully open up both

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<v Speaker 1>manufacturing and trade in Kenya, and so it is the

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<v Speaker 1>idea to expand this line into Uganda and bordering countries. Well.

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<v Speaker 1>There has been a grand plan for many years now

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<v Speaker 1>among African nations, especially at East African nations, to build

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<v Speaker 1>rail network that will all join up and again with

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<v Speaker 1>the same idea that they're going to have better connectivity,

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<v Speaker 1>which means better trade both people and cargo being able

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<v Speaker 1>to move around and therefore really help these economies to grow.

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<v Speaker 1>But due to many reasons including for example, governments changing,

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<v Speaker 1>changing their minds, not getting along with each other, politics,

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<v Speaker 1>and also money, so lack of funding in some places,

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<v Speaker 1>this hasn't really happened and they are trying again still

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<v Speaker 1>to try and make some of these lines be built

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<v Speaker 1>and therefore get this connectivity that they've wanted for such

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<v Speaker 1>a long time. One of the business businessmen who has

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<v Speaker 1>interviewed spoke a bit about execution or the difficulty of

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<v Speaker 1>executing and and bottlenecks. Now what was the point that

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<v Speaker 1>he was making and how does the br initiative how

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<v Speaker 1>would it overcome those issues? So there were in one

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<v Speaker 1>part they were talking about the teething problems they've been

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<v Speaker 1>having with this particular line. So previously, businesses have put

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<v Speaker 1>their goods on to a train which is very slow,

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<v Speaker 1>or onto trucks going between one Baston and Nairobi and

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<v Speaker 1>that would take maybe eight, ten twelve hours to get

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<v Speaker 1>there because the roads themselves aren't that good either. Now

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<v Speaker 1>what they've done is the government has essentially pushed businesses,

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<v Speaker 1>forced them to use the new rail line, the SDR.

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<v Speaker 1>It's offered them subsidies to do so, because what's happening

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<v Speaker 1>is you still need trucks at either end to get

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<v Speaker 1>the goods off the train and two ways be and

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<v Speaker 1>so these are some issues which eventually should be ironed out,

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<v Speaker 1>so you need the infrastructure around them exactly. But I

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<v Speaker 1>think these are seen as fairly short term issues because

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<v Speaker 1>eventually they will be sorted out. But of course it's

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<v Speaker 1>hurting businesses right now. Now. You mentioned Excellent Bank, which

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<v Speaker 1>was which is the bank that is funding most of

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<v Speaker 1>this project. It seems to me listening to once again

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<v Speaker 1>to some of the people speaking on the on the episode,

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<v Speaker 1>that there's an argument that's sort of a debate about

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<v Speaker 1>whether these projects are going to be economically viable, with

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<v Speaker 1>one guy was saying that he really can't see how

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<v Speaker 1>it's ever going to be economically viable, and then you

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<v Speaker 1>spoke to another businessman I think, who was saying, well,

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<v Speaker 1>you know, once these projects are in place, they're going

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<v Speaker 1>to actually spare economic development and that will in turn

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<v Speaker 1>pay for itself. Can you just tell us a little

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<v Speaker 1>bit more about what you're hearing or what you heard

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<v Speaker 1>when you were in Kenya about the viability of these projects.

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<v Speaker 1>Is it still a debate or is it falling in

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<v Speaker 1>one way or another. It's still somewhat of a debate,

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<v Speaker 1>But I do think that many people do think that

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<v Speaker 1>this is a very expensive piece of infrastructure. So and

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<v Speaker 1>also because this is just the first part of the line,

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<v Speaker 1>there will be parts beyond this, as I mentioned, which

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<v Speaker 1>are already in the process of being built that the

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<v Speaker 1>government has borrowed for as well to build to the

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<v Speaker 1>next part of the line. There as a loan from

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<v Speaker 1>Exam Bank as well for eight of that cost of that.

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<v Speaker 1>The next part of the line, how much is that

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<v Speaker 1>I can't remember. Over a billion definitely, and then then

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<v Speaker 1>the next part of the line after that, it's going

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<v Speaker 1>to be in another three point eight billion. And what's

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<v Speaker 1>actually happened is because there's been more pressure on the

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<v Speaker 1>government because of concerns about the ability to pay back

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<v Speaker 1>these loans. There's one arm of the of the railway

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<v Speaker 1>that again leads towards um the Ugandan border, which the

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<v Speaker 1>Kenyan government had actually agreed would be another loan. But

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<v Speaker 1>they've gone back to China now and said, actually, can

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<v Speaker 1>half of that actually be come as a grant not alone?

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<v Speaker 1>And they've tried to renegotiate. Now it hasn't been decided

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<v Speaker 1>yet whether China will let that happen. But things are

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<v Speaker 1>beginning to change as the Belton Road Initiative rules out,

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<v Speaker 1>Governments across the world, not just in Africa, are becoming

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<v Speaker 1>a little bit more aware about the financing issues, about

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<v Speaker 1>indebtedness um sort of these concerns which have been raised

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<v Speaker 1>by various policymakers and economists, and then revisiting exactly what

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<v Speaker 1>the terms of the deal might be now of course,

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<v Speaker 1>when for some of it it's too late because the

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<v Speaker 1>loans have already been made. But for things which haven't

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<v Speaker 1>happened yet, there is still a chance to reprocess, like

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<v Speaker 1>we've seen very publicly obviously in Malaysia exactly. One other

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<v Speaker 1>point that was made was was you interviewed a woman

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<v Speaker 1>who is the chief executive. Yes, the crop line, that's right,

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<v Speaker 1>and and and she was making the point that she's

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<v Speaker 1>worried that African leaders have seen the whole African continent

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<v Speaker 1>go to China. But at the same time she says

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<v Speaker 1>that there's a lot to learn from China. Now what

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<v Speaker 1>was she talking about there? I think she was referring

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<v Speaker 1>to business business practices, um, in terms of efficiency execution.

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<v Speaker 1>The Chinese have come in and many business leaders have said, well,

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<v Speaker 1>actually China get things done. They get things sounds quickly,

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<v Speaker 1>they get things done pretty much, you know, as there

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<v Speaker 1>was supposed to. So that's one thing that actually they

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<v Speaker 1>can look at. On innovation of something else that came

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<v Speaker 1>up I thought was interesting. Yes, learning known any things,

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<v Speaker 1>taking on board new ideas as well, and ways to

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<v Speaker 1>do things simple things like manufacturing exactly. Um. But of

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<v Speaker 1>course you know when you let another a competitor, potential

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<v Speaker 1>competition that there are risks as well. Um you know,

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<v Speaker 1>she talked about let in the African leadership, letting the

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<v Speaker 1>content go to China. I think in that she was

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<v Speaker 1>referring to basically not having strict enough checks and balances

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<v Speaker 1>against a for example, the rail line itself of the

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<v Speaker 1>financing for that, but also in her particular industry, how

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<v Speaker 1>ways that the government could protect her industry better. So she,

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<v Speaker 1>you know, is an agro chemicals and she is in agriculture.

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<v Speaker 1>It's a huge part of the Kenyan economy, and I

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<v Speaker 1>think she is voicing her opinion that there should be

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<v Speaker 1>more done by the government to protect them in the

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<v Speaker 1>face of more imports coming in from outside because of course,

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<v Speaker 1>whether you know better links trade links, trades coming in

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<v Speaker 1>as well as out, So there is that threat. But

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<v Speaker 1>one of the one of the points another one of

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<v Speaker 1>the people you spoke to, I think it was a

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<v Speaker 1>It was a man who was in charge of a

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<v Speaker 1>company that made edible oils, and he was talking about

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<v Speaker 1>how there's an opportunity for Africa to become a much

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<v Speaker 1>more important food exporter, given the fact that not much

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<v Speaker 1>of African food makes it to China these days. And

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<v Speaker 1>it set me wondering about whether there are already in

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<v Speaker 1>place a sort of China food excess arrangements or trade

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<v Speaker 1>deals between the African nations and China. Are there f

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<v Speaker 1>t as in place? I think this is something that's

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<v Speaker 1>the Afghan nations really want to try and hammer out.

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<v Speaker 1>I'm unclear as to whether there are specific agreements in place,

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<v Speaker 1>but this is something that some of them would like

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<v Speaker 1>to take advantage of if it should happen. But again,

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<v Speaker 1>I think with many industries, they do feel that the

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<v Speaker 1>governments are not giving them enough support export items out

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<v Speaker 1>to other countries, China included, and they would like more

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<v Speaker 1>support from the government to help them to do this, so,

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<v Speaker 1>you know, perhaps as you say, special trade agreements or

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<v Speaker 1>agreements helping them to roll out products into new markets.

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<v Speaker 1>I think there are a lot of manufacturers in Africa

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<v Speaker 1>who are looking for new markets, not just within the

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<v Speaker 1>continent itself, but outside, and they're searching for ways to

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<v Speaker 1>do that, and I think they'd like a bit more

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<v Speaker 1>help to try and do that, especially in the phase

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<v Speaker 1>of seeing potential competition coming in. Yeah. Another part of

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<v Speaker 1>the program looks at the African Leaders Conference that took

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<v Speaker 1>place in Beijing, earlier this year where Sun Ping was

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<v Speaker 1>talking about how China may invest but it won't interfere

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<v Speaker 1>in African politics or in the internal workings of African government.

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<v Speaker 1>How much do you think that that is a selling

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<v Speaker 1>point for African leads when they're looking at countries which

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<v Speaker 1>are offering them up loans, because it's not just Africa,

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<v Speaker 1>is it. That's right. There's been a growing sensitivity um

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<v Speaker 1>to what some see as China's reach its soft power

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<v Speaker 1>as well into other countries. China is always maintained that

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<v Speaker 1>it sees the Belton Road as a way of spurring

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<v Speaker 1>economic development. It does not see it as a means

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<v Speaker 1>for political gain. But of course there are concerns because

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<v Speaker 1>you know, when you have one country with a lot

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<v Speaker 1>of power, because it has a lot of money, and

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<v Speaker 1>often it's the biggest trading partner as well, then some

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<v Speaker 1>will see concerns they're given the amount of power that

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<v Speaker 1>China has. UM. China has become aware of these sensitivities.

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<v Speaker 1>It's trying to reel back um the idea perhaps that

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<v Speaker 1>it has so much reach or power into other countries. UM.

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<v Speaker 1>And it has repeatedly said you know we are we're

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<v Speaker 1>when not into interfering in other nations. And this is

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<v Speaker 1>a line that is I think it's had for a

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<v Speaker 1>very long time, regardless of whether it's about the Belton

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<v Speaker 1>Road initiative about anything else. But whether others believe it

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<v Speaker 1>or not is another thing. Well, when you were there,

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<v Speaker 1>did you have much sense that, you know, China was

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<v Speaker 1>there on the ground, that there were Chinese people who

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<v Speaker 1>are controlling things, not on the superficial level. I think, Um,

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<v Speaker 1>when you went to the train, most of the people,

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<v Speaker 1>if at all, almost all of the people that you

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<v Speaker 1>saw that they encountered in terms of yes, that's right,

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<v Speaker 1>we got onto the str that from a bass back

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<v Speaker 1>to Nairobi, they were all Kenyans. But at the higher level,

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<v Speaker 1>the company that runs actually operates the YESDR they got

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<v Speaker 1>a ten ure um deal to run it is the

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<v Speaker 1>Chinese company that built it, which is the China Reil

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<v Speaker 1>and Bridge Corporation, which is a subsidiary of c C

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<v Speaker 1>c C, which is one of the biggest state owned

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<v Speaker 1>infrastructure builders in China or in the world possibly. And

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<v Speaker 1>then at the high levels it is the Chinese. But

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<v Speaker 1>you may not see them on an everyday level, right right,

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<v Speaker 1>because I mean, you know, years ago when China first

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<v Speaker 1>went into Africa, you heard a lot of stories about

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<v Speaker 1>China actually bringing in their own workers to build the projects.

0:13:13.480 --> 0:13:16.800
<v Speaker 1>Any evidence of that going on, I didn't see any

0:13:16.840 --> 0:13:19.320
<v Speaker 1>with my own eyes, but there's lots of controversy about that,

0:13:19.360 --> 0:13:24.880
<v Speaker 1>So there's lots of stuff written about The controversies about

0:13:25.640 --> 0:13:28.800
<v Speaker 1>China is not all these companies. Rather, I'm not hiring

0:13:28.880 --> 0:13:32.240
<v Speaker 1>enough locals. They're hiring a lot of Chinese workers who

0:13:32.280 --> 0:13:34.240
<v Speaker 1>stay there. The Chinese workers don't live in the same

0:13:34.240 --> 0:13:37.839
<v Speaker 1>places as the local workers do. They've treated differently. I

0:13:37.880 --> 0:13:40.880
<v Speaker 1>didn't see any evidence of that myself, but then it

0:13:41.040 --> 0:13:45.000
<v Speaker 1>wasn't something I was specifically digging out. And also, you

0:13:45.040 --> 0:13:48.760
<v Speaker 1>were looking at a completed project. Yes I was. There

0:13:48.760 --> 0:13:51.000
<v Speaker 1>were still apparently workers there, but I was looking at

0:13:51.080 --> 0:13:55.880
<v Speaker 1>something where people had already mostly finished building, or that

0:13:56.000 --> 0:13:57.880
<v Speaker 1>is the part that we were at there, already finished building.

0:13:58.440 --> 0:14:01.439
<v Speaker 1>Now the company will say that actually, you know, we

0:14:01.640 --> 0:14:04.600
<v Speaker 1>employ a lot of locals. So until unless you know

0:14:04.600 --> 0:14:07.480
<v Speaker 1>the actual numbers or you can actually compare what they're

0:14:07.480 --> 0:14:10.040
<v Speaker 1>talking about, is difficult to know really where the truth lies,

0:14:10.240 --> 0:14:13.200
<v Speaker 1>which brings me to the transparency issues. Is there an

0:14:13.280 --> 0:14:17.520
<v Speaker 1>issue about transparency with how these loans are set up

0:14:17.559 --> 0:14:21.520
<v Speaker 1>with how these companies are organized. Can your ordinary Kenyon

0:14:21.880 --> 0:14:24.880
<v Speaker 1>actually find out exactly what the terms are that have

0:14:24.960 --> 0:14:27.560
<v Speaker 1>been agreed with China on a lot of these projects. Well,

0:14:27.560 --> 0:14:29.760
<v Speaker 1>I think this is one of the issues that many

0:14:29.760 --> 0:14:32.600
<v Speaker 1>critics have is that a lot of these deals as

0:14:32.680 --> 0:14:35.560
<v Speaker 1>loans are not as transparent as they should be. Now,

0:14:35.920 --> 0:14:38.360
<v Speaker 1>for example, there was a case not in Kenya, but

0:14:38.400 --> 0:14:42.320
<v Speaker 1>in Pakistan where Pakistan said, you know, we need to

0:14:42.360 --> 0:14:46.000
<v Speaker 1>borrow the money. We might turn to institutions the World

0:14:46.000 --> 0:14:48.640
<v Speaker 1>Bank for example, for that money, and China said, well,

0:14:48.680 --> 0:14:51.840
<v Speaker 1>if you do that, then they threatened to reveal the

0:14:51.920 --> 0:14:55.840
<v Speaker 1>terms of its loans to Pakistan. Now, this is something

0:14:55.880 --> 0:14:58.560
<v Speaker 1>which could which could have been politically embarrassing for the

0:14:58.600 --> 0:15:02.400
<v Speaker 1>well the previous government suppose yes, So this is something

0:15:03.760 --> 0:15:06.760
<v Speaker 1>where there has been a call for a lot more

0:15:06.800 --> 0:15:10.560
<v Speaker 1>transparency over the terms of these loans, exactly what they involved. Um.

0:15:11.520 --> 0:15:14.720
<v Speaker 1>And of course there is also a lot of discussion

0:15:14.760 --> 0:15:18.600
<v Speaker 1>and talk about how clean the deals actually are, you know,

0:15:18.640 --> 0:15:20.440
<v Speaker 1>because if you don't really know what the deals are,

0:15:20.920 --> 0:15:26.040
<v Speaker 1>what's been agreed, then everything under that is very murky.

0:15:26.280 --> 0:15:29.080
<v Speaker 1>I suppose the bottom line about all of this and

0:15:29.080 --> 0:15:32.160
<v Speaker 1>and in particular, the Belton Road initiative and how it's

0:15:32.200 --> 0:15:36.600
<v Speaker 1>been laid out in in Africa marks a complete sea

0:15:36.760 --> 0:15:40.200
<v Speaker 1>change in the development model that we saw before in Africa,

0:15:40.240 --> 0:15:44.080
<v Speaker 1>which was more of an AID based development model. How

0:15:44.360 --> 0:15:47.480
<v Speaker 1>how is it is it is it true that there

0:15:47.560 --> 0:15:49.400
<v Speaker 1>is a sea change has happened? Have we moved from

0:15:49.400 --> 0:15:54.880
<v Speaker 1>one model to another? I think probably things that Belton

0:15:54.960 --> 0:15:58.200
<v Speaker 1>Road are getting a lot more coverage, So it does

0:15:58.240 --> 0:16:01.080
<v Speaker 1>seem like, oh, we're moving from one mode to another.

0:16:01.200 --> 0:16:04.440
<v Speaker 1>I think that there are still many other places and

0:16:04.440 --> 0:16:09.560
<v Speaker 1>institutions helping with loans and offering money to African nations

0:16:09.600 --> 0:16:13.320
<v Speaker 1>to build infrastructure projects and other things. Um, there are projects.

0:16:13.360 --> 0:16:16.240
<v Speaker 1>For example, Tanzania is building its own real line and

0:16:16.280 --> 0:16:19.080
<v Speaker 1>that's where the Turkish company doesn't have to be, you know,

0:16:19.160 --> 0:16:22.480
<v Speaker 1>from from China. Each nation can make their own decisions

0:16:22.520 --> 0:16:25.720
<v Speaker 1>on what and how they're going to build. But um,

0:16:25.880 --> 0:16:30.400
<v Speaker 1>there is probably an increasing move away from aid. But

0:16:30.520 --> 0:16:32.000
<v Speaker 1>you know, when it comes down to it, as one

0:16:32.040 --> 0:16:34.440
<v Speaker 1>of the businessmen said, vere More Shah here, the chairman

0:16:34.440 --> 0:16:36.760
<v Speaker 1>of Vico. He said, in the past it was aid.

0:16:37.720 --> 0:16:40.320
<v Speaker 1>Now many of the loans can there are the option

0:16:40.400 --> 0:16:42.720
<v Speaker 1>of having loans which don't seem to have as many

0:16:42.880 --> 0:16:45.680
<v Speaker 1>ties attached to it, which seems more attractive. But in

0:16:45.720 --> 0:16:47.800
<v Speaker 1>the end, what they need is investment. They just need

0:16:47.840 --> 0:16:49.400
<v Speaker 1>the money. They need the money to build, because I

0:16:49.440 --> 0:16:52.840
<v Speaker 1>can tell you now some of that infrastructure really needs upgrading.

0:16:52.880 --> 0:16:56.680
<v Speaker 1>The roads fully jammed all the time, because the roads

0:16:56.800 --> 0:16:59.720
<v Speaker 1>need a lot of that. But some of the fantastic

0:16:59.720 --> 0:17:01.800
<v Speaker 1>picture is that we were looking at You've taken some

0:17:02.920 --> 0:17:07.960
<v Speaker 1>very interesting footage of the old infrastructure, of the new infrastructure,

0:17:08.359 --> 0:17:12.199
<v Speaker 1>and quite a lot of camels, a few camels in

0:17:12.200 --> 0:17:14.679
<v Speaker 1>the market. It looked hot. How hot was it there

0:17:14.680 --> 0:17:16.520
<v Speaker 1>when you were doing you're surprised? I me, my battle

0:17:16.680 --> 0:17:20.240
<v Speaker 1>was quite warm. There was woman sunny, but Airobi because

0:17:20.280 --> 0:17:22.679
<v Speaker 1>it's quite actually quite chilly, and you'll see in some

0:17:22.720 --> 0:17:25.760
<v Speaker 1>of the pictures people are wearing jackets and coats because

0:17:25.800 --> 0:17:28.239
<v Speaker 1>it's not as a woman. Fact, when we first got there,

0:17:28.320 --> 0:17:31.080
<v Speaker 1>Rish and I likened it to London in the autumn,

0:17:31.440 --> 0:17:34.399
<v Speaker 1>not quite like sweltering Hong Kong. No, but my bats

0:17:34.440 --> 0:17:37.199
<v Speaker 1>at me very warm and very sunny. Please thank you

0:17:37.320 --> 0:17:40.320
<v Speaker 1>very much indeed for talking to me. Next next time

0:17:40.320 --> 0:17:42.879
<v Speaker 1>we're going to be talking about the fourth installment of

0:17:42.880 --> 0:17:45.280
<v Speaker 1>the series. Which looks at what the b r I,

0:17:45.400 --> 0:17:48.359
<v Speaker 1>the Built and Road Initiative, is doing in Europe and

0:17:48.400 --> 0:17:51.119
<v Speaker 1>how the Europeans are responding. So I hope you'll come

0:17:51.160 --> 0:17:53.760
<v Speaker 1>back and listen to that as well. I'm David Tweed.

0:17:53.840 --> 0:17:54.199
<v Speaker 1>Thank you,