Kenyan President Uhuru Kenyatta looked like he had a great time in France last week. After all, the weather in Paris this time of year is absolutely lovely and this being his first trip out of the country since the COVID-19 outbreak, he was able to get away from the increasingly nasty fight that he’s having with his own deputy president, William Ruto, who’s vying for his job in the next election.
The food, the weather, and the break from Nairobi’s intense politics are all wonderful but those seemed to pale in comparison to the sheer joy that both President Kenyatta and his host, President Emmanuel Macron took in signing large infrastructure financing deals that they both claim will pioneer a new era of development finance in Africa.
“What Kenya and France are doing is leading in a new model of financing that does not involve debt but rather is encouraging private sector to put in their money and get the returns from the project that they’re doing.” — Kenyan President Uhuru Kenyatta
While the Kenyan president came home with his bags stuffed with various concessional loans from French and European development finance agencies, he also picked up a sizable public-private-partnership (PPP) contract to build nearly 200 kilometers of new road.
It’s not a mystery why President Kenyatta wants to find a new way to finance infrastructure. He’s getting pummeled politically for his reliance on Chinese loans and his prized Standard Gauge Railway is teetering on the edge of default. So, finding less burdensome (read non-Chinese) financing methods is critical for both political and economic reasons.
President Macron, likewise, has his own agenda that extends beyond merely aiding Kenya’s transportation development. With his own economy mired in debt amid the spiraling economic crisis brought on by COVID-19, these PPP deals provide French companies with new opportunities beyond their traditional markets in North and West Africa.
“Why is it that for several years, a country like Kenya has turned a lot to China? It’s because China provided funding and turnkey solutions, along with ultra-competitive investments, which did not respect the rules of the OECD.” — French President Emmanuel Macron
The president, like so many of his compatriots, is also struggling to grasp the reality that China has largely eclipsed French influence on the continent, relegating it to an uncomfortable second-tier status. These infrastructure deals are part of a larger French effort to reclaim some of their lost standing.
But despite all of the excitement and hoopla about the deals, it’s hard to see what precisely was new.
There were some grants. OK. Cool. Interest-free money is always good. There were a few low-interest concessional loans. We’re all very familiar with those. And there was that PPP contract which they presented as something truly innovative.
Private sector companies building infrastructure without the government assuming any of the upfront costs is not exactly a pioneering concept, nor is it different from what some Chinese stakeholders are already doing in Africa. In fact, the Chinese have PPP-style toll roads in Uganda, Tanzania, and, yes, even in Kenya.
Like the Kenyans, China too has been exploring new ways to move beyond the so-called “Angola Model” of development finance that exchanges resources for infrastructure. This is due to the glaring shortcomings of that arrangement, on full display amid the worsening debt crisis. Last year, Chinese and African scholars/think tanks were floating ideas about a new “China-Africa Swap” model that would incorporate more private sector stakeholders from all sides.
It’s not surprising that politicians love to talk about PPPs. After all, somebody else is picking up the tab. But they can be a lot more difficult to manage as the U.S. embassy in Nairobi learned last year when the airport expressway was transferred from Bechtel to the China Road and Bridge Corporation.
So, let’s be happy for Presidents Kenyatta and Macron, they seemed like they had a great time. But we should also keep in mind that these supposedly new deals look an awful lot like the old ones.