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Why Chinese players are taking private stakes in Africa’s new megaprojects
- Ports in Nigeria and Cameroon illustrate how Chinese firms are shifting to ‘integrated investment, construction, and operation’ model
- Chinese financing and investment in big African infrastructure projects under belt and road fell to a historical low last year
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Lekki Deep Sea Port in Nigeria is among new megaprojects in Africa showing how the Chinese government lending boom is gradually being replaced by the commercial project market.
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Observers say Chinese firms are shifting from a model that limited them to engineering, procurement, construction plus finance to now taking stakes in running the infrastructure once it is built in a model known as integrated investment, construction, and operation (IICO).
IICO is now commonly used in Chinese discussions on public-private partnerships (PPPs). It refers to a long-term contract which usually entails the design, financing, construction, operation and, in certain cases, toll collection of an asset.
It also comes in the form of build-operate-transfer (BOT), build, own, operate, transfer (BOOT) and build-own-operate (BOO) contracting.
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Nigeria opens new China-funded seaport in bid to drive economic growth
Nigeria opens new China-funded seaport in bid to drive economic growth
The approach is being promoted by Beijing and is behind new projects such as the Lekki port in Lagos and phase 1 of Port of Kribi in Cameroon. The Kribi port was financed by China Eximbank and contracted to China Harbour Engineering Company for construction and which later joined as a minor shareholder in the port operation joint venture.
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Another example is the 27km (16-mile) Nairobi Expressway built and financed by the state-owned China Road and Bridge Corporation for US$668 million. The firm will recoup its investment by charging toll fees for three decades before transferring ownership to the Kenyan government.
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