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March 19, 2014

Lessons for Africa - and China - on how to avoid corrupt project brokers

handshakeCommentary piece by Bob Wekesa, published in Kenya's Business Daily

The continuing Nairobi-Mombasa standard gauge railway saga offers a deep learning curve for Kenya and China.

Much as focus has been trained on the money, it is becoming obvious that the main problem arises from Kenyan rather than the Chinese end of the bargain.

Anybody who has followed Africa-China relations would appreciate the fact that China often prospects for economic opportunities within the context of individual African countries.

Most Chinese companies study the situation in Africa (and globally) to better align their business practices.

To this end, one loses count of Chinese research and development initiatives aimed at understanding investment policies and practice dynamics in other countries.

Chinese agencies hardly seek to directly change the policy and regulatory architecture in nations where they invest in. Instead, they strategise, latching on existing circumstances and figure out how to best fit in.

So, what business and investment environment do Chinese investors and contractors find in Africa?

They find cartels, brokers, wheeler dealers or corruption networks behind well-meaning projects.

So entrenched is the wheeler dealing genre of business in Africa that in places such as Nairobi, Kampala and Lagos, you will meet ‘corporate chiefs’ who gallivant from office to office peddling influence.

Hardwired into the political systems, the wheeler dealer class calls the shots. Countless researches have demonstrated how impossible it is for international companies to attempt to bypass these cartels to engage directly with governments. In some cases, corruption and official is so blurred that a public servant is himself a wheeler dealer.

Linkages between top government officials and ruling political parties/elites mean that the wheeler dealer bridges the divide. If in doubt about the entrenchment of the culture of official or elite corruption, just look through the Transparency International reports.

The speculators mostly sell air. As soon as governments announce a priority list of projects in sectors such as transport and energy that call for international collaborations, speculators will be on prowl.

China’s rise in international contracting means that many of the wheeler dealers will seek out Chinese partners for public-private partnerships, Build Operate and Transfer or engineering procurement and construction deals.

Interestingly, often these speculators hold no office in government or have investment advisory firms known to link foreign entities with governments.

Their only claim to a positive contribution is that they are able to bridge a Chinese firm’s interest in a business deal and the Kenyan government’s development need.

They sell ‘air’ precisely because they labour hard to link the two entities, skim off fat ‘facilitation fees’ and move on to the next big thing in town. But this ‘air’ may be noxious in that the wheeler dealers have no qualms inflating funding, bypassing procurement and other laws, short-circuiting processes, engaging in kick backs, etc.

They would be in the mould of the robber barons of the US in the 18 and early 19th centuries that inspired anti-trust laws or a similar situation in the UK that spurred the serious crimes laws.

I bet African corruption networks would argue that they are providing a crucial service by finding the resources to correct the continent’s largely uncharted territory insofar as infrastructure is concerned.

As Daily Nation’s columnist Onyango Obbo argued, the fact that corruption rears its ugly head every time there is a mega project in the works means that work is underway to correct Africa’s lowly infrastructure stature.

China has over the last decade taken pole position in infrastructure development across the continent along with all the flak that comes with being sucked into corruption.

The lesson China and Kenya (and other African countries) can learn from the Sh400 million-plus railway project is that they should rein in the speculators who have spoilt the party.

President Uhuru Kenyatta had to address the media making the case for the cleanness of the deal. Although they gave the deal a clean bill of health, the Kenyan parliamentary committees that investigate the matter seem to have been unconvinced about the deal.

Mr Kenyatta’s press conference in January, where he was flanked by his entire cabinet has been viewed as a fight back.

The Kenyatta administration would instead have struck a blow for transparency and accountability by admitting mistakes, moving on to name the shadowy individuals that drove the deal and starting afresh on this project.

A second lesson for both the Kenyan and Chinese authorities is to undertake thorough research into procurement laws as well as the role of watchdog entities such as parliaments.

The Kenyan government wouldn’t be in such a muddle were it that due diligence with respect of the legal infrastructure within which the railway infrastructure should be navigated were aligned. Many infrastructure projects have unnecessarily wound up as sleazy affairs.

The test for Kenya in this particular saga and for Africa in terms of the many planned projects will be how to structure clean deals.

Mr Wekesa is a PhD candidate at Communication University of China and a research associate at University of Witwatersrand. Email:

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