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A Case Study of Chinese Companies’ Construction and Operation of Ports Overseas: The Kribi Port in Cameroon

Naohiro Kitano

Chinese companies are actively involved in the construction and operation of ports overseas. In addition to the technology and experience that they have accumulated through the construction and operation of domestic ports, they are also able to tap ample funds to undertake such ventures.
The major Chinese companies that deal in overseas port construction and operation are referred to as “global terminal operators.” They include CSP (COSCO SHIPPING Ports Limited), a subsidiary of COSCO SHIPPING Holdings Co., Ltd.; CMPort (China Merchants Port Holdings Co., Ltd.), affiliated with CMG (China Merchants Group Limited); and CHEC (China Harbour Engineering Company Ltd.) under the leading state-owned construction company CCCC (China Communications Construction Company Ltd.) CSP has invested and acquired operating rights in such ports as Piraeus in Greece, while CMPort made investments in the port authorities of or acquired operating rights in Lome Port in Togo, Colombo and Hambantota in Sri Lanka, and other ports.
This paper looks at the port of Kribi in Cameroon as a case study of ports built and operated by Chinese construction companies. Cameroon is located on the Atlantic coast of Central Africa facing the Gulf of Guinea. It shares a national border with Nigeria in the west and is rich in natural resources. It has a population of approximately 25 million, and its national territory is around 1.3 times that of Japan. The capital city Yaoundé is located inland. Cameroon’s largest port Douala was built with aid from the World Bank and Japan too provided yen loans for the development of a container terminal. On the other hand, the construction of a deep-water port in Kribi facing the Gulf of Guinea with the cooperation of Cameroon’s former colonial power, France, and other entities had long been planned because Douala is a rather shallow river port with a limited capacity. This never came to fruition due to lack of funds. CHEC learned in 2006 that the Cameroon government was contemplating building a port in Kribi, so it began preparing to participate in this project. In 2008, it proposed a construction plan free of charge, eventually signing a contract with Cameroon in 2009 in Phase One of the construction work, on condition of obtaining loans with preferential conditions from the Export-Import Bank of China (China Eximbank).
Since CHEC had no previous experience in port construction in Cameroon, as part of its preparations, it engaged the services of French consultants to validate its technical proposals through model tests. China Eximbank, in light of the importance it saw in this project, provided $420 million in preferential buyer’s credit in 2011, thus enabling the project to take off. Construction work was completed in 2014. Dredging for this port project was undertaken with large dredgers provided by the Nagoya-based Kojima Holdings, which was engaged as CHEC’s subcontractor. The American engineering company Louis Berger served as consultant.
In 2014, $390 million in preferential buyer’s credit was granted to build a 35-kilometer highway connecting Lolabe where the Kribi Port is located and downtown Kribi and further on to the port of Douala. CHEC is currently undertaking this construction project. In 2015, a consortium consisting of the French transport and logistics company Bolloré, leading French shipping company CMA CGM, and CHEC won the bid for the 25-year concession of the container terminal, and in 2017, China Eximbank further provided $150 million in Chinese government concessional loans and $530 million in preferential buyer’s credit for Phase Two of the port project. CHEC again won the contract for the construction work.
The port of Kribi began operations in March 2018. CMS CGM was able to shorten travel time on its shipping routes between Europe and West Africa by several days. The port handled 153,000 TEU of container cargo in 2019, out of its total capacity of 350,000 TEU. It now also handles cargo bound for Chad and Central Africa. Plans are afoot to build logistics facilities and industrial parks in the hinterland of Kribi Port in the future, and CHEC is also involved with this.
As described above, by taking advantage of preferential buyer’s credit from China Eximbank, CHEC was not only able to win the construction contract for the Kribi Port; it has also succeeded in participating in new projects, such as Phase Two of the port project and construction of the access highway to the port. In addition, CHEC is attempting to shift its business, which used to be centered on port construction, to port operation through cooperation with French companies in third-country markets.
Backed by loans from China Eximbank and the China Development Bank, Chinese companies have rapidly expanded infrastructure construction in the African states and other developing countries with high infrastructure needs. However, faced with the issue of debt sustainability of the borrowing countries, they now have to rethink their strategy.
It appears that this approach is also at a crossroads in Cameroon. China provided loans totaling some $3 billion to Cameroon from 2008 to 2015 and has continued to provide new loans since then. As a result, although Chinese companies have been able to move forward with such infrastructure projects as hydroelectric power plants and the construction of sections of a highway connecting Douala and Yaoundé, on top of the projects mentioned earlier, Cameroon’s debts to China have piled up rapidly.
The Cameroon government requested extended credit facility (ECF) with the International Monetary Fund (IMF) and has been under a three-year ECF program from 2017. The ECF is the IMF’s aid system for low-income countries facing chronic international balance of payment difficulties. Cameroon is considered at great risk of sovereign debt bankruptcy, and China also wrote off $60 million in interest-free loans in 2019. Meanwhile, Cameroon’s international debt repayment was expected to soar to $800 million (471 billion CFAF) in 2019, and 35% of this was borrowed from China. Although the Cameroon government has made a request to the Chinese government to defer debt repayment to China Eximbank, China’s response is still unknown at this point. As in other countries, the reality is that the sustainability of infrastructure built by Chinese companies is also difficult to maintain in Cameroon.
It remains to be seen how Chinese companies will overcome these issues and how they will be involved with infrastructure construction in the developing countries.

(Submitted on Feb. 9, 2020)

1 親会社は国務院国有資産監督管理委員会の管理監督下にある中国遠洋海運集団有限公司(China COSCO Shipping Corporation Limited)。

2 親会社は国有資産監督管理委員会の管理監督下にある中国交通建設集団有限公司。

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