I was driving along Waiyaki Way at 1 am this morning. The road begins as the Uhuru Highway, towards the south of Nairobi, near Mlolongo. It wraps north into Nairobi Central (where it becomes Waiyaki) and continues to the west into Westlands and further into Kiambu County. The road, and city, is renowned for gridlock. It's said that congestion costs 100 KSh billion every year (£650 million). These days, traffic is worse than ever because of unrelenting building projects supporting the growing city: Nairobi's population grows at ~4% per year, doubling every 20.
At 1 am, however, the traffic has cleared, exposing broken tarmac. Waiyaki Way is 'under construction' although there are no warning signs. Free from congestion, the matatus drive liberally, on either side of the road and in any direction they like. It's dark. There are few streetlights, no markings or reflectors, so everyone drives full-beam, blinding one another.
The Nairobi Express Way is a 27.1km mega-project, tearing in a sore wound through the city along Uhuru Highway and Waiyaki Way. 9km of the Express Way is elevated; it hovers on trunks, flying over the traffic below. When the roads are quiet, sparks waterfall down from the construction site ten metres above. Late at night, welders weld and grinders grind. The embers light up sections of the pitch dark road like volcanoes.
Projects like this are not unusual for booming countries. Whereas construction projects take decades to get approval in the UK, they happen fast in Kenya because they need it: it will take just thirty-eight months to build the Express Way, completing in March '22.
Similarly, Turkey, in the last two decades, has boomed. Since 2003, there have been 181 mega public-private partnership projects. These are funded privately or by other governments, and government-backed repayments, often optimistic assumptions. One, for example, is Wonderful Eurasia in Ankara; Europe's most extensive and most extinct amusement park. The Atlantic reports that "The project, built by the Ankara Metropolitan Municipality, cost hundreds of millions of dollars, and featured 17 roller coasters and dozens of other attractions spread over a 320-acre park, which now sits empty."
Like Wonderful Eurasia, the Nairobi Express Way is funded through a public-private partnership. The China Communications Construction Company (CCCC) has put $668 million (72.8 KSh billion) into the road. Once open, a subsidiary of the CCCC, the China Road and Bridge Corporation, will operate the road for 27 years to recoup the money through tolls. It will cost between Sh100 and Sh1,550 ($1 to $15) to use the Express Way. Notably, the toll charges are dollar-based to avoid exchange rate losses.
The Turkish government has debt in dollars to fund its infrastructure projects, as with the Express Way. Through tolls or tickets, repayments are collected from the public in lira. This isn't good for the government or the Turkish people. Inflation does not eat away at the principal; instead, it is more expensive to pay back. If previously you had to collect seven lire to pay back a dollar, now you have to collect thirteen. Wages are not rising at the same rate. Turkey's inflation was officially 36 per cent in December; according to the FT, "the rate cuts have pushed the country's real interest rate to minus 22 percent. That has deterred investors from saving in lira and piled huge pressure on the currency, which lost about 45 per cent of its value against the dollar last year."
A Turkish friend tells me how toll prices are going up and up to make up for the losses, in real terms, that the government is facing. Electricity prices are doubling. A video (in Turkish) shows a vegetable salesman: "I just sold a quarter of a cabbage to a customer. Half of a half. And if there are still people saying that the economy is good then they should open their eyes and look around."
As with Turkey, Kenya's treasury notes the Public-Private Partnership (PPP) framework "has over the years enabled the Government of Kenya to implement high-quality infrastructure projects especially in the energy and roads sectors." Kenya's treasury recognises the risk: "PPPs however, also come with fiscal risks. The government appreciates the importance of monitoring fiscal risks and has over the years included a fiscal risk statement … However, this fiscal risk statement has not covered adequately the risks that may arise from PPPs." — the risk statement is two pages long.
Some analysis exists, however. The East African reports that across seven projects (including the Express Way) that are either operational or under implementation, "Kenya would pay $1.4 billion for early termination of the PPP contracts due to government default" (as of October 2021). Surprisingly, this is relatively small, but the total government debt is only $71 billion. By contrast, the UK's government debt is $3 trillion (!!!), as of March last year.
This is all to say that, as we drive beneath the mega-projects that shape the cities we live in, we can ponder the risk and rewards associated with each one of them. Remember, for cities to grow, projects like this are necessary. Even pre-completion, cars use the newly laid Express Way tarmac to skip ahead in heavy traffic. Dust is piled at each end of the new road to stop this, but it doesn't work. However, when waiting in traffic, one can't help but wonder what happens if a currency gets weaker and repayments for infrastructure are in USD.
My week in books 📚
On China by Henry Kissinger - This is an ambitious book, touring China for 4,000 years. If you want to get a deep overview of the politics of the superpower, this is a good place to start. For more info, read my essay from last week that picks up on some of the central themes of the book.
Draft No. 4 by John McPhee - I like to write, and want to get better at it. IMO, while not as good as On Writing Well, or Bird by Bird (both amazing to begin with if you want to improve your writing), this is great. McPhee encourages independent writing: “No one will ever write in just the way that you do, or in just the way that anyone else does. Because of this fact, there is no real competition between writers. What appears to be competition is actually nothing more than jealousy and gossip. Writing is a matter strictly of developing oneself. You compete only with yourself. You develop yourself by writing.”
What have you been reading? LMK.
Live well,
H