Chapter 11 Following the Tracks: Chinese Development Finance and the Addis–Djibouti Railway Corridor

Within this salient relationship, one sector that has received major attention is transport – specifically, railways. As well as the Addis Ababa Light Rail Transit project, the new Chinese-built Addis–Djibouti line (or Ethio-Djibouti Railway) has become a flagship project in the twenty-first century Maritime Silk Road, in Sino-Ethiopian co-operation, and in the Ethiopian government’s ambitions for economic modernisation. Commencing commercial operation in January 2018, the railway is the first constructed in Ethiopia since the French-built Chemin de Fer over a century ago, and is notably the first electrified railway in Africa. Under the government of the Ethiopian People ’s Revolutionary Democratic Front (EPRDF), and the leadership of former premier, Meles Zenawi (in power from 1995 until his death in 2012), railway development was one part of a wider industrial strategy that sought to use infrastructure investment to foster the development of regional economic corridors from Ethiopia’s manufacturing centres, to key seaports in Djibouti, and the Addis Djibouti line was to be the first of a broader national network that would also connect industrial hubs in Mekele in the north and Hawassa in the south-west. By lowering the economic and transaction costs of logistics through infrastructure investment, the government hoped to foster industrial zone development along these railway corridors. In turn, this boost to export sectors would generate much-needed foreign exchange that would repay the borrowing for infrastructure investment, and in the longer term, to the structural transformation of the economy.

Symbolically, the Addis–Djibouti railway (ADR) carries a special significance in the China–Africa relationship, as the first Chinese railway project in Africa since the Tanzania–Zambia (TAZARA) railway, built in the 1970s with Chinese aid. Belt and Road Initiative discourse has also enfolded the Horn and East African regions, making them strategically valuable in Chinese foreign and economic policy. In Kenya, China Road and Bridge Construction Company (CRBC), supported by China’s Eximbank, has constructed two phases of a standard gauge railway from Mombasa to Nairobi, initially planned to extend to Naivasha and to the Ugandan border.1 These sections extending towards the Ugandan border have proved a challenge for the Kenyan government, as Chinese finance has not been forthcoming since the completion of the section to Naivasha and, as of 2019, plans for funding the SGR’s extension with China Eximbank have stalled indefinitely.

In the African context, however, railways have also been historically associated with the colonisation of Western powers into African states.2 T. W. Roberts, ‘Republicanism, Railway Imperialism, and the French Empire in Africa, 1879–1889’, The Historical Journal, 54:2, 2011, pp. 401–20. This has been reflected in the extractive design of colonial railway, which tends to connect inland resources to ports and colonial metropoles, rather than improving regional connections.3 Remi Jedwab, Edward Kerby and Alexander Moradi, ‘History, path dependence and development: Evidence from colonial railways, settlers and cities in Kenya’, The Economic Journal 127.603 (2017): 1467–94. The Addis–Djibouti railway follows this model, but with the design of boosting the integration of Ethiopian manufacturing into global supply chains. It is notable for its genesis and development as an Ethiopian initiative; however its long-term sustainability and financial viability remains under question. Initial operation, which remains under Chinese management, has proved problematic, including technical challenges relating to its electrification, local social impacts and the spillover impacts of sub-regional security challenges. The case highlights not only the risks and costs to foreign debt financed infrastructure, but also the importance of developing domestic capacity in order to manage it, and ensure its long-term sustainability.

However, the potential of railway lies in its contribution to industrial and urban development and in serving logistical needs – a key constraint for African industries and particularly manufacturing. For rapidly urbanising African centres and nascent industrial hubs, rail can serve as a lower-cost option for freight transportation compared to trucking; railways also serve as a more sustainable, less polluting transport option for passenger travel. The African Development Bank’s (AfDB) 2015 report on rail also notes its potential to spur the growth of complementary industries, including food, retail and in maintenance of rolling stock, and due to its interlinked nature with other core industries such as steel and energy. As such, ‘railways should be seen as a component part of a wider industrial development plan’.4 ADB, Rail Infrastructure in Africa, 99. More recently in 2020, the AfDB funded part of a feasibility study (a total of around US$1.2 million) into the development of an Ethiopia–Sudan railway link connecting Addis Ababa to the Sudanese port of Khartoum, in line with the economic development plan of both states, as well as the broader goal of fostering regional integration.5 AfDB, ‘Ethiopia: The African Development Bank Gives $1.2 Million for Ethiopia-Sudan Railway Study’, African Development Bank <www.afdb.org/en/news-and-events/press-releases/ethiopia-african-development-bank-gives-12-million-ethiopia-sudan-railway-study-36099> [Accessed 1 May 2021].

This rise in Chinese infrastructure lending during the 2000s accelerated after the global financial crisis, at a time when major Western lenders were unable and/or unwilling to support large infrastructure projects in Africa, despite the infrastructure gap. In China, industrial overcapacity at home and the lure of untapped markets abroad have also pushed investors and firms overseas.2 See: Deborah Brautigam, Tang Xiaoyang and Ying Xia, ‘What Kinds of Chinese “Geese” Are Flying to Africa? Evidence from Chinese Manufacturing Firms’, Journal of African Economies, 27: supplement 1, 2018, pp. i29–51. Simultaneously, China’s foreign economic policy has encouraged and supported Chinese (usually state-owned) companies in ‘going out’ through preferential incentives and benefits, as well as through its policy banks, China’s Eximbank and China’s Development Bank, which offer favourable and quick loans to governments conditional on the procurement of Chinese goods.

Much of this has been channelled through the Forum of China–Africa Cooperation (FOCAC) political initiative, the triannual summit that serves as a platform for bilateral meetings and engagement. The more recent Belt and Road Initiative (BRI) is the latest emanation of this policy impulse. While the BRI’s mission aims to foster economic connectivity across the Eurasian ‘belt’ and maritime routes – partly through investments in transportation and communication infrastructure – it also serves Chinese domestic economic needs, by offshoring domestic excess capacity. Though many African projects’ inception pre-dates the official Belt and Road discourse, both the Light Rail and ADR, the Kenyan SGR, the new Chinese naval/logistics base in Djibouti, and commercial port investments have all been folded into the BRI.

Elsewhere, Chinese companies bringing Chinese high-speed rail technology are competing against European and Japanese firms to construct lines in Southeast Asia and North Africa.3 Agatha Kratz and Dragan Pavlićević, ‘Norm-Making, Norm-Taking or Norm-Shifting? A Case Study of Sino-Japanese Competition in the Jakarta-Bandung High-Speed Rail Project’, Third World Quarterly, 40:6, 2019, pp. 1–22; Michelle Ker, China’s High Speed Rail Diplomacy, Staff Research Report: US–China Economic and Security Review Commission, Washington, D.C., 2017; Uwe Wissenbach and Yuan Wang, Local Politics Meets Chinese Engineers: A Study of the Chinese-Built Standard Gauge Railway Project in Kenya’, Policy Brief: China Africa Research Initiative, Washington, D.C., 2016. Rail technology has been designated a key strategic sector. Having developed through foreign technology transfer and deliberate government support, Chinese rail exports – and the ‘supply-chain export’ of its manufacturing chain that international railway projects allow – are now a key opportunity to offshore Chinese domestic overcapacity. Beyond Ethiopia and Kenya, Chinese firms have competed for railway contractors in Nigeria, where Chinese finance and firms are constructing a new line from coastal Lagos to the northern provincial capital of Kano; in Angola, Chinese firms constructed the Benguela railway line; and has also financed locomotive purchases in Zambia.4 Based on SAIS-CARI data.

Chinese companies and financing have also attracted their share of criticism. Compared to traditional infrastructure financing from multilateral development banks, Chinese loans do not mandate the same kind of open competition as World Bank or other multilateral development bank (MDB) financing. Infrastructure finance guarantees are instead tied directly to procurement of Chinese goods and services. Chinese loans are often characterised as ‘no-strings attached’, as they lack the same kind of conditionality over environmental and social protections that MDB or Western financing dictates, generating concerns over their environmental impacts in the context of weak governance and institutions.5 Frauke Urban, Johan Nordensvard, Giuseppina Siciliano, and Bingqin Li, ‘Chinese Overseas Hydropower Dams and Social Sustainability: The Bui Dam in Ghana and the Kamchay Dam in Cambodia: Chinese Overseas Hydropower Dams’, Asia & the Pacific Policy Studies, 2:3, 2015, pp. 573–89. Labour relations have also been a source of controversy, as local employment and treatment of labour has been a source of unrest in Chinese resource and construction sector projects.6 Ching Kwan Lee, The Specter of Global China: Politics, Labor, and Foreign Investment in Africa, Chicago, 2017.

Beyond environmental sustainability, Chinese-financed projects and infrastructure also face long-term project sustainability issues. For example, the decline of the Tazara railroad after the departure of Chinese engineers, despite efforts in skills training, showed the failure in long-term knowledge transfer and in the self-dependence principles that Chinese aid purported to represent.7 Jamie Monson and Liu Haifang, ‘Railway Time: Technology Transfer And The Role Of Chinese Experts In The History Of TAZARA’, in Terje Oestigaard, Mayke Kaag, Kjell Havnevik and Ton Dietz (eds), African Engagements, Leiden, 2011, pp. 226–51. The current surge of Chinese infrastructure projects presents similar risks but also opportunities to correct these earlier failures.

Infrastructure is a crucial component of the government’s long-term development strategy, and an integral part of Ethiopia’s Growth and Transformation Plans (GTP I and II), which aim to structurally transform the economy from an agrarian base to an industrial and manufacturing powerhouse in the region. Railways are only one part of a wider industrial strategy that seeks to use infrastructure investment to facilitate economic corridors in an export-led growth model. By lowering the economic and transaction costs of logistics, Ethiopia seeks to facilitate industrial zone development and its export and manufacturing sectors, in turn promoting the long-term structural transformation of the economy towards higher value sectors. Priority industries have been targeted for export promotion, including cut flowers, textiles and leather.3 Deborah Brautigam, Toni Weis and Xiaoyang Tang, ‘Latent Advantage, Complex Challenges: Industrial Policy and Chinese Linkages in Ethiopia’s Leather Sector’, China Economic Review, 48, 2018, pp. 158–69.

Borrowing from Chinese and Asian successes in industrial zone development, Ethiopia has also heavily invested in developing industrial zones across the country. One, the Eastern Oriental Zone, was the first Chinese state-sponsored zone to be constructed, from 2006–2007. Since then, other zones have been constructed by GOE, including around Bole airport in Addis Ababa, and in some cases with Chinese contractors, such as Havassa and Dire Dawa, south and east of the capital. Further industrial parks are planned in Adama, Mekele and Kombolcha, all cities along (planned) railway corridors.4 A report by Fudan SIRPA notes that ten industrial parks are planned. In 2016, Havasa and Bole Lemi will be completed. In 2017, the three parks of Mekele, Kombolcha and Adama will be implemented. In addition, there are Kilinto, Dire Dawa, Bahir Dar, Jimma and the five parks in the airport’s airport logistics park are scheduled to be completed by 2019. Take the Hawasa Industrial Park as an example. As of July 2017, the foreign exchange earning capacity was US$15 million. A total of 17 integrated agro-industrial parks are also planned across four different states, targeting the development of its agricultural sector.

This focus on railway infrastructure is also connected to the concept of ‘transit-oriented development’ (TOD), which the GOE has also applied to its urban railway projects, namely the Chinese-built Light Rail Transit in the Addis Ababa centre. Urban and cross-national railways stimulate investment through raising land values and defining industrial and commercial development corridors, which include the numerous industrial zones.5 Mentioned by several interviewees at the Ethiopian Railway Corporation: 22/5/18a; 22/05/18b; 26/06/18; 17/1/19. The capital intensiveness of railways makes them difficult to justify financially, however, as many Ethiopian emphasised during interviews; it was not the ‘financial’ returns but the broader benefits to the economy that made it rational.

The aftermath of the Ethiopia–Eritrean war changed the calculus, making the Djibouti port connection a veritable lifeline for now-landlocked Ethiopia, and revitalised the national necessity of railway. Driven by Prime Minister Meles Zenawi, in the early 2000s the government created a Technical Advisory Group under the Ministry of Transport and Communications. The group laid out a master plan for nine railway lines across the country, a total network of 5,060 kilometres of track.2 310518a, Ministry of Transport. Of this, the Addis–Djibouti line was considered a priority, while the second to be tendered was the section from Awash to Mekele, the northern regional capital. The drive for railway was not only motivated by economic necessity, but also as a means for political and social cohesion.3 220518b, ERC. Out of these plans, the Ethiopian Railway Corporation (ERC) was created in 2007 and tasked with managing the future development of the network.

The GOE turned to several international partners, particularly the Agence du Developpement Français (AFD) during this period, who agreed to fund the rehabilitation of the railway. However, in the wake of the financial crisis, the AFD was unable to extend sovereign concessional loans to the project that would have attracted private investment for a new concession.4 Foch, ‘The Paradox’; Dipti Ranjan Mohapatra, ‘An Economic Analysis of the Djibouti–Ethiopia railway Project’, European Academic Research, 3:10, 2016, pp. 11376–400. The European Commission in 2009 also offered €50 million in development aid to finance its refurbishment, but the final sum was far too low – ‘50 million is a peanut’ quipped one respondent at the ERC.5 220518b, ERC. After multiple delays and conflicts with the contractor, the refurbishment was eventually abandoned around 2011. Meanwhile, the old CDE company was retrenched, with most of the staff absorbed into the state-owned Metals and Engineering Technology Company (METEC).6 While the old CDE workshop and assets remain, both in Addis Ababa and in Dire Dawa (having now been absorbed into METEC property), they have been largely abandoned and are not functional. The old CDE workshop in Dire Dawa (which the author visited), is now preserved largely as a museum. The CDE reportedly still runs a local freight service between Dire Dawa and Djibouti twice a week, though this could not be confirmed.

Around this time, Ethiopia had already begun negotiations with new partners for an electrified railway line. Both Brazil and India showed interest, and Indian consultants were also involved in initial pre-feasibility studies. However, it was Chinese contractors and Chinese financing that won the contract. Through a series of high-level bilateral talks, China negotiated not only a proposal for the new railway but also pledges for a new industrial sugar plant at Kuraz and the Grand Ethiopian Renaissance Dam transmission line. Chinese contractors offered a modern railway with a completely new standard-gauge width track, based on Chinese technology and design, and China Eximbank would guarantee the funds.7 12062018 MOFEC; 24 May 2018, Ministry of Finance.

Financing for both the ADR’s construction and the power transmission lines were provided by China’s Eximbank in two separate packages. Project construction was financed through a US$2.49 billion commercial loan, which covers 70 per cent of the total US$3.49 billion construction project cost. The Ethiopian government, notably, divided the construction contract into two sections, from Addis Ababa to Mieso and from Mieso to Dewele at the border with Djibouti, in order to foster competition and faster completion. As contractor for the Addis light rail transit project, CREC was a competitive choice for the Addis–Mieso section, with the idea that the railway would eventually be linked to the urban LRT. Meanwhile CCECC won the eastern section from Mieso to the Djiboutian border.

Contracts were signed at the end of 2011, and construction began in 2012. After winning the Ethiopian contract, CCECC promptly crossed over the border to lobby the government of Djibouti for the Djiboutian segment of the contract as well, also facilitating China Eximbank for financing.3 A loan of around US$500 million (based on SAIS-CARI data collection efforts). A separate loan package for rolling stock procurement was arranged with the China North Industries Group (Norinco), who later signed a contract with Ethiopia’s METEC to assemble wagons domestically.

Ethiopia already had a bilateral commitment with China to finance a railway on the provision that Chinese contractors would be awarded its construction. However, a conflict arose regarding the Ethiopian government’s representative. Originally, the ADR project was going to be supervised by SweRoad, the same consultant who supervised the construction of the LRT on behalf of the Ethiopian government. However, under pressure from Chinese financiers, the contract with SweRoad was severed and replaced with a Chinese company, the CIECC, instead.4 Africa Intelligence, ‘Ethiopia: SweRoad Wants to Be Compensated’, The Indian Ocean Newsletter, 18 January 2013 <www.africaintelligence.com/ion/business-circles/2013/01/18/sweroad-wants-to-be-compensated,107940602-art> [Accessed 27 April 2021].

Implementation of the project was also complicated by inter-governmental negotiations with Djibouti over joint management as well as immigration issues, delaying construction. In January 2017, Ethiopia and Djibouti signed an agreement to create a joint venture company, the Ethio–Djibouti Railway, to manage the new trunk line. The negotiation of this was lengthy due to the issue of ownership shares, as Djibouti would face a diminished share compared to the 50:50 split they enjoyed in the concession for the old CDE railway. The final agreement took much of a year, and was a compromise of 75:25 in favour of Ethiopia.

After winning the construction contract in 2013, Yapi Merkezi played a significant role in facilitating a US$300 million loan from the Turkish Eximbank as well as subsequent financing from European partners, including Credit Suisse, who supported the project with a total US$1.1 billion loan. Notably, the AKH railway follows European technical and social standards, and European financiers exercised much more stringent requirements for social impact management schemes for displaced communities along the route. However, aspects of railway design have had to accommodate to the Chinese ADR. Beyond its standard gauge, specifications for tunnels and curvatures of the route were altered to accommodate larger Chinese locomotives.

A key technological divergence between the projects are the signalling systems employed between the two railways, which reflect the differences in European and Chinese standards. This presents a logistical challenge for the AKH’s integration with the main ADR trunk line, first in terms of the hardware to integrate the sections of rail track and of onboard equipment for the Chinese locomotives, and second the technical and management training for staff to operate between the two lines. Ensuring cross-compatibility between the two systems will also require additional funding, a perennial challenge to Ethiopia’s cash-strapped railway corporation. A further, major challenge is the financing and construction of corresponding transmission lines to power the AKH–ADR line. One respondent noted that, “even if we install everything, we cannot test it because there is no power supply”.2 170119a, Addis Ababa.

The Doraleh Multipurpose Port (DMP) which opened in May 2017 was constructed by CCECC, the same contractor as the railway, with a loan from China Eximbank. At a project cost of US$590 million for Phase 1 and Phase 2, it has the capacity to handle 8.8 million tons of goods per year. In contrast to Kenyan ports and other major African ports, the Djibouti Doraleh Container Terminal (which Djibouti holds the status of primary shareholder) has a higher than average efficiency for the region, with a crane productivity of 37 moves per crane hour. Ethiopia revenue and customs also has an internal dry port located at Modjo, between Awash and Addis Ababa where containers from the railway would be offloaded. These complementary infrastructures are also essential to the eventual functioning and economic feasibility of the Addis–Djibouti railway.

According to a 2018 UNCTAD report, the volume of road freight transportation between Addis and Djibouti was 1,000 trucks per day, which includes 350 fuel tankers and 500 container vehicles on average. The capacity of a cargo train of 3,500–4,000 tons of freight would be equivalent to between 100–200 truckloads. At current volumes of cargo, the report estimates a need for 11 trains and 50 wagons moving daily. As of early 2019, the number of trains moving daily between Addis and Djibouti was four (two daily in each direction), as the ERC and EDR company sought to start slowly and increase gradually.

Technical issues with the power supply have also been problematic for the railway during its first months of operation. Since commercial operations began, power problems due to overvoltage issues in the stretch between Dire Dawa and Djibouti has caused repeated service interruptions, and is a challenge to the Ethiopian Railway Company’s technical capacity.1 Though lessening in frequency, this is a technical problem where surges in the electrical grid (due to Ethiopia’s export of power to its neighbours) lead to overvoltage in the railway transmission line, akin to blowing a fuse. While the long-term environmental and economic rationale for electrification holds, in the short and medium-term it has been a major obstacle to operation.

Some of these last-mile costs are also due to political economy factors: the monopoly of the state-owned Ethiopian Shipping and Logistics Service Enterprise (ESLSE) has a monopoly over stevedoring and freight forwarding services; road freight is also ‘dominated’ by a small number of Ethiopian companies with vested interests against railway competition.3 Foch, ‘The Paradox’.

More worryingly, ethnic clashes between Afar and Somali groups in the eastern parts of the country have negatively hampered the operation and uptake of the railway in its debut year. While these are not directly caused by the railway’s construction, the railway has become a flashpoint for existing social grievances and inter-ethnic tensions in the region, as a representation of a federal project and perceived to have little benefit for the local communities that it bypasses. Collisions with livestock have also contributed to these resentments. There have been reports of multiple instances where the railway and road were blockaded by local protestors: in one case the passenger train was held up overnight, with all passengers forced to remain on board until local representatives were able to negotiate with protesting groups for their safe release. This has had an unambiguously detrimental impact on the railway’s uptake and its reputation: despite improvements in passenger numbers in mid-2018 and a doubling of freight trains by the third quarter, numbers had fallen by the end of the first year due to stoppages caused by security issues.

Overwhelmingly, many of these decisions were governed by political considerations. One ERC respondent even described the pressure of completing the railways on time to meet the GTP Phase as “a pressure point”. This prioritisation of speed above all else motivated strategic decisions such as the division of the Addis–Djibouti and Awash–Mekele lines into dual segments, introducing competition between contractors. This decision incentivised the firms’ lower-cost bids during the tender process – one factor that contributed to the ADR’s substantially lower total project cost compared to the Kenyan SGR.1 150119a, CCECC.

However, prioritising speed came with other costs. One major weakness has been the lacklustre efforts at technology transfer and capacity building during the project construction phase. One ERC respondent noted that they “tried to voice needs during the approval process”. The lack of institutional and technical capacity was a huge disadvantage in bargaining or pressuring external partners.2 220518, ERC. In contrast, ERC respondents noted a much stronger emphasis on skill training during the construction of the Turkish phase of the project, showing they had learned the second time around from their experiences with Chinese contractors.

There are several areas where Ethiopia’s elite exercised agency and made conscious choices within the constraints of technological specifications. Electrification for the line is also a distinctive feature that the Ethiopian government strongly pushed, though this has not been without challenges, as detailed previously. The absence of fencing for large sections of the Addis to Djibouti route is another example of this. Although fencing is standard design in China’s railways, the ERC was motivated by considerations both for cost-saving and for not cutting through local communities. This choice has, as noted, generated major operational problems with livestock collisions, forcing limits on train speed and generating local grievances, and illustrates some of the challenges in transplanting foreign technological systems and practices into new contexts. The unintended consequences it has generated also demonstrates the need for new legal and regulatory frameworks.

These challenges highlight the political will and ambition within Ethiopia’s governmental institutions, but also the weakness of capacity in terms of evaluating and managing large-scale infrastructure projects. In the design and negotiations over the railway, lack of technical capacity has been a hindering factor for Ethiopia. A long-term meta-challenge for Ethiopia’s railway institutions will be the development of a managerial infrastructure and a body of technical expertise to accommodate the different technologies that it has absorbed, and to eventually integrate those technologies. Long-run operation requires the parallel development of regulations, protocols and operating procedures. By not relying solely on Chinese material technology, Ethiopia is better positioned to be less dependent on China for this aspect. However, it now faces the challenge of integrating two foreign systems while developing its own indigenous standards, and will still depend heavily on the intervention and management of Chinese operating firms in the meantime.

On this, China appears to have been remarkably lenient. Ethiopia was able to default on its loan repayments to China for one year, which was mutually agreed upon and came with no penalty. Additionally, in late 2018 after high-level bilateral talks and via the FOCAC platform, the original SGR loan terms were renegotiated from a 15- to 30-year tenor, or repayment period.4 170119, ERC. On the part of the contractors, the SOEs have had to swallow their costs: the optics of the Belt and Road demands that the projects continue to run, even if the Ethiopian state cannot pay for them.

The political advantages that Chinese financing entails have been a boon for cash-strapped Ethiopia, but it has perverse implications for the balance of power between the ERC and its Chinese contractors. While the ERC finds itself dissatisfied with aspects of the railway’s quality and management, it has limited bargaining power vis-à-vis the companies. On the ADR, due to delayed O&M contract payments, ERC staff found themselves regularly surrounded by CREC and CCECC staff pressuring them for payment; they also made several concessions to assuage contractors. The manager of the light rail notes that it took two years to pressure the contractor to provide resources for a new maintenance workshop, and even then it was only made possible by pulling political strings, negotiating and involving the Chinese economic counsellor’s office.

As debt sustainability becomes increasingly salient, the Ethiopian government has sought other options. Under Prime Minister Abiy Ahmed, there has also been an effort to diversify away from Chinese debt financing, towards public–private partnerships, encouraging private sector involvement in railways. China’s Eximbank has also shown greater risk aversion to further railway lending, given the huge losses that have come out of lending to the project. The extension of the Awash line to Mekele was contracted to China Communications Construction Company (CCCC); however China Eximbank funding for the project has not been so forthcoming, and it is unlikely until confidence is restored in the performance of the Addis–Djibouti line.

For the time being, there is little appetite on both sides for further railway finance. The financial burden of the railway’s debt finance has strained the capacity of Ethiopia’s cash-strapped government to repay, but the case also illustrates the other side of the ‘debt-trap’ narrative: while Chinese lending has contributed to higher debt, as a partner it has also shown much-needed flexibility in the face of Ethiopia’s repayment struggles. For China, Ethiopia remains a key strategic partner, even if, in the railway sector, the light at the end of the tunnel seems dim.