The Turkish construction companies outfoxing China in Africa

The 273 km, $2.2bn railway line, running east from Kampala, Uganda, to Malaba, just across the border in Kenya, should have been built by now.

In 2015, a Chinese state-owned firm, the China Harbour Engineering Company, won the contract to build the crucial transport link. 

But after eight years with no movement on the project, this January, the Ugandan government pitched the project to a Turkish company, Yapi Merkezi.

The episode was not a one-off. Turkish firms have gotten good at outfoxing Chinese construction rivals. 

In 2019, Turkish multinational Summa beat Chinese companies to secure contracts for the construction of a parliament building and shopping mall in Equatorial Guinea, as well as a convention centre in Rwanda. Yapi Merkezi won a tender in Ethiopia against a Chinese company in 2017 to build one of the country's most modern train lines. In 2021, it outbid a Chinese competitor in Tanzania to win a $900m railway project. 

China's gargantuan state finances mean that Turkish companies lack the backing to constitute a real threat. But recent successes over Chinese counterparts show that while Turkey may not be a fully-fledged rival in Africa, it is nipping at China's heels across the continent.

Turkey's Africa Action Plan

Turkey has been making inroads into African markets for decades. It began in 1998, with the Africa Action Plan, which aimed at boosting bilateral relations continent-wide. But it was under President Recep Tayyip Erdogan's administration that Turkey really began to focus on the continent with large-scale economic and diplomatic investments. 

Presented as a "strategic partner" by the African Union in 2008, Turkey has enjoyed playing the Ottoman card on the continent: arguing that, unlike Western powers, it has no colonial history there, and has refrained from pillaging the continent's resources. Erdogan has even described Turkey as an "Afro-Eurasian" country.

Following up on the Action Plan, Turkey launched two more similar policies: Africa Opening in 2008 and Africa Partnership in 2013. The country's presence on the continent is now more visible than ever. 

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The number of Turkish embassies has increased from just 12 in 2002 to 43; Turkish Airlines now flies to 61 places across the continent; the Turkish Cooperation and Coordination Agency has opened 22 offices; and the Maarif Foundation has 175 schools in 26 African countries.  

Turkish construction companies have followed suit. They now do 17.8 percent of international construction business in Africa, according to 2021 figures from the Turkish Contractors Association, which stated that the total volume of projects undertaken by Turkish construction companies now surpassed $77bn. 

Turkey's trade volume with African countries has increased from $5.4bn in 2003 to $34.5bn in 2021. 

Turkish construction companies have been increasing their share in the African market. Istanbul-based Yapi Merkezi has worked on projects in Algeria, Ethiopia, Morocco, Senegal, Sudan and Tanzania. Summa Construction, meanwhile, built the Dakar Arena, the Dakar International Conference Center and the Blaise Diagne International Airport in Senegal and Niamey Airport in Niger. 

An array of Turkish companies have built houses, stadiums, convention centres, hospitals, shopping malls and embassies across the continent - with Ottoman and Seljuq flourishes. 

Chinese dominance

Turkey's gains in Africa, however impressive, are dwarfed by those of China, which is the continent's top investor and largest trading partner. 

China's annual foreign direct investment in the continent rocketed from $490m in 2003 to $43.4bn in 2020. The trade volume between the two hit a high point in 2021 of $254bn.

And China now provides 16 percent of Africa's total manufacturing imports.

'It is still premature to see Turkey as a real game-changer in Africa, with a capability of competing with China'

- Federico Donelli, professor

Federico Donelli, a professor at Italy's University of Trieste and author of Turkey in Africa, believes that it is therefore "an exaggeration" to speak of a Turkish-Chinese competition in the continent. 

"Turkey is a rising middle power in the multipolar international system. Africa, from this perspective, can be considered a microcosm of global dynamics," he told Middle East Eye.  "However, it is still premature to see Turkey as a real game-changer in Africa, with a capability of competing with China."

Mehmet Ozkan, a professor at the National Defense University in Istanbul, agrees that Turkey is not in a position to start competing with China.

"Firstly, China's economic resources are incommensurably larger than those of Turkey," Ozkan said.

"Secondly, Ankara's policy in the region is not to get into competition with any other actors. Rather, Ankara believes that Africa is resourceful for Turkish companies to make a profit while developing diplomatic and humanitarian relations."

That said, Ozkan argues that Turkey's "clean history" on the continent makes it a popular business partner, as do local fears that the relationship with China - with its loans and long-term agreements for natural resources - might turn neo-colonial. 

"Turkey's cultural and religious ties, as well as its emphasis on direct and equal cooperation, gives Ankara a more reliable position - promising a win-win situation," Ozkan told MEE.

However, Hannah Ryder, CEO of Beijing-based Development Reimagined and a researcher at Centre for Strategic and International Studies, does not "take this argument seriously" as China "propounds the same argument to underline its difference from the Western investors".

Ryder believes African countries need to assess each relationship based on merit in terms of what they contribute to African development plans.

"Both Chinese and Turkish government have been taking significant steps to ensure their actions in Africa are aligned with African development plans," she said.

Filling a vacuum

Turkish companies generally prefer cooperating with local suppliers and employing local people, Donelli said, with Turkey encouraging the exchange of expertise and providing training courses.

For instance, working on an Ethiopian railway project, Turkish company Yapi Merkezi adopted English as its working language - unlike a similar Chinese project in the country - and trained 40 Ethiopians to become railway staff. 

Moreover, China's strict Covid-19 policy and the ensuing supply chain disruptions have provided opportunities for Turkish companies, said Donelli.

"Despite being undoubtedly the biggest player in Africa, the pandemic has forced China to reconsider its investment plans in Africa," he said. 

"As a result, it has created vacuums, especially in the infrastructure sector, that Turkey is trying to fill." 

Ryder, however, thinks that there is no such vacuum, but rather a competition over certain projects, as seen in Uganda. Still, she admits that Chinese firms have been facing pandemic-caused challenges.

China's loan commitments to foreign countries decreased to $3.7bn in 2021 from $35.6bn.

This decrease means less projects would be undertaken in Africa at a time when Beijing has been facing problems with recouping its money from certain African countries, including Zambia, which failed to pay an instalment in November of its $5.5bn debt to China. 

Financial power

At this point, Turkey has two advantages, according to Donelli: its proximity to the continent and its technical superiority, especially in construction. 

Turkish construction companies are well-established internationally, constituting 40 of the world's biggest 250 contractors.

For instance, at a meeting between Angolan and Turkish businesspeople, an Angolan investment expert said that "a lot of the infrastructure that [the Chinese] built, like roads, quickly wore out" and that "Turkish companies with higher quality have a business chance".

Even so, China's dominance is maintained by a financial might that Turkey cannot compete with.

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Although Erdogan has overseen a period of economic growth, unorthodox economic policies in recent years have seen the government battling inflation that has depleted people's savings and seen real wages go down. With a presidential election in May, the focus - and spending - may be drawn away from the continent.

"The Russian invasion of Ukraine, the decrease in liquidity on a global scale and Turkish Eximbank's shrinking capacity to fund big projects make it more challenging for Turkish companies to penetrate new markets," said Mehmet Erdal Eren, head of the Turkish Constructors Association.

Soaring inflation and the instability of foreign currency rates, along with the recent introduction of several measures, including forcing exporter companies to sell 40 percent of their profits in foreign currency and buy Turkish lira, have left companies stranded.

Meanwhile, credit growth has stopped as banks refrain from giving loans that are considered to be cheap.

"On the other side, Chinese companies are in fact state companies. Therefore, their investments receive considerable support from their government," Eren said.

"Our main deficiency against China is the lack of financial power."