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Chinese rail company signs $5.5 billion contracts in Africa

State-owned China Railway Construction Corp (CRCC) has signed contracts worth $5.5 billion in Africa.29 Apr 2015

The company will build a $3.5bn, 334 kilometre intercity rail line in Nigeria and a $1.9bn residential project in Zimbabwe through subsidiaries in Africa, it said in two regulatory announcements.

Financing for the rail project has still to be settled: "The financing for the project has not been finally implemented at current stage, and the formal implementation of the project is subject to the final implementation of the financing," the statement said.

On the housing project, CRCC said that "Upon execution of the commercial contract of the project, the owner will implement the financing for the project. The parties will enter into phased construction contracts separately according to the progress of the financing for the project."

"China continues to make progress in African infrastructure," said John Yeap of Pinsent Masons, the law firm behind Out-Law.com. "Given the technical capabilities gained from the success of its domestic rail industry, coupled with deep financing capacity, China is a natural partner for these projects".

Last week, China's central bank used its foreign exchange reserves to inject at least US$62 billion in capital into three "policy banks" to support the country's 'belt and road' economic plan, according to Chinese business news site Caixin.

China's belt and road initiatives cover the building of infrastructure across south and Southeast Asia, the Middle East and through Central Asia to Europe to create demand for China’s industrial exports.

In November, CRCC announced that it had signed a $11.97bn contract to build a railway along Nigeria's coast, in what itsaid was "China's single largest overseas contract project".

The Nigerian government’s ‘25-year railway strategic plan’ up to 2027 has been developed to encourage private sector investment in renovation of the country’s existing narrow gauge railway lines and building new, standard-gauge lines.