United States (US) President Joe Biden sounded positively Xi Jinping-ish this week when he said the New Delhi G20 summit provided a ‘new path’ that would save everybody money and increase the global south’s capacity to grow.
Biden was referring to a new corridor from India to the Middle East and Britain, including new railroads, shipping lanes and pipelines. Xi wasn’t at the summit, but this seemed like an alternative to his famous Belt and Road Initiative (BRI) connecting China to Europe – with tentacles snaking off to Africa.
Biden and the leaders of India, Saudi Arabia, the United Arab Emirates, France, Germany, Italy and the European Union (EU) announced the India-Middle East-Europe Economic Corridor at the G20’s Partnership for Global Infrastructure and Investment (PGI) event.
Biden added an African dimension, saying another G20 project was a railroad across Africa. The first stage will support rehabilitation of the existing Lobito Corridor – a 1 300 km Angolan railway that continues for 400 km in the Democratic Republic of the Congo (DRC) to Kolwezi, the heart of the Copperbelt.
The 30-year concession was awarded to the Lobito Atlantic Railway consortium, a joint venture by Trafigura, international construction company Mota-Engil and independent railway operator Vecturis.
To some degree piggy-backing on what was the Benguela corridor, largely built by China, the US and EU have partnered to develop the corridor from the Angolan Port of Lobito through the DRC to Zambia. ‘The greenfield Zambia-Lobito rail line connecting Zambia and Angola will be the largest single US and EU investment in [Africa] in a generation,’ the US says. It’s the shortest route to American and European markets for the DRC and Zambian minerals and other products.
Helaina Matza, PGI acting US Special Coordinator, said the G7’s PGI was created in 2022 to close the infrastructure gap in emerging economies. An initial US$600-billion was pledged to finance the PGI over five years, of which the US had committed to US$200-billion. The Lobito Corridor was its first ‘flagship’ project, she said.
Matza said the EU joined the project at the recent G20 summit, and aimed to provide ‘loan assistance’ to refurbish the existing railway to Kolwezi and then on to Zambia (and beyond). She said currently it took about three weeks to port, mainly by road. The Lobito Corridor could reduce that to four days, and would concretise the African Continental Free Trade Area.
The corridor’s main purpose has been to carry minerals from the DRC and Zambia to Lobito Port. The aim is to develop commerce along the route, like agribusiness. The US is already exploring providing financial support for feeder roads to the railway in Zambia to carry agricultural produce to market.
Matza acknowledged that ‘infrastructure has not been the traditional way we show up in Africa,’ but the US and other partners had responded to the continent’s appeals. Perhaps implicitly contrasting with China, she said the US and EU would provide their backing ‘in a meaningful way … that supports our values and our objectives, which includes supporting democracies, regional connectivity, and … creating diversity in supply chains and trade routes.’
Angolan Transport Minister Ricardo Viegas d’Abreu told ISS Today that the Lobito Corridor’s US and EU backing confirmed its importance in dynamising the economies of Angola, DRC and Zambia. Bob Wekesa, Wits University’s African Centre for the Study of the United States Deputy Director, said US and EU support underscored the global competition between the West and China. Speaking to ISS Today, he said Western governments realised that the global south wanted more than ‘preaching and proselytising’ on governance issues.
However, Wekesa said the Lobito Corridor would transport raw materials to port, rather than value-added finished goods produced in Africa. That’s no doubt true, though Matza said the US and its partners would try to drive US and Western downstream investment in the DRC-Zambia copper-cobalt belt. That appeared to be a nod to America’s broader aim to keep strategic minerals in Africa rather than allowing them to be siphoned off to China in raw form.
The Western focus on infrastructure comes when China’s Belt and Road Initiative is flagging, partly because it has largely been funded with Chinese loans, which recipients struggle to repay, and which have been opaque.
So, as Jakkie Cilliers, Head of African Futures and Innovation at the Institute for Security Studies points out, the critical questions about the Lobito Corridor loans will be their terms and interest rates, and whether they are public. He also flagged the need for common technical railway standards to harmonise the Chinese standards mostly being used in East Africa.
The sense that Biden was taking the gap left by Xi was palpable at the G20 summit. Beijing never publicly said why Xi didn’t attend, but the weight of speculation was that he felt the host, India’s Prime Minister Narendra Modi, sought to bolster his aspiration to be the global south leader – a title Xi evidently claims for himself.
So Biden came with proposals to boost World Bank funding for development finance. There was also broad agreement to reform the Bretton Woods Institutions. But can Western countries knock China off its pedestal as the developing world’s best friend? The Lobito Corridor could be the test.
It will require more support from the private than government sector, and so far, business enthusiasm is low. Reuters recently reported that only one mining company had signed up to use the corridor. Matza agreed that long-term commitments were essential to getting the project off the ground, but was nevertheless optimistic.
The Lobito Corridor is an ambitious project with many moving parts, making it vulnerable to breakdown. Perhaps the demonstrated commitment of the US and the EU will encourage sceptical mining houses to climb on board.
Written by Peter Fabricius, Consultant, ISS Pretoria