The $1.7 Billion Railway That Could Challenge China’s Influence in Africa

This railway is at the heart of a high stakes battle between the US and China for economic influence in Africa. It’s the Benguela Railway, part of the Libido Atlantic Railway, which connects Angola to the heart of the copper belt in the Democratic Republic of Congo. The line is crucial for transporting minerals, essential for things like EV batteries and other green technologies to the rest of the world. For years, China has LED Africa’s infrastructure development, pouring hundreds of billions of dollars into projects like railways, ports and roads. But a successful US backed bid to restore the rail line could change power dynamics across the continent. The Benguela railway isn’t new. It was built in 19 O2 and has always been crucial to Angola’s trade, But it was severely damaged during the country’s civil war. If you go on the rail line, you can see some blown up armored vehicles. You can see rail cars that have been left to rust. After the war ended, Angola needed to rebuild its infrastructure, and China stepped in to fill that need. So in 2006, Angola agreed to a $2 billion deal with a group of Chinese companies to rebuild the railway line. But poor construction and upkeep led to rundown stations, malfunctioning safety systems, offline servers and frequent derailments. On the train line, there’s something like 10 derailments a year, which is extraordinary. The stations weren’t well built, there’s all sorts of technologically equipment that just isn’t working. And so the entire rail line really needs a a rebuild. But this time, Angola turned down a proposal from the Chinese government to renovate and manage the same neglected railway. Instead, it awarded several European companies a 30 year contract, which the United States government is likely to finance With a $250 million loan. The $1.7 billion project will fix the train tracks and stations, add over 1500 wagons and educate train operators. It will also give countries involved in the project, eager to advance their clean energy initiatives greater access to critical raw materials like nickel and cobalt. The big topic on Africa in Washington at the moment is all about critical and strategic minerals and and security of supply. Demand for these elements is expected to increase by 20 fold from 2020 to 2040, which has fueled interest in the Libido Corridor and to the Democratic Republic of Congo, the world’s largest producer of cobalt. The project is expected to be a key source of economic opportunity for Angola’s young population, so hope that they will both feed the rest of the world and also create jobs and opportunities inside of Angola. Historically, you can see when you create corridors, they attract people, especially if they’re more economic opportunity. China’s Belt and Rd. initiative has played a major role in Africa’s recent infrastructure development. Launched by Chinese President Xi Jinping in 2013, its goal is to boost China’s global economic influence through infrastructure trade and investment deals. China loaned African governments over $160 billion from 2000 to 2022 and Angola has received the most. The Chinese in Angola provided roads, railways, football stadiums, suburbs of cities. But the initiative has faced criticism from around the world over poor construction, environmental impact and long term economic sustainability. And it’s left some countries with significant debts. Those are debts that are very hard to pay back. In a response to the Journal, the Chinese government said that the Belt and Rd. initiative was not accountable for African debt. In recent years, China’s economy has taken a turn and investments in Africa have plummeted. Lending dipped below $1 billion in 2022, hitting a nearly two decades low. China has been looking at it’s debt exposure in Africa that it hasn’t had the sort of returns that it was expecting, and so it’s a lot more risk averse in terms of its investment portfolio. This low gave the US an opportunity to step in, but the US isn’t just interested in pushing back against China’s influence in the region, it also hopes to secure key resources for future technological advancements. Copper in particular will prove vital as the country transitions from old style energy production. The Biden administration has put a focus on strengthening commercial relations with Africa. In 2022, the government set out a plan for a modern US Africa partnership and promised to invest $55 billion in the continent. the United States has been traditionally behind in doing business in Africa and I think the the Biden administration is hoping that will change and is trying to help that change. And while it is cautious of progress made by other countries in the region, the Biden administration has really made a point of saying to African countries, we understand you have long standing relations with the Chinese, with the Russians. We’re not saying you have to give that up, but here’s what we offer and we think you’ll like it. And the offers don’t stop at the Libido Corridor project. the US is funding solar energy projects and other infrastructure projects in Angola. But US investments in the region are minimal compared to what the Chinese government has provided over the past 20 years. Still doesn’t measure up to what the Chinese have done across Africa, but it is a start, and I think that African countries are starting to notice that that’s happening. However, the Libido railway project might still benefit the Chinese. There’s also a reality that the libido corridor will not exclude the export of minerals to China along it. It’s not a monopoly railroad for the United States and the EU. It’s for free trade. And this corridor might just be the start of more U.S. investment in Africa. The final blueprint would be a railroad codes from the Atlantic to the Indian Ocean and the United States is helping fund the the research into whether that’s feasible. And who knows, maybe someday might fund the, you know, the project itself.