US/EU Lobito Corridor Project Could Counter China's Efforts

 The Washington-based Center for European Policy Analysis posted on 2 April 2024 a commentary titled "Confronting the China Challenge in Africa: The Lobito Corridor" by Eduardo Castellet Nogues.

The US Development Finance Corporation and the Export-Import Bank, together with European partners, are funding a huge infrastructure project in the Lobito Corridor that runs from Zambia's copper fields, through the mineral rich Democratic Republic of the Congo, to the Angolan port of Lobito.  China has been the principal infrastructure partner in this part of Africa throughout this century.  If the project is successful, it could counter China's Belt and Road Initiative in this part of Africa.   

Angola: How the US Can Compete with China and Russia in Africa

 The Washington Post published on 27 January 2024 an article titled "U.S. Deepens Ties with Angola, a Model for Washington's Ties to Africa" by Michael Birnbaum.

Secretary of State Antony Blinken recently completed a visit to Angola where he highlighted the significant U.S. engagement with the country, including partnering with European countries in the infrastructure sector, once an area dominated by China. The U.S.-Angola relationship demonstrates how Washington can improve ties with African countries without directly challenging China or Russia.

Comment:  Angola is admittedly an easier country than many in Africa for the United States to develop this kind of strong partnership.  It is rich in oil and thus able to repay loans.  Although the same political party has been in power since achieving independence in 1975, it now functions under a multiparty system with some possibility for opposition parties to gain power.    

The U.S. and Europe Challenge China in Angola

 The Wall Street Journal published on 21 January 2024 an article titled "How the U.S. Is Derailing China's Influence in Africa" by Michael M. Phillips.

The United States is challenging Beijing's commercial dominance in oil-rich Angola, Africa's largest recipient of infrastructure loans.  Angola rejected a Chinese bid to rehabilitate and operate freight service along the Lobito Corridor and granted it to a U.S.-backed European consortium.  The U.S. Export Import Bank is lending Angola $900 million to buy American equipment for solar projects and a $363 million loan guarantee for an American company to sell steel bridges.  The U.S. is also looking to sell miliary equipment to Angola.

Comment:  While this is a major success for U.S. commercial policy, it only concerns Angola and not the other 53 countries in Africa as the title of the article implies.  The U.S. still has a long way to go if it wants to challenge China commercially throughout Africa.   

The US International Development Finance Corporation, Africa and China

The Center for Strategic and International Studies (CSIS) published on 12 October 2018 a useful discussion of the new US International Development Finance Corporation (USIDFC) titled "The BUILD Act Has Passed: What's Next?" by Daniel F. Runde and Romina Bandura.

While it is generally acknowledged that the USIDFC is a response to China's increased financing of projects globally, some accounts suggest this new agency can match what China is offering. Thi CSIS study makes clear that the USIDFC is a significant new tool for the United States but not equivalent to what China has been doing and continues to do. USIDFC merges the Overseas Private Investment Investment Corporation (OPIC) and several pieces of USAID. It raises the spending cap of the former OPIC from $29 billion to $60 billion for USIDFC, which can make loans or loan guarantees, acquire equity or financial interests in entities as a minority investor, provide insurance or reinsurance to private sector entities, and provide technical assistance.

Like OPIC, USIDFC has a global reach. Between 2000 and 2014, only 18 percent of OPIC's total commitments went to Sub-Saharan Africa according to a study by the Center for Global Development. In 2017, 27 percent of OPIC's portfolio was devoted to Sub-Saharan Africa. As of the beginning of 2018, just over $7 billion of OPIC's cumulative portfolio supported projects in Sub-Saharan Africa. This contribution to African development has been important and is destined to increase under the more generously funded USIDFC, but it has a long way to go before it competes with Chinese funding. China announced a $60 billion, three-year financial package for all of Africa in 2015 and another $60 billion, three-year package in 2018. While the funding by China and the USIDFC is not entirely comparable, the difference in amounts is stark. One way the United States can help address this gap is to revive and increase funding for the US Export-Import Bank.