US allocates $360 million to Lobito Corridor project

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The U.S has recently allocated a substantial amount of $360 million towards the construction of the Lobito corridor, a vital infrastructure project connecting the Democratic Republic of Congo (DRC) and Zambia through Angola.

This allocation signifies the US’s commitment to counter the growing influence of China on the African continent, particularly in emerging areas of power competition such as DRC, Tanzania, and Zambia. These countries hold vast reserves of critical mineral resources, including cobalt, copper, and lithium.

In an effort to counter China’s Belt and Road Initiative (BRI) in Africa, the US, along with a consortium of investors led by the Partnership for Global Infrastructure and Investment (PGI) initiative, has developed the Lobito Corridor as a strategic infrastructure development plan. The Lobito Corridor aims to create efficient transportation routes that connect these resource-rich African countries to global markets.

Recently, a milestone was achieved as the PGI Private Sector Investor Forum was convened in Lusaka, Zambia. This forum, co-chaired by Zambian President Hakainde Hichilema, Amos Hochstein, Senior Advisor to US President Joe Biden, and Samaila Zubairu, President of the Africa Finance Corporation (AFC), gathered over 250 business and government leaders from various countries and organizations, including Angola, DRC, the European Union, the US, and international investors.

During this significant event, the American Development Finance Corporation (DFC) announced the approval of a $250 million debt facility to the Africa Finance Corporation (AFC). This funding will enable the AFC to support infrastructure projects across the African continent, including those within the Lobito Corridor.

US allocates $360 million to Lobito Corridor project
US allocates $360 million to Lobito Corridor project

The allocation of $360 million by the US towards the Lobito Corridor project marks a crucial step in countering China’s influence in Africa. It highlights the US’s commitment to promoting development and economic growth in resource-rich countries like DRC and Zambia. By investing in strategic infrastructure projects, the US aims to improve connectivity, trade, and investment opportunities, thereby boosting regional and global economic integration.

The proposed financing for various projects in Zambia and the Democratic Republic of Congo (DRC) is currently undergoing a due diligence process. One of the initiatives involves the Development Finance Corporation (DFC) providing a $10 million loan to Seba Foods Zambia. This represents the first American food and agriculture investment along the Lobito Corridor, a significant transportation route in the region.

Additionally, the Africa Finance Corporation (AFC) has expressed its interest in providing $100 million in funding to Kobaloni Energy for the establishment of a cobalt refinery in Chingola, Zambia. The ultimate goal is to build the first electric vehicle battery grade cobalt sulphate plant on the African continent. These commitments from American institutions in Lusaka towards the Lobito Corridor now amount to approximately $360 million in new financing.

Another notable deal involves a memorandum of understanding between the AFC and La Générale des Carrières et des Mines (Gécamines), a Congolese commodity trading and mining company. This agreement aims to develop critical minerals in the DRC, further promoting economic growth in the region.

US allocates $360 million to Lobito Corridor project
US allocates $360 million to Lobito Corridor project

The latest announcements highlight the significant investments made by the US government in Angola over the past year. These investments have surpassed $1 billion and have had a positive impact on various sectors. For instance, the Export-Import Bank of the US has authorized a loan of over $900 million to support the construction of two solar energy power plants. These plants are expected to generate more than 500 megawatts of renewable energy, contributing to Angola’s sustainable development goals. Additionally, an Exim loan guarantee of $363 million will aid in financing and constructing over 180 bridges, connecting rural communities in Angola.

In January 2023, DRC, Zambia, and Angola collaborated to establish the Lobito Corridor Transit Transport Facilitation Agency Agreement. This initiative aims to accelerate growth in domestic and cross-border trade along the Lobito Corridor, a region located in Central Africa. As part of this project, a railway line will be built to connect important mineral mines in Zambia and the DRC with Lobito port in Angola. This 1,200 km railway line has garnered significant interest, as it promises to reduce transport time, improve connectivity between mineral-rich regions, and decrease the carbon emissions associated with current road transportation.

The construction and expansion of the corridor will be a significant step in integrating the African continent and strengthening its connections with global markets. By increasing export possibilities, boosting regional trade, and developing key market segments, the corridor will not only have a positive impact on the economy but also create decent jobs and improve the lives of many Africans. One of the most ambitious projects in this endeavor is the establishment of the first trans-African rail line, which will stretch from the Atlantic Ocean to the Indian Ocean. This railway, spearheaded by the PGI, will enhance connectivity and facilitate the transportation of goods across the continent.

However, there are concerns about China’s dominance in Africa’s mineral resources and supply chains. As reported by the Africa Policy Research Institute (APRI), China has already established a significant presence on the continent and has taken the lead in building supply chains for crucial metals and minerals such as cobalt and lithium. This puts China in a favorable position to control and benefit from Africa’s rich mineral resources.

The Lobito Corridor project holds immense potential for the participating countries. Efficient transportation infrastructure will enhance the export of critical mineral resources to global markets, attracting foreign investment and spurring economic growth in the region. Additionally, it will facilitate the transportation of goods and services, promoting regional integration and cooperation.

Kosi Ezeonyeka
Keith Kosi is a South African correspondent who holds the esteemed position of reporting for Who Owns Africa. With a laser-focused approach on current affairs, Kosi's expertise extends to the realms of politics, business, and culture. Her incisive analysis and in-depth coverage have earned her a reputation as a credible and trustworthy source of information. As the South African correspondent for Who Owns Africa, Kosi occupies a pivotal role in delivering news and updates to a global audience. With a deep understanding of the region's political landscape, She keenly observes and reports on the activities and developments within the South African government and its impact on the continent. Kosi's reports are characterized by meticulous research, unbiased analysis, and a keen eye for detail, ensuring that her readers are well-informed about the complex dynamics at play.

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