The BGA Angola Team. led by Senior Adviser Mário Almeida, wrote an update to clients on U.S. President Joe Biden’s recent visit to Angola and the strategic importance of Lobito Corridor.

Context

  • U.S. President Biden’s historic three-day visit to Angola in early December represents a new beginning in the bilateral relationship, marking the first diplomatic exchange of its kind in southern Africa since 2015. The mission to the two coastal cities of Luanda and Benguela sought to demonstrate a new U.S. commitment to Africa and Angola, particularly in the context of ongoing U.S.-China economic competition in the region. Biden’s statement that “Angola is the world’s future” is profound and underscores Washington’s intent to foster deep and enduring ties.
  • The Lobito Corridor, an 800-mile railway project connecting Angola’s coast to Africa’s resource-rich interior, was the focus of Biden’s visit. Funded in part by the United States, the corridor is meant to counter China’s outsize influence in many African countries. Its development, a linchpin in the U.S. critical minerals strategy, will be Biden’s signature initiative on the continent.

Significance

  • The past two decades of economic cooperation in Angola have been characterized by Chinese-led infrastructure projects and some investment, supported mostly by incurring debt rather than through equity investment. When Angola emerged from a devastating civil war in 2002, the government appealed to wealthy Western countries for help rebuilding. Their hesitation opened the door for China to enter the scene. China helped reconstruction, but Angola accumulated over $42 billion in Chinese debt, larger than any other country in Africa.
  • Biden also visited the Lobito Corridor, a railway project partially funded by the United States that runs from Angola’s border with the Democratic Republic of Congo to Lobito on the Atlantic Ocean. The railroad is being built by a consortium of Trafigura, Mota-Engil Engenharia e Construcao Africa (Mota-Engil) and Vecturis, which has received a 30-year concession from Angola’s Ministry of Transport to develop the corridor. Due to its geographical position and abundant natural resources, Angola is strategically positioned as one of the leading logistics players in southern Africa.
     

Implications

  • Angola has become a key node in advancing U.S. interests, but it will be essential to align expectations on all sides. Although Angola has many short-term needs, the United States intends in the long term to help channel investment into the region. The extent of U.S. commitments will demonstrate whether Washington is “all in” on Africa and able to support greater investment outside of the oil and gas sector. Angola needs investment in pharmaceuticals and health care, technology, mining, energy, food security, agri-business, education, tourism, infrastructure and energy transmission lines along the Lobito Corridor.
  • The Angolan government and people are keen to expand and diversify their economic relationships beyond the current limited number of countries. With the support of the United States and countries in Europe and Asia, Angola could reap significant economic dividends in the next 20 years. The challenge is to merge each partner’s short-term and long-term strategies into a cohesive plan that will deliver results for all parties.

We will continue to keep you updated on developments in Angola as they occur. If you have any comments or questions, please contact BGA Angola Senior Adviser Mário Almeida at malmeida@bowergroupasia.com.

Best regards,

BGA Angola Team

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