Saturday - September 21,2019

Angola and China open Atlantic to African neighbours

Angola and China open Atlantic to African neighbours

The Benguela Railway was once Angola’s bloodline, carrying goods to and from the interior of the country, and onwards to Zambia and Zaire (now the Democratic Republic of Congo). Its profit posted in the last full year of business in 1973 was the equivalent of more than US$ 6 million dollars. The railway meant far more than just money, however, boasting a long and complex history.

Memories of the railway

The name of the Benguela Railway still resonates today, along with that of its promoter, Scotsman Robert Williams, friend of Cecil Rhodes, a pioneer in European exploration in Africa. “Benguela is the natural starting point for a railway to transport ore. I ask you to help me build the line and I will make Lobito a more important port than the one in Lourenço Marques” (now Maputo, in Mozambique), the entrepreneur told the Portuguese Ambassador in London in 1902.

This story still abounds with legends and images of long trains whose wagons are heaving with goods, ripping through the bright red earth of the Angolan highlands. It also brings up more dramatic memories, of the wreckage of once stately bridges shattered in the canyons during the war.

The railway line covered almost 1,350 kilometres, broken up by 67 stations. The line served as a bridge between the Angolan Atlantic and some of the richest mining areas in the world. It was impassable along its entire length for almost 40 years. Until now.

Today it is the most important of three railways that, with technical and financial support from China, promise to take trade and development into the heart of Angola … and of Africa.

Continued potential

About 85 years after the construction of the Benguela Railway, it’s potential is still intact. Nowadays it is even more valuable. The railway was initially intended to be the shortest route for export of ore from the region of Katanga (southern Congo) and the Copperbelt (Northwest Zambia) − through the port of Lobito. But the line also passes through agricultural areas with great potential.

Renowned Angolan academics Regina Santos, Ana Duarte and Fernando Pacheco have spearheaded research on the Lobito Corridor, producing several publications. They believe that the “unique” features of the Benguela Railway could be reproduced today. They told Macao magazine that the Lobito corridor crosses through 12 to 20 million hectares of arable land, with excellent potential for grazing and good access to water, plus about 150,000 hectares of eucalyptus plantations. Less than ten percent of this arable land is worked, and agro-industry is still rare.

All this points to the agricultural potential of Angola in general, but of the Benguela Railway in particular, to carry agricultural produce, for domestic demand and export through the Port of Lobito, they say. According to the academics, the explored area could be extended to around 250,000 hectares, including forestry. There is also indigenous forest in the provinces of Lunda Sul and Moxico offering potentially high income levels.

At the eastern end of the railway, in Moxico province, near the border with the Democratic Republic of Congo, is the famous bridge over the River Kasai. Just over the border is the province of Katanga. It is estimated that in Katanga alone deposits of copper and cobalt account for 40 percent and 50 percent of the world’s total reserves, respectively. Not coincidentally, the recovery of this railway line was considered in 2011, a key part of the Master Plan for Transportation in the Southern African Development Community (SADC).

Multiple benefits

“The awakening of the Benguela Railway is still very important as it is multimodal − offering transport between Angola, DRC and Zambia − and strategic, because it is the shortest and cheapest route from landlocked SADC countries to the markets of Europe and the US,” the Angolan researchers say.

Last year, the Angolan Ministry of Transport estimated that in 2015 the Benguela Railway would carry 20 million tons of goods. This would require the railway to attract the flow of Zambian and Congolese minerals for export. At the moment most of these goods are transported through South African ports, 8,000 miles away.

The refinery under construction in Lobito has the capacity to process 200,000 barrels of oil per day, creating the potential for another major stream: exports of Angolan fuels to neighbouring countries by land. This is a business worth millions of dollars and of strategic importance to the Angolan authorities.

The railway would facilitate transporting goods and attracting investment, as well as improving transport facilities for people in the region. It would also have an important role to play in economic growth in Angola and neighbouring countries. Following on from this, according to the researchers, “The integration of the transport and communication network would be facilitated at the regional level, allowing Zambia to import products directly from Angola, such as oil, and connect to the sea through the port of Lobito.” Once the Lobito Corridor is fully operational it “will enable further development of Zambia, re-launching sectors such as copper production, agriculture and the creation of joint ventures between businessmen of the two countries”. Angola, the researchers say, could become a “regional hub, given its privileged location, including its ports, particularly in terms of international trade”.

Luís Bernardino, Doctoral Researcher at the Centre for International Studies of the University Institute of Lisbon (CIS-IUL), says, “Angola has had a good strategic vision by focusing on creating communication routes, and will become an economic hub in the sub-Saharan region.” He continues: “The southern Atlantic Ocean is the future … one where the main commercial routes will be located in the future. And Angola is geo-strategically well positioned to be a regional power in central and south-south trade.” For neighbouring countries this is a golden opportunity.

Rebirth of ports

The focal point of this corridor will be the Port of Lobito, which has been modernised and expanded with a container terminal, an ore terminal and another one for fuel. Work was carried out by the China Harbour Engineering Company. The port’s current capacity of 3.7 million tons of cargo per year will be increased to 4.1 million tons when the Benguela Railway, rebuilt by China Railway Construction, is working at full capacity.

Lobito-born Eugenio Costa Almeida, an Angolan researcher at CEI-IUL (Centre for International Studies, ISCTE-IUL), notes that this port has the potential to be the most important in West Africa. “The economic reality is that there is excellent dovetailing between railways and ports,” he tells Macao magazine.

The Angolan government’s project has always involved the reconstruction of the railway. But now it is expanding to include a wider set of infrastructure initiatives designed to support growth and development of areas of high potential. The corridor project includes the international airport of Catumbela and others, plus A roads and highways to complement this. In Luau on the border with the DRC a new international airport is under construction. A container depot and warehouses will also be built soon.

“The development of the railways in general and the Benguela Railway in particular, will not only boost the development of Angola and its neighbouring countries through raw materials, fuel and food at lower and more affordable prices, but will also allow further development of areas around the railways. In the case of the Benguela Railway, it will increase the economic and territorial expansion of the port of Lobito with the return − due to being closer and cheaper − of minerals and raw materials produced in the DRC and Zambia,” says Costa Almeida.

Three great railways

Ports are also the essential end points of two other railways: the Luanda Railway (CFL), rebuilt by China Railway 20, and the Moçâmedes Railway (CFM) in the hands of China Hyway. The regions and populations served by these facilities are also expecting a boost to development.

The Luanda Railway focuses on transporting people, particularly between Luanda and Viana. Although in the case of the Benguela Railway economic activity is still in its infancy, further north there is already significant business activity. In Malanje province, for example, the municipality of Cacuso has received significant public and private investments. These include the Capanda Dam and the adjacent Agro-Industrial Perimeter, which currently houses four agro-industrial companies, one with Chinese technical assistance. There is also the Biocom project, which is already producing sugar and electricity. In this case the partnership is between Odebrecht (Brazil), Sonangol (Angolan state company) and private Angolan company, Damler. Other projects are planned for the region and it is believed that the train will be a huge boon.

In the region of the Mocâmedes Railway, there are plans for iron ore exploration in Cassinga, Huila Province, as well as potential areas for mining in Kwando Kubango Province. Costa Almeida notes that the railway line should stretch south to Namibia, “which along with passing through some of the best mining centres in the country and with the development of the port of Namibe, would strongly develop this railroad.”

The development plan of Angola’s Integrated Railway System provides for the connection of the three lines to the rail networks of neighbouring countries. The Benguela Railway would connect to Zambian Railways, through a special branch line starting at Luacano station, in Moxico province, and the new Lumwana line, under construction in Zambia. The Moçâmedes Railway should connect to the Namibia railway system, starting from Cuvango station, stretching over a distance of 343 kilometres, as far as Oshikango in Namibia close to the border with Angola’s Cunene province. A study is underway for construction of the Congo Railway, which will link Luanda to the provinces of Bengo, Uige, Zaire and Cabinda, over a distance of 950 kilometres, linking up later with the Chemin de Fer du Congo Ocean, in Congo Brazzaville.

Another idea that has been mooted, “perhaps in the very long term” is the “perpendicular connection of the three great” railroads. “That would be the icing on the cake,” the researcher says.

Public-private partnerships?

Angola’s government over the last 12 months has given out signs that private companies may have a role in the development and management of these facilities. The move has been welcomed by analysts. The Economist Intelligence Unit (EIU) in a recent report said, “These potentially valuable assets are not to be handed over too cheaply, or delivered to firms without the capacity to be successful.”

The government is considering the merger of three railway companies, into a new public company, Caminhos de Ferro de Angola (Railways of Angola), with operational and commercial activities handed over to private companies. According to Costa Almeida, privatisation raises doubts: “Sometimes, and not infrequently [privatisation] is the best solution for good and better management of public affairs.” He cautions, however, that you need to discuss what kind of privatisation you are looking at − complete privatisation or just management?

Loro Horta, an academic researcher and diplomat based in Beijing, notes that these are strategic assets, so any privatisation requires “great care”. However, he adds that “partnerships in which the Angolan government and foreign companies work together can be, in my humble opinion, the best option”.

Outlook for China-Angola relations

The project for reconstruction of the main railway lines in Angola, by the China Railway Engineering Corporation, started in 2005 at a time when Angola had difficulty accessing financing, at an estimated cost of US$ 3.5 billion. The triple project was the main recipient of funds that China made available to the Angolan government.

Nowadays, three parallel connections are fully restored: the more than 900 kilometres between the port of Namibe and Menongue near the Cassinga iron mine; 540 kilometres from Luanda to Malanje, a diamond area; and almost 1,400 kilometres of the Benguela Railway. The focus now is on ensuring a quality service to drive growth and development.

The completion of the work opens up new areas for cooperation between Luanda and Beijing, which is investing heavily in railways in Africa. Work is about to begin on a US$ 3.8 billion-euro project financed by China’s Exim Bank to rebuild the East Africa Railway, connecting the port of Mombassa, in Kenya, to South Sudan, via Uganda, Rwanda and Burundi. The electric railway between Addis Ababa and Djibouti, and railway networks in Chad and Nigeria are also under construction.

Luís Bernardino said that China has a policy for the entire continent, investing in strategic sectors which impact on their interests, such as access to raw materials. Credit lines “are quite attractive for the Angolan government” and are “in key strategic projects” in the country. “I think we will continue to witness the presence of Chinese investment in Angolan soil for many years,” he added.

Regina Santos, Ana Duarte and Fernando Pacheco note the importance of the strategy for the transport sector, which is “imperative to create growth in other sectors”. These include agriculture, construction and real estate, to which “Chinese companies, some of which are private and already deployed in Angola, also make their contribution”.

“The Government continues to believe that relations between the two countries should go forward, given the multiple cooperation agreements, memorandums of understanding in various fields such as energy, telecommunications, education, culture, agriculture, etc. That is, everything points to both Angola and China seeing each other as strategic allies,” the researchers say.

According to Costa Almeida, the two countries have already shown that their relationship goes far beyond railways. “Just recently President Eduardo dos Santos visited two large industrial areas built entirely by the Chinese − a cement factory and a beer company − which will keep the Chinese managers and trainers in these companies for a long period,” he says. “Alongside this there are highways that continue to receive Chinese funding and there will be other areas where the Chinese can remain in Angola.”

Loro Horta notes that ties between the two countries are still at their strongest in the oil and gas sector. Now infrastructure “can be considered the second most important economic area”.

“China is now probably the most advanced nation in terms of railways and has supported many countries in developing their connections; inter-regional trade remains relatively small, and the railway can change that,” he says. “If these railways are planned as part of a wider system of infrastructure and economic activity, they have the potential to integrate the economies of southern Africa in a way that has never been seen before.”

Fonte: macauhub