EU and US advance collaboration with Africa

Continent is the new minerals super region and there is an urgent need to develop it economically

I’m in New York this week for the UN General Assembly and Climate Week, and as I move around the city and meet policymakers and civil society organisations from across the world I realise Africa is the topic of an unprecedented number of conversations. 

There are two main contexts. The first is that by 2050 a quarter of the world’s population will be African, so there’s an urgent need to develop the continent economically. There will be a strong correlation between the economic health of the continent and the rest of the world. 

The second is that Africa is the new minerals super region — and the EU and US have joined forces to partner with the continent on this. I can understand the cynicism this causes, but it’s not just focused on resource extraction. 

We know the response to resource colonialism, primarily through an extraction-only model, is met with resource nationalism as countries seek to capture a larger share of the benefits.  

To enable them to do so the US and EU are making commitments and resource allocations to expand infrastructure, build processing capacity and inject liquidity into the mining value chain across the continent. 

But these commitments and funds are not just flowing from New York this week, they also came from the G20 summit earlier this month in India. For example, the Partnership for Global Infrastructure & Investment announced support to Angola, Zambia and the Democratic Republic of Congo (DRC) to develop the Lobito Corridor, which connects southern DRC and northwestern Zambia to strengthen the countries’ regional and global trade capacity via Angola’s port of Lobito.  

The US and EU are also partnering with the three African countries to begin feasibility studies for a new greenfield rail line expansion between Zambia and Angola.

Importantly, the partnership isn’t just to support extractive value chains but will accompany investments in agriculture value chains and digital access to boost the overall economic competitiveness of the region by enabling job creation, boosting productivity and trade, and increasing revenue for three countries facing serious debt challenges.  

There’s a lot of discourse on the “race” for the continent’s minerals, particularly between Russia, China and the West. But it needn’t be a race — the goal is global dispersion of resources and processing so that resources aren’t overwhelmingly concentrated in the hands of a single country.

The reality is that at present China has a monopoly on key minerals such as rare earths. It does 90% of global processing for them. This level of concentration is detrimental to global stability regardless of which country has it. Case in point: China cut off all rare earth exports to Japan after a fishing trawler dispute in 2010, undermining national, energy and technological security.  

Compared to 15 years ago African countries have made strides, realising they don’t have to partner with a single country — they get the best deals by working with multiple countries. It also avoids being captured, which is a growing concern. 

For example, Angola is the biggest recipient of Chinese loans on the continent, with a resource-backed loan model. At the conclusion of the civil war in 2002 Chinese lenders extended funds for infrastructure development, using future petroleum revenues to guarantee repayment. Angola borrowed $42.6bn.  

The model seemed OK until oil prices began falling, making the debt harder to repay. When oil fell from $115 to less than $50 per barrel in 2016, Angola fell into a recession and its economy contracted for five straight years. The Covid-19 pandemic and resulting collapse in oil prices only deepened this. The country barely avoided a debt default. 

This has resulted in a loss of autonomy — Angola can’t join the global marketplace. Decades on it still has $18bn in outstanding debt, and is exporting more than 70% of its oil to China to repay that debt.  

The US and EU model enables countries to take their resources to the global marketplace. It’s not an infrastructure-for-resource swap like we saw in the DRC with $3bn in infrastructure investments to access $93bn in critical minerals.

The US and EU would like to source a larger share of their critical minerals from Africa, but this is by no means a prerequisite for financing or infrastructure. That is largely why the Group of 20 and UN General Assembly have seen a significant volume of conversation between African, US and EU leaders. 

That’s good. African countries are winning from this