Congo outlines $9bn China deal

William Wallis – The Financial Times

Copyright The Financial Times
May 9 2008
The government of the Democratic Republic of Congo has unveiled details of a controversial $9.25bn agreement that pledges millions of tonnes of copper and cobalt to China in exchange for roads, railways and other infrastructure.
The deal, finalised last month, could prove one of Beijing ’s most ambitious forays into Africa yet. On paper it secures 10.62m tonnes of copper and 620,000 tonnes of cobalt for resource-hungry Chinese industries, but this is dependent on overcoming operational challenges that are as great as anywhere in Africa .
The deal comes at an uncertain cost to Congo , a country the size of western Europe that has been left, after decades of dictatorship, conflict and political turmoil, with less than 5,000km of tarred roads.
Like many of Beijing ’s big state-backed projects in Africa , this one pits a Chinese commercial model for engagement with the continent against the bureaucracy of western development assistance.
The Congo government was at a delicate stage in negotiations to secure a write-off of around $8bn of external debt when news broke last year of its plans to enter a barter agreement with Beijing .
Officials from multilateral lending institutions have been tight-lipped about the consequences but warn privately that, should the deal result in the state contracting fresh debt, it could scupper the write-off.
Benedicte Christensen, director of the International Monetary Fund’s African Department, said last month the agreement posed a “dilemma”.
Pierre Lumbi, Congo ’s infrastructure minister, outlined to parliament details of what the country stands to gain, listing hundreds of clinics, hospitals and schools, two hydro-electric dams, 3,300km of road and 3,000km of railway.
Major routes, to be constructed by Chinese companies, would link the mineral- rich south of the country to its ports in the west and connect the north to the south. Mr Lumbi argued that the provision of this infrastructure would consolidate reunification of the country and bring down prices for basic goods. “This contract is the foundation on which the growth of our economy is going to be built,” he said, comparing it to the Marshall plan to reconstruct Europe after the second world war.
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