10/31/2023 | Press release | Distributed by Public on 10/31/2023 12:41
MODERATOR:Okay. Good afternoon, everyone, from the U.S. Department of State's Africa Regional Media Hub. I welcome our participants today logging in from across the continent and around the world. Today, we are very pleased to be joined by the Acting Special Coordinator for the Partnership on the Global Infrastructure Investment Helaina Matza. Special Coordinator Matza will discuss the recently signed memorandum of understanding on the development of the Lobito Corridor and the Zambia Lobito rail line by the African Development Bank, the Africa Finance Corporation, the United States, the European Union, Angola, and the Democratic Republic of Congo, and Zambia. So Special Coordinator Matza joins us from Washington, D.C., where she's just back from Europe from the signing of the MoU.
So, as usual, Special Coordinator Matza will deliver some openings remarks and then we'll turn to your questions. So today's call is on the record, and with that, I'd like to turn it over to Acting Special Coordinator Helaina Matza.
MS MATZA:Thank you so much, and I'm delighted to be here today. I apologize in advance - as you might be able to notice, I'm a little under the weather, but I didn't want to miss the opportunity to chat with you all on this really timely development on this project that I know so many of you have been tracking over the last 18 months or so. So maybe I'll just do a little bit of a topper, a little bit about what we think is exciting about this next phase of the project, and then just try to be as conversational as possible. And I definitely recommend don't be on the road for three weeks in one go if you want to come back in one piece.
But all kidding aside, as I've mentioned before to this group and others, the work that we're doing in the Lobito Corridor really is, to our President, the flagship contribution that we're bringing to PGI, which isn't just a U.S. initiative but a shared G7 initiative together that we are working on to deploy over $600 billion by 2027 to close the infrastructure gap around the world. This is a really high target; this is a really complicated effort. And what really the aim of how the U.S. is taking on this mandate, is to really focus on being able to deploy and de-risk investments in physical infrastructure. So all the great capacity development work we do, that's all incredibly important, but our President has tasked us to really focus on these important economic corridors that promote connectivity, that allow us to layer investments across the telecoms space, the energy space, and then of course supporting the development of rail and ports.
So you can imagine, when we found the opportunity to support the work that the DRC Government, the Angolan Government, and the Zambian Government have already decided they wanted to do in their tripartite agreement, which they very serendipitously signed on our Fourth of July this year, we wanted to make sure we are doing everything we can to help with those efforts. And we had some early PGI success in Angola, where over the course of the last year this initiative has been in motion for a little over a year and a half; our implementation team at State has been around for about nine months, and now we have a full team on the U.S. side doing this work.
And our, really, first set of projects kind of explains that ethos, right? So in Angola, we're in the process of closing financing from DFC to help finance the rail refurbishment from the Port of Lobito all the way to the DRC border. We've been working very closely with Africell, a U.S./UK operator, as they're working to develop new offerings in Luanda and beyond for 4 and, ultimately, 5G access. Our USAID has put forward programs to help provide grants for mobile money, bringing regular consumers and entrepreneurs into the day-to-day mix of being able to leverage that additional connectivity. And then a project that I think you heard many from our administration mention, but almost a billion-dollar investment in a large-scale solar project, which we think will be followed by some additional investments in microgrids.
So this formula is exactly what we're trying to translate to the rest of the corridor. And we knew that as we were starting to build the team, we had to make sure we were formalizing and creating success all along the way. So going into the G20 this year, which is probably the last time I left this group, we were delighted to bring on the European Union alongside us, and they have committed to work with us to help finance the feasibility study work, which is really important, and we plan to get started before the end of this year. So we're really not only trying to demonstrate that these - this ecosystem of investment is aligned with our values, with the values of the countries we're working in, but that we can do it.
And so in the two months - because there's only been two months since that announcement - we've been hard at work making sure that we are developing the actual team that can do this. And that's where AFDB and AFC come in. Obviously, partners with extreme amount of expertise working on the continent, AFDB being able to do kind of large-scale funding and support, and AFC as a private developer - a good anchor for all of our concessional finance, all of the work that the host governments want to get done, designing a project that really is privately operated, which is exactly what our partners in Zambia, Angola, and DRC want.
They wanted to demonstrate collectively, together, that you can invest, and you can invest in large-scale infrastructure. And this rail element of what we were able to bring into our MoU with this grouping and this consortium is a great example of that. It's 800 kilometers of new greenfield rail cutting between Angola and Zambia. It involves a large contribution from AFDB that they're sorting out the parameters. And collectively, all funding partners put together around $10 million to start the feasibility study, as I mentioned, before the end of this year.
Every one of our systems are already hard at work, and in fact we're getting pictures since we've been on the plane just a couple of days ago from our embassies and teams and AFC and AFDB reps hard at work figuring out what these additional additive investments can be as we start designing the scope for this rail.
So we thought it was really, really important to codify that project developer group. We thought it was really, really important that that group didn't just have public participants but that it had private participants from the front end. And it's just a very atypical way that the U.S. has done business, and we're really delighted to start working this way and replicating it where on the front end, we work with our partners on a vision, we figure out the structure to implement it, and we commit every step of the way.
And so for the last two weeks, my colleague Danae, who's really the brainchild behind the work we're doing in Lobito and is on this call with us today, the two of us spent a lot of time with our Angolan partners, with our partners from the DRC, with our partners in Zambia not just working on getting this MoU ready - because an agreement's an agreement - but working on all the other contours that we really care about. We've had really meaningful conversations in what we can do in Angola to support their port development as they have a new operator coming to the table very shortly.
We spent a lot of time in both Angola and Zambia talking to the agribusiness sectors to see what we can do in the near term to support additional development that ultimately can leverage this more efficient transport route, which we know will make it a lot easier to be able to do cold-storage shipping and give that sector a boost. We talked to clean energy providers in all those countries as well, and in DRC spent a long time out - spent really being out there in Lubumbashi and Kolwezi, understanding the challenges of the sector, working closely with many private stakeholders but also the state-owned mining company to get a sense of how they're trying to structure deals and how we can help continue to support bringing Western capital.
So I know this is a very, very longwinded introduction, but I would just be remiss if I didn't share that the rail is huge and the MoU definitely commits us to that, but the visionary, aspirational message that all partners agreed to, that's all happening today and we're all committed to not letting those other elements slide. And then obviously at the end of that trip, we were delighted to have all of our African ministers that we spent the first two weeks with meet us in Brussels to have the signing ceremony on the margins of the Global Gateway conference. We are so delighted that the Europeans really joined this model with the U.S. on how to implement PGI projects and elevated it as really one of their top areas of progress in the - since the beginning of Global Gateway.
So we're really - we're excited. We took one day to celebrate, and now we're fast at work making sure that we're doing everything to get us to the next phase - namely, starting that feasibility work and then ensuring that we're looking and helping rack and stack some of these additional projects.
So with that, let me pause and take any questions.
MODERATOR: All right. Thank you very much, Special Coordinator Matza. And we'll now begin the question-and-answer portion of today's briefing. We are welcoming questions for the special coordinator and hope that some of our attendees will use that "raise hand" button. I already see one up, and we've got a couple of questions that were submitted in advance. So please, everyone, let us know what questions you might have for Special Coordinator Matza.
So let me first go to a question which was submitted by Ms. Kemi Osukoya from Africa Bazaar Magazine, and the question is: "Given that we have seen similar infrastructure projects built by other foreign governments in Africa, with some of those projects now in bad shape due to lack of maintenance, how does the U.S. Government plan to maintain this project long term, engage local stakeholders as well as foreign investors to ensure the project benefits Africa long term?"
MS MATZA:That's an excellent question. Yes, thank you. It's such an important question, and that's why I tried to take so much time on the front end to kind of walk you through the way that we're trying to structure this opportunity. And it's not all concessional financing going directly to governments. We do have a private partner on the front end, AFC, who will be helping build the physical consortium that will have responsibilities not just for construction of the rail, but putting forward a plan for operation and maintenance and putting forward a plan around capacity development to ensure that for the sectors that are already there, whether the Zambia rail lines or equivalent workers that take part on the Angolan management, that there's a home and space for them.
But we know and I think we've learned from mistakes and projects that over the years, frankly, we've helped bail out because they needed refurbishment a little too quickly, that that combination of balancing this investment for the people of the country, making sure they're working, they're employed, that it serves them needs to be met with us bringing in opportunities for professional management and training.
And so that was a big reason why instead of an MoU that was kind of outlining this big, big glorious vision, we said we're going to tell you who our project team is, and that's the team that we will keep adding additional private support and expertise to. That will do a couple things. One, it'll endure - it'll ensure the infrastructure endures. But two, it'll demonstrate that we are able to get to close to near commercial financing opportunities on the continent, which is ultimately the win, right? We want to be able to demonstrate together that these projects can be designed, even if a little bit creatively, to be able to be built on commercial terms and ultimately run on commercial terms.
So I'm not trying to be too overly enthusiastic, but I think that combination of guardrails is what we're using to get started, and then this is a long and big project; we will iterate as we go and continue to learn and calibrate.
MODERATOR: All right, thank you very much. So once again, we are welcoming questions from all of our journalists, so please don't be shy - send us your questions, raise your hand. There's one hand raised that's Kate Bartlett of VOA. Kate, if you'd like to ask your question live, we'll open your mike for you.
QUESTION:Great, thank you very much. I wanted to ask, how does this rail line or how will this rail line compare to those built on the continent by the Chinese? And will it connect with the Chinese ones at any point? And just a second point, who will be working on it? Will it be locals? Will there be a trickle-down effect for local people in these three countries? Thank you.
MS MATZA:Yeah, so our ethos for any sort of infrastructure we invest in is that the project is transparent. I mean, you can see on the internet - if not today, very soon - the contours of the MoU and what we agreed to, and that it's open access. And so it's very important to us that we design and we work with our host governments to ensure that they're requesting the same type of support from all partners that these rail projects or ports, you name it, are able to be utilized and driven by trade and commerce that's happening on the country.
So while too soon to say which exactly rail line or project that that - this particular connection will connect to, because there's a lot of work happening, there's maybe a Tazara refurbishment, there's a lot of talks about an additional rail line that can continue south and maybe out through Mozambique, we're taking this on one piece at a time knowing what we can finance, support, and help design. But ultimately, all of these routes should be operating in a way that they are able to be leveraged and used by all participants on the ground. And so to us, that's really our core ethos and how we want to demonstrate that there's a way to attract that type of investment and that that can really benefit the people of the country.
To your second point, yes, and if I'm not making it clear enough, I think we're looking at this in two folds. One is building a rail by itself is great, but it's just the trade route; you have to invest in the actual ecosystem that makes that trade route successful. And you can't do that without the people who live in those countries that are taking part in the development of the commerce, right? So it's not just about getting outputs out and getting inputs in; it's about evaluating with our country partners what does this do to be able to incentivize businesses that have been really important for those governments to have boosted up? And agribusiness really comes to mind. There's a huge, healthy sector in Zambia. There's a growing sector in Angola. And all of these projects are owned, managed, run for the most part by people who live in those countries.
And so when we talk about trying to electrify communities, where we're trying to improve electricity, it's not just for the operation of, like, this rail really working; it's for the effort to make the rails like this that the whole corridor is successful and that people who live along that corridor can participate not only in commerce but in other activities that really benefit the economic development of themselves and their countries.
And as we start developing this process, I think there's going to be a huge push and desire on both sides to ensure that we have Angolan and Zambian partners at the table with us on the front end, whether that's businesses that are operating there or workers that are seeking to be employed on the construction side. But construction only lasts for a couple of years, so we have to think a little more creatively about how we're able to work together to incentivize those longer-term jobs and opportunities.
And so these are all really essential layers to what we're doing, and that's why we need to get this feasibility study done. We need to know how much this project costs. We need to understand the connection point to some of the other farm blocs and other areas that we've been working with both those governments to help develop, get a deeper understanding on how we can help support the border crossings and the feeder roads and all things that we have tools for, like our MCC compact in Zambia, but others have tools for as well to ensure that we're really maximalizing the benefit of this corridor coming to fruition.
MODERATOR:Right, thank you very much, Special Coordinator. We have another question which was submitted from Mr. Kabanda Chulu of the Zambia Daily Mail. The question is: "Are the promoters of the project going to consider collaborating with North West Railways Limited, a Zambian entity that has already conducted feasibility studies for the development of the railway project from Chingola passing through Solwezi, Lumwana, up to Kalumbila on the border with Angola?"
MS MATZA:So I can say for sure that all the partners, including the private developers but also the governments, have been working together to unearth all the feasibilities, pre-feasibility studies that have been done, and gain a deeper understanding about what we know and understand about the route and then what else we need to solve for as well. So I think there's a real desire to be inclusive, to not reinvent the wheel, but also understand that ultimately how you do your feasibility is related to how you finance a project, so you have to do some of that work as the project developer no matter how good the work is that's out there already. But my understanding is that connections like that are being made every day by the project teams.
MODERATOR:All right, thank you very much. So we have one more question submitted live by Francis, Govima. Francis, let's see if we can open your mic if you would like to ask your question live. If not - if you don't want to ask your question live, I can read what you've submitted in the Q&A.
QUESTION:Good afternoon, everyone.
QUESTION:All right, thank you. My name is Francis. I write for Govima, Govima Media. So I was trying to ask a question about the strategies - I have three questions, actually; please forgive me. What strategies are in place to ensure this rail project is environmentally and socially sustainable? We have certain issues as regards this in - I'm in Nigeria, Lagos State precisely. We have some people unbundling, certain power inclined to power the rails, the Blue Line rails. We have what are called Blue Line rails in Lagos, Nigeria here, and before you say Jack Robinson, we have certain people unbundling them and giving - and the projects, if not the government quickly stepped into action, were to be bastardized. I was wondering the environmental conduciveness of this rail project. That's my number one question, please.
Then the other one is the security measures which will be put in place by the United States of America to ensure that this project is being safeguard given its cross-border nature.
Then thirdly, please, these countries - we all know they have some - certain peculiarities that regards intra-security situations. So to make it sustainable, what is the plan of the United States Government in partner with beneficiary countries, they understand the metrics of their security in their home countries, to ensure that they carry the local - maybe local government, kings and chiefs and all that along to be able to enlighten their people that it's for our local development and national development so they are able to protect it? Thank you.
MS MATZA:Yeah, really great questions, and this is going to be an incredibly important element of our feasibility. So let me share kind of two thoughts now, and then I think this is a question you guys should keep coming back to on us as we get further along, because they're absolutely essential to get right.
So in the case of the environmental - well, let me take a step back. On the side of Zambia's portion of the rail, most of the proposed project does coincide with an existing road or parts of roads that connect with each other. So there are a couple elements that we know have been partially solved for but not totally, like community connections and where and how some of the concerns around relocation would need to be addressed, but you have to dive into those in the context of rail. You can take what you learn from roads but understand that it's not totally translatable - same with gradation and all of the elements that require a rail to be designed in a way that's safe and environmentally sound. So we know that we have something to pull from but that we have a lot more work to do.
Similar, on the Angolan side, where there are some connective tissue, a portion of the rail is very greenfield. So all of these elements will be a huge part of the initial feasibility and design, and part of the reason why we are ensuring that we have partners like AFDB, partners like us in the U.S. who will be using our own financing agencies, and then, of course, the Europeans, is because we have what we think are very high-standard tours around environmental stewardship, protection, quality, and that that all needs to be factored into how we design and price and finance this project.
And so part of this as a first line of defense gets addressed by how funders are willing to finance projects, and I think that's been a part of the desire for many of our partner countries, our host countries, to start continuing to diversify Western investment into their countries to be able to help manage some of those issues and create the competition that they deserve in their countries. And so while I don't have a very strong answer because we haven't done the review yet, I can say with a good degree of certainty that the companies that we bring in are often large-scale companies with shareholders. They're beholden to many people, not just one, in ensuring that that environmental stewardship is incredibly important, and same for our own financing agencies that have very, very clear guidelines and requirements to participating and supporting efforts to uphold the highest international standards.
The other piece on security - this is something that we are working closely with our government partners to identify some of - as you mentioned, they're aware of their security concerns, so helping us outline and more deeply understand the type of challenges they already face on existing rail projects, how they have mitigated - because in the case of Angola and DRC, they already have a cross-border rail - and all of that needs to get factored into our understanding of, ultimately, what that's going to make the project cost and the type of way that you would want to design the operation team to be able to monitor those efforts.
And so these are all incredibly important conversations that I think our approach to them will get more granular once we have not only that information from our host countries but a deeper understanding of what we learn from conducting the feasibility.
MODERATOR:All right, very good. I think we might have time for one more question, and we did get a question submitted in the Q&A from Matt Hill of Bloomberg. The question is: "How long will it take to complete the feasibility study? Previous cost estimates are that the 800 kilometers new line linking Chingola to Luau would cost about a billion dollars to build. Is that still a reasonable estimate?"
MS MATZA:Yeah, so it's quite hard to comment on the total cost and value of the line, because we've heard so much disparity in, like, how that's been valued. It's always over a billion dollars, but we are preparing ourselves that it could be quite a bit more expensive, especially when you think over the crossover element. So we've got ourselves an incredibly expedited timeline. We want this rail to be built within five years. That's complicated for any large-scale rail project, let alone in one that's crossing multiple jurisdictions, and so we've been really working backwards.
We know we need to bring - begin the feasibility this year, and we know that it shouldn't take more than six months. We of course are facing all sorts of very practical challenges that we'll have to pay attention to, like rainy season in Zambia, where it'll be a little trickier to be on the roads, but the goal is really to stay as close to that timeline as possible, not only for our partners but for us also, right - we are actively trying to fundraise and design and ensure that we can invest in these additional projects around the rail, so it's quite important for us to move as fast as we can.
I think that we'll have much better answers for the rest. If the feasibility comes back as we anticipate, I think we feel confident our timeline will hold, but we may be learning something wonderful or something that makes it a little bit more complicated. But this is really the kind of glide path we gave ourselves together to get started.
MODERATOR:Okay, thanks very much. That wraps up the questions. I want to thank Special Coordinator for the Partnership on Global Infrastructure and Investment Helaina Matza for joining us, and thanks to all the journalists as well. As usual, a recording and transcript of today's briefing will be distributed to participating journalists as soon as we can produce them. If you have any questions about today's briefing or if you'd just like to stay in touch with us, please contact the Africa Regional Media Hub at [email protected]. And please also follow us on Twitter at our handle AfricaMediaHub. Thank you to everybody and have a good day.
MS MATZA:Thank you.
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