July 18, 2012 12:22 am

Infrastructure: Benguela railway transformed by loans from Beijing

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Angolan train passengers©AFP

On the line: miss your train to Huambo and you wait a week for the next

Benguela, 500km south of Luanda, seems a different world from the capital – a neat, laid-back city with pink villas shaded by acacia trees, towering palms in its squares and the country’s best beaches.

When Angola gets tourism together, it will be a destination.

But the main reason the name of this old slave port and provincial capital has resonance is the railway built in the early decades of the last century 1,340km into the interior, one of the legendary exploits of colonial Africa, and the venture’s latter-day revival an emblem of China’s new role in infrastructure projects across the continent.

“Angola is a building site,” reads a painted slogan at a football ground near Benguela’s new station. True, but it has become largely a Chinese building site.

Using loans obtained by mortgaging future oil supplies, Angola has contracted out the main share of its reconstruction to the Chinese. Nothing symbolises this role more than the $1.5bn Benguela railway, built by China Railway 20 Bureau Group Corporation and to a large extent by Chinese labour.

Not much is going on, however, at the station, decked with rows of shiny metal seats. Services along the 30km stretch running north to the terminus at the deepwater port of Lobito resumed less than a year ago for the first time since 2002, the year the fighting stopped. So far, there are just two trains a day, using old locomotives and rolling stock. New units – imported from China – are still being fitted out.

The line striking out east from Benguela has been restored to Luena, 1,000km away. Scheduled services go part of the way, to the city of Huambo. Miss your train there and you have to wait at least a week for the next one. But then, up to last year, no trains came at all for 20 years.

When the refurbished line reaches the Democratic Republic of Congo border, possibly around the end of the year, it will reconnect a transcontinental route between the Atlantic and Indian Oceans, opening a trade corridor through Angola’s hinterland.

A new mineral terminal, also Chinese-built, is nearing completion in Lobito, providing an outlet for copper and other ores from the DRC and Zambia – the purpose the railway was originally built for.

The venture began with a concession granted in 1902 to Sir Robert Williams, a Scottish entrepreneur, who formed the Benguela Railway Company. Work started in 1905, initially under Sir John Norton-Griffiths, or “Empire Jack”, a British soldier and engineer who had served in the second Boer war. Difficult terrain, so steep on one part of the original route that it required a rack-and-pinion system, was not the only problem. It suffered repeated setbacks – disruption by war in Europe, soaring costs, a chronic Portuguese debt crisis, refusal by Britain to guarantee debentures and then, after the railway was finally inaugurated in 1929, world depression.

Run by a subsidiary of Société Générale de Belgique, the railway never fulfilled its promise. After independence Angola’s, sabotage by Unita rebels and minefields along the route left it inoperative. When the concession expired a decade ago, it was in disuse.

What transformed its prospects for reviving the railway was the offer of virtually open-ended Chinese finance. Angola’s first $2bn line of credit from the state-owned China Exim Bank was announced in 2004, just when the government had broken off negotiations with the International Monetary Fund, baulking at IMF insistence on reforms and transparency.

Further credit lines followed on similar terms – long-term loans repayable through deliveries of oil. China relies more on Angola for its oil imports than any other source apart from Saudi Arabia, and it is Angola’s biggest client. International officials emphasise that the funding terms are by no means concessional. But Angola had no alternative at the time. “It was the only way to get it,” says one official. “When you are in that situation, surely you are not going to get it cheap.”

Manuel Vicente, the top economy minister, last month put total Chinese credit at $10bn, while China’s outgoing ambassador was quoted earlier saying the accumulated credit lines came to $14.5bn. In any case, Angola has used up only part, despite dozens of big public works projects, including a new international airport under construction outside Luanda, a university campus and a vast 20,000-unit social housing development south of the capital. by a real estate arm of the oil company Sonangol in conjunction with China’s state-owned Citic group.

The vehicle for most of the choice projects is the Hong Kong-based China International Fund and its affiliate, China Sonangol, a complex and secretive alliance of private and public interests. At times Angola’s new cityscapes look more like China than Africa. The frequent use of Chinese on signs and hoardings reinforces the illusion. With skills and locally sourced materials in short supply, Chinese contractors bring them in, relying on experienced Chinese workers more than the training of local employees.

During a visit to Beijing in April, the head of Angola’s migration department told the national news agency, Angop, there were nearly 260,000 Chinese in the country. They mostly live in separate communities. In Luanda’s south-eastern outskirts, in a district called Vila Chinesa (Chinese Village), a China Jiangsu company compound resembles a large army barracks, controlled by implacable armed guards.

Outside Benguela station, a man sweeping rubble from the entrance introduces himself as Mr Wang from Xi’an in central-northwest China. He has been in Angola for three years but speaks little Portuguese.

Other Chinese have settled into commercial activities such as motorbike stores, car repairs and stalls selling flip-flop sandals. “We are all trying to work out where the Chinese women are,” says Nancy Gottlieb, an American who runs a school of English and guest house in Benguela. “We never see them.”

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