Start the conversation
By Mike Caggeso
Congo is drumming up investor support to the tune of $58 million to build a new harbor, Economy and Commerce Minister Andre-Philippe Futa told Bloomberg.
The African country's only port in is the city of Matadi, which is about 90 miles up the Congo River that drains into the Atlantic Ocean. And Matadi's port is operating only at one-quarter capacity because warehouses are closed and containers waiting to dock are congesting the harbor, he said.
"There is no port at Matadi now. In fact, our country has no port, I'd say," Futa said.
Meanwhile, its capital city, Kinhasa is 185 miles inland, and what little goods are able to come into the harbor take a long time to get there because of insufficient roads.
The country is one of Africa's largest [about one-quarter of the size of the United States] and its third most populous, yet its per capital GDP [$774] ranks 174th in the world.
Underneath all that land is a wealth of diamonds, copper and cobalt. And growing from it is an agricultural industry that produces coffee, palm oil, cotton, sugar, tea, cocoa, plantains and rice.
However, local and foreign businesses curtailed operations in Congo as two civil wars in eight years killed an estimated 3.5 million people and ravaged its economy. The country is trying to turn itself around because the potential is huge, as evidenced by the country's estimated 7% GDP growth for 2007, according to the.
And China knows it. Congo is one of several African countries China is investing billions in – investments that secure a large piece of Africa's growing resources.
An agreement last year between Congo and Chinese governments will develop infrastructure projects – water, electricity, education, health and transportation – that would be paid for by Congo's copper and cobalt reserves, Brussels-based Mondiaal News reported.
A more "concrete" example is state-owned mining company Gécamines, which will invest $3 billion in new mining areas. Profits would then repay China for its infrastuctural upgrade that couldn't have been completed without financial assistance.
"It took a long time, that's for sure," Paul Fortin, CEO of Gécamines, said. "We had to agree on an economic model that stipulates how the Chinese investments will be repaid with the revenue of Socomin. Apart from that, these were normal business negotiations comparable to those I did for the many partnerships of Gecamines with private companies."
Standard Bank is Africa's largest lender, servicing 18 sub-Saharan countries. And with all that additional capital, it can grant more loans to local entrepreneurs and farmers, boosting output to the customers literally waiting in Matadi's port.
"We will try to keep almost all the money that we can outside of South Africa because it is earmarked for growth in Africa and growth outside of Africa," Jacko Maree, Standard Bank CEO, told Reuters.
Of course, China will get its kickbacks. In real terms, China's government will get a piece of every new loan, every ATM fee, every credit card, etc. taken from Standard Bank.
The problem with building a new harbor is location. The vast majority of Congo's territory is inland, with only about 25 miles of coastline.
If the harbor in Matadi can't function properly, where would a new one go? Matadi is a small city of about 250,000 people and the cities on the coast are considerably smaller.
Supposing a new harbor is built in Matadi or another coastal city, more roads and railroads would then be required to transport goods to and from the interior.
And that brings the discussion back to China. Compared to the billions it has poured into the country in the last couple years, the $58 million for a new harbor is one of the cheapest and best long-term investments in Congo.
News and Related Story Links:
- CIA World Factbook:
- Money Morning:
Is China Annexing Africa?
- Mondiaal News:
China Outdoes Europeans in Congo
- Money Morning:
China Drills Into Africa with $5.4 Billion Investment