EU foreign aid takes transactional turn with Africa minerals push

The Lobito Corridor, a 1,300km stretch of railway from Kapiri Mposhi on the edge of Zambia’s copper belt to the port of Lobito in Angola, was first laid down in the early 1900s by colonial powers to transport critical minerals from central Africa to its Atlantic ports.

Previously known as the Benguela Railway, the project is set to carry 1mn tonnes of copper a year by 2030 and is being revived as the flagship investment in the EU’s new strategy for foreign aid: muscling up and seeking geopolitical gains for its cash.

The EU and its member states are investing €2bn in the project alongside the US, the African Development Bank and private companies, in what Brussels’ international partnerships commissioner Jozef Síkela has held up as a new model for the bloc’s development programme.

“This is agriculture, this is logistics, this is vocational training alongside transport,” Síkela told the Financial Times, arguing that the EU brought a more sustainable approach than China’s vast Belt and Road scheme.

“It connects, of course, the African copper belt to global trade and Europe’s clean tech industry, so I will not hide that we are getting copper. But once they will be able to process [and] refine the copper, then they can use the infrastructure for shipping products with higher value added.”

But non-governmental organisations and some officials in development agencies fear that Lobito is emblematic of a modern gambit for influence and resources that has uncomfortable echoes of colonial-era Europe’s approach to the continent. They are concerned that the EU is sacrificing its values in a race for natural wealth with China, the US and other global powers.

“The Lobito corridor is a very good example of the problematic nature of where the EU development budget and policy [are] headed,” said Frank Vanaerschot, director of Counter Balance, a coalition of development and environmental NGOs. “It’s not really clear how this will favour economic opportunities and interests for the local development.”

Lobito underlines a notable shift in the EU’s attitude to development aid, coming at a time when funding for global aid projects has been radically cut by the US but also as other western governments tighten their purse strings.

The US has indicated it could invest as much as $5bn in the Lobito project, underlining its strategic significance for western countries as they take a more transactional approach to development aid.

The bloc has put its €300bn Global Gateway scheme — announced in 2021 to provide grants, loans and guarantees for projects around the world — to work in favour of its economic and foreign policy goals: securing critical minerals and energy supplies, and curbing irregular migration.

“The development paradigm is changing,” said Dora Meredith, Europe director at the foreign policy think-tank ODI. “There are more transactional narratives around and moral narratives have less traction with policymakers.”

An ODI report on the EU’s development agenda noted that in a time of stretched public budgets, arguments for development would be more effective if they could be “linked to domestic priorities in a tangible way”.

The EU is by far the largest donor in the OECD, accounting for 61 per cent of overseas development assistance in 2024, according to OECD figures, although more and more of that money has stayed within Europe as the bloc channels funding towards Ukraine to support it through Russia’s full-scale invasion.

While the EU budget for development and foreign assistance will receive a significant boost, doubling from about €108bn to €200bn in the bloc’s next joint budget starting 2028, it will be trained on more strategic targets as well as providing investment opportunities for European companies abroad.

The projects that the EU is championing through Global Gateway include internet connections in central Asia using European technology and a hub for green hydrogen in Namibia, with additional investments to train local workers.

The idea, EU officials say, is to provide a more holistic approach than China’s $1tn Belt and Road infrastructure scheme, which has left several developing countries loaded with unsustainable levels of debt.

“While on the surface Global Gateway may be perceived as mainly an investment push promoting the private sector, it now comes with a more comprehensive approach, which is crucial and very welcome, to expand its development impact,” said a UN official.

Alexander De Croo, the new head of the UN Development Programme, told the FT that there was a logic to the EU’s change of approach. “Capital allocation in what you would call the developed world is actually quite hard these days because the demographics are not very conducive for higher returns because we are societies with an older demographic.”

That made developing countries “very attractive because the needs are there. You can start from a blank page and the demographics are actually very attractive because this is often a very young population,” said De Croo, a former Belgian prime minister.

Global Gateway had “crystallised” an evolution of development aid over the past few years, he added. “The global discussion these days is dominated by discussions about security, about migration, about illegal drug trade” — “symptoms” of issues such as extreme poverty and inequality that development aid should be used to tackle.

Some UN officials and NGOs, however, worry that focusing on large-scale investment projects, and making funds conditional on issues such as curbing migration, could come at the expense of humanitarian aid and local development projects such as schools or hospitals.

“You need both. You need to have humanitarian assistance. You need to have investment,” said Raouf Mazou, assistant high commissioner for operations at the UN’s refugee agency. “Border control is legitimate . . . but if you do that without investing or providing humanitarian assistance you are going to waste your resources.”

“This should really be the priority: tackling inequality, ending poverty, to make sure that there’s local added economic value, that it puts local communities at the heart of decision-making processes,” Counter Balance’s director Vanaerschot said.

“If you then look at the fact that some of the projects at the heart of the strategy are mining projects and big energy projects, that makes it very sensitive to problems happening,” he said, pointing to human rights abuses and environmental risks associated with those sectors.

In the case of the Lobito corridor, officials and NGOs have warned that the project would benefit European countries but ran the risk of creating little added value for local communities.

“There has always been self-interest, but now it is just more raw, frank and sharp,” said a senior official working in development. “Global Gateway was always supposed to be complementary to [official development assistance]. Our concern is that it will become an export credit agency to promote the private sector.”

But Síkela insisted that whatever the European interest, Global Gateway “should be balanced and it should be to a mutual benefit”.

“I don’t believe in zero sum games,” he said.