On the Road to Post Conflict Reconstruction by Contract: The Angola Model

Abstract

When the war ended in 2002, the Angolan government approached traditional donors, including the International Monetary Fund and the Paris Club, for loans to fund its post-conflict reconstruction but they were not forthcoming. China offered a colossal 2 billion US dollars line of credit to Angola to finance infrastructure projects as part of a historic deal that is now commonly known as the ‘Angola model’ or the ‘Angola mode’. That deal rehabilitated, modernized and expanded Angola’s shattered infrastructure with the sort of finance that could only be matched by the magnitude of the destruction during the Angolan civil war. This paper offers an insight into the terms and conditions of the resource-for-infrastructure (R4I) investment contracts or the Angola model that Chinese investors have been using in Africa since the turn of the century. The basic mechanism is the exchange of natural resources for national infrastructures by dint of two related investment contracts, namely a resource (mining or oil) contract and an infrastructure contract. China gets the resources from the host state in Africa and, in exchange for the resources, it carries out key infrastructure projects in that state. R4I arrangements are unique contracts which, before this century, were unheard of in the fields of law, foreign direct investment and development. Yet almost all analyses of R4I contracts and the Angola model shy away from contract theories and rather employ perspectives from political science, economics, political economy and development studies, among other disciplines. As a consequence, these analyses often portray the Angola model in ways that find no justification in contract law and theory. The present paper joins the debate on R4I contracts from the perspective of contract law. The paper divides into four substantive parts. The first part explains the nature and origins of R4I contracts. The second part describes the mechanics of R4I contracts in greater detail by laying out the specific terms of the Angola-China contract. The third part draws on its description of the terms of R4I contracts to present the R4I contractual framework as the essence of China’s win-win philosophy in Africa. Those terms fall into two groups: The terms belonging to the resource component and those belonging to the infrastructure component of the Angola-China contract. The fourth part delves into the clauses that insulate the developmental impacts of the contract in Angola from its political economy. The conclusion tries to exact lessons that other resource rich countries in Africa can learn from the Angola model.