China and India launch investment spree in Africa ahead of key summit
Sheng Jiapeng | China News Service | VCG Chinese President Xi Jinping and South African President Cyril Ramaphosa (not pictured) deliver a speech at the opening ceremony of South Africa-China Scientists High Level Dialogue between the two countries' scientists on July 24, 2018, in Pretoria, South Africa.
Chinese President Xi Jinping and Indian Prime Minister Narendra Modi have continued to lend in tandem to African countries ahead of a major emerging markets summit in Johannesburg, South Africa, beginning on Wednesday.
Xi, arriving in South Africa on Tuesday, pledged $14.7 billion of investment to the country.
His South African counterpart Cyril Ramaphosa is attempting to reboot the countryâs economy after years of mismanagement and stagnation under former President Jacob Zuma. Ramaphosaâs target is to raise $100 billion in foreign investment.
The South African rand rose 1 percent on the news of Chinaâs commitment, according to Reuters.
$2.8 billion of Chinaâs cash will be siphoned off into South Africaâs primary state utility Eskom. The struggling public firm reported a $171 million full-year loss on Monday.
Modiâs lending on behalf of India has been more modest, as the worldâs fastest-growing major economy trails Chinaâs ubiquity on the African continent.
During a flying visit to Uganda, Modi pledged $205 million to the East African country. The sum is intended to help Uganda develop its dominant agricultural sector and electricity distribution infrastructure.Why is India growing so fast?
âAlternatives to the Westâ
Both Xi and Modi were in Rwanda earlier this week, where a total of over $300 million was announced in loans. The money will develop the tiny, landlocked East African nationâs agriculture, roads and special economic zones.
Analysts CNBC spoke to read the news as Rwandan President Paul Kagame sending a defiant message to the U.S. over trade, amid an ongoing spat over second-hand clothes.
Among African countries, âChina and India are viewed as alternatives to the West,â Anna Rosenberg, research director at emerging markets advisory firm Frontier Strategy Group, told CNBC via e-mail.
âSince economic growth has accelerated and interest from other emerging markets has picked up, African governments are glad to have more choice among those that are willing to support development efforts.â
While Chinaâs ready capital dwarfs that provided by India, the latter country can share its technologic al advances with Africa, Munish Gupta, vice president of the India Chamber of Commerce, told CNBC Africa. âToday, China shares very little of its technology with the rest of the world,â he said.
Rosenberg added that given Chinaâs prominence on the African continent, countries were ânow well aware of the strings attachedâ to business deals. Meanwhile, âAfricans are well exposed to Indian work culture,â she said, given that âthere are many African/Indian run distribution companies across the continent, especially in East Africa, typically run by locals of Indian descent.â
Xi and Modi are to attend a three day BRICS (Brazil, Russia, India, China and South Africa) summit, uniting the leaders of the bloc which encompasses the five emerging economies.
Brazilian President Mi chel Temer and Russian President Vladimir Putin will also be joining host Ramaphosa. Trade, given the current climate of U.S.-China import tariffs, is set to dominate the agenda.China pledges $14.7 billion investment in S outh Africa Source: Google News India | Netizen 24 India