China and India continue to put huge investments in African countries prior to an emerging markets summit in Johannesburg, South Africa.
Chinese President Xi Jinping and Indian Prime Minister Narendra Modi both committed to pledging investments in Africa, a huge leap for the economic progress of Africa. Both will attend a 3-day BRICS (Brazil, Russia, India, China and South Africa) Summit.
Chinese President Xi, who arrived in South Africa on Tuesday, promised a U.S.$14.7-billion investment to the country. Because of this pledge from China, South Africa's Rand increased by one percent.
South African President Cyril Ramaphosa is now rehabilitating South Africa's economy after years of crisis due to the mismanagement of its former president Jacob Zuma. South Africa is now targeting U.S.$100-billion in foreign investments.
China will invest the U.S.$2.8-billion to Eskom, the primary state utility of South Africa. Eskom reported that it suffered a U.S.$171-million loss in 2017.
Meanwhile, Indian Prime Minister Modi pledged the U.S.$205-million during his visit to Uganda. The amount is intended for the development of Uganda's agriculture industry as well as in building infrastructure for its electricity distribution.
Because of these developments, African countries consider China and India as their best alternatives to the West when it comes to pouring in foreign investments in their countries.
"China and India are viewed as alternatives to the West," said Anna Rosenberg, the research director of emerging markets advisory firm Frontier Strategy Group. "Since 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."
Among the main agenda items during the BRICS Summit is the recent imposition on tariffs and duties of imported goods by the U.S. Government.
"I expect to see a bold, sweeping statement led by the Chinese side that will condemn protectionism and de-globalization with an intent to keep the global trading regime intact and predictable," said Managing Director for Emerging Markets and Africa at Deloitte Martyn Davies. "Access to the global economy through trade has underpinned China's economic success over the past two and half decades."
Accordingly, China's assistance to African countries has developed stronger ties between China and these African nations. In 2016, due to China's insistence, the Group of 20 assured to help Africa develop its industry. During this time, China had already poured in more than U.S.$33-billion to aid the development of Africa's power sector.
