After the economic slow-down, inflation and recession – and perhaps, some most pessimistic might say, the eminent down-fall of BRICS, all eyes turn to Africa as the new best thing regarding investments. Brazil and China have already been investing heavily in Africa, but how and where these two countries are investing in the African continent are strikingly different.
China has been investing in infrastructural development such as, building highways in Tanzania, financing electricity projects in Sub-Saharan Africa and constructing whole towns in Angola. Most recently, Ethiopia made the headlines as the first African Sub-Saharan country to have a metro system (photo). At Addis Ababa the light-railway system was funded by China and it will be run for the next five years by the Shenzhen Metro Group and China Railway Engineering Corporation. Chinese money is also paying for a new full-sized railway in Ethiopia, connecting Addis Ababa to Djibouti, which is planned to open next year, as well as new lines in Kenya and Nigeria.
However, Chinese companies are still learning about the African industry. According to the Chinese commerce ministry, it is estimated that 65% of Chinese foreign direct investments make a loss; compared with a 50% international norm. Anyway, in the price-sensitive African market, any investment of this kind is always welcome.
For Brazil, investing is Africa has a very different motivation. The country aims to help Africa by transferring knowledge and technology, while at the same time using shared history and culture to form bonds. And, of course, as a mineral-rich nation itself, Brazil has the luxury of obtaining raw materials from Africa and re-selling them elsewhere.
Angola and Mozambique
Angola and Mozambique have been the two countries where Brazil has been cooperating the most, due to their natural resources and for being Portuguese speaking countries too. The Brazilian industry of engineering and construction, represented mainly by Norberto Odebrecht, Andrade Gutierrez, Camargo Corrêa, Queiroz Galvão and EMSA also have expanded its presence in Angola and Mozambique.
Technology transfer and development of new drugs – especially for HIV/AIDS – also have been one of Brazil’s cooperation with Africa. In 2008, Fiocruz, a Brazilian pharmaceutical company, opened in Mozambique and started to produce a retro-viral medication and it is the first of its kind in the continent.
The growing interest in Africa can also be explained by Brazil’s ambition to obtain a permanent seat in the UN Security Council. This is one of Brazilian diplomacy’s top priorities for reasons of both prestige and principle. Brazil is therefore counting on the support of Africa. Africa is becoming a space that can multiply Brazil’s power.
This post was originally featured on EmergingEquity.org