African safari

| Updated on January 11, 2018 Published on May 24, 2017

India has striven to improve its presence in Africa, but is nowhere near China

It’s the final frontier — a continent of untold natural wealth with which India has had links since time immemorial and where rising prosperity has created attractive markets all the way from South Africa to Zambia, Kenya and smaller countries such as Mali. India’s corporate sector is already making a multi-billion thrust into Africa and its efforts are being matched by the Centre, which is determinedly wooing countries across the continent. In 2015, 41 African leaders turned up for the India Africa Forum Summit in New Delhi and now India has followed up that event by hosting the annual meeting of the African Development Bank (AfDB). Significantly, Japan’s deputy finance minister is also in Gandhinagar to figure out the role his country can play in Africa.

For India, making a strong bid to increase its presence in Africa has become a geopolitical imperative as it looks for ways to counter an ever-more muscular China, which has grabbed the lion’s share of African business opportunities. India offered African countries a $10-billion line of credit in 2015 and, more recently, it offered Kenya a $100-million loan for agricultural mechanisation. In Africa, though, Indian trade has not followed the flag but gone out far in front of it. India has made investments of roughly $54 billion in the continent in the last 26 years and many more companies are zeroing in on opportunities. Among the heavyweight players are Airtel, which placed a $10.7-billion bet on Africa by buying Zain Telecom with its continent-wide networks. Airtel Africa has struggled but finally turned a small profit this quarter. Other big players include state-owned ONGC Videsh which has bought into oil and gas properties in Mozambique and Sudan. Similarly, Vedanta Resources has spent $2.6 billion on Zambia’s Konkola Copper Mines. The oldest and biggest Indian player in Africa is, of course, the Tata Group which is in everything from trucks to power, chemicals, hotels and beverages in 12 countries. At a different level, companies such as Godrej and Marico sell personal products like hair oil across Africa. Inevitably, corporations setting out on an African expedition have encountered a variety of pitfalls. This month, Sudan refused to renew OVL’s contract unless it awarded higher royalties. And Karuturi Global, which leased vast farming tracts in Ethiopia and made smaller investments in Kenya in an ambitious bid to become the largest cut-flower grower, has landed in some bad tangles.

But India is still far behind the Chinese in its efforts to carve out a major share of the African market. About 15 per cent of India’s foreign investment is going into African countries but that’s nowhere near the Chinese, who’ve built roads and bridges and even a large share of the fishing industry along the coast. India has to team up with the Japanese to match China’s financial muscle but it will need a concerted effort by both the private sector and the Government to come up from behind.

Published on May 24, 2017

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