Reaching out to Africa

ARNDT MICHAEL | Updated on August 12, 2014

Visible Indian presence: A sizeable diaspora has also helped. INDUSTRYANDTRAVEL/SHUTTERSTOCK.COM

Both India and China are forging a range of business alliances. While China’s presence is huge, India can be a game-changer

The drastic increase in trade volumes over the last few years is an impressive testament to the new Indian pivot to Sub-Saharan Africa (countries that lie to the south of the Sahara desert); trade between India and Sub-Saharan Africa stood at $60 billion in 2012.

Still, trade volumes in the same year were markedly eclipsed by those of the EU ($567.2 billion), the US ($446.7 billion), and China ($220 billion). Nevertheless, India’s engagement shows a successful new focus on the region where it has implemented specific programmes in the economic, political, and, especially, pan-African sphere.

Multi-pronged engagement

From an economic perspective, there are three pillars of Indian engagement. First, the investment programmes: The Focus Africa programme encourages trade through identifying areas of bilateral trade and investment, with a total sum of $550 million for each five year period.

It offers export subsidies to Indian companies trading with twenty-four African countries and Lines of Credit (LoC) to African governments and regional organisations.

In addition, India grants preferential market access to exports from thirty-four Least Developed Countries (LDC) in Africa.Besides these state-led initiatives, private-sector Indian companies – Apollo Tyres, ArcelorMittal, Bharti Enterprises, the Essar Group, the Godrej Group, the Mahindra Group, Reliance Industries, or the Tata Group – are heavily engaged in a multitude of multi-billion dollar financial investments and projects. The latter two, for example, are involved in sectors as diverse as oil exploration, mining, natural resources, infrastructure development, construction, energy, logistics, hospitality services, financial services, information and communication technology development, automotive outputs operations, real estate, education, or health care services.

The second pillar is development aid, especially in the form of the Indian Technical and Economic Cooperation (ITEC) programme. ITEC is tasked with capacity building in the field of agriculture, civil or military training, or consultancy services.

In total, India has spent more than $1 billion for such assistance in the past for Sub-Saharan Africa, making the region the largest recipient of ITEC aid.

India does not base aid programmes on OECD rules by the receiving state and it does not matter whether India deals with democratic governments or autocratic regimes in the frame of its development programs.

The third pillar concerns hydrocarbons as well as other natural resources. Indian public and private oil companies have attempted, sometimes in direct competition with Chinese state-backed companies, to secure oil and gas fields and exploration contracts.

In 2012, around 20 per cent of India’s crude oil imports already came from Angola, Nigeria, Sudan, or South Africa.

In the realm of diplomacy, India is working together with various Sub-Saharan African countries through the Non-aligned Movement (NAM), the G-20, or the G-77. With South Africa, India regularly works together in the frame of the BRICS and the IBSA (India-Brazil-South Africa) Dialogue Forum.

India has entered into defence agreements with Mozambique, Madagascar, and the Seychelles.

Pan-African approach

In addition, there is the India-Africa Partnership Conclave for direct business-to-business opportunities and institutionalised cooperation with all African Regional Economic Communities. Besides, two significant Africa-India Forum Summits in 2008 and 2011 have taken place. The project with the largest pan-African impact is the Pan-African e-Network, a $116 million joint venture together with the African Union (AU).

The project aims at eventually implementing an Africa-wide network for tele-education, tele-medicine, or video-conferencing, transcending the narrow limits of mere bilateral relationships.

Finally, the sizeable Indian diaspora, particularly in East Africa and Southern Africa, has started to serve as an economic and political transmission belt between India and Africa. This diverse expatriate diaspora covers second and third generation Indians, labourers, and wealthy businessmen, and, despite its economic unevenness, forms a valuable resource in terms of remittances, development, and business opportunities.

Out of all of this, new dimensions of India’s foreign policy have emerged, namely the integration of commercial and political diplomacy, and the Indian desire to play the role of an active entrepreneur willing to compete with China.

Both countries have been genuine competitors, especially in the field of hydrocarbon exploration rights and land acquisition, with India having lost a number of bidding rounds against Chinese companies that successfully employed money politics and political leverage.

In the past years, however, several bidding rounds — Angola and Nigeria — have now gone to India. It not only offered high sums of money, but, at the same time, promised large investments in infrastructure and especially employment to African workers.

These examples display a special “Indian way” of dealing with Africa. For one, India can now reach out to every single African state, either bilaterally, in the frame of a REC, and especially in its unique pan-African projects.

After India handed over the pan-African e-network to the AU, China followed India’s pan-African approach and built the new headquarters of the AU. Besides, studies have shown that India focuses on ownership and provides employment for Africans. Sub-Saharan Africa’s support for India will increase India’s international leverage and bargaining power in its position as an international stakeholder. During the India-Africa Forum Summit in 2011, all present African countries officially declared they supported India becoming a permanent member of the UN Security Council.

India now has the potential to become a real game changer in the new scramble for Africa and will impact the way other countries think about and deal with engaging Sub-Saharan Africa.

The writer is a Senior Lecturer at the Department of Political Science, University of Freiburg, Germany. This article is by special arrangement with the Center for the Advanced Study of India, University of Pennsylvania

Published on August 12, 2014

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