World at Africa’s feet

Deepak Nagpal Africa – the land where poorest of the poor live. It’s been almost three centuries since the world’s industrialisation started in the 18th century in northwest England. However, still, more than 30 of the world’s 48 least developed countries are located in Africa – the continent where nearly 14% of the world’s human population lives. But efforts are being made in the world’s second-biggest continent to change and overcome developmental problems. The governments across Africa – at least the ones not mired in civil war – are implementing policies which have far-reaching pro-development implications. Poverty level is coming down, per capita income is rising and Africans are starting to live a better life.To help further the process of economic development in Africa, November 20 was proclaimed as Africa Industrialisation Day by the UN General Assembly on December 22, 1989. The aim of the Day is to mobilise the commitment of the international community to the industrialisation of Africa.Land of Opportunity Despite its plethora of problems, Africa is a land of promise and opportunity because of its vast natural resource wealth. It is this reason that India, China, the European Union and the United States have not been able to resist the temptation to form partnerships with African countries that are mutually rewarding. China in particular, has been signing deals after deals with African countries to tap the continent’s natural wealth and, in turn, aid Africa’s industrialisation and development. Of late, Asian trade and investment has been rising in Africa and this is part of the global trend towards South-South co-operation among developing nations. African exports to Asia have tripled in the last few years, with Asia becoming Africa`s third largest trading partner after the EU and the US. The Indian and Chinese investments flowing into Africa are also on the rise. China taps Africa China has been at the forefront of the recent mad race to secure deals in Africa. And the world has taken note of this fact as Chinese leaders, including President Hu Jintao, Premier Wen Jiabao and other top State officials, have been paying visit after visit to the resource-rich continent in the past few years. As the most populous country in the world, China knows it will soon have to look outside to fulfil growing internal demand for natural resources, including oil and gas. The Chinese government has been wise enough in realising this fact faster than most other countries. This has given Beijing an edge over other countries seeking deals in Africa. China has taken up many development works in Africa, apart from providing cash for the natural resources it is buying. This has won the Dragon a lot of goodwill. And governments across the continent are more than willing to sign deals with the world’s fastest growing economy. Beijing, on many occasions, has come on record to state that it is spreading prosperity in Africa, compared to the West which has failed to do so. The West, which is wary of China’s growing might, has been critical of the Dragon’s strides in the world’s poorest continent. Opining that Africans urgently need roads and radios instead of human rights and freedom, China through its Exim Bank has invested in nearly 300 projects across the continent, most of these focussing on building roads, railways, ports and mines. China exhibited its vibrant Africa policy to the world by holding a meeting – the Beijing Summit of the Forum on China-Africa Cooperation – with 48 African nations in November 2006. The Dragon made a move to floor the African leaders at the summit with its pledge to double the aid to the continent and to offer USD 5 billion in loans and credits by 2009. With Beijing also deciding to build up emergency strategic oil reserves of some 100 million barrels over the next few years, it is increasingly looking at African oil as it fits well into its strategy to secure energy assets for future. Currently, China sources a third of its total crude imports from African nations like Angola, Sudan, Congo, Gabon and Nigeria. In the first half of 2007, China’s direct outbound investment stood at USD 480 million, and it exported a staggering USD 16.4 billion worth of goods and services to the continent’s nations in the same period. Further, to finance trade and investment by Chinese firms in Africa, Beijing has launched a USD 1 billion special fund. In another significant move, China’s biggest lender, the ICBC bank is acquiring a 20% stake in South Africa`s Standard Bank for USD 5.6 billion. The deal is the biggest foreign acquisition by a Chinese commercial bank yet, and is also the largest foreign investment in Africa. While the Beijing Summit was a boon for African nations, it created a stir among other world powers, including the US and EU. Both knew China played a masterstroke by bringing nearly 50 African countries on its side by giving out economic benefits. And China is aware of the fact that in a world where political and economic blocs of nations are going to be the order of the day, it was time to muster up as much international support as possible. China`s tactics in Africa have been very clear – aggressively pursue commercial deals and stay clear of politics. And African officials have been very welcoming of this policy. India’s bid to catch up With China`s influence growing over energy-rich Africa, India has already pressed the alarm button. New Delhi is following Beijing’s path to increase oil and gas imports from the resource-rich continent to reduce dependence on Middle East nations like Iran. In comparison to China, which during 1995-2006 signed energy agreements worth USD 8 billion with African nations and pledged investment of another USD 40 billion at a mega conference of African energy ministers last year, India’s investment in Africa’s energy sector has been only USD 2 billion. However, speaking at the India-Africa Hydrocarbon Conference held recently in New Delhi and attended by 25 African nations, External Affairs Minister Pranab Mukherjee said that India was seeking to take forward its partnership with Africa. India is a natural market for Africa’s rich hydrocarbon resources, Mukherjee had told the conference. The prospects for partnerships with African countries have also grown in the recent past with a surge in investments by Indian companies in nations like Libya, Sudan, Nigeria, Egypt and Gabon. The co-operation holds significance as Africa has the potential to play an important role in enhancing India’s oil supply security through diversification of its crude oil import sources. Significantly, Africa has 10% of the world’s total oil and gas reserves and its hydrocarbon exploration potential remains relatively untapped. To give a push to Indo-African ties, Prime Minister Manmohan Singh earlier this year visited Nigeria – Africa’s largest oil producing country. In Abuja, Singh announced a "strategic partnership" with Nigerian President Umaru Yar’Adua and signed four agreements to bolster bilateral relations, including in the energy sector. Singh’s historic visit to Nigeria was the first by an Indian Prime Minister in the last 45 years. The Prime Minister also travelled to South Africa for the trilateral IBSA summit with Brazil, where Africa’s biggest economy agreed to explore ways for co-operation with India in civil nuclear field through “acceptable forward-looking approaches”. Prior to the Prime Minister’s visit, External Affairs Minister Pranab Mukherjee also travelled to Africa this year and secured the 53-member African Union’s crucial support for New Delhi’s bid for a permanent seat in the expanded United Nations Security Council (UNSC). India has already made it clear that the UNSC’s expansion will be meaningful only if it had a representation from Africa, including in the permanent category. During his trips to Ethiopia and Libya, Mukherjee was able to reach agreements on enhancing bilateral ties in various fields. India has also expressed its interest in strengthening co-operation with African nations to jointly combat international terrorism. Further, the ties between India and Africa are poised to move into the fast lane with New Delhi planning to host the first summit with the African Union in April next year. With trade between India and Africa growing, a framework agreement between New Delhi and the Southern African Customs Union for a preferential trade agreement is on the anvil. India is also planning to give duty-free access to products from least developed African countries, and is building a Rs 500-crore Pan African e-network to bridge the digital divide among 53 countries of the continent. Like China, India’s Exim Bank has also extended lines of credit to Rwanda and Sudan for various development projects. US, Europe outpaced While India and China have woken up to the realities and are investing in every possible sector in Africa, the US presence has largely been restricted to the energy sector. Investment experts say foreign direct investment flowing into Africa has more than doubled since 1998, but few US companies have invested in the region except for the oil and mining sectors. Official US government figures show that American holdings in the sub-Saharan region total just USD 19.6 billion. Further, the US has shown interest in diversifying its energy supply sources from the Middle East and is increasingly looking at the African continent. Currently, Africa meets 16% of the US’ imported fuel imports. So far, the US’ interest in Africa has largely been restricted to geo-political issues, like the strife in Sudan’s Darfur region. Several African nations have become hubs of terrorism and insurgency, like Somalia and the Democratic Republic of Congo. So, it becomes imperative for the US, which is leading the global war against terror, to weed out terrorism from these countries. To expand its military presence in Africa, the United States is also planning to set up a unified military command there. However, top officials have moved to allay concerns that US was trying to push more troops onto the continent and impose American policy. Washington’s policy is to assist African countries to build their security capacity and have a secured environment, officials say. At present, the US has some 1,800 troops at a counter-terrorism task force base in Djibouti, in the Horn of Africa. Going by the speculation, Ethiopia, one of Washington`s strongest military allies in Africa, is likely to house the unified military command`s headquarters. China’s ‘economic’ push into Africa has worried not just India but also Europe. European Union member nations have been forced to agree to suspend a boycott of controversial Zimbabwean President Robert Mugabe so that a long-delayed summit with Africa could take place. The indecision over whether to invite the Zimbabwean leader to the summit has meant the planned EU-Africa summit had to be put into cold storage. African leaders have refused to attend the summit if Mugabe was excluded, while Britain and other European countries have shown disinclination to invite him. But EU diplomats have realised that to stay in the race to keep securing African resources, they would have to hold the first EU-Africa summit in seven years, planned for December. But they say that does not signal a change in EU’s attitude towards Mugabe. This is because “the Africa-China summit has been an alarm bell for some”, said European Commission spokesman for Aid and Development Amadeu Altafaj. The 27-member EU is Africa`s largest trading partner with trade totalling over EUR 200 billion (USD 283.1 billion) in 2006. Portugal is the current EU president and its diplomats are of the view that the long delay in holding a proper dialogue with Africa has cost Europe a lot, not least in losing business opportunities to China.