India, China vie for expanding footprints in African continent

Team ZRG/New Delhi

India may conclude a Preferential Trade Agreement with South Africa by the end of this year as part of its strategy to expand its economic, political and strategic footprint into Africa. From an Indian perspective, Africa is important. One, there is a scramble to engage with the resource-rich continent among major powers including the US, the European Union and China.

Of particular interest, if not a cause for concern, is Chinese ascendance in Africa. Beijing’s surge as a manufacturing nation in the early 1990s and lack of natural resources spurred its search abroad for trade opportunities with resource rich continents like Africa. China has already overtaken the US as Africa’s largest trading partner with a US$166 billion trade volume in 2011. It corners 16.9 per cent of Africa’s global trade share.

India-Africa ties have burgeoned. In fact, bilateral trade increased twenty-fold in a little over decade with volumes jumping from US$3 billion in 2000 to US$60 billion. Trade between India and Africa has grown by 24.8 per cent in the past decade, which almost matches the 26.3 per cent growth in Sino-African trade. The growth in volumes has boosted confidence in both sides to raise the bilateral trade target to $90 billion by 2015 from $70 billion set earlier.

While it is Chinese versus the rest in Africa, India has a distinct advantage over rivals such as the US and the European Union, which is rooted in shared anti-colonial struggle and values such as anti-apartheid. The presence of a strong Indian Diaspora in many African nations particularly Eastern and Southern Africa is yet another advantage.

Unlike China, India’s strategy is more subdued. Compared to Beijing’s aggressive economic strategy aimed at gaining access to Africa’s key mineral resources to fuel growth, New Delhi is more interested in forging lasting economic partnerships which are mutually beneficial. The idea is not to replicate colonial systems of exploitation of African wealth. In contrast, Beijing’s strong emphasis on resource extraction has earned it the reputation of being “neo-colonialists”.

India’s stress on “capacity building” approach to Africa has been voiced from highest levels. In a recent visit to Ethiopian capital Addis Ababa in May end to attend the 50th Golden Jubilee Celebration of African Union, Vice President Hamid Ansari outlined India’s terms.

“Our (India’s) approach is not intrusive and non-prescriptive but consultative and above all, responsive to Africa’s assessment of its needs,” he said.

India joined a group of ten select partners of AU which includes the likes of the US, the European Union, China, France, Brazil and Russia at the Ethiopian capital.

India’s economic presence has been characterised by the predominance of private enterprises which specialise in areas like education, health services, information technology and telecommunications. Indian projects include more utilitarian and social development-oriented ones like rural electrification in Mozambique and Ethiopia, railways in Senegal and Mali, cement in Congo and computer training in Lesotho. Indian companies are involved in Chana and military barracks in Sierra Leone.

The likes of Tata Group, Mahindra, Dr Reddy’s, Cipla, Bharti Airtel et al are making their presence felt in Africa with their creativity, low-cost technology and diversified operations. Cipla has revolutionised African Pharma sector by supplying inexpensive generic anti AIDS drugs despite opposition from Western multinational corporations. Bharti Airtel acquired Zain Telecom’s 15-country Africa operations for a total enterprise value of US$10.7 billion, making it the sixth-largest telecom service provider in the world by numbers of subscribers. Apollo Hospital has a facility in Dar-es-Salaam.

While trade is important, the support of a strong 54-member African Union is crucial for future United Nations reforms. These nations constitute a third of the membership of the General Assembly and can come handful in other global institutions of governance. For India especially, a more proactive cooperation with countries in the East Africa can help tackle the menace of Somali pirates who have become more brazen in their targeting of merchant ships and vessels traversing via the Persian Gulf and the Arabian Sea. Here, Indian political establishment will have to demonstrate strong ability to take action.

India’s future looks bright in Africa, if only its government gets its act together. It is unfortunate in the extreme that key projects worth Rs 6,000 crore signed under the India-Africa Forum Summit to build capacity at the pan-African, regional and bilateral levels are stuck due to either fund crunch or time overruns. Such an attitude won’t do any good to India’s African cause.