India’s Role in Africa
Throughout the years the discourse surrounding development in Africa has been either one of slim promise or one of hope. Recently, the prospects of African development have been more optimistic as a result of the growing global interest in the African continent and its markets. Globalization has played a huge role in the growth of African economies. Various emerging economies such as China and India otherwise known as the Asian drivers have become key stakeholders in African development. Business and political article headlines have been intrigued by China and India’s seemingly newfound interest in Africa. Some question the intentions of the Asian drivers presence in Africa while others look to them as catalysts for African growth. For the purposes of this essay I will focus solely on India’s role in the future of Africa’s development. Narratives regarding the interaction between African countries and India depict a mutually beneficial relationship built on South- South solidarity. The strengthening of this relationship is evident through the increasing number of conferences and summits such as the Indo African Summit that are taking place now and in the future. India will continue to play a positive role in the future of African countries development. India’s role in Africa is and will continue to be the role of an investor, capacity builder, and aid donor. With the growing power of partnerships such as Brazil, Russia, India, China, South Asia (BRICS) and India, Brazil, South Africa (IBSA) it remains clear that the relationship between Asia and Africa will continue to flourish.
India as an Investor
India has experienced so much growth over the past ten years that it now has the financial capacity and desire to invest in other countries. Moreover, in order to fulfill the needs of the growing economy and population India has turned to Africa as a source for raw materials and energy. In fact, energy security is driving most of the Indian policy decisions in Africa. For instance, “India resorted to an aid-for-oil strategy and succeeded in getting a US $6 billion investment to establish an oil refinery, power plant and railway lines in Nigeria, through a joint venture oil company, ONGC Mittal Energy Ltd (OMEL)”. In order to meet their energy needs India has invested countless amount of money into the African energy sector, which is only expected to grow. While in a way the intentions of India’s interest in Africa is self motivated they are also improving the infrastructure of African countries. India has recognized the African continent as a strategic economic and security partner. India’s economic growth is undeniable. In fact, India is now the second largest exporter of computer and information services. This gives them the capital to invest in larges scale projects in Africa. In particular, Indian multinationals such as the Tata group and Reliance International have grown extremely powerful on the global scale. Indian companies such as “the Tata Group has helped to diversify African exports. For example, Tata has opened an instant coffee processing plant in Uganda and a vehicle assembly plant in Zambia. Both benefit the national economies by adding value to raw materials and aiding diversification away from primary agriculture”. The diversifying of investments in Africa will allow the country to grow economically and focus on varying sectors. Trade between India and Africa dates way back to the fourteenth century and is only expected to grow. In fact, “bilateral India– Africa trade grew from US$967 million in 1991 to US$30 billion in 2007/08. Africa’s share in India’s global trade increased in just four years from 5.8 per cent in 2002/03 to 8 percent in 2006/07”. As mentioned earlier, India has also made significant efforts to improve the infrastructure in African countries. For instance, “India’s state owned engineering companies like IRCON and RITES (Rail India Technical and Economic Services) have also played a significant role in constructing road and railways in Africa. RITES have bagged contracts to refurbish and run always in Mozambique, Sudan and Tanzania”. Indian investment in infrastructure will help raise productivity in African countries. As India is expected to surpass the United States economy as the second largest economy in the world we can expect a larger Indian role in Africa.
This graph demonstrates steady increase of Indo African trade, which is only expected to grow in the future. African exports more goods to India than India exports to Africa, which results in a positive trade balance for Africa. India has also been making trade policy decisions, which are accommodating to African countries. For example, in 2008 India implemented a duty free tariff preferential scheme for forty-nine least developed countries (LDCs), which benefitted thirty-three countries. Moreover, India has also extended line of credit to many African countries to account for Indian imports. For example, “ as of March 2008 India had fifty-two operational lines of credit totaling US $2 billion in more than thirty African countries”. This amount was predicted to double in five years time. India’s trade policy and investment projects have benefited many African countries. In summation, India will continue to play a part in Africa’s development because India’s capital and desire for investment will continue to grow.
The Western Critique
There is no doubt the Asian drivers will continue to play an important role in Africa, however, there is contention as to whether the actions of the Asian drivers truly benefit or hinder African development. The problem with this debate is that the opposition is primarily a western critique. That being said, Indian companies have been criticized for taking advantage of corruption in gaining contracts from African companies. Moreover, Indian companies also seek to take advantage of Mauritius offshore financial facilities and favorable tax conditions For example, “in 2006, Transparency International released its Bribe Payers Index which ranks countries in terms of the propensity of their businesses to pay bribes while operating abroad: India was deemed the worst offender”. While this might be true it is important to acknowledge that these critics are usually westerners who are equally as guilty in terms of taking advantage of African corruption. Moreover, some of these companies have also partaken in corporate social responsibility projects that give back to the local community. Western critics also claim that the Asian drivers presence in Africa is no short of colonialism because they are stripping away Africa’s raw materials. However, the Balasubramanyam study argues that, “endowments of natural resources of various sorts in several of the African countries may have been left unexploited mostly because of insufficient domestic demand and investible resources. Foreign direct investment from China and India may provide a vent for this surplus and contribute to the growth of the host economies”. Furthermore, the present condition of the world has changed compared to twenty years ago and now more than ever the new scramble for Africa can be a good thing because it gives African countries more bargaining power. For one thing, China and India have become more reliant on Africa for their source of energy and materials, which places a deal of power in the hands of African countries should they chose to use it. Furthermore, in order for African countries to reap the full benefits from the investments from the Asian drivers they must address corruption and implement stronger fiscal policy. The rhetoric surrounding Indo African relations is one of South South solidarity and a unification of developing powers. This relationship challenges the power dynamics of the world because this solidarity reflects a more multipolar world. A multipolar world would strip away power from the United States and other western countries. Western critics are quick to criticize the involvement of Asian drivers in Africa, which is hypocritical considering the history of colonialism. Thus, it is important to acknowledge the western media bias that exists when the topic in question involves the increasing influence of Asian drivers.
India as a Capacity Builder and Distributer of Knowledge
Perhaps India’s most important role is its role as a capacity builder and sharer of knowledge in African countries. India has invested money in sharing knowledge with several African countries. For instance, “in 2005 India became the first Asian country to become a full member of the African Capacity Building Foundation (ACBF), and pledged US $1 million towards the foundation’s sustainable development and poverty alleviation capacity-building initiative”. India is also a member of the African Development Bank. These memberships show India’s dedication towards training African people and fostering a stronger environment for development. Capacity building and skills training from India to Africa have been primarily in the field of agro-business, which is considered India’s specialty. For instance, “the Indian government invested US$ 15 million in Sierra Leone (in the form of a line of credit) for the development of commercial agriculture, including the purchase of a wide range of agricultural machinery and equipment. This investment is designed to address Sierra Leone’s under-exploitation of agriculture resources and consequently its food insecurity issue”. India’s knowledge in the field of agriculture could help Africa eradicate hunger (which is a United Nations Millennium Development Goal) and aid in solving the food crisis they face. India is contributing to African development in healthcare as well. For example, “because of cheap Indian drugs, the proportion of AIDS patients being treated rose from 2 per cent in 2003 to 37 per cent in 2009”. This is significant because defeating AIDS is part of the United Nations Development Goals. Thus, cheap Indian drugs would allow more access to a cure for AIDS for people suffering in African countries.
There is so much more potential for capacity building and knowledge sharing between India and Africa. In the future, India should aim to expand collaboration with African countries in terms of knowledge partnerships. The information technology field is a field where India has an advantage and can thus teach African communities certain useful and relevant skills. India has made an effort to train African workers, which is said to contribute to the African economy. Indian companies are more integrated into African society emphasizing training Africans on how to maintain and repair the plants they build. This type of training and assistance for African citizens is crucial in order for Africa to break the cycle of poverty and truly build up their economy.
The Difference Between India and China
Some academia acknowledges the fact that media coverage of China’s relationship with Africa overshadows that of India’s. India’s relationship with Africa is said to be different compared to the other Asian drivers, such as China, because of the role of the Indian diaspora in Africa. In fact, eight percent of the global Indian diaspora is located in Africa. The diaspora is a crucial part of Indo African relations because they can serve as economic diplomats and communicators who know the local customs. The Chinese and Indian players involved in African countries differ. India’s private sector, rather than the government, plays a huge part in African countries. For instance, the Confederation of Indian Industries (CII), the Associated Chambers of Commerce and Industry (ASSOCHAM), the Federation of Indian Chambers of Commerce and Industry (FICCI), and the Federation of Indian Exporters Organization (FIEO) identified Africa as an emerging power and launched programmes to promote economic and business cooperation. As mentioned earlier, Indian multinationals have a growing presence in Africa. This differs from China because, “the Indian state is not actively involved, but rather that state support for Indian commercial activities in Africa is more limited than that offered by Beijing to Chinese players involved on the continent”. China’s involvement in Africa is primarily through state owned enterprise. Unlike China, India aims to become a stakeholder in the continent rather than a shareholder. China’s involvement in Africa is resource-based investment initiated by the Chinese government. China also uses Chinese workers in Africa instead of hiring locally. In contrast, India hires and trains locally and engages in capacity building. While the fundamental interest in African materials and energy is the same China and India’s presence in Africa is different.
India as an Aid Donor
India has shifted from an aid receiver to an aid development giver by launching multiple programs that aim to benefit African development in different ways. For instance, “ITEC allocates aid based on the importance (economic and/or strategic) of the recipient country for India; it also provides funding for the training of African personnel in India, for projects, technical assistance, study trips, and humanitarian assistance”. This program will not only help spur trade and investment between India and Africa but also provide skills assistance to African locals. India has also been providing humanitarian aid to many African countries such as Uganda, Rwanda, Congo, and Liberia by providing food in drought or by sending peacekeeping forces in turbulences. Unlike Western countries India’s aid to African countries come with no loopholes or expectations. There is no promise of political conditions for democracy and economic adjustments that need to be made in exchange for development aid. This allows African countries to lie out their own plans for development and government. Furthermore, as a developing country India is more in tune to what African countries need for development compared to developed countries. More importantly, aid packages from countries like India gives African countries an alternative to the rigid aid packages from western countries. India has also expanded the African Talent Programme, which gives scholarships to African students. There have also been proposals for creating an Indo African Virtual University. Moreover, “at the second Africa–India Forum summit in May 2011, it was announced that US$700 million would be made available to establish new institutions and training programs across the African continent”. Clearly, India is making many efforts to assist African development.
India’s development work in Africa is not an act of selflessness; there are strategic reasons why India is so interested in Africa. For instance, investing in African countries and giving them aid are ways of garnering political support from fifty-three African governments for India’s bid on the United Nations Security Council Seat. This is why Indo African relations can be described as a mutually beneficial relationship because in a way both parties win. If India does win a bid for the United Nation Security Council it would mean a huge stride for developing countries because in a way India will represent them. We can expect India to “woo” Africa with aid packages until India secures a seat on the Security Council.
The Asian drivers are and will continue to bring in large amounts of capital, which they will be looking to invest and receive a return on. Since the rest of the world has ignored Africa the Asian drivers view it as the perfect place for investment. As India expands economically its policy and strategy is aimed towards reaching a globalized audience in terms of investment and influence. India can serve as a development role model to African countries. In turn, African countries can learn from past Indian development failures and successes. In conclusion, India will continue to invest, share knowledge and provide aid to African countries. Despite the criticism from the Western world the Asian drivers will continue to play an impactful role in the African economy.
*anything in quotes are from the below references
References
Balasubramanyam, V.N. “China And India’s Economic Relations With African Countries — Neo-Colonialism Eastern Style?”. Journal Of Chinese Economic And Business Studies 13, no. 1 (2015). doi:10.1080/14765284.2014.994844.
Fantu Cheru, and C. I Obi. The Rise Of China And India In Africa. London: Zed Books, 2010.
Financial Times,. “Africa: Can India Follow China’s Lead?”, 2015. http://blogs.ft.com/beyond-brics/2013/07/24/africa-can-india-follow-chinas-lead/.
Taylor, Ian. “India’S Rise In Africa”. International Affairs 88 (2016).
The African Development Bank Group Chief Economist Complex,. India’S Economic Engagement With Africa. Africa Economic Brief, 2011.
Yadav, Ram Pratap. “India’s Foreign Policy Towards African Continent In Post Cold War Era”.Journal Of Education & Social Policy 1, no. 1 (2014).