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Thursday, July 12, 2007

India's Africa Story

At least once every few weeks, everyone from C. Rajamohan to various blogs tell us that we don't have an Africa strategy on par with the Chinese.

Aside: As most things about India's policy, things happen in dribs and bits and one has follow the short news reports from PTI and other news stories to know the full story. One usually doesn't see a well written 5000 word newspaper article or unclassified report that summarizes all activities relating to a story - whether it relates to development of nuclear weapons over decades or Kargil war. Occasionally one can find a good book. But most of the articles that report the entire sequence of events are written by non-Indian institutions. US Council of Foreign Relations (CFR) has prepared just such a short note, using Indian news articles, on India's involvement in Africa.

While the scale and extent of India's involvement of Africa is not the same as Chinese - with it's much hyped Africa Summit spending billions in aid and government directed investments in African countries, via mostly Chinese PSUs, India is none-the-less investing and providing aid to large and small African nations. The type and mode of investment is vastly different from the Chinese. Contrary to the Chinese communist government, Indian State has stopped creating more PSUs and is scaling back, very modestly under Manmohan, in existing PSUs. So the private sector, Indian companies still, has taken the lead. And there many advantages with this approach. The knowledge transfer happen over business deals, not through the hyped ceremonial, and usually useless, Memorandum of Understandings (MOUs) signed by ministers and babus. Because entrepreneurs are involved on both sides, the deal will probably be most cost efficient, producing maximum returns, to both parties with little corruption and skimming of precious tax payers money by either parties.

India’s private sector now wields significant clout in Africa, as Karen Monaghan, CFR’s national intelligence fellow and an Africa expert, discusses in this new podcast. Monaghan notes that India’s model of private investment differs strikingly from China’s model of state-managed investments. India’s government has been a “reluctant suitor,” Monaghan says. But Indian companies, whether conglomerates like Tata, pharmaceutical firms like Cipla, or automobile companies like Mahindra, have all undertaken profitable projects in Africa. Monaghan notes that Africa gives these companies access to the continent’s emerging markets as well as the chance to set up relatively inexpensive factories.

India’s private-sector investments in Africa traditionally focused in areas where the Indian population was already active on the continent, particularly in countries sharing history as British colonies. Nigeria, for instance, is India’s second-largest trading partner and a significant source for oil imports, according to data from an April 2007 report from the British think tank Chatham House. The report notes, however, that this dynamic is rapidly shifting as Indian companies increasingly seek investments in non-Anglo western African countries. Trade deals with Francophone Cote d’Ivoire, for instance, are forecasted to grow to $1 billion between 2006 and 2011.

Of course, Indian state is not completely absent in Africa because Indian state is still active within India itself. Most of these are restricted to oil/gas deals.

Indian businesses also invest in some more controversial African operations, similar to those investments that have drawn criticism to China. India’s state-owned oil company, for instance, holds a 25 percent stake in a major Sudanese oil-field (Times of India).

Before throwing the high-respected President A P J Kalam out of office, dis-allowing him to continue his second term as president, Sonia/Manmohan coterie gave a parting gift by consenting to an ambitious $100 million public project, pan-African E-Network Project, that Sri Kalam outlined many years ago - connecting universities throughout Africa using satellite, cable, and other technologies, linking them to some Indian universities, enabling them to be more collaborative and productive. Then again, with Sri Kalam not there to shepard the project, it could just turn out to be another grand project announced by UPA that usually goes nowhere.

Finally, the India-Africa story is more than making profits for India companies and government aid:

Emerging trade relationships present intriguing options (Sapa-AP) for African nations, which are increasingly turning to New Delhi for help with their own internal development goals—Ethiopia for highway project funding, South Africa for hotel investments in the run-up to the 2010 World Cup, and Niger for cheap imports of Indian rice-milling machinery. Monaghan says that invaluable lessons from India’s own path to development get passed along during the course of trade transactions. She notes the active role Indian companies have taken training and educating African workers and the implicit lessons of the importance of entrepreneurship for “driving and generating jobs, generating income, and generating growth.”[India Eyes African Investments - CFR]

This, in the long term, is better for African people and its countries, the world at large, and for India's soft power, than all the billions that the Chinese can throw at the continent.