Guest Post: India's African "Safari"

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Submitted by Sudha Ramachandran via The Diplomat,

Although its interests in the continent are broadly similar, India’s engagement with Africa differs significantly from China. Will it prove sustainable?

India’s engagement with Africa has grown remarkably over the past decade.

Trade with Africa jumped from U.S. $3 billion in 2000 to $52.81 billion in 2010-11 and is expected to exceed $90 billion by 2015. India has emerged as Africa’s fourth largest trade partner, after the European Union, China and the United States. Its cumulative investment in the continent exceeded $35 billion in 2011 in industries diverse as energy, pharmaceuticals, agriculture and telecommunications.

Close ties between India and Africa are not new. Trade has flourished between East Africa and India’s west coast for centuries. India also supported Africa’s struggle against colonial rule and apartheid, and its freedom movement inspired the anti-colonial struggles of African countries, Ruchita Beri, an expert on India-Africa relations at the Institute for Defence Studies and Analyses (IDSA) in New Delhi told The Diplomat. Throughout the 1960s and 70s, India worked closely with the newly liberated African countries to forge common positions on global issues. 

However, New Delhi’s interest in Africa waned in the 1990s. With the end of the Cold War, India was preoccupied with mending relations with the West and establishing ties with the newly independent former Soviet republics in Central Asia. As a result Africa moved to the margins of India’s foreign policy.

Rapid economic growth and soaring energy requirements, however, forced India at the turn of the new millennium to rethink its neglect of Africa.

India imports 70% of its oil, much of it from the politically volatile Middle East. Finding new suppliers to diversify its oil sources is crucial to its energy security and Africa is an attractive option. 

Besides oil, Africa is rich in gold, diamonds, platinum, copper, manganese and uranium. India's diamond-cutting industry – the world's largest – depends on rough diamonds from Africa, while uranium in Niger, Uganda and Tanzania is vital for India's nuclear power industry.

There are other reasons too for India’s renewed interest in Africa. Africa is rich in votes at the UN General Assembly, which India needs when it pushes for a seat in the Security Council.  Realization of its strategic ambitions too hinge on cooperation with Africa. India is keen to assert its naval power across the Indian Ocean from Africa’s east coast to the western shores of Australia. This has prompted it to step up naval cooperation with Africa’s Indian Ocean littorals like Seychelles, Mauritius and Madagascar. Tackling problems like piracy off Somalia’s coast too requires India to work with Africa.

India’s interest in Africa is thus multifaceted although its focus is on the economic dimension.

Historically, India was active in Africa’s Anglophone countries and in East Africa. It was the large Indian diaspora in countries like Kenya, Tanzania and Mauritius that facilitated close economic relations. Over the past decade, however, India is looking beyond East Africa. With oil and other natural resources emerging as key drivers of its engagement, West Africa and South Africa are the focus of its attention. Nigeria’s immense oil wealth has contributed to its emergence as India’s top trading partner in Africa, accounting for roughly 30% of India’s trade with the continent.

India’s imports from Africa consist mainly of primary commodities (91% of its imports from Africa in 2010). Oil accounts for 61% of Africa’s exports to India. The continent also provides a market for India’s manufactured goods – over two-thirds of African imports from India are manufactured goods such as pharmaceuticals, machinery and transport equipment.

The domination of oil and natural resources in India’s imports from Africa and of manufactured goods in its exports to the continent has drawn criticism that India is indulging in a “neo-colonial grab” for Africa’s resources. Critics liken its trade with Africa to that which the European powers engaged in with their colonies.

“This is an uninformed view,” argues HHS Viswanathan, a distinguished fellow at the Observer Research Foundation in New Delhi and India’s former ambassador to Nigeria and Cote d’Ivoire. “Africa of today is not the same as during colonial times. When countries exploit the resources of Africa today, the terms are set by the African nations and not by outsiders. The deals are mutually beneficial.”

Echoing this view, IDSA’s Beri said that India’s relationship with Africa is “not a one-way street,” with benefits flowing to one side only. “India is sharing its own development experience with Africa,” she said. It was its services sector that spurred the Indian economy and India is now helping Africa achieve a similar growth by building its services sector.

“Capacity building is an important component of India’s engagement of Africa,” says Aparajita Biswas, head of the Department of African Studies at the University of Mumbai. India is supporting institutional capacity building at the pan-African, regional and bilateral levels. It is setting up scores of institutions in areas as diverse as food processing, agriculture, textiles, weather forecasting and rural development. A pan-African e-network linking schools and hospitals across Africa with top institutions in India will make Indian expertise in healthcare and education accessible to the African people.

Illustrating the mutually beneficial nature of India’s ties with Africa, an official in India’s Ministry of External Affairs (MEA) drew attention to training in diamond cutting, polishing and grading that India is providing to the people of Botswana. “While India’s diamond cutting industry has benefitted from Botswana’s diamond roughs, India is enabling Botswana to move up the value chain in the diamond business,” he pointed out.

Similarly, while Africa provides a major market for India’s pharmaceutical industry – 14% of India’s $8 billion pharmaceutical exports in 2009 went to Africa, “the role it has played in controlling the spread of HIV/AIDS and other diseases by making treatment affordable cannot be ignored,” the official said. Besides pharma companies like Ranbaxy are not just selling to Africa but have set up production facilities there.

India’s investments in African land have drawn criticism too. It has been accused of engaging in a “land grab,” especially in Ethiopia where Indian companies like Karturi Global, one of the world’s largest exporters of roses, have leased vast tracts of land to cultivate cash crops.  This could undermine Africa’s food security, critics charge.

“Land grab is too strong a term” to describe Indian companies’ cultivation on Africa’s land, counters Viswanthan, “So far, the projects have benefitted both parties,” he says. However, he cautions that such projects have to be “constantly monitored for any adverse effects on local food security.”

Parallels are often drawn between India and China’s African “safaris.” Indeed, their trade with Africa has grown at similar rates; India’s at a compounded annual growth rate of 24.8% and China’s at 26.3%. More importantly, access to natural resources and especially oil is the main driver of both Asian giants’ engagement of the continent.

There are important differences though.  For one, India’s footprint in Africa is small compared with that of China. Take their role in Africa’s trade for instance. In 2011, India accounted for 5.2% of Africa’s global trade compared with China’s 16.9%. Besides, unlike China’s investment in Africa, which is led by state-owned companies, Indian investment is mainly driven by the private sector. In another contrast with Chinese companies, India hires local laborers while many Chinese companies bring Chinese laborers to their projects in Africa.

Indian officials admit that China’s aid-for-oil strategy, which involves extension of soft loans for massive infrastructure projects in return for African oil, used to impress them as it helped Beijing secure deals in its favor, according to the MEA official. This prompted India to follow the Chinese strategy in some countries where it was seeking oil deals.  However, India was unable to match the aid the Chinese offered. It underscored the need for an approach that built on India’s strengths, which ultimately resulted in India focusing on capacity building in Africa.

India is upbeat over its relations with Africa. It has reason to be. With regard to oil for instance, not only has its access to African oil grown significantly – Africa now accounts for  20% of India’s fuel imports – but also it has been successful in acquiring equity in African oilfields, observes Viswanathan.

The question is how secure are its investments in Africa? Its experience in Sudan underscores the need for caution. ONGC Videsh Ltd (OVL), the overseas unit of India’s state-run Oil and Natural Gas Commission, invested $2.5 billion in oil exploration and production in an undivided Sudan. This investment came under threat with South Sudan’s secession from Sudan in 2011, with three OVL blocks in the Muglad Basin straddling the border between the two Sudans and one entirely in South Sudan. This situation became especially precarious earlier this year when Sudan forced South Sudan to halt oil production, resulting in massive losses for OVL.

As for allegations of neo-colonial exploitation, these have been leveled largely by the western media. Will such a view eventually be echoed by Africa, potentially jeopardizing India’s presence there?

India hopes that its capacity building, people-centric approach and efforts to build a sustainable partnership with Africa will keep such allegations at bay.