Strengthening India- Africa Ties

Published on 8th April 2008

The India- Africa Forum Summit is an indication of the coming of age of India’s relations with African countries. India’s relations with African countries are time tested and historical. In recent years, they are being  revitalised as indicated by the duo's booming trade.Trade, for example, grew from US$967 million in 1990-91 to $25 billion in 2006-07 (inclusive of oil imports). This transformed relationship is driven by a number of factors.

Changing African Outlook

First, on the political side, there has been an end in sight to some of the debilitating conflicts that have ravaged the continent in places such as the Democratic Republic of Congo, Rwanda, Sierra Leone, Liberia and Ivory Coast. After years of negotiations, the Comprehensive Peace Agreement (CPA) was signed between southern rebels and the Sudanese government in 2005. There is a move towards Africans taking charge of their own destiny as reflected in the African Union’s steps towards conflict resolution. The continent is also embracing democracy and good governance. For example, whereas two-thirds of African states have conducted multi-party elections in recent years, 24 countries have signed up for the African Peer Review Mechanism (APRM), an offshoot of the New Partnership for Africa’s Development (NEPAD) initiative launched by African countries in 2001.

Second, on the economic plane, about 20 countries have averaged a growth rate of over 5 per cent during the past decade. According to the latest IMF World Economic Outlook, the average growth rates for Sub- Saharan Africa were around 5.8 per cent in 2007.

Africa’s Growing Strategic Importance

There has been a perceptible rise in the importance of Africa for New Delhi. First, India’s growing energy needs have forced it to diversify its oil imports. Although India has been dependent on West Asia for its oil imports in the past, India, like the US and the other major powers, has now recognised the energy potential of African countries. Currently, around 24 per cent of India’s crude oil imports are sourced from Africa. Indian national oil companies like the Oil and Natural Gas Corporation Videsh Limited (OVL) have invested in equity assets in Sudan, Ivory Coast, Libya, Egypt, Nigeria, Nigeria-Sao Tome Principe Joint Development Area and Gabon. Private sector companies like Reliance have also invested in equity oil in Sudan. Essar has also procured exploration and production blocks in Madagascar and Nigeria. India has recently completed a $200 million project to lay a pipeline from Khartoum to Port Sudan on the Red sea.

Second, there is a growing recognition of the fact that countries on the eastern coast of Africa fall under India’s maritime strategic neighbourhood. To address the prevailing  insecurity in the Indian Ocean given the existence of extremist organisations and criminal syndicates that traffick drugs, arms, humans, and pirate, the Indian Navy has been active in its diplomacy in the Indian Ocean. It provided maritime security during the African Union summit in 2003 and the World Economic Forum in 2004 in Mozambique.

Third, Indian industry has realised the strategic commercial importance of Africa as revealed in its Focus Africa and Team 9 initiatives. New economic initiatives launched by the African governments like the NEPAD have also attracted the interest of Indian investors. There is a growing realisation that African economies are at a stage of development that requires India's appropriate technology and products at competitive prices. According to a recent study by the Federation of Indian Industry and Commerce (FICCI), it is “high time India took a pragmatic assessment of the business opportunities offered by Africa.” The success of the four India-Africa project partnership conclaves held in New Delhi since 2005 (the last one attracted 606 African delegates from thirty three countries, negotiating 152 projects worth $10.5 billion) is an indication of Indian industry’s growing interest in Africa.

Opportunities

India and Africa together make up nearly a third of humanity. Politically, both share similar world views – they acknowledge the growing North-South divide, identify with issues like reforms in institutions of global governance, and face similar challenges of instability and conflict. It is therefore quite natural that countries from Africa and India have come together to collaborate in multiple areas.

One of the priority areas for India is human resource development and capacity building. In the last forty or more years, India has extended $1 billion worth of assistance in this sector in Africa through the Indian Technical and Economic Co-operation Programme (ITEC). This has involved deputation of Indian experts in a number of African countries. Over 1000 officials and 15,000 African students receive training in India annually.On the health sector, Indian pharmaceuticals industry leads in the developing world in terms of technology, quality and range of affordable medicines. Collaborative research and development partnerships between Indian and African pharma majors would be mutually beneficial. Several Indian pharma and healthcare companies  like Ranbaxy laboratories, Cipla Limited, Aurobindo Pharma and Emcure Pharmaceuticals have invested in Africa.

Other areas of cooperation include information & communication technologies where the Indian government, private sector IT and telecom companies have recognised the potential investment opportunities available in Africa. India has already made a vast contribution through building the Pan-African E-Network, which will connect all 53 nations of the African Union through satellite and fibre optic network.  In the agriculture sector, African countries are looking for ways to replicate the Indian “green revolution model.” A few Indian companies like the Kirloskar Brothers Ltd., Water and Power Consultancy services (WAPCOS) and International Tractors Ltd. have already made a mark in Africa.

Expansion of power projects has been  one of the priorities for African countries in recent years. Opportunities thus exist for Indian public and private companies for setting up power plants and harnessing alternative energy technology. Indian companies like Bharat Heavy Electronics Limited (BHEL), Tata Power, Suzlon Energy and Mohan Energy Corporation among others are making inroads in this sector.

Challenges

India is not alone in strengthening its ties with Africa. The United States and Europe are also taking steps in this direction, mainly with the fear of Africa exporting its problems – refugees, health problems and more importantly terrorism to Europe and elsewhere. China has been active in forging partnerships all across Africa, offering economic aid and political support, and promising to be an “all weather friend”. China’s interest in Africa is reflected in the phenomenal growth of its trade with Africa, which ballooned from $6.5 billion in 1999 to $40 billion in 2005.Due to weak and fragile states with limited institutional capacity in enforcing the rule of law, governance issues are the inevitable challenges in doing business in Africa.

Recommendations

As India enters into a fresh dialogue with Africans, it should be aware that it cannot match the pace or the extent of engagement of the EU, US or China in Africa. Hence it should leverage the strengths of the unique Indian model. India ought to showcase its long term approach towards Africa, which is based on training, technological assistance and trade. India should  hinge on empowering Africans and recognising African diversity without emulating the Chinese short term approach based on extraction of natural resources.

Efforts should be made to strengthen ties with more than three million people of Indian origin on the continent. They could play a greater role in promoting business ties. The presence of African Indian businessmen in the delegations from South Africa, Uganda, Kenya and Zambia is a pointer in that direction. Nevertheless, these efforts should not overshadow efforts to build cultural contacts with mainstream Africans.

The African leadership expects India to become a shareholder in Africa’s development; a shareholder that is well informed of African aspirations and helps them refashion indigenous structures to achieve them.

This is a condensed version of India and Africa Partnership:Opportunities and Challenges that was first published in IDSA Strategic Comments on April 8, 2008.


This article has been read 2,127 times
COMMENTS