By P.K.Balachandran/Ceylon Today
Colombo, September 11: By engineering the admission of the African Union (AU) into the G20 group of nations, India has won over Africa, a continent which is attracting world powers once again. The AU’s admission at New Delhi’s insistence helps India face China’s formidable challenge to it in Africa.
Apart from the Western world, India and China have also been eying Africa for its natural resources.
In the absence of Xi Jinping of China at the G20 New Delhi summit, India’s Prime Minister Narendra Modi hogged the limelight among the leaders of the Global South and representatives of the African Union.
The summit was basically a show of the Global South in general and and Indian Prime Minister Modi in particular, despite the presence of Western heavy weights like US President Joe Boden, British Prime Minister Rishi Sunak and the French President Emmanuel Macron.
The admission of the African Union under New Delhi’s watch will greatly help India make further inroads into Africa against a very formidable challenge from China.
Welcoming the African Union’s Chairperson, Azaly Assoumani, to the table of the G-20 leaders, Indian Prime Minister Modi said the inclusion of the African bloc will “strengthen the voice of the Global South.”
India hosted the India-Africa Forum Summit in 2015 and has expanded its diplomatic footprint in the continent by opening new missions in the member countries of AU. Apart from supporting the inclusion of the African Union as a permanent member of G-20, India had also invited Nigeria, Egypt, and Mauritius as part of the ‘Guest Countries’ at the G-20 summit.
The establishment of the India-Africa Forum (IAF) Summit has helped institutionalize India’s engagement with African countries, says Divya Malhotra in her paper entitled: Growing India-Africa partnership: Factors and Trends published in March 2023 in indianewsnetwork.com.
Under the India-Africa Forum, three summits (in 2008, 2011, and 2015) have been held. The first India-Africa summit took place in April 2008 in New Delhi in which 14 African countries had participated. At that summit, the two sides decided on nine areas of cooperation. To increase trade, India extended fresh credit lines to the tune of US$ 5.4 billion and gave Africa “Least Developed Countries (LDCs)” tariff concessions.
The second India-Africa summit was held in Addis Ababa in May 2011. At that summit, India pledged US$ 700 million and a fresh loan of US$ 5 billion to support the establishment of new institutions and educational initiatives. India gave 500 new training slots under its technical education program plus 400 additional scholarships for African students.
The third summit held in New Delhi in October 2015 was attended by Heads of state and government from more than 40 African nations. The fourth summit was scheduled for 2022 in Mauritania, but is yet to be held. However, at the BRICS summit at Johannesburg this year, India interacted with Africa thanks to the South African President Cyril Ramaphosa.
In the last eight years, India has extended concessional loans of over US$ 12.3 billion to Africa and completed 197 projects. Another 65 projects are under execution. The projects are in infrastructure, connectivity, skill development, health, education, information technology, small and medium-sized businesses and rural development.
Malhotra further says that Africa gets Indian aid also under the Colombo Plan’s Technical Cooperation Scheme and the Special Commonwealth Assistance for Africa Programme. Additionally, the 24 programs offered by the Indian Council for Cultural Relations (ICCR) offering 3,365 scholarships each year, have 900 slots reserved for African scholars.
India is among the top five investors in Africa with investment at US$ 71 billion over the past 25 years. Mauritius, Mozambique, Sudan, Egypt and South Africa have been the top recipients of Indian investments.
The Tata Group has car factories in Zambia and Uganda, assisting those nations’ efforts to diversify their exports. Indian pharmaceutical firms have increased their production quotas in Africa. WTO exemptions have enabled Indian firms to create and supply inexpensive drugs to combat HIV/AIDS in the African continent. For instance, in Nigeria, the percentage of AIDS patients receiving treatment has considerably increased as a result of these inexpensive Indian medications, Malhotra points out.
Another focus of cooperation with African countries is on low-cost housing programmes in Zambia, Kenya, Togo and Mauritania. India has also given a loan of US$300 million for building a railway line connecting Ethiopia and Djibouti.
Africa is India’s fourth largest trading partner. India exported US$ 40 billion worth of goods to Africa, while importing US$ 49 billion worth of goods from various African countries. India’s main exports to Africa are refined petroleum products and pharmaceuticals while Africa exports crude oil, gold, coal and other minerals to India.
At the World Economic Forum in 2014, the two sides reaffirmed their intention to reach a trade volume of US$ 500 billion by 2020. Through the Duty-Free Tariff Preference (DFTP) scheme, access has been given to 27 African LDC countries
Competition from China
The latest Africa’s Dynamic Development Report, which is jointly released by the OECD and the African Union, showed that between 2017 and 2022, China’s greenfield Foreign Direct Investment (FDI) in Africa reached 74 billion yuan ($10.14 billion), accounting for 18% of the global greenfield FDI inflows into Africa. This was in the same tier with Europe and the US.
More than 3,000 Chinese enterprises have invested deeply in Africa, of which over 70% are private companies, says China’s state-owned Global Times.
“At many Chinese companies operating in Africa, over 80% of the staff are local employees. Chinese companies have given back to local communities by building bridges and roads, drilling wells and installing street lights. At the same time, they have increased technology transfer, local procurement and personnel training in Africa, and helped modernize the continent’s agricultural, manufacturing and services sectors, upgrade its manufacturing and processing techniques, and create greater value-added, contributing significantly to the stability, development and prosperity of African countries,” Global Times said.
Lauren Johnston, writing in conversation.com says that China’s engagement with Africa has been going beyond oil and extractive commodities to industrial production, job creation, and investments that lead to African exports, and productivity-enhancing agricultural and digital technology opportunities. This is called the “Yunan model”.
According to the Policy Centre for the New South, China has become Africa’s largest trading partner, accounting for more than US$ 282 billion in trade in 2022. Approximately 16% of Africa’s total manufactured imports came from China in 2018, a shift in a continent that so heavily depended on Europe.
Twenty-five economic and trade cooperation zones with China have been created in sixteen African countries. Such zones, registered with China’s Ministry of Commerce, had attracted 623 businesses with a total investment of US$ 7.35 billion by the end of 2020. Such cooperation zones have boosted local industrialization in various sectors, including natural resources, agriculture, manufacturing, and trade and logistics.
With such initiatives, the Chinese footprint in Africa has grown to approximately 12% of Africa’s industrial output—about US$ 500 billion annually. As for the infrastructure sector, Chinese companies claim nearly 50% of Africa’s contracted construction market.
Chinese loans have been used primarily to develop Africa’s poor infrastructure, About 40% have been utilised for power generation and transmission and 30% for upgrading outdated transport facilities.
However, because of high levels of indebtedness and financial vulnerability in some African countries, debt-trapping in Africa has been an accusation levelled against Chinese investments.
But Chinese loans have low interest rates and long repayment periods, the Policy Centre for the New South points out.
“China has also announced that some Least-Developed Countries (LDCs) would be exempted from outstanding debt. The International Monetary Fund (IMF) and the World Bank have played a role in providing the necessary guidance for responsible borrowing,” the Policy Centre notes.
With both India and China assiduously competing for the hand of Africa, the once exploited continent, should see better days befitting its potential as a well-endowed land.