Image Courtesy: MEA
C3S Paper No. 0172/2015
“When the five-day India-Africa Forum Summit takes place in India from October 26 (2015), the two sides along with the industry honchos are expected to deliberate on the need for greater cooperation in agriculture and agro-processing, which would have a positive impact on the food security situation in Africa and India. Analysts feel that, to boost Africa’s agricultural production, the Indian industry can help in training and transfer of technology as it imports pulses from the African continent, as recommended by diplomats from both sides.” [1]
These developments shed light on a few questions pertaining to India-Africa relations, especially vis-à-vis China:
How have India-Africa-China relations evolved over time? What are India’s economic interests in Africa in comparison to China’s linkages? What measures can Delhi take to bridge the trade gap between India and Africa?
Distance no barrier: Thriving historical linkages
India-Africa ties took shape across the vast Indian Ocean since the 4th century. But Africans in India really flourished as traders, artists, rulers, architects and reformers between the 14th Century and 17th Century.[2] One outstanding personality was Ethiopian born Malik Ambar, who came as a slave but rose to be a Regent of one of the South Indian Sultanates. He proved to be an unbeatable nemesis for the mighty Mughals and finally laid the foundation of Maratha power which would rise to its zenith with Chatrapathi Shivaji.[3] Ambar is believed to be the father of guerrilla warfare in India since he used his Maratha cavalry to harass the Mughals with great effect.[4] Africa supplied not only great leaders but vital resources. East African iron was exported to India for the manufacture of famous swords.[5] Centuries later, Mahatma Gandhi inspired African countries, who were resisting the shackles of colonialism and apartheid, with peaceful dialogue and non-violence.
Chinese linkages were no less prominent. In the early years of the Ming Dynasty, between 1405 and 1433, China launched one of history’s most remarkable and mysterious naval enterprises: Admiral Zheng set out in fleets of technologically unparalleled “treasure ships” to destinations as far as the Horn of Africa.[6] However these missions were not aimed at territorial conquest or resource trade. They merely reflected the Chinese desire to exchange high-level visits and gifts or “tributes”. The nature of ties changed in the 1950s-1970s when China was keenly interested in propagating Communism throughout the African Continent, and even supplied military hardware for this purpose. It gradually obtained a key objective: the recognition of the ‘One China’ policy. Communist propaganda has since then waned, but military and trade ties remain strong, and are far ahead of India’s tryst with Africa.
The Indian Elephant races with the Dragon
India-Africa trade is set to touch USD 100 billion this year, up from around USD 70 billion in 2013 and a major leap from barely USD 5 billion about a decade ago. While Indian exports to Africa include petroleum products, automobiles, pharmaceuticals and telecom equipment, imports are crude oil, gold, raw cotton, precious stones and textile yarn.[7] Besides, 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.[8] Despite the depth of cooperation, India-Africa trade is dwarfed by China’s presence in Africa.
China has moved far beyond India, by becoming Africa’s largest trade partner in 2009. Beijing needs economic relations with Africa chiefly for importing crude oil, making the resource rich continent China’s second largest energy supplier. Africa also exports other resources to China, namely iron ore, metals, other commodities, as well as a small amount of food and agricultural products. At the same time, China exports a range of machinery and transportation equipment, communications equipment, and electronics to African countries.[9]
However some barriers in Africa- China do remain. Africa has been affected by the unpredictable Chinese financial scenario: Currencies in African countries with strong exports to China, like South Africa (gold and wine), Angola (oil), and the Zambia (copper) have already fallen following Beijing’s move to devalue the yuan.[10] On the other hand, Africa can rely on India with its resilient economy.
Despite the detriments observed, China-Africa trade has received a significant boost since the Forum on China-Africa Cooperation (FOCAC) was established in 2000. Since this multilateral cooperation institution was setup, trade has jumped from USD 50 billion in 2000 to over USD 200 billion in 2012. However, the African side has its own fears and reservations regarding the influx of Chinese goods and labour and export of African resources: At the fifth FOCAC Ministerial Meeting in Beijing, South African President Jacob Zuma remarked that “Africa’s commitment to China’s development has been demonstrated by the supply of raw materials, other products and technology transfer. This trade pattern is unsustainable in the long term. Africa’s past economic experience with Europe dictates a need to be cautious when entering into partnerships with other economies.”[11] The evidence is clear as seen in the nascent and vulnerable African industries being hit by China’s aggressive exporting of machinery and manufactured goods. Textile, shoe and ferrochrome steel makers are especially harmed. Besides, the corporate social responsibility programs operated by Chinese companies are “passive” rather than “active.”[12] In this light, the 6th FOCAC meeting in 2015 will possibly witness an elevated devotion on Beijing’s part towards (African priorities), including agricultural development, industrialization, training, job creation and technology transfer through investment in manufacturing industries.11
On the other hand the very first India-Africa Forum Summit at Delhi in 2008 focused on agriculture and human resources, besides technology and energy. IAFS-II resulted in the Addis Ababa Declaration of 2011. It highlighted a range of issues beyond bilateral trade: U.N. reforms, Africa’s place in world affairs, climate change, countering terrorism, the Doha Round and South-South cooperation. The announcement of India’s new funding for additional commitments — USD 5 billion for lines of credit, USD 700 million for new institutions and training programmes, and USD 300 million for the Ethiopia-Djibouti railway line — was an apt response to African expectations.[13] The IAFS-III to be held in Delhi this year will have a unique line of action: inviting all 54 members of Africa, unlike earlier summits. This will help to enhance India’s image in Africa considerably.
However India has always remained ahead of China in the sphere of positive public perception. One factor behind this is that India markets to Africa according to the domestic needs: Although Africa has a large population of 1.1 billion, there is less viability as a strong market due to prevalence of low income. In this light India is going to export to the predominant agricultural sector, for instance supplying tractors for small farms. On the other hand, Chinese trade with Africa remains Sino-centric. For instance, the goods exported to Africa are priced so low that it affects the local manufacturers. This in turn causes job displacement. There are also concerns about the Chinese presence, in terms of unfair labour practices and environmental concerns. On the other hand, Indian presence in welcomed in Africa, as it generates a significant number of local employment opportunities. According to a Financial Times report, companies such as Mahindra say they hire about 90 per cent of their employees locally, with the aim to upping that to 95 per cent and more.[14] The report adds that instead of only selling finished goods, Indian conglomerates are already producing certain products in Africa.8 This implies the opening of more avenues for employment in Africa’s manufacturing sector. Employment is not limited to the African side alone. Andhra Pradesh signed an agreement with East African nations to send 500 farmers to work as entrepreneurs and landowners.[15] This will help to offset the difficulty faced back home due to droughts and lack of fertile land. Thus India and Africa share a symbiotic relationship in the crucial human resources sector.
Government consulting is another area where India can exercise its expertise. This is necessary, as many of the states in Africa need direction while consolidating their unstable economies. Communication will not be a barrier to such ventures. The colonial legacy of both parties leaves little cultural or language barriers. But China cannot boast of the same people to people affinity. There are reports of the Chinese people’s racial prejudice towards Africans and ignorance about their imperialist dominated past.
India’s specialization in ICT also gives it an edge over Chinese presence in Africa, via the Pan Africa e-network which was kicked off in 2006. The USD 1 billion project, in tandem with the 54 members of the African Union, aims to connect the African states to a satellite and fibre optic network. This network has been a boon for telemedicine programmes and online education. The brainchild of former Indian President A.P.J. Abdul Kalam, the pan African e-network enables doctors in India to offer consultation as well as training to their counterparts in Africa. The advantages garnered in e-education are numerous. The ease of access for African students to classroom sessions in India enables a sound teacher-student ratio when compared to the often crammed African university classrooms. The superior quality of the online internationally recognized courses have no room for cheating. Besides, they expose Africans to Indian culture and learning attitudes.
India also bypasses China in the realm of peacekeeping operations. Since India needs crucial oil and gas supplies from Sudan, South Sudan, Libya and Nigeria, apart from energy interests in Angola and the Ivory Coast, it has led to led to India contributing significant peacekeeping troops to the continent. India has deployed 2200 peacekeeping troops to the United Nations Mission in South Sudan (UNMISS) alone, while China deploys approximately the same number all across the continent. Significantly, Indian companies have a 25 per cent stake in two South Sudan oil companies, and an oil pipeline. Other Indian peacekeeping operations include past and ongoing deployments in Namibia, Liberia, Angola, Congo, Ethiopia- Eritrea, Mozambique, Somalia, Rwanda and Sierra- Leone. The approach of peacekeeping is also different. For instance, China’s contributions to UN peacekeeping missions have generally been non-combat peacekeepers in medical and engineering roles.[16] This may be to protect and sustain China’s investment projects. On the other hand India, while also protecting its economic interests, believes in goodwill as well as presenting itself as a strong contender for a permanent seat in the UN Security Council.
While peacekeeping remains India’s stronghold, China has surged far ahead in terms of aid. Some experts refer to China’s financing strategy as the “Angola model,” by which Beijing provides low-interest loans to countries with low credit ratings, and in turn receives favorable rights to develop oil and mining projects.9 While exact figures are hard to pinpoint, it is estimated that China engages in 1,673 projects in 51 African countries and has committed USD 75 billion in official finance.[17] However African leaders are almost three times more likely to spend Chinese development aid in areas where they have ethnic ties, casting doubt on the humanitarian effectiveness of Beijing’s strict “hands-off” policy in the continent.[18] According to AidData, most of that aid went to areas where national leaders were born, indicating a strong political bias.14 Interestingly, China handles foreign aid via its Ministry of Commerce, unlike India, where aid is a function of the Development Partnership Administration arm of the Ministry of External Affairs. This shows the difference in implied intentions while contributing aid. Chinese overseas firms are known to survey the ground reality in their areas of operation, and report back to the home country. Beijing shapes its aid strategy accordingly. India follows a more humanitarian approach while granting aid. In fact, Africa is the largest recipient of Indian aid. In 2011 India committed USD 5 billion in aid to Africa. It is estimated that Indian aid to African countries in 2014-2015 is Rs. 350 crores. An assessment of the nature of aid given demonstrates that India is keen to help Africa build its vocational skills, educational and hospital infrastructure, IT, agriculture, river basin management, green energy and even surveillance and radar equipment.
The humanitarian nature of India’s aid is not sufficient to tide over the reality of China’s clout in Africa, especially in infrastructure. From the days of when the Tazara Railway was built to the present day high speed rail networks, China has chugged a long way in building Africa’s infrastructure. In 2014, China announced that it expects to raise its direct investment in the continent to USD 100 billion by 2020, mainly in infrastructure development which will be channeled through various Chinese lending agencies, including the newly established BRICS Bank. The AIIB will also lend to African states. However Chinese backed infrastructure projects are criticized for their inferior standards and disregard for ecological damage. Political turmoil in the recipient state is also ignored. On a different note, India is serving as a role model for democracy in Africa, where for instance many states are keen to emulate Electronic Voting Machines (EVMs) system in order to avoid electoral malpractices and coups. India must take advantage of these small yet significant milestones to widen its influence in Africa.
Staying ahead in the African Safari
India can capitalize on the positive public perception it enjoys in the continent. It is observed that Kenya has a higher positive perception of China, while South Africa ranks lower.[19] This appears ironical at first, given that South Africa is China’s largest African trade partner, with trade valued at more than USD 20 billion. Perhaps the high level of trade has led to competition with local producers and sellers, thus denting China’s image. India must not ignore Africa’s interest in Prime Minister Modi’s ‘Make in India’ campaign. As proposed, they must be encouraged to export to India, make in India and sell in Africa. This will ensure positive relations on a government-government, business- business and people-people level.
In addition, active Corporate Social Responsibility can be teamed with peacekeeping efforts to achieve humanitarian ends. India, in its own small way can include the democracy quotient while building relations from a bottom-up approach. It can help to offset opposition from authoritarian regimes. It will be a difficult path, but India cannot afford to be a silent spectator as it rises to be an economic powerhouse in a few decades. True, diplomatic foreign policy dictates that India should not interfere, but perhaps the key lies in mediation and building political awareness. It will be feasible to put India’s diplomacy with Africa, which has stronger roots than China’s, to good use and create a favourable political atmosphere for future business opportunities. Indian entrepreneurs can team with African traders in less trodden yet promising paths such as rural industries, indigenous products and fashion designing. Incentives can be offered to Indians engaging with Africa. Indian diamond traders can be encouraged to lead the way for the rest of the world to buy only ‘conflict-free’ diamonds, thus forcing African states in turmoil to seek conflict resolution.
India may not have the economic resources that China does to engage with Africa, but it does have the treasures of democracy, sectors such as IT, and entrepreneurial spirit. These may serve to give Delhi a lion’s share of Africa’s goodwill. The IAFS’s continued emphasis on agriculture demonstrates that India acknowledges that the primary economy of both sides needs due diligence, unlike the Chinese focus on resources and manufacturing, which is presenting its own set of problems. India has, in the past and the present, been a vital part of Africa’s peace movement and security. This aspect can translate into rich dividends as India moves forward with its large Western cousin. In time, India can be one of the lamps that helps to illuminate the continent emerging from the shadow of under development and make Africa a true Indian ally, in every sense of the word.
[1] Huma Siddiqui, “India-Africa conclave to discuss agri cooperation”, The Financial Express, August 19 2015, http://www.financialexpress.com/article/markets/commodities/india-africa-conclave-to-discuss-agri-cooperation/121605/
[2] Vikas Pandey, “Africans in India: From slaves to reformers and rulers”, BBC News, December 19 2014, http://www.bbc.com/news/world-asia-india-30391686
[3] A. Rangarajan, “Malik Ambar: Militray Guru of the Marathas”, The Hindu, October 12 2008, http://www.thehindu.com/todays-paper/tp-features/tp-sundaymagazine/article1437711.ece
[4] Manimugdha S Sharma, “When black was no bar: How Africans shaped India’s history”, Times of India, October 10 2014, http://timesofindia.indiatimes.com/india/When-black-was-no-bar-How-Africans-shaped-Indias-history/articleshow/44766055.cms
[5] Historical Relations across the Indian Ocean (Belgium: UNESCO, 1980), 17. http://unesdoc.unesco.org/images/0004/000421/042152eo.pdf
[6] Henry Kissinger, On China (England: Penguin, 2012), 9.
[7] “India, Africa trade to touch $100 billion by 2015”, Times of India, October 1 2013, http://timesofindia.indiatimes.com/business/india-business/India-Africa-trade-to-touch-100-billion-by-2015/articleshow/23367675.cms
[8] Sudha Ramachandran, “India’s African “Safari”’, The Diplomat, December 4 2012, http://thediplomat.com/2012/12/indias-african-safari/
[9] Christopher Alessi, and Beina Xu, “China in Africa”, CFR Backgrounders, http://www.cfr.org/china/china-africa/p9557, (Accessed August 24 2015).
[10] Amadou Sy, “Chinese yuan devaluation is not the real concern for Africa: A weakened Chinese economy is!”, The Brookings Institution, http://www.brookings.edu/blogs/africa-in-focus/posts/2015/08/21-china-yuan-devaluation-africa-sy , (Accessed September 1, 2015)
[11] Leslie Hook, “Zuma warns on Africa’s ties to China”, Financial Times, July 19 2012, http://www.ft.com/intl/cms/s/0/33686fc4-d171-11e1-bbbc-00144feabdc0.html#axzz3kO55wpZX
[12] Yun Sun, “The Sixth Forum on China-Africa Cooperation: New Agenda and New Approach?” The Brookings Institution, http://www.brookings.edu/~/media/Research/Files/Reports/2015/01/foresight-africa/china-africa-cooperation-sun.pdf?la=en, (Accessed August 31, 2015)
[13] Rajiv Bhatia, “India-Africa Summit: from agreement to action”, The Hindu, June 9 2011, http://www.thehindu.com/opinion/op-ed/indiaafrica-summit-from-agreement-to-action/article2088135.ece
[14] Peter Vanham, “Big Dreams of India-Africa Trade at Delhi Forum”, November 5 2014, http://blogs.ft.com/beyond-brics/2014/11/05/big-dreams-of-india-af rica-trade-at-delhi-forum/
[15] “India- Boosting Trade with Africa”, Africa Business Pages, http://www.africa-business.com/features/india_africa.html, Accessed August 21, 2015.
[16] Bill Humhrey, “Chinese Peacekeepers in Africa?”, The Globalist, http://www.theglobalist.com/chinese-peacekeepers-africa/, (Accessed August 24 2015)
[17] “6 Surprising facts about Chinese aid to Africa”, One, http://www.one.org/us/2013/04/30/6-surprising-facts-about-chinese-aid-to-africa/, (Accessed August 24, 2015)
[18] “African presidents ‘use China aid for patronage politics’”, The Guardian, November 21 2014, http://www.theguardian.com/global-development/2014/nov/19/african-presidents-china-aid-patronage-politics
[19] Prof GJ Rossouw, Dr Sofie Geerts, Namhla Xinwa, “Africans’ Perceptions of Chinese Business in Africa: A Survey”, Ethics Institute of South Africa, http://www.ethicsa.org/phocadownloadpap/Research_Reports/AfricanPerceptionSurveyChineseBusinessWEBSITEVERSION.pdf, (Accessed August 24, 2015)
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