India’s New Promises To Africa

During the second India-Africa Forum Summit last week in Addis Ababa, Indian Prime Minister Manmohan Singh promised a veritable laundry list of new initiatives geared toward supporting African development: a $5.7 billion loan package, including $5 billion in lines of credit and $700 million for new institutions and training programs; $300 million for a railway line between Ethiopia and Djibouti; and even $2 million for the AU mission in Somalia.

India’s foray into Africa is, of course, nothing new. Similarly to other nations, India is seeking to gain a strong foothold in the resource-rich, economically promising region. A few factors, however, set India’s commitments to Africa apart:

Private sector led partnership

Indian companies already have a strong presence in Africa, and many have identified African markets as promising areas for expansion. Tata, the famous car maker, as well as Bharti Airtel (a company which spent $9 billion in asset acquisition last year in Africa), are among the companies leading the way on the continent.

There are long-standing historical ties between Eastern and Southern Africa and India. People and goods have been traveling between the two continents for centuries, and there is already a high degree of integration. Already, an estimated 2 million Indians are living in Africa, and India is touting a shared history, as well as a common experience of colonialism. There is also an added advantage for Indian companies seeking business in Africa. Indian companies are familiar with the territory: a diverse population of about 1 billion, a rapidly growing middle class, as well as weak governance and poverty are all elements that also define their home country.

PM Singh’s state visits and the high level summit are but the continuation at the state level of increased links that are being forged in the private sector.

Catching up with China

Much of the commentary around the India-Africa Forum Summit and India’s new promises to the continent focus on the differences between India and China’s investments in the continent. For India, China and many other countries, Africa represents untapped markets, and a wealth of natural resources to support growth at home. Over the years, however, the relationship between India and Africa has been primarily forged through private sector investments. While for the past couple of decades, China has been  making massive inroads into African markets and becoming an increasingly significant player both economically and politically, India has been lagging behind. The numbers speak for themselves: China-Africa trade soared in the last decade, topping $114 billion, while India-Africa trade stands at about $30 billion, with the prospect of reaching $70 billion in the next few years.

But the nature of India-Africa relations is quite different than China’s. India is eager to leverage its expertise in building up IT, manufacturing and infrastructure management capacity in Africa, and the India-Africa Forum Summit reflected this broad, far-reaching engagement. The diversity of investments announced, as well as the search for political alignment (notably, on eradicating global terrorism, Security Council reform and a shared position on NATO in Libya) are signs that India-Africa relations have potential beyond the statist approach preferred by China.

A new era in cooperation?

It’s difficult to predict what this new top-level engagement between India and Africa will yield in terms of benefits for the African continent. It seems, though, that India is well-placed to earn the good will of African nations. Where the West is seen as neo-imperialist, and China as self-serving, India has an opportunity to create strong ties on a number of levels: political, diplomatic, economic and social. This point was not lost on Indian analysts – an editorial in The Financial Express notes: “India’s biggest hope is that while China’s investments are exploitative, India’s are aimed at African people.