Thursday, February 12, 2009

Africa: 'Quiet' India Could Offer Lessons to Continent

Alex Vines and Elizabeth Sidiropolous in, 6 April 2008

Several African leaders travel to New Delhi this week for the inaugural meeting of an Africa-India Forum Summit, organized by the African Union and the government of India. Citing Mahatma Gandhi's observation that future African-Indian commerce would focus on "ideas and services" rather than raw materials and manufactured goods, guest columnists Alex Vines and Elizabeth Sidiropolous write that India could offer Africa important lessons and experience.

China 's inroads into Africa are well known, but India's approach has been much quieter. Indian traders once sold glass beads to an eager African market. Now its expertise centers on science and technology. This week, the India-Africa Forum meets for the first time in New Delhi, offering a fresh insight into this modern-day scramble for Africa.

India-Africa trade stood at U.S. $967 million in 1991. By 2006-07, India's exports to Africa stood at $8.4 billion, while imports aggregated $11.4 billion, having almost doubled since the previous year.

Like China, India has done deals with Sudan and has avoided criticising Sudan's government on Darfur. India recently completed a $200 million pipeline that links Khartoum and Port Sudan on the Red Sea. In 2006, India voted against a resolution at the UN Human Rights Council that would have put responsibility on Khartoum to end the violence.

India is also involved in Zimbabwe, with trade worth $40 million in 2006 and in January, its acting ambassador in Harare praised the "good cordial relations" between the two countries. Its Africa policy is driven by economic interests. But competition, particularly with China, is also pushing New Delhi to deepen its presence on the continent.

India 's flagship oil and gas company, ONGC Videsh, produces Sudanese oil and has invested $2 billion in eight African countries. In 2005, a package deal created to compete against China by an ONGC-Mittal consortium resulted in additional Nigerian oil exploration rights.

The overall surge in imports from Africa is mainly due to these increased Nigerian oil imports, which now represent India's second largest source of imported crude. ONGC Videsh also invested $750 million to acquire a 25 percent partnership in the Greater Nile Petroleum Company (GNOP) in Sudan in 2003. Today, India gets 3.24 million tonnes of equity oil from GNOP.

Over the past five years, India has extended credit worth $2 billion to African countries, of which more than half has already been taken up. Its economic links are moving beyond its traditional Indian Ocean and Commonwealth partners. Investment in Côte d'Ivoire, for example, is expected to grow to $1 billion by 2011, which represents 10 percent of all Indian foreign investments over the past decade.
Increasingly it is China, rather than Pakistan that worries New Delhi's policy makers.

In 1999, China's trade relations with Africa were less than that of India's. Since then, Sino-African trade has soared to $55 billion. India's concern about Chinese expansion is very real and most visible in the African-Indian Ocean rim, with deepening ties such as defence agreements with Mozambique and the Seychelles. The opening of an Indian surveillance installation in Madagascar symbolises the importance of the Indian Ocean as New Delhi's backyard. Most of India's imports and exports travel by ship, so keeping sea lanes safe is a strategic priority.

But India pushes in fits and starts and, unlike China, does not have the focus of containing Taiwan, or the weight of a permanent seat on the UN Security Council to provide a political spine to its Africa policy. New Delhi still seeks Security Council reform and its peacekeeping commitments are aimed, in part, at strengthening its case. There are 9,000 Indian troops in Africa for the UN.

This week's summit is a modest effort compared with Beijing's Africa jamboree in November 2006. New Delhi does not want the two compared, so its invitation list is symbolic: 14 African heads of state and the heads of all eight regional groups.
The summit's declaration will provide future cooperation, especially in human resources, science and technology, industry, health, security and judicial reform. The lifting of trade duties on African imports is also planned.

On the commercial level, India cannot compete dollar for dollar with China. For example in 2004, ONGC's bid for an Angolan oil block failed at the last moment when its offer of $200 million for infrastructure development could not compete with a massive $2 billion from China.

However Indian business is expanding across the continent. The World Bank says Indian firms employ a larger number of Africans than the Chinese, who import more workers. This may be true, but Indian business has had a mixed history.

In Nigeria, union members abducted eleven Indian steelworkers in 2007 over a pay dispute. There are also examples of corrupt practice such as the recent United Nations scandal in the Democratic Republic of Congo, where Pakistani peacekeepers sold guns to rebels in exchange for gold that was then exported via East African-based Indian traders.

Western countries have tried to get closer to India over its Africa ties. British Prime Minister Gordon Brown and German Chancellor Angela Merkel have indicated their desire to work with India in the continent, but New Delhi has indicated its preference for southern partners not "tainted" by colonial pasts. However, the ONGC partnership in Nigeria with London stock market-listed Mittal steel shows commercial pragmatism.

There is a need for India to co-ordinate its Africa efforts: this week's forum clashes with the tenth meeting of the African Partnership Forum in Tokyo. The APF was created in 2003 to broaden dialogue between G8 countries and the New Partnership for African Development (NEPAD) to include Africa's major bilateral and multilateral donors, including India.

India should not regard Africa simply as a source of natural resources. Instead it needs to invest in the continent's human capital and share know-how. There are already signs of this happening, such as India's funding of the Pan-African e-Network Project in partnership with the African Union.

After living in South Africa, Mahatma Gandhi observed, "The commerce between India and Africa will be of ideas and services, not of manufactured goods against raw materials after the fashion of western exploiters."

India 's post-colonial democracy may provide lessons for Africa. It also offers important experience in agricultural expansion, clean water management and dealing with climate change threats. Competition to invest in Africa is welcome; the challenge is for businesses and governments to strike deals that generate wealth but also help eradicate poverty and invest in the continent's human capital.

Alex Vines is the Africa programme head at Chatham House in London and Elizabeth Sidiropolous is the director of the South African Institute of International Affairs in Johannesburg.