India loads up presents for African safari By Siddharth Srivastava
NEW DELHI - Outbid by China in acquiring natural resources, particularly energy
stakes across the world, India is looking to build a challenge in Africa, with
interests in diamonds, oil and gas, minerals and information technology (IT)
projects.
This week, New Delhi hosted the first India-Africa summit, which adopted the
"Delhi Declaration" and the "Africa-India Framework for Cooperation" as a
blueprint for substantially enhanced cooperation. The summit was attended by
eight heads of African states and delegations from 14 African countries.
While many Western governments have written off loans to Africa, fresh infusion
of funds has been slow, which is driving many
African countries to turn to China and to a lesser extent India for money to
finance development projects, while offering mineral and hydrocarbon assets in
exchange.
Kenyan President Mwai Kibaki said at the summit: "A winning partnership is one
in which we encourage sustainable trade and investment while promoting a better
life for all within sustainable human settlements."
In a clear indication of New Delhi's quid pro quo approach to garnering new
business, India offered "duty-free access" to 34 African nations under a
"Duty-Free Tariff Preference Scheme" for least-developed countries.
The scheme will apply to goods of interest to African countries such as cotton,
cocoa, aluminum ores, copper ores, cashew nuts, cane sugar, ready-made
garments, fish fillets and non-industrial diamonds.
Addressing the two-day summit, Indian Prime Minister Manmohan Singh said, "We
have held extremely substantive and productive discussions on all issues which
confront India and Africa and I offer Indian assistance in ushering in a green
revolution in Africa [referring to agriculture]."
Manmohan declared that India would increase more than twofold credit lines to
projects in Africa, from US$2.15 billion in 2003-4 to $5.4 billion in 2008-9,
and boost grants and aid.
Though most observers agree that New Delhi's African push is due to the fear of
being ousted by China in the resources-rich continent, the prime minister said:
"We are not in any race or competition with China or any other country. It is
up to Africa to determine the path they wish to pursue and to the extent of
what lies within our capacity, we will offer whatever help is required."
Yet the undercurrent of competition is quite apparent. Jairam Ramesh, India's
federal junior minister of state for commerce and industry, was more
forthright: "The first principle of India's involvement in Africa is unlike
China. China says go out and exploit the natural resources, our strategy is to
go out there and add value."
Observers have highlighted common features between the latest Indian approach
to engage with Africa and the Chinese strategy put in place in 2004. Beijing's
efforts have yielded results and India has been feeling the pinch of lost
business opportunities. India is now pursuing a similar line, though on a
smaller scale. In 2006, Beijing hosted the China-Africa Cooperation Forum,
which was attended by more than 40 African heads of state.
India's trade with Africa has risen to $25 billion in 2007-8 from $967 million
in 1991. However, Sino-African trade, which was less than India-Africa trade in
1999, has soared to $55 billion, with a goal to reach $100 billion by 2010.
African exports to China grew almost 50% between 1999 and 2004, compared with
under 15% to India. India also lags behind China in direct investment in
infrastructure projects such as roads, power and oil and gas exploration.
China has adopted an aggressive approach towards resource-rich countries such
as Sudan, Angola and Congo, investing billions of dollars and extending easy
loans in exchange of access to oil, copper and manganese.
One of the biggest Chinese mining operations on the continent is the Chambishi
copper mine in Zambia. Its interest covers the entire range of African
minerals. In 2006, China's top offshore oil producer China National Offshore
Oil Corporation agreed to pay $2.3 billion for a stake in a Nigerian oil and
gas field.
Indian players have been trying to gain a foothold in Africa as well. India's
official investment in Africa is about $2 billion and the private sector's $5
billion, led by Tata Group, Ranbaxy Laboratories and Kirloskar Brothers, which
have mostly focused on markets in South Africa, Nigeria, Egypt and Kenya. The
new goal is to broaden the base of this presence.
During the New Delhi summit, Tata Motors said it plans to launch its cheap car
Nano in Africa and deepen its semi-knock down operations (assembly of end
products) in Kenya. Tata has said that it is studying the scope of passenger
car assembly in Africa and is looking to make a presence in Senegal, Ghana,
Uganda, Angola and Algeria.
One area of immense interest to the Africans has been to gain from India's
prowess in IT, in which its skill sets are much ahead of China. The
Confederation of Indian Industry said that Indian software companies will be
ready to share "high quality education resources" to help Africa develop a
global IT work force.
India's leading IT education company, the National Institute of Information
Technology (NIIT), said it would provide "relevant IT curricula in line with
international trends". NIIT IT education centers already have a presence in
Africa.
India has also been working on package deals with Namibia and Angola in order
to build stakes in oilfields and rough diamonds. India's huge diamond-cutting
industry uses about $10 billion in rough stones every year, adding about $4
billion in re-sale, according to government figures.
India's state-owned explorer Oil and Natural Gas Corporation (ONGC) and ONGC
Mittal Energy, a joint venture, are investing in energy stakes in Nigeria. That
country has been seeking investments in infrastructure sectors such as power
and railways in return for stakes in oil blocks. ONGC is looking at a stake in
the 200,000 barrel a day Lobito refinery in Angola. India's largest refiner,
Indian Oil Corp, is also working on investment plans in Nigeria.
In Sudan, China National Petroleum Corporation, ONGC and Malaysia's Petronas
are the biggest players in the oil sector. War-ridden Sudan, which started
exporting oil in 1999, has become sub-Saharan Africa's third-largest oil
producer, after Nigeria and Angola.
North American and European companies have been strongly discouraged from
taking part in Sudan's oil sector, especially by Washington, leaving Sudan open
to Chinese, Indian and Malaysian investors.
Elsewhere, the Gas Authority of India is involved in Madagascar, while ONGC and
Reliance Industries Limited have interests in Libya.
As the presence of China looms large over Africa, some analysts have begun to
accuse it of "neo-colonialism". As India follows China in Africa, it is being
charged with "Asiatic imperialism".
However, observers also say that China's and to a smaller extent India's
economic involvement has reduced African dependence on the West and given the
continent more economic flexibility.
Siddharth Srivastava is a New Delhi-based journalist
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