Transcript India’s Growing African Strategy: Competing with China

India’s Growing African Strategy:
Competing with China
Sanusha Naidu
Research Fellow
Centre for Chinese Studies
Stellenbosch University
South Africa
Email: [email protected]
Presentation to Royal Geography
Society Conference
29 August 2007
London
‘India’s keenness is evident from the fact that TERC [Trade and
Economic Relations Committee] has decided to club Africa with the
progress on India-US economic dialogue…add to that the increased
attention being given by China…the government thinks that it’s time to
step up trade flows if not invest more’
The Times of India (11.07.2007)
‘Chinese model is a government led model, not a commercial model.
When they develop infrastructure, most of their labour comes from
China, cost is low and Africa benefits but process of commercialisation
doesn’t take place. There is not much capacity building. Local people
are not involved. Meanwhile, Indian model will be private sector-led
growth facilitated by governments will be better appreciated by
Africans. It will enhance development of local entrepreneurial skills. It’s
India’s model. They said they want to build projects themselves and
did it. That’s Indian’s approach: create local capacity and sustainable
development’
Dr. Mohan Kaul, Director General, Commonwealth Business
Council, London, 2007.
PRESENTATION OVERVIEW
• Purpose of the paper
• Historical Relations with Africa
• Broadening political and economic
engagements after the Cold War
• Conclusion: Is The Elephant riding
the Dragon’s tail in Africa?
Purpose of the Paper:
To assess the balance of relations between Africa and
China through the lens of India’s growing African strategy
and determine to what extent does it reflect a competition
for strategic political and economic leverage across the
continent.
Historical Relations
 Ideologically located within the context of the NonAligned Movement and the Spirit of Bandung in which its
global role was based on championing the struggles of
anti-colonialism and anti-racism.
 Aligned to its Principles of Peaceful Co-existence that
it developed with China.
 Africa considered to play as a significant role in Prime
Minister Nehru’s non-aligned force
Historical Relations Continued……
 Because of the large Indian Diaspora living in the Continent.
 Underpinned by Cold War Polemics and the border dispute with China
where Africa’s mixed reaction to the conflict forced New Delhi to realise
that “it did not have a strong ally it had hoped for…and therefore actively
worked towards countering Chinese penetration in Africa” (Serpa 1994).
 Led to a) increased material support to the liberation struggle in
Southern Africa i.e. anti-apartheid struggle in South Africa and b)
expanding economic co-operation with the Indian communities
 Some analysts argue that as a partial response to China’s burgeoning
relations with newly independent African states, the difficulties
experienced in accessing markets across the continent and the need to
develop leverage (result of Sino-Indian tensions) New Delhi launched the
INDIAN TECHNICAL AND ECONOMIC CO-OPERATION (ITEC), which
emerged from a meeting convened of its head of trade missions from
Africa and West Asia in 1963.
 But the military humiliation in the Sino-Indian border dispute,
confronting the Cold War on its doorstep and the death of Nehru saw
India’s role in global system becoming marginal and India’s engagement
with Africa becoming negligible.
Contemporary Engagements: Broadening Political and Economic
interactions after the Cold War
 Whereas India’s foreign policy during the Cold War was mainly guided by
Nehruvian principles aimed at non-alignment, an alternative order and SouthSouth co-operation, in Africa this appeared to be motivated by it own polemic
with Beijing for leverage.
 All of this changed following the Cold War where policy mandarins
considered how new impulses in the global arena should reshape its PostCold War foreign policy ambitions.
 Propelled by Economic liberalisation of the 1990s, which aligned itself to a
shift in foreign policy thinking by the Ministry of External Affairs which
emphasised that ‘in the future new relationships based on concrete
economic, technological and educational cooperation will assume enhanced
significance’.
 In Africa this was about reinventing and rejuvenating the old relationship
and aligned to a confluence of interests around justice in the global order
leveled at promoting a new international order, fighting against
underdevelopment and poverty and finding export markets, and attracting
foreign capital and technological know-how.
India’s economic footprint vis-à-vis China in
Africa
Indian Energy & Mining Investments in Africa
Key
Chrome/ Ferrochrome
Cobalt
Copper
Diamonds
Iron ore
Oil Refinery
Oil Exploration/Prospecting
Natural Gas
Steel Refinery
Oil Pipeline
Phosphate
Carbon
Source: Centre for Chinese
Studies
Chinese Energy Investments in Africa
Key
Oil
Gas
Future Investments
Exploration
Source: Centre for
Chinese Studies
Chinese Infrastructure Investments in Africa
Key
Road & Bridge
Rail
Housing/ Schools/ Hospitals
Airport
Telecoms
Stadium/ Ministry Buildings/
Conference Buildings, etc
Power Stations/ Dams
Irrigation/ Water Projects
Oil Pipeline
Business Park/ Enterprises/
Factory
Radio/ Broadcasting Station/
Cinema/ Theatre
Source: Centre for Chinese
Studies
Chinese Mining Investments in Africa
Key
Aluminium
Chrome/ Ferrochrome
Coal
Cobalt
Copper
Diamonds
Iron ore
Manganese
Nickel
Platinum
Silver
Tantalum
Tungsten
Zinc
No official Chinese
investment but top export to
China in 2006
Source: Centre for
Chinese Studies
 The overlap in China and India’s economic footprint into the continent reflects
similar interests across the Continent as the maps above illustrate.
 Although China reflects an embedded dominance, Peter Pham argues that
India mirrors China’s “quest for resources, business opportunities, diplomatic
initiatives and strategic partnerships” globally and in Africa.
 Energy Security is an overriding priority, especially as India is oil dependent
and demands in the domestic economic increase.
To guard against the vulnerabilities of volatile oil prices, instability in oil rich
regions and geopolitical uncertainties that fuel possible supply disruption to
diversify its energy sources and secure lines of supply
Therefore India’s energy footprint in Africa is becoming increasingly apparent.
 The main investor is Oil and Natural Gas Company (ONGC) through its
overseas arm ONGC Videsh (OVL)
 Between the period 1995-2005 ONGC increased its acreage holdings from 2
to 14. These included investments Sudan, Nigeria, Ivory Coast, Libya, Egypt,
Gabon.
In 2005 OVL entered into a joint venture with Mittal Steel to form ONGC Mittal
Energy (OMEL), which entered into a US$6 bn infrastructure deal with Nigeria
in exchange for 2 offshore acreages.
ONGC/OVL Investments in Africa
Country
Type of Investment
Size of Investment
Nigeria
Oil pipeline
Not stated (25% stake in the
Greater Nile Petroleum Oil
Company (GNPOC) project
Sudan
Oil production
Not stated (24% share in Block
5A & 24% share in Block 5B)
Sudan
Oil refinery
US$ 1.2 bn
Sudan
Multi-product export pipeline
US$ 200 mn
Concession agreement to
explore for oil in North
Ramadan Block
Egypt
Libya
49% participating interest in 2
onshore exploration blocks
Ivory Coast
23.5% interest in offfshore bloc
C1-112
Sudan
Source: Various Newspaper articles
Oil pipeline (part of the Greater
Nile Petroleum Operating
Company)
US$ 750 mn
Other Indian NOCs in Africa
Country
Indian Company
Type of Investment
Size of Investment
Côte d’Ivoire
Unknown (various
companies acting as a
consortium)
Oil Prospecting
US$1 bn
Nigeria
National Thermal
Power Corporation
(NTPC)
Liquefied Natural Gas
US$1.7 bn
Nigeria
Indian Oil
Corporation (IOC)
Oil refinery
US$ 3.5 bn
Nigeria
Indian Oil
Corporation (IOC)
Liquefied Natural Gas
(LNG) plant & Oil
refinery
US$ 2 – US$ 4 bn
(proposed)
Nigeria
Oil India
25% stake in Sunetra
Nigeria OPL 205 Ltd.
Gabon
Oil India
45% stake (including
operatorship) in an
onshore block
Sudan
Videocon Group
Oil Prospecting
Source: Various Newspaper Articles
US$ 100 mn (76%
stake)
The Trade Dimension
INDIA AND CHINA’S TRADING RELATIONSHIP WITH AFRICA, 1999-2005 (US$
millions)
25 000
20 000
15 000
10 000
5 000
0
1999
2000
2001
2002
2003
2004
India: Exports to Africa
India: Imports from Africa
China: Exports to Africa
China: Imports from Africa
Source: World Trade Atlas (2006)
2005
 India-Africa trade has jumped from US$967 million in 1991 to over US$9.5
billion in 2005 (The Nation 2007).
 For the period April 2006 – January 2007 India’s trade with the continent was
estimated at US$19.3 billion. In 2006 exports to Africa amounted to US$9.4
billion while imports from the continent were US$12.5 billion.
 In the past five years, India’s exports to Africa grew by 120%, compared to
76% export growth with the world (Ahmed 2007)
 Yet Africa’s share of India’s global exports trade remains negligible despite
India’s export market shifting southwards. Out of a total of US$103 billion for the
FY 2006 Africa only constituted 7% of Delhi’s export market whereas Asia and
Oceania constituted the lion share of 47% (www.eximbankindia.in).
 Indian exports to Africa consist mainly of manufactured items (49%), chemical
products (11%) and machinery and transport equipment (10%) (Ahmed 2007).
 In terms of the main export partners, South Africa features prominently with
exports totalling US$2 billion in 2006, followed by Kenya with US$1.3 billion,
Nigeria at US$936 million, Egypt at US$739 million and Mauritius with US$539
million.
Fig 1: India trade with Africa, US$ bill
14.0
US$ bill
12.0
10.0
8.0
Imp from Africa
6.0
Exp to Africa
4.0
2.0
0.0
2000
2002
2004
2006
Dec year
Source: World Trade Atlas
 Indian imports from Africa are mainly primary goods. In 2006 oil (61%) was
the largest import followed by gold (12.9%), phosphate chemicals (6.5%), nuts
(2.9%) and copper ores (2.1%).
 Nigeria was the largest import partner for India in 2006. Imports totalled
US$5.6 billion followed by South Africa with US$2.5 billion, Egypt at US$1.4
billion, Algeria with US$532 million and Morocco at US$517 million.
 But India’s trading relationship with the continent is still negligible when
compared to China’s trade relationship with the continent which topped US$55
billion in 2006.
Increasing Market Traction
 Despite perceptions that India is ‘sleeping walking in Africa’ when compared
to China’s trade partnership, signals are that New Delhi is awakening to the
reality that Africa represents a strategic market and priority in its global
commercial expansion.
 This is being mobilised through:
→ The Conclave ‘India Africa Partnership Project’ – a joint initiative between
EXIM Bank of India (EXIM) and the Confederation of Indian Industries (CII)
promotes economic ties with the continent.
- In 2005 160 delegates from 32 African countries attended a meeting entitled
‘Expanding Horizons’ in Indian where over 70 projects estimated to more than
US$5 bn were discussed.
- In 2006 a similar meeting took place in October where over 300 African
participants and 375 Indian businessmen discussed over 300 projects worth
US$17 bn.
-In 2007 three Regional Conclave meetings took place in Ivory Coast,
Mozambique, and Uganda to strengthen business linkages.
→The ‘Focus Africa Programme’ under the EIBI
-Provides financial assistance to various trade promotion orgs., export promotion
councils, and apex chambers in the form of Market Development Assistance.
- Under this programme total lines of credit extended to SSA by the EIBI is over
US$550m (The Nation 2007) targeting regional blocs like ECOWAS and COMESA.
- Have also extended Lines of Credit to ECOWAS Bank for Investment (US$250m),
PTA Bank (US$5m), the Industrial Dev. Bank of Kenya (US$5m), and EADB
(US$5m).
→ Other Initiatives:
• US$200 million line of credit to NEPAD under the India-Africa Fund designed to
promote African economic integration;
• US$500 million line of credit for the Techno-Economic Approach for Africa-India
Movement (TEAM-9) which is an initiative with 8 Francophone countries;
• US$1 billion investment in a joint venture with the African Union to build a Pan
African e-Network to provide telemedicine and tele-education through integrated
satellite, fibre, and wireless connectivity;
• Letters of intent signed between the State of Andhra Pradesh and Kenya and
Uganda to send 500 Indian farmers to cultivate land in the respective countries
Emerging presence of Indian Companies
The outreach of these companies extend beyond the
resource sector to include:
- Hotel and Leisure (Tata renovating the Taj Pamodji Hotel in
Zambia for US$800m)
- Pharmaceuticals (Ranbaxy, Dr. Reddy’s & Glenmark
Pharmaceuticals)
- Vehicle Assembly and supply (Provision of 250 Tata Buses
in the DRC, TATA plant assembly at Ndola, Zambia, Mahindra
& Mahindra trucks and vehicles in Southern Africa).
- Infrastructure, Engineering & Power transmission (KEC
International Ltd, Rites Railway, Ircon, Kamani Engineering
Corp.)
- IT, Software & Telecommunications (Infosys Technologies,
Ramco Systems, Hinduja Group)
More than Business…..
Becoming a significant development partner to the continent.
Under the ITEC programme has provided more than US$1 billion worth of
technical assistance and training of personnel. Also provides scholarship
opportunities for Africans
In 2005 India became the first Asian country to become a full member of the
African Capacity Building Foundation (ACBF) and pledged US$1 million towards
the foundation’s sustainable development and poverty alleviation capacity
building initiative.
Contributed to UN peacekeeping operations in Africa - largest contingent of
peacekeepers to the continent with 3,500 troops in the DRC; 1400 Indian military
contingent constitutes the largest contribution to The UN Mission in Ethiopia and
Eritrea; also supplied its peacekeeping missions with helicopters, medical and
communication equipment.
India has also joined the HIPC II initiative and to date has written off debts
totalling US$24 million to Mozambique, Tanzania, Uganda, Ghana and Zambia.
Food donations to Namibia in 2003 as well as to Chad and Lesotho in 2004.
200, 000 mosquito nets to the Republic of Congo
Construction equipment and materials to Seychelles as part of the
reconstruction process following the Tsunami
Conclusion: Is the Elephant Riding the Dragon’s Tail in
Africa?
 Cursory level India’s growing engagements in Africa cannot be ignored.
 But does it constitute competition with China?
 Depends whether one wants to see it in this context or view India’s growing
African strategy through the lens of its independent foreign policy
engagement.
 Yet one thing is certain: India’s burgeoning relations with Africa reflects
critical considerations for China’s deepening involvement across the
continent.
 Immediate future signs are that China will remain the dominate power in
Africa’s international relations
 See India as non-threatening to its strategic interests because of Beijing’s
entrenched political and economic largesse
 But in the long-term could be considered seen as a competitor once India
builds up its influence and augments economic engagements with Africa
At the COLD FACE……..
- Developing a similar like FOCAC institution with the first possible meeting
in early 2008
- Instituting a Development Agency to monitor and augment the aid
partnership with Africa
- Leading the charge of the Doha Development Round and greater equity in
multilateral trade issues affecting the South
- Challenging the exclusivity of the G8 and contemplating initiating a similar
institution to boost the strength and voice of the South
- Engaging more actively with regional multilateral agencies i.e. observer
status in COMESA, member of the AfDB, engagements with NEPAD and
ACBF
- The Indian democratic history and experience i.e. issue of governance
- Indian firms accountable to private shareholder versus Chinese firms
accountable to political stakeholders
- Pushing competitive advantage in pharmaceuticals and
telecommunications
- Lobby the Africa bloc for support in its bid for a permanent seat in the
reformed UN Security Council
The Big Policy Questions
 How will Africa respond to China and India competing for influence and
economic leverage?
 Will African countries compete with each other to try and court China and
India for trade and investment deals?
 Which of the two will Africa see as the better partner?
 What will be the impact of geo-politics i.e. the West’s engagement vis-àvis China versus India for Africa’s engagement?
 How will Africa leverage its relations with China and India to increase its
own position in the global system?
 Who will be the real winners (i.e. Africa’s citizens or African elites)?
What will be the role of continental institutions i.e. African Union and
NEPAD in developing a cohesive engagement with China and India?
 Will Africa use the challenges experienced in its engagements with China
to develop better relationship with India?
Thank you!
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