INDIAS RELATION WITH AFRICA

An Assignment In Africa in World Affairs

By Hayden Santimano Part II CLAS

History Africa & India have had trade relations since a long time. The West Indian states would trade with the East African states. And culture & traditions progressed. This was until both got colonized by the western countries. Relations during cold war 1960-2000 Leaders like Gandhi and Nehru strengthened ties that were severed through the many years of colonisation. Both these leaders played an important role in bringing back the former ties and closeness that prevailed. African countries joined the non-aligned movement pioneered Egypt, Ghana India, Indonesia and Yugoslavia after 1961. Since 1962 India stared to look inwardly at its regional tensions. India got caught up in various problems facing its security. They had to fight several wars. All this led to decreased attention to the African nations. Which in turn led to poor relations during this time. In 1991 India opened up to globalization, liberalization. The 1990s saw a downsizing of Africa's importance in India's international priorities as the latter's diplomatic presence shrank and the number of diplomatic missions was reduced as personnel and resources were shifted to Israel and the newly created Central Asian countries. With the end of the Cold War, India was focused on continents further to its West North America and Europe - or to countries to its East and, in the process, Africa moved to the margins of India's radar. Mutual Benefits Energy Security: Cheap energy and other strategic raw materials from African continent has become an economic and political imperative. By 2030 India will be the wo rlds 3 largest consumer of energy. Currently 75% of our oil imports comes from politically volatile Middle East. Projections suggest that India will depend on oil for almost 90% of its energy security need by the end of this decade. Trade Relations: India's trade with Africa has expanded 500% from $5.2 billion in 2003 to an estimated $26 billion in 2008 and in 2009 gone up to $36 billion. In March 2010 India-Africa conclave meeting attended by 34 countries decided to scale up bilateral trade with Africa to $70 billion by 2015. Africa has emerges as a huge potential market for Indian goods and services. Transfer of Technology: Africa is interested in acquiring cost effective & intermediate technology in the field of agriculture, IT, pharmaceuticals, etc. India is able to provide reasonably good technology for a reasonable price. Africa would like to have their own green revolution & become food sufficient. They would like to have broadband and get connected to the world, they also are the second largest market for telecommunications, & this

industry is not very well targeted yet. India has an edge in pharmaceutical industry and Africa could use Indias help to fight aids and malaria. Permanent seat in UN Security Council: India knows that the African states are not very strong or powerful like the western nations, and that they dont possess any much influence in international relations. Yet India is constantly looking to their support for strength in numbers. Having the whole of Africa on Indias side automatically gives it 54 countries which provides a certain legitimacy to the claim. Trade & Investments India is Africas 4th largest trading partner behind the EU, China and the US, and a significant investor across the continent. Bilateral trade hit $57bn in 2011, and is targeted to reach USD 90bn by 2015. At present, India accounts for 5.8% of Africas trade. While still small compared with Africas traditional partners (Europes trade with Africa exceeded USD 300bn in 2011) the pace of growth in Africa-India trade and investment over the past decade is rivalled only by China-Africa trade. Africa has the worlds second-fastest-growing mobile telephone market. Trade: Indias top four African trading partners account for 68.6% of total Africa -India trade. All have trade surpluses with India: Nigeria, Angola and Algeria for oil and South Africa for gold. Nigeria is the fifth-largest source of Indias fuel imports, providing up to 12% of fuel imports. South Africa accounted for 10.4% of Indias total gold imports in 2010. The trend among the top three trading partners (increasing trade surpluses) has led the growing trade imbalance between India and Africa, and Africas USD 14.8bn surplus in 2011. Nature of Trade

Indias Trade with Africa Is Driven by Access to African Oil, And Manufactured Goods Country Trade With Trade Main Trade Item Share Of India Balance India Total 2000-10 (% Of AfricaTotal India Imports/Exports) Trade 2011, % Nigeria 16,754.8 Surplus: 11,763.9 Oil exports (97) 29.4

a Market for Indias Share Of Countrys Total Trade 2011, % 10.2

South Africa Angola Algeria Kenya

12,116.6 6,960.4 3,229.0 2,376.6

Surplus: Gold exports 4,273.5 (54) Surplus: Oil exports 5,562.1 (99.6) Surplus: Oil exports (97) 647.9 Deficit: - Manufactured 2,121.9 imports (57) Deficit: 1,604.9 - Manufactured imports (50)

21.3 12.2 5.7 4.2

5.9 9.0 3.1 10.0

Tanzania

2,258.2

4.0

16.4

Sudan Mauritius Ghana

1,403.6 1,267.3 1,088.4

Surplus: Oil exports (77) 169.4 Deficit: - Petroleum 1,218.1 imports (57) Deficit: - Manufactured 473.9 imports (86) Surplus: 443.0 Oil exports

2.5 2.2 1.9

6.0 17.0 4.3

Congo

675.7

1.2

4.4

Both Nigeria and South Africa are former colonies of Britain. This similarity has led to 50% of Indias trade with these two countries. Also diamonds brought from South Africa once polished and sent to markets bring huge revenues for India. Destination Of Indias Aid Program Country 2005-06 Bhutan Bangladesh Nepal 251.36 11.56 14.67

2006-07 120.4 4.44 46.47

2007-08 162.44 13.33 22.22

Sri Lanka Myanmar Maldives African Countries Afghanistan Central Asia Latin America

5.56 4..89 2.93 13.55 -

6.23 8.89 1.33 4.44 98.94

6.22 4.44 4.33 11.11 96.44 4.44 0.34 53.35

Other Developing 111.96 Countries

Private & Public Sector Investment Indias entry into Africa is spear headed by private sector. Mahindra & Mahindra group, Tata group escort & Apollo are some which have begun to look towards Africa for raw materials (manganese, bauxite, gold, diamonds, iron ore, chrome) and markets (engineering products, consumer goods). Between 2004-11 the CII & Exim bank have jointly organized seven major meetings that brought together major private sector organizations and government representatives to discuss & review the progress made in deepening economic engagement between India & Africa. Ircon & Railway India technical & economic services are two large state owned companies that are that are engages in construction of rail network & leasing of locomotives in Sudan, Tanzania and Kenya. Exim bank has played a critical role in facilitating the entry of Indian private sector through its LOCs to African governments, regional entities such as east and southern African trade & development bank the east African development bank, the West African development bank to promote Indian exports & consultancy services. As part of India Africa Forum Summit 2008 India would allow 34 countries to have duty free imports. Culture In 1964, the Indian Technical and Economic Cooperation (ITEC). Under this scheme the government provided for various schemes to improve Africas human development as well as promote good will.

Capacity Building: Offers technical training to personnel in the large network of vocational and human resource development institutions across India. Various jobs are taught like processing, manufacture of agricultural tools, carpentry, plastic moulding, brickmaking, among others Project Assistance: Assists with project identification, drawing up feasibility report, project implementation & training of local personnel to eventually manage and run the project on their own. Institution Building: A more sustainable, long-term solution lies in the building of appropriate institutions. Scholarships Provided: Graduate and post-graduate courses in prestigious Indian universities, covering a wide range of disciplines in the humanities, science and technology and professional areas such as engineering and medicine. Security India has defence agreements with Seychelles & Mauritius. In 2011 Indian army special forces conducted a joint exercises with the Seychelles Peoples Defence Forces including training in airborne and anti-terrorist training. In 2003 India signed a memorandum of understanding with Seychelles to patrol the territorial borders. Same year INS Investigator gifted to them. Security cooperation between India and Mauritius date back to 1974 when India handed over a naval ship AMAR for coastal surveillance. In 2001 India provided them with CGS Observer & interceptor patrol boats on lease for 5 years. Under the Indian technical & economic cooperation program training facilities in Indian defence establishments are provided to the Mauritius police force. India is a large supplier of defence equipment. Since early 2003 India has been patrolling the exclusive economic zone of Mauritius. Indias first listening post on foreign soil in Madagascar. Military ties with other African Indian Ocean Rim States. In late 2004 Indian air force conducted a combined air defence exercise with its South African counterpart. This was 1st ever combined air defence exercise by India in Africa. India and South Africa have also conducted joint naval drill off the coast of Africa in 2005. In 2004 an agreement for increased Tanzanian military personnel training & more frequent calls by Indian war ships at Tanzanian ports. Relations also expanded with Mozambique. India provided joint patrol off the cost of Mozambique during the African union summit in 2003 and again in 2004 for world economic forum meeting. A defence agreement signed in 2006 for Indian navy to

provide regular patrols of the coast of Mozambique & to supply it with arms for defence purposes. In 2010 four Indian war ships deployed in western Indian Ocean for naval exercises with the navies and coast guards of Tanzania, South Africa, Seychelles and Mauritius & port calls to Reunion and Mozambique. Comparison Between Chinese & Indian Investments India became a regional member of the African Development Bank in 1982 - two years before China. But China holds more shares in the bank and has greater voting power, and it was in Shanghai, not Mumbai, that the bank chose to hold its first board meeting in Asia recently. It was India that helped several African countries establish their military academies but it is China that wields more military influence on the continent. China's economic and energetic diplomacy in Africa stands in sharp contrast to India's. China has more diplomatic missions in Africa than even the United States, and its leaders and officials swing through the continent regularly. President Hu Jintao's visit to Africa early this year was his third in less than three years. Compare this with India's performance. India has five diplomatic missions to look after its interests in 25 countries in West and Central Africa. Nigeria is an important trade partner and among India's most important sources of oil - 20% of India's oil is sourced here. Yet the last Indian prime minister to visit Africa was Jawaharlal Nehru in 1962. And in 2009 gone up to $36 billion but china in same year $109 billion Indian diplomats insist that Africa is high on Delhi's foreign-policy priorities today, and indeed, its relations with Africa have grown. India's trade, excluding oil, surged from $914 million in 1990-91 to a little over $9 billion in 2004-05. India has firmed up deals with oil-rich Sudan, Nigeria and Angola. ONGC Videsh, the overseas-investment arm of state-owned Oil and Natural Gas Corp, has invested about $720 million for a 25% stake in the Upper Nile oilfield and plans to invest $200 million more in a 741-kilometer product pipeline. Africa has about 8% of the world's known oil reserves and 70% of its oil production is concentrated in West Africa's Gulf of Guinea. India has stepped up its diplomatic offensive here. In 2004, India pledged $500 million in the form of concessional credit facilities to eight energy- and resource-rich West African countries - Burkina Faso, Chad, Equatorial Guinea, Ghana, Guinea-Bissau, Ivory Coast, Mali and Senegal which, together with India, form TEAM-9, the Techno-Economic Approach for AfricaIndia Movement. Six other countries have expressed interest in joining the initiative. India's strategy and strengths in Africa are quite different from China's. China concentrates on resource-based investment, while India has focused on capacitybuilding. Indian investments are largely private-sector, riding on the back of the lines of credit given by the Indian government, says Indrani Bagchi in The Times of India.

According to Center for Foreign Relations sub-Saharan expert Karen Monaghan, "Indian companies are much more integrated into African society and the African economy." They hire locally and emphasize training Africans on how to maintain and repair the plants they build. Since Indian investments are generally more equitable for the locals, locals have a greater stake in Indian projects. In contrast, China has adopted a neo-imperialist strategy in Africa, using mercantile economic policies focused on resource extraction. Its proximity to corrupt and unpopular leaders in the continent could compromise its long-term objectives in Africa. China is also unpopular with many grassroots Africans, as evident from the increasing attacks its workers and immigrants have faced in countries such as Zambia. The Chinese are not the only foreigners exploiting raw materials in Zambia, but they are the ones who have aroused the greatest hostility - and been attacked - because of fears that the 30,000 Chinese immigrants in the capital Lusaka are stealing badly needed jobs. India's strength lies in public goodwill, China's in its deep pockets, which it has dipped into often to swing deals in its favour. For instance, in Angola, India had almost closed a deal with Anglo-Dutch energy giant Shell to purchase a 50% share in an oilexploration project and offered $200 million in aid. But China managed to swing the deal in its favour by offering Angola $2.3 billion for aid. Impressed by China's successes in Africa, India appears to be trying to replicate the aid-for-oil strategy. In West Africa, India has offered up to $1 billion toward power or infrastructure projects in exchange for oil-exploration rights and supplies. In 2005, Mittal Steel and ONGC announced an investment of $6 billion to establish a refinery, power plant and railway lines in Nigeria through a joint-venture company, ONGC-Mittal Energy Ltd (OMEL). Under the mega-deal between ONGC and the Nigerian government, OMEL would create the infrastructure, while Nigeria would give it oil blocks. "The formation of the ONGC-Mittal joint venture and its infrastructure project in Nigeria are wholly in keeping with the modus operandi of cash-rich Chinese companies," wrote Sushant K Singh in a recent Chatham House paper titled "India and West Africa: A Burgeoning Relationship". The OMEL deal "is seen as one of the first examples of India's new approach in West Africa". Indian analysts warn that by adopting China's strategy, India will lose public goodwill. Western Reaction They west is not yet sure as to how to go about with everything. On the one hand they are afraid that their influence will go down now in the region. This is because in the past they were the only powers for the African nations to look up to meaning they could dominate them as they wanted. They are also upset with the fact that they will have to now share their resources and that they i.e. the west will have less for themselves.

On the other hand more countries means more helping hands to build up Africa. With the help of nations like India that have traditional ties and abundant good will they can propagate democracy, free market economy, etc. They can also look forward to a multi-country solution to the piracy issue. Conclusion Both India and Africa have had a time tested relation that has overcome decades. It is not a one sided relation, both the parties involved are benefiting from this partnership. India is providing a helping hand where ever it can although it has its limitation in terms of finance whereas Africa is providing valuable resources for Indias progress. Their relation is still in a very nascent stage. They are yet to have free trade agreements and deeper security and cultural ties. In the past Africa was doomed to be with the western nations where as now they have a whole host of nations to choose from. Whether they choose China or India or Japan or the West this will determine the future of the African nations.

Bibliography Books India in Africa: Changing Geographies of Power by Emma Mawdsley & Gerald McCann The rise of China and India in Africa by Fantu Cheru & Cyril Obi Journals India in Africa: implications of an emerging power for AFRICOM and US strategy by J. Peter Pham India and Africa: Development Partnership by Ambassador Shyam Saran Indian Diaspora, Globalization and Transnational Networks: The South African Context by Chandrashekhar Bhat and K. Laxmi Narayan Evolving IndiaAfrica Relations: Continuity and Change by Ruchita Beri Indias African Engagement by Daniel Large