Tuesday, July 17, 2007

India pushes people power in Africa

BANGALORE - China has outpaced India in the race for influence in Africa, but India has signaled that it is not about to give up the fight. During his recent visit to Ethiopia, Indian Foreign Minister Pranab Mukherjee inaugurated an e-network initiative that will enable Delhi to reach out to people in Africa's 53 countries.
The pan-African e-network will allow schools and hospitals across Africa to link up with top institutions in India. The initiative will bring Indian expertise in health care and education to the African people at low cost. Indian diplomats will hope the initiative will earn the Indian public and government goodwill and influence in Africa.
India doesn't necessarily lack for goodwill in Africa, however. India's cultural and trade ties with the continent go back several centuries, and its support for decolonization and its struggles against apartheid are well known.
However, its influence has been dwarfed by China's. 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.
In contrast, China's interest in Africa blossomed over the decades. Between 1955 and 1977, China sold US$142 million of military equipment to African countries, and trade expanded to touch a record $817 million in 1977. China's trade with Africa grew at 700% in the 1990s to touch $55 billion by 2006. China is now Africa's third-largest trade partner.
China's investment in Africa is massive. The bulk of it is in the oil sector in countries such as Algeria, Angola, Chad, Equatorial Guinea, Gabon, Nigeria and Sudan. China controls most of Sudan's oil. It is building roads, railways, harbors and petrochemical installations in Africa. At a meeting of the African Development Bank in Shanghai last month, China promised to provide about $20 billion in infrastructure and trade financing to Africa over the next three years. China has pledged to double development assistance to Africa by 2009. Having already written off debts of almost $1.5 billion in Africa, it has promised to write off a similar amount again.
China's presence in Africa is enormous. Consider this. China has 900 projects in Africa; more than 800 Chinese companies are operating there; it has sent 16,000 medical personnel to the continent, offered scholarships to 20,000 African students, and trained 17,000 African professionals.
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.
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 Africa-India 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 capacity-building. 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 favor. For instance, in Angola, India had almost closed a deal with Anglo-Dutch energy giant Shell to purchase a 50% share in an oil-exploration project and offered $200 million in aid. But China managed to swing the deal in its favor 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.
"If India wants to avoid the charges of 'neo-imperialism' that have been directed against China, it needs to develop a policy of sustainable partnership with Africa," strategic-affairs analyst Raja Mohan wrote the Indian Express. "It must offer a radically different model of aid and economic cooperation that focuses on capacity-building and technology and skill transfer to Africa."
For now, China has the advantage in its match with India on the African court. China's deep pockets are determining the deals in Africa today. Whether India will go the Chinese way in its Africa adventure remains to be seen. The e-network initiative inaugurated last week signals that, for now, India favors its people-centric approach.

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