How Indian and Chinese involvement in Africa differs in intent, methods and outcomes

Abhishek Mishra Junior Fellow with ORF’s Strategic Studies Programme.

Republished with full permission of the author. Originally published by Observer Research Foundation. Click here to view the original article.

Africa today is a continent of growth and opportunities. With a young, fastest growing youth population in the world and considerable natural resources and human capital at its disposal, Africa is poised to be a significant growth factor in the global economy. Positive winds of change are sweeping across the continent, which is now home to half of the top ten fastest growing economies of the world. Africa is an opportunity, one that is being shaped by and for the African people.

As Asia’s two largest economy, India and China have been able to tap into this emerging African opportunity. Both are shaping new narratives of engagement with Africa. But while much has been written and deliberated on when it comes to Indian and Chinese involvement in Africa, it is important to highlight differences in its methods of implementation and the impact it has generated on the lives of common Africans.

Nature of Chinese involvement in Africa & increasing backlash

Chinese approach towards aid partnership to African countries is more traditional in nature – focusing on resource extraction, infrastructure development, and elite level wealth creation. Such an emphasis on more traditional forms of aid through Foreign Direct Investment (FDI) on hard infrastructure projects might seem lucrative on the surface to many developing and small African countries who are always looking for quick and easy money, but is such an approach sustainable in the long run?

While certainly it is important to engage in nuanced debates on African debts that is not driven by ‘Chinaphobia’, one cannot deny the opaque nature of most Chinese contracts which are mostly not visible to or available for public scrutiny.

Over the past few years, China has funneled more and more money into Sub-Saharan Africa. As per estimates from China Africa Research Institute (CARI) at John Hopkins University, loans from Chinese government, banks, and contractors to African governments and state-owned businesses totaled US$ 143 billion between 2000 to 2017. Countries like Djibouti, Zambia, Democratic Republic of Congo and Angola have been identified as being at highest risk for debt distress. Low income countries are in danger of becoming locked into debt due to cheap and unsustainable Chinese loans.

Even more alarmingly, the opacity of the costs and terms of Chinese loans makes it difficult for countries to conduct risk assessment of the projects. While Chinese projects seems to serve the quest of African nations to build a sound infrastructure, a closer examination reveals that they serve Beijing’s ambitions to write the rules of the next stage of globalisation. According to Ted Bauman, senior research analyst at Banyan Hill Publishing, “it is clear that China’s primary goal with foreign investment is geopolitical and not economic.” But the main trouble is that these investments helps to bind countries to China politically, and through debt obligations, creates a form of leverage. China is using its hefty economic prowess to build political ‘soft power’ through its ‘Go Out’ policy, wherein China sends its employees of its state-run companies to Africa, as well as investment money.

Moreover, there has been multiple concerns over Chinese labour practices, often viewed as unfair, with various cases reported of poor and harsh working conditions. The types of precarious labour conditions typically includes cases of low salary below the minimum wage standards, language barriers, unfair termination of contracts, lack of holidays, medical care, insurance, and other benefits.

Latest trends in India’s Africa engagement

India’s bilateral partnership with African countries can best be defined by the spirit of developing together as equals. Indian engagement lays emphasis on long term – enhancing Africa’s productive capacity, diversifying skills and knowledge, and investing in small and medium-sized enterprises. Our special relationship is underscored by the fact that India was one of the first few countries, after the Hong Kong World Trade Organization Ministerial in 2005 that announced duty free, quote free access to low income countries back in 2008. Even during recession from 2009-2012, trade between India and Africa continued to grow nearly by 32%. Currently, for the year 2017-2018, our bilateral trade stood at US$ 62.66 billion, and during the first quarter of 2019 has reached US$ 69 billion.[i]  In terms of investments, India is the fifth-largest investor in Africa with our cumulative investments standing at US$ 54 billion.

Although India and Africa’s economic relations are modest compared to China, India has numerous advantages, including proximity, a common language, popularity of Indian culture, and the appeal of democracy.

Our most prominent example of sustainable development partnership is reflected through International Solar Alliance (ISA). Africa has taken a leadership role in solar expansion with 25 member-states out of total 48 countries to ratify the agreement coming the African continent. Under the initiative, India has pledged to more than US$ 1 billion for implementing off-grid solar energy projects in Africa, especially in West African countries.

Also, with the enunciation of the Ten Guiding Principles for India Africa Engagement back in July 2018, the Indian Government has addressed the primary concern of not having a coherent Africa policy. For the longest time, India has been criticised for not having a clear vision or strategy for Africa, even after seventy years of robust engagement with the continent. Although many aspects of the Ten Guiding Principles are not new, they serve two purpose – the Guiding Principles represents a continuity in policy that has historically defined India Africa partnership, and at the same time reflect a change in the nuances and priorities in our engagement. Most importantly, these principles have been clearly articulated, and can thus be seen as a vision document for India Africa partnership.

Not without its fair share of criticisms

There is no doubt that Indian projects, capacity, and skills development programmes has positively impacted the lives of many Africans. However, at the same time, there is a realisation that our partnership is yet to reach its true potential. Indian engagement in Africa is not without its criticism. The principle concern has been India’s poor track record when it comes to project delivery and implementation. India is viewed to be slow in delivering on its development partnership commitments, especially in comparison to China. Also, few agribusiness firms have been criticised for land-grabbing and displacing local population. Cumbersome bureaucracy on both ends also makes it difficult for funds to reach its intended beneficiaries.

In such an instance, India’s main challenge is to bridge the gap between rhetoric and practice, and this is where India has made positive strides. Various commentators, analysts, practitioners have time and again questioned if India could live up to its lofty promises. The answer to that is ‘yes’.

Outcomes of the Mid-Term Review meeting of India Africa Forum Summit III

As mandated by the 2015 Delhi Declaration of IAFS III, representatives of India and African Union met recently met on 11-12 September to take stock of the state of implementation of various areas of cooperation between India and Africa and deliberate on the preparations for IAFS IV to be held in 2020.

There were three important takeaways from the meeting;

-Firstly, the status of implementation from Indian side was welcomed by African Union representatives. Out of the total US$ 10bn Lines of Credit promised by India under IAFS-III, more than US$ 6.4bn LOC have been committed or ongoing.

-Second, out of the US$ 600mn target of grant assistance under IAFS-III, an amount of more than US$ 700mn has already been committed or ongoing.

-Third, India has completed more than 40,000 slots for training, scholarship and capacity building, out of the total commitment of 50,000 slots under IAFS-III.

In recent years, India has stepped up its game and completed various big-ticket projects in due time. These include: construction of Presidential Office in Ghana, National Assembly building in Gambia, Kosti Power plant in Sudan, Rift Valley Textiles factory in Kenya, water treatment projects in Tanzania, sugar factories in Ethiopia, and IT Parks in Mozambique and E-Swatini (Swaziland).

In the last four years, India has also established

  • 6 IT Centers (South Africa, Egypt, Morocco, Lesotho, Ghana, Namibia and Tanzania);
  • CGARD Technology Center in Madagascar;
  • 7 Vocational Training Centers;
  • Technology Center in Harare, Zimbabwe;
  • various Food Processing Business Incubation Centers; and
  • Entrepreneurship Centers.
  • New initiatives like the e-ITEC and e-Vidhyabharti and e-Arogyabharti (e-VBAB) have been appreciated by Africans.

These projects are examples of how Indian assistance is making a difference to the economy and lives of people in African countries. Now that India’s project delivery speed has improved, the foremost task at hand is to maintain the momentum, find new areas of cooperation, and regularly review progress through established joint monitoring mechanisms.

While China’s economic muscle and heft in Africa is unmatchable, India does not see itself in a competition with China. At the same time, there is growing realisation in Africa that Beijing’s terms of engagement are less than desirable. This has given India a window of opportunity to take on more projects in Africa. Unlike China, India’s partnership with Africa is based on a model of cooperation that is responsive, demand-driven, free of conditions and one that liberates Africa’s potential, rather than constraining its future.

Republished with full permission of the author. Originally published by Observer Research Foundation. Click here to view the original article.

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