July 16-31, 2018
Africa is central to the global economic strategy of China and India. Visits of Prime Minister Modi and Chinese President Xi Jinping to some of the African countries ahead of the recent BRICS summit in South Africa reflected this growing synergy . Indeed, they received rousing receptions , which were matched by string of economic packages offered by both countries.
Be it trade or investment, Western powers dominated African economies for decades, till world’s second and sixth largest economies –China and India – started moving into the economic space of the continent.They are there in infrastructure, energy, agribusiness, mining and processing, manufacturing , development of small and medium enterprises, IT and the list goes on.
The two Asian giants imbued with their inherent strength and reach, have two different approaches in their Africa-focus strategy. China, by virtue of its political structure, is quick with its responses to Africa opportunities. Indian industry, especially the private sector, has a significant presence in Africa. Yet, it lags behind China in the government to government initiatives. Indian government’s response takes a longer time to put in place enabling mechanisms to facilitate the entry, consolidation and expansion. That often gives thumbs down to India not only against China but also vis a vis other emerging economies like Turkey, Brazil etc .
Indeed, Indian government created platforms like India-Africa Forum Summit, India Africa Trade Ministers Meet, International Solar Alliance etc. Are they mere copy cats of Chinese Africa centric programs, which have considerable insights, meticulous planning and execution and importantly, a deep pocket to invest in diverse fields-infrastructure to aerospace, bio-technology to solar power.
India’s economic engagement with Africa has declined over the years. T he pronounced slump seems to be at the investment front. The “World Investment Report for 2018”, by the United Nations Conference on Trade and Development (UNCTAD),pegs Indian FDI in Africa in 2016-17 at $14 billion against $16 billion in 2011-12 . China, on the other hand increased its investment from, $16 billion in 2011-12, to a massive $40 billion in 2016-17.However, FDI flows into Africa dropped by 21% in 2016-17, due to lackluster investment climate .
Trade also demonstrates a skewed trend. India-Africa trade figures between 2013 and 2017 also present a disappointing picture, falling from $67.84 billion to $51.96 billion. The China-Africa bilateral trade, in comparison, has stood at $170 billion.
However, one interesting development is that many Indians are exploring Africa-some as employees, professionals working for Indian companies like Airtel, TATA, OVL, etc or with local businesses or even setting up small businesses. Many of them have relocated from Gulf countries, which have become less lucrative. In cities such as Dares salaam , Nairobi , Addis Ababa , there is a growing presence of Indians in diverse fields, such as hyper-markets, hotels and restaurants, textile mills etc. Indian diaspora’s key role in politics as well as industry is well acknowledged.
As far as Africa is concerned, it is immaterial which country invests in the continent. Its main focus should be to attract investment, provide security to such investments and tweak policies to attract investors and investments. That way, the region has to go a long way in creating a business friendly ecosystem and easing procedures of doing business. Sooner it does the better.
