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Rediff.com  » Business » India bids for Africa's hearts and minds

India bids for Africa's hearts and minds

May 27, 2011 13:41 IST
"When elephants fight," Ethiopian prime minister Meles Zenawi told Business Standard in Addis Ababa recently, "the impact is felt by the grass."

Zenawi's comment, accompanied by a knowing smile, came in answer to questions posed by visiting Indian journalists on the "new scramble for Africa" clearly under way across the vast continent between Asia's largest nations and rising economic powers, India and China.

Even as Prime Minister Manmohan Singh completed a four-day trip to Ethiopia where he attended the second India-Africa Forum summit - he travels to Tanzania for the next two days - and unveiled a series of dazzling initiatives, New Delhi seems to have clearly made its most impressive bid yet for influencing hearts and minds across Africa.

In one swoop, the PM put the world on notice. Here was India, struggling with problems of governance as well as poverty eradication at home, but willing to lend a hand to fellow and friendly Africans.

"There is an old saying," the economist-PM, quoting John Maynard Keynes, told an African journalist who wanted to know why India was investing in a politically unstable continent, "that an act of investment is an act of faith…India has enough faith in the societies, systems and governments of Africa to overcome temporary difficulties…They have the will and the resources to overcome them."

Why the focus?

The PM had put his finger on the button.

Africa's incredible natural resources, from oil and gas to gold, iron ore, manganese and uranium, are the envy of nations like India and China, who need these minerals to feed their voracious appetites seeking annual eight-nine per cent growth rates.

Small wonder Africa has become the newest area for their presumed rivalry.

The figures suggest the Chinese dragon is leaps and bounds ahead of the Indian elephant. India's trade with Africa stands at $46 billion, while China's trade with Africa surpasses $125 billion.

India's credit lines, as the PM promised earlier this week, touch $5 billion, while China's credit lines are said to be double that figure.

In addition, there's a $5-billion venture capital fund that Beijing has appointed, besides another $1 billion to help small and medium enterprises set up operations in Africa's special economic zones.

Chinese investments, currently at $15 billion, are expected to touch $50 billion by 2015.

Indian diplomats admit the Chinese are ahead in the economic stakes, but argue this is only half the story.

"Apart from the fact that China is a much richer country, India's initiatives are completely different because we are helping the Africans to learn how to fish. The Chinese, in contrast, are catching the fish and giving it to the Africans."

Delhi's new catch-phrase these days is, 'capacity-building in Africa'.

Srikanth Kondapalli, a professor of Chinese studies at Jawaharlal Nehru University in the capital, said the Beijing Consensus was so successful in Africa because unlike the Washington Consensus, which focused on good governance and human rights, "China refused to interfere in the internal affairs of the African elites. The exploitation of Africa's resources is tied up with the patriarchs. It is an entirely different kitchen."

For example, in Angola, the Chinese built oil refineries as well as a pipeline to the port from where Chinese ships transport crude all the way home. In return, the Chinese paid the Angolans good money for the oil, enabling the former conflict-ridden country to enjoy its current 15 per cent rate of growth.

Style and success

The Indian approach to Africa, said Kondapalli, adopts the middle path, which cannot shut itself off from the democratic struggles taking place across the continent, but does not want to preach either.

At a seminar in Chandigarh this week, African diplomats based in India were frank.

Vicente Paulo C Chihale, commercial counselor at the Mozambique high commission in Delhi, told IANS that compared to India, "The Chinese government is very pro-active. If the Chinese say they will invest $500,000, they will immediately do so but in India, things take some time."

Still, Indian businessmen are learning - and learning fast.

Airtel's operations in 16 African countries, with Kenya as its headquarters, are successful because they are replicating the price-sensitive Indian model.

Ram Karuturi, a Bangalore-based businessman, is so good at growing enough roses in the highlands of Ethiopia that he has become the largest grower in the world (he exports all to western Europe).

Gagan Gupta, a young entrepreneur originally from Mainpuri in Uttar Pradesh, has persuaded the Tanzanian government to give him 300 acres to open the first privately-held special economic zone in that country.

At the Chandigarh seminar, Katureebee Tayebwa, a counsellor at the Ugandan high commission in Delhi, also told IANS: "We are happy there is intense competition between India and China to gain African markets. It is very good for us. These countries make huge investments, mostly without conditions. They give stiff competition to the US and Europe."

Perhaps, Meles Zenawi was right. When elephants fight, the grass feels the impact.

In Africa's case, India and China are not flattening the grass, they are simply enriching it in their own ways.

Jyoti Malhotra in New Delhi
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