India’s Alternative Approach Towards African Market.

 

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In this article, Atharva argues that despite the availability of abundance of mineral reserves in Africa, the country depends on foreign economic actors and investments owing to the lack of a sustainable manufacturing sector. This makes Africa prone to exploitation, by countries that look for an external source to uplift their consumer markets. However, the Indian economy seems to have a different approach towards the African markets…

Abundance of minerals and metals give Africa a natural resource economy. The list is endless. However, African resources, despite their potential to drive growth, have been subject to years of colonization. In addition, Africa lacks a sustainable manufacturing sector. This has created dependency on foreign economic actors and investments. Nations that need to support their growing consumer markets look to the African continent. Their answers lie in her resources. However, this article would argue that the way India looks at African markets and resources does not point to neo-colonialism.

Here, it must be stated for the purpose of this article, that Sub-Saharan Africa has a higher vulnerability to exploitation. Chisadza and Bittencourt (2014) reported that nations in this region, with the exceptions of South Africa and Angola, face enormous developmental challenges despite having their Oil and fuel production account for nearly 12% of the global production. The continent has the world’s largest share of mineral reserves. The Democratic Republic of Congo is believed to have 24 trillion USD worth of iron ore deposits.  But the region still lacks adequate health care systems, and suffers from poverty, unsustainable forms of governance and illiteracy. In the 1980s, Sub-Saharan Africa saw a huge population rise of 3.3% while its agricultural output grew at 1.4%. In comparison, the North appears to have structures in place that could secure the efficient use of their resources. In politics and academia, North African nations are often clubbed with nations of the Middle East under the umbrella of the ` Maghreb’ region. This link brings with it the riches of trade with the Middle East. This leaves the Sub-Saharan region more vulnerable to a term that has become synonymous with huge Foreign Direct Investments (FDI); Neo-Colonialism.

Neo-colonialism, as Nkrumha, K. (1965) observes, is a term that refers to a form of indirect control of a nation by foreign actors. Unlike colonialism, there is less influence of political strategy and more influence of economic agendas. It involves exploitation of the natural and human resources of the nation involved. Thus, it is the lethal combination of capitalism and geo-politics.  This was born out of a global power imbalance after World War II. This imbalance emerged between what we now refer to as the ‘North’ and the `Global South’.

Nations that engage in this type of indirect control over third world nations, are more often than not, economically powerful. For instance; USA. The trend appears to be pointing toward nations that have the ability to mobilize robust manufacturing capital (man, money and material), driven by their energy security needs.

As McWilliams and Piotrowski (2014) argue, the present ‘moment’ in International Relations dictates that we have reached the far end of the unipolar behaviour displayed by the US. The `new actors’ such as India and China have now become increasingly important and powerful players at the table. At the African table, the situation offers interesting paradigms. Indian investments in Africa are seen as a chance for Africa to move away from the monopolization of her resources and focus on a progressive trajectory. Donor domination as a tool for neo-colonialism can now be addressed.

India and Africa, both being former colonies, are linked by history, culture and heritage.  Africa could look upon India as an inspiration in economic growth and development strategy. While Africa strives to secure Indian investments on her soil, she is also hopeful that these investments bring with them the opportunity for her to finally move along a desired economic path. The recent `India-Africa Summit’ in New Delhi, the 3rd of its kind, presents an epitome in growing dialogue and people-to-people contact between the two regions.

However, within the context, Indian investments have been criticised and accused of falling under the broader pattern of  ‘neo-colonialism’. Such accusations stand on the foundations of incidents such as the land grabbing in Ethiopia by Indian corporations.Such moves are validated by both governments as “necessities for development’. True as that may be, the `opportunity cost’ of such moves is borne by the indigenous communities of the region. Indian corporations have acquired more than 600,000 hectares in a nation where 80% of the population derives its livelihood from the agricultural sector. In addition, investments in sectors such as agriculture, health and food security require intricate strategy, in the absence of which accusations of neo-colonialism are born. While these accusations appear to have as they bring along with them.

Indian investments in Africa appear to be largely welfare-oriented. Consider, as an example, `The Pan-Africa E-Network’. This Information and Communication Technology (ICT) project launched by India in collaboration with the African Union, has a budget of approximately 117 Billion USD today. At its conception under the then President, Dr. A.P.J. Abdul Kalam, India had dedicated over 125Million USD as an initial commitment. Lives of citizens in 48 African nations are directly impacted by this project. The project is aimed at e-medicine and tele-education initiatives that would actively build the human capital in Africa.

However, there are also private actors that include business corporations at play. Which may be another reason why India is accused of `Neo-colonialism’. In order to get rid of such misconceptions, one must ideally look at the sectoral priorities and nature of these investments. The Tata Group, Kirloskar Brothers Ltd, Larsen and Turbo (L&T), Mahindra and Mahindra (M&M) in addition to Chennai based health sector giant Apollo share a presence in Africa. The nature of these investments are clear to point out that they have no direct intent to create windows of indirect control. Such investments are primarily born out of development cooperation from the Indian end. This cooperation holds a two-fold agenda.

Firstly, the Export and Import bank of India (EXIM) has extended nearly 2.25 billion USD worth of Lines of Credit (LoC) into the continent. At present, Indian LoCs in Africa are valued at over USD 1,739 Billion. USD 552 Billion worth of these LoCs are in Sub-Saharan Africa.

Drawing upon the LoC initiative, the other branch of this development cooperation is India’s ` Aid and Technical Assistance Program’. From 1995-2005, Indian aid to Africa crossed over 3% of the Indian budget. Expected aid from 2005-2012 stands at a staggering USD 5.4 Billion.

Also, projects such as the Indian Technical and Economic Cooperation (ITEC) and India’s USD I Million commitment toward the African Capacity Building Foundation are aimed at addressing some of the fundamental challenges that the continent faces such as poverty alleviation and capacity building.

Indian pharmaceutical companies who are now dedicating heavy resources toward Africa, hold in their investments, the key to health challenges such as malaria and HIV pandemics. Indian supremacy in knowledge and technology in the health sector can be substantially beneficial for the African population.

In order to shape the perception of Indian investments in Africa, it is also crucial to consider the other powers which hold stakes in the region. US has long been criticized for its policy toward Africa. Increasing security and military involvement has been preventive of the emergence of local economic forces and livelihoods.  Increased strength of security/intelligence wings gives more power to the elites which hinders the execution of effective economic reforms. US and UK based corporations have invested far more in the continent than India or China. Even China, which is seen as a parallel force to India in Africa, has vastly differing sectoral priorities. Cheru and Obi (2010) argue that China has been focused on infrastructure and technology based deals with African nations. Thus, if one were to take a wider view of the players on the scene, it can be argued that India’s presence in the continent can be overshadowed by the bulk and nature of various other investing nations. Thereby closing any room for the creation of a window of indirect control by India alone.

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Hence, it can be argued that although Indian corporations have business interests and investments in power, energy, infrastructure, technology and agriculture, these are supplanted by development strategies that these investments align with. Neo-colonialism requires the power at play to control the resources of the third world nation in a manner most suitable for the benefit of the power. Which is a trend one does not find in Indian investments. Further, the control is more likely to come through other players such as UK, US or China. The India-Africa economic partnership, appears to be, on the basis of the research hereby conducted, mutually interdependent and beneficial.  Further, growing public diplomacy and cultural linkages draw the two regions closer and close the door for economic domination. If, however, India vastly changed its investment patterns, reduced its development cooperation and decreased its `risk assessment standards’, the investments might tell a different tale.

Atharva is a Student at Jindal School of International Affairs.

List of Citations and References:

Cheru, F., & Obi, C. (2010) The Rise of India And China In Africa.

London: Zed Books.

Nkrumah, K. (1965) Neo-Colonialism, The Last Stage of Imperialism.

London: Thomas Nelson & Sons.

Mcwilliams, C.W., & Piotrowski, H. (2014) The World Since 1945: A History Of International Relations (8th Ed.) Colorado : Lynne Rienner Publishers.

Bittencourt & Chisadza (2014). ` Is Democracy Eluding Sub-Sahran Africa’. University Of Pretoria; Department Of Economics Working Paper Series.

“Inside The Review Of African Political Economy”. Review Of African Political Economy , 32, (1985): 95–101.

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