There should be no let-up in India’s efforts to scale up its engagement with the African countries. The ongoing Third India-Africa Forum Summit is being held in interesting times. It could address differences between India and the conglomeration of less developed and rapidly emerging economies that is Africa, as two major multilateral events draw close — the climate change meet in Paris next month and the WTO ministerial in Nairobi in December. Besides, the larger geopolitical and economic backdrop is intriguing and complex. While North Africa is in turmoil, the other parts have become more politically stable, creating room for sustainable trade and investment ties. While a fall in commodity prices has hurt most African economies, which rely solely on such exports, a partnership with India offers them the chance to break out of this vulnerability and diversify their manufacturing base. China has belied expectations on this score, having invested billions in infrastructure and mining, but giving back little by way of jobs, technology or skills. India’s advantage over China lies in its democratic credentials and years of trade and cultural ties. The last two such summits saw India committing over $5 billion in concessional aid, which not only sent the message that it was serious about Africa, but also that it was willing to lend more on the recipient’s terms, in contrast to China, the US and the EU. India should stick to this approach, as the benefits are considerable. It can get Africa’s support on Doha Round issues such as intellectual property (as in the case of HIV-AIDS treatment earlier, where India’s role has been remarkable). Efforts by the OECD to drive a wedge between the least developed and emerging economies over issues such as climate change can be addressed.
India’s bilateral trade with the continent stands at about $75 billion, with at best a negligible surplus in the latter’s favour. India’s investment has been put at $50 billion (against China’s $26 billion) but this figure includes an ‘investment’ of $42 billion in Mauritius! Bilateral trade, after increasing by 32 per cent annually between 2005 and 2011, has decelerated. This is due to the drop in commodity prices impacting Africa’s exports of coal, oil and other minerals. These constitute over 70 per cent of India’s imports from Africa — essentially oil from Nigeria and Angola, and coal from South Africa. The importance of these countries in India’s growth ambitions can hardly be overstated. Likewise, India can promote the export of engineering goods, farm equipment, and medicines, besides services such as education and medical tourism.
For such progress, a long-term vision must be in place. A hands-off approach by New Delhi cannot work in the absence of mature economic institutions. Stray complaints regarding individual investors in Africa — whether it is over land acquisition, environment or labour — should be addressed tactfully as these can cloud overall investor sentiment. Let’s develop on our goodwill and learn from China’s mistakes.