India and China in Africa
Researchers, experts, diplomats and journalists from four continents gathered at the Nordic Africa Institute in September for one of the first major international conferences surveying the surging presence in Africa of the emerging giants China and India.
Opened by the Swedish Minister for Development Cooperation Ms Gunilla Carlsson and the ambassadors to Sweden of China, India and Sudan, the conference attracted, in the words of Nordic Africa Institute research director Fantu Cheru at the opening session, some of “the best and the brightest” among scholars and experts for an exchange ranging from geopolitics to peacekeeping via investment policies and raw materials.
Such notables as the renowned Egyptian scholar Samir Amin were among the participants, with Amin holding a public lecture at the end of the first conference day on the critical topic of “The new scramble for Africa: The roles of China and India”.
In the words of conference convener Fantu Cheru, “China’s and India’s rise poses a number of challenges, [but] on balance, the opportunities should outweigh the threats if managed correctly.”
“Regrettably, missing from the new China-India-Africa cooperation arrangements is a clear and coordinated strategy by African leaders on how to engage these emerging powers constructively. While both China and India know what they want from Africa, African countries have yet to develop a common framework on how to negotiate with China and India from a stronger and better-informed platform,” Cheru has pointed out.
Gunilla Carlsson, Swedish Minister for Development Cooperation made a similar point in her opening speech at the conference, noting that “the growing presence of China and India in Africa could be a moment of immense opportunity, with numerous positive spin-off effects”.
Anticipating critical viewpoints, the ambassador to Sweden of the People’s Republic of China, Mr Chen MingMing, in his speech at the opening session pointed to the common experience of colonial oppression of China and Africa. “China”, he said, “has a close bond of friendship and solidarity with Africa.” Ambassador Chen underscored that China is a long-term development partner, with a moral obligation to help Africa. “China”, he said, “is proud of its past record in Africa.”
The Indian ambassador Mrs Deepa Gopalan Wadhwa equally emphasized the shared history of poverty and colonialism and bonds between Africa and India that go back more than a century. Citing India’s liberation leader Gandhi and his experience with racial oppression in South Africa she pointed to India’s support for liberation in Africa since the 1950s. Ambassador Wadhwa noted that many African leaders have studied in India and that over 50,000 Africans study in India every year.
Sudan’s ambassador Moses M. Akol injected a note of skepticism into the discussion with his speech, noting that some “view China’s ascendancy to the helm of the international financial system with a great deal of apprehension”.
Samir Amin, himself a living monument of anti-colonialism, in his lecture at the end of the first day of the conference also spoke of the possibilities inherent in the new linkage between Africa and China-India. This new alliance, Amin said, is “potentially in a stronger position to dismantle the international monopolies” that control international trade, and much better so than at the time of the famed Bandung Conference of 1955, when Asia and Africa came together for the first time in an attempt to challenge the current world order.
The main part of the conference was organized in eight sessions or workshops, beginning with an overview of “The Big Picture: China and India as Emerging Giants” and passing through several aspects, such as the Chinese role in conflict development and peacekeeping, and finally reaching two sessions on historical and cultural perspectives of China-India-Africa relations.
A full report, including most of the 28 papers presented at the conference, will later be published as a freely downloadable electronic document. This report will only attempt to highlight a small number of the papers.
The scramble for control of energy and raw materials is a dominant factor in much of China’s and India’s approach to Africa. As professor Timothy Shaw pointed out in his presentation in Session 1:
“China takes over 60% of Sudan’s oil exports of over 500,000 barrels per day – now 10% of China’s oil imports – and some 35% of the flow from Angola. It owns 40% of the Sudanese oil sector and one of its SOEs built a 1,600 km oil pipeline to the coast in less than 12 months. Sudan’s oil industry is located primarily in the disaffected South so is inseparable from conflict.”
Professor Alemayehu Geda of the University of Addis Ababa, in a paper entitled ‘China and India’s Growth Surge: Is it a curse or blessing for Africa? The Case of Manufactured Exports’, discussed how China’s aggressive export strategy is displacing African products from third markets, but may still benefit from this growth. This, according to professor Geda “is possible if Africans step in to the manufacturing export space left by the Asian drivers as the latter move to higher technological ladder of manufacture exports”.
One of the more contentious issues of China’s presence in Africa was discussed in the session on ‘Conflict Development and Peacekeeping Nexus’ on the first day of the conference. Discussing China’s role in Sudan and Darfur, Professor He Wenping of the Chinese Academy of Social Sciences (CASS) and currently guest researcher at the Nordic Africa Institute presented a picture in line with the official Chinese viewpoint, noting that:
“The root of the Darfur issue is poverty, and so economic development and cooperation are the solution. Through appointing a special envoy to Darfur, bridge-building between the Sudan government and the Western players as well as sending Chinese military engineers for implementing the UN 1769 resolution, China has been playing a very constructive role on the issue of Darfur.”
Daniel Large of the Africa Asia Centre in London, UK, held a more critical viewpoint, noting that “despite the value of all such external partners, the economic dominance of China in Sudan has raised the uncomfortable spectre of dependency”.
Citing traditional Chinese arguments that “underdevelopment, resource scarcity and environmental change” are the main causes of the Darfur conflict, Large said these were undoubtedly contributing factors to the conflict, but, he added:
”These cannot be taken on their own in isolation from the particular nature of political relations with the central ruling state apparatus in Khartoum in the combination of centrifugal development, political marginalization and exploitation of Sudan’s peripheries that has fuelled conflict not just in Darfur but other parts of Sudan.”
Prejudice dies hard. In 1972, Manubhai Madhvani was arrested in Uganda for being of Indian origin and jailed in a dungeon nicknamed the "Singapore Block".
Dictator Idi Amin snatched all his wealth and expelled him from the country. To this day, the 79-year-old businessman counts himself lucky for not having been killed then.
It is events like this � and the all-too-familiar images of disease, poverty and squalor � that have shaped the stereotype of Africa in the minds of Indians. Somehow, we may have been a bit late to note when the continent began to change for the better.
In fact, Madhvani returned to Uganda in 1985 and rebuilt his family business in sugar and hospitality to a $200 million empire. Uganda, and many other African countries, reformed their economies and opened up to foreign investment.
But before we responded to the new Africa, someone else did. In a well-planned and executed strategy, China has been thrusting itself in all spheres of economic activity in the continent.
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The Chinese "invasion" of Africa is veritably the biggest state-run investment in the last decade. They are everywhere. State-run Chinese firms are building bridges, roads, telecom networks, airports, and generally boosting the infrastructure all around. In return, they are getting access to natural resources.
China is now Africa�s biggest trading partner, ahead of the US. More than a million Chinese workers are now based there. After the European colonists left Africa, the Chinese have been dubbed the "neo-colonists".
But recently, a new picture is emerging in our image of Africa. And happily, its tone is Indian. Unlike China�s push driven by its government, the Indian march to Africa has been led by the private sector.
After proving themselves in fields as varied as automobiles, telecom and education in recent years, Indian businesses are gradually upping the ante.
Big ticket investments and acquisitions are emerging. In other words, Africa has become the new frontier for Indian companies to break into.
Steadily, the profile and the scale of Indian investments in Africa is going up.
In early August, the Essar group bought a refinery in Mombasa, Kenya. Essar is no stranger there. Its $450 million investment in the country�s mobile telephony market is yielding results � Essar�s brand �Yu� has 400,000 subscribers.
There�s considerable excitement around Bharti group�s on-going talks for a merger with MTN, Africa�s biggest telecom company, which could create the world�s third largest telecom company.
NIIT has grown to be one of the continent�s biggest firms in information technology training, having taught 150,000 students across 55 centres.
The Tata group, the Mahindras and Ashok Leyland have been selling vehicles for more than five years now with increasing success. Indica cars are a common sight in Johannesburg. Sales have moved up from 5,000 to 20,000 a year.
Consumer products company Marico is already in Egypt and South Africa through a carefully orchestrated strategy of buying out local hair care brands. This is just a snapshot of the 42-odd frontline firms from India that have answered the call to Africa.
What have all these companies sensed in the form of the African opportunity? When asked why Africa, Raman Dhawan, managing director of Tata Africa Holdings, asks why not.
"We are expecting Africa to grow substantially over the next two decades. We are here like any other international company. We are no different from the rest of the world.
They are looking at growth here, so why shouldn�t we? If you can be a good international company, you will find growth in Africa."
After decades of living on the fringes when the West dominated and Asia rose, the African continent is finally coming on its own.
"Since the early 1990s, African countries went through serious structural reforms, improvement of economic management, incentives to develop the private sector, important changes in governance legislation in doing business," says Jose Gijon, head of Africa and Middle East desk, OECD Development Centre.
One slice of the opportunity is a middle class numbering anywhere between 350 million and 500 million, larger than India�s. And per capita income is growing.
The continent clocked an impressive growth rate of 5.2 per cent in 2008. Of course, with recession and a crash in commodity prices, the growth may taper to 2 per cent.
But its trade links with China and India hold out hope that it could recover in tandem with these countries, says a recent article in the Harvard Business Review (HBR).
Besides, as Professor Vijay Mahajan of McCombs School of Business, The University of Texas at Austin and author of the book Africa Rising says, "When you look at (opportunities in) the world, and take out India and China, so where do you go next? The logical answer is Africa."
But it isn�t as if the risks have disappeared. In fact, sudden regime changes, violence and logistical nightmares continue to slow down businesses. But for the most part, it remains a high-risk, high return game.
"In Africa, any country depends on the leadership of the right person. Uganda, for instance, is becoming more open to foreign investment due to President Musevani who is all for an open economy and free trade," says Madhvani.
Today, the global economic crisis has opened up newer opportunities for Asian investors.
"Several big projects in Africa are on hold. Western investors are losing interest in some places," says Andrew Mold, senior economist and head of the Finance for Development Unit, OECD Development Centre. The Chinese and now, the Indian investors, are filling in that breach.
The one advantage Indians can push home is the presence of the diaspora. The ties are age-old. Madhvani�s family migrated to Uganda in 1893. There are several other business families � from the Mehtas to the ComCraft Group � that are particularly active in East Africa.
Keeping Up with the Chinese
As in everything else, the Chinese are playing a game of scale in Africa. The Indian surge may not yet match that.
While India put in $2 billion in the continent last year, the Chinese committed investments of about $8 billion dollars in 2009, according to the HBR article.
"For one, almost all of China�s investments tend to be state-led, while India�s investment is private," says Mold. Chinese leaders are also engaging with their African counterparts much more than the Indians do.
Indian businessmen agree that reducing the gap with the Chinese will be tough.
"We are nearly five to seven years late," admits Prashant Ruia, group CEO of Essar. Competing with the Chinese is impossible, to be honest. They are building roads, airports and projects as a grant. They are taking a 20 year investment risk � something private companies like us cannot do. We do not have the kind of backing that the Chinese have, they are present on a much larger scale too. They have had a head start and have been there for the past 10 years," adds Ruia.
This state-driven strategy to give infrastructure and take natural resources is the hallmark of China�s African policy. Take the $9-billion deal it struck in Congo.
China will build roads, rail networks, hospitals and schools in return for access to cobalt and copper. (It�s a different matter that the IMF has raised a red flag over Congo�s indebtedness from this deal and threatened to cancel its debt relief to that country.)
Indian businesses that have made a beachhead in South Africa and to an extent Nigeria, are still coming to grips with the rest of Africa. Indians are much more comfortable in the English speaking countries.
They have not yet fully ventured in the French or Portuguese speaking areas.
"But the Chinese do go everywhere � they don�t speak English. Yet they do business everywhere," says Somdeep Banerjee, head of Tata Steel KZN.
Apart from the first wave of companies, much of corporate India is still Africa-shy. The problem is of perceptions, and of lack of information," says Navdeep Suri, Indian consul-general in Johannesburg. "There�s a lot of opportunity, and we have nothing to fear but our ignorance."
It�s not that China�s progress has been without any problems. For instance, in Congo valley, Chinese state-run enterprises had reneged on significant deals to source copper from the mines in Kantago district, after their prices fell.
China has been accused of propping up dictatorships and other repressive regimes with direct military aid and favours.
That has generated considerable ill-will and wariness towards China across Africa. Already, China�s growing presence in Zambia has met with internal resistance.
India is doing better.
"The Indian companies here, from Tata to Mahindra & Mahindra, are doing a phenomenally good job," says Martyn Davies, CEO of South African research group Frontier Advisory and director of the Asia Business Centre at the Gordon Institute of Business Science in Johannesburg.
"They are extremely well accepted in South Africa, running very, very good business. And this is FDI that is welcomed by almost all African countries."
It�s the same story with Indian managers, who are usually at ease with Africans in those clubs where local managers hang out. Indian managers talk to local African managers in ways the Chinese never do.
Rules of the Game
More than a century ago, Mohandas Gandhi find his calling there and today, many Indian companies find South Africa the perfect gateway to the rest of the continent. The Tatas are present in 11 countries, but the biggest presence is in South Africa.
The Tatas plan a presence in all of Africa, and with all of Tata. Tata investments in Africa are closing in on the half billion dollar mark. The Tatas plan on taking that close to a billion dollars over the next few years, basing themselves in South Africa.
"We do feel that the benchmark will be South Africa for the whole of Africa," says Dhawan. "We can reach the continent much better if we are established in South Africa."
Tatas are also learning the rules of the game along the way. Banerjee of Tata Steel KZN, while trying to set up a ferrochrome plant, realised that environment is a big concern in South Africa, unlike other countries.
The company had to wait for three years to get environmental clearance. Tatas won�t miss this nuance again, he says.
There are other nuances that Indian companies must understand. "In South Africa if you want to expand and do well, you need to have �empowerment partners�. The government is ensuring that there are reservations and the black community get jobs now. In mineral resources development� they have to have an equity stake in your business. This might become a norm in manufacturing as well. We have known this for a long time. Zimbabwe and Namibia also have similar laws,"
Venturing into a new country requires local knowledge. And NIIT chose to work with local partners in all the eight countries that it operates in.
"This way we will have more access points � somebody who has been in the country, knows the job and skills requirements, and also knows the student�s capabilities," says G. Raghavan, president of global individual learnings solutions at NIIT.
Rather than run smack into Chinese competition in Africa, one tactic to tap Africa is to go to countries where China isn�t as active. That�s what the Essar group did. It focussed on East Africa. It figured that the region was largely English speaking and had lower political risks.
Yet even that proved to be a tough ask. It took Essar Oil nearly two and a half years to negotiate and get a 50 per cent stake in the Mombasa refinery where a set of investors led by Shell were offloading (the other half was owned by the Kenyan government).
In the middle of its negotiations with Kenya, Essar discovered an MoU between the Kenyan and Libyan governments that called for preference to Libyan companies. When the Libyans made an offer for the same stake, Essar was almost out of the reckoning. Essar even tried for a deal with the Libyans but did not succeed.
Only when the Libyans eventually pulled out for their own reasons, did Essar get back in the reckoning. "The feeling was earlier that the Indians have come as opportunists, to take away resources. The Kenyan government had to be convinced that we aren�t traders, but long-term investors," says a senior executive with knowledge of the talks.
The Healing Opportunity
A bigger Indian presence is in the Africa no one wants to know, the Africa one dreads.
The scourge of HIV is widespread and it is the cheap antiretroviral drugs from Indian companies that are the mainstay of treatment in most parts.
"Sub-Saharan Africa accounts for 10 per cent of the world population but has 75 per cent of the HIV burden," says Skhumbuzo Ngozwana, chairman of South Africa�s National Association of Pharmaceuticals Manufacturers.
The number of people in need of immediate treatment in Sub-Saharan Africa is four million, he says.
While Indian generic drugs are far cheaper than their branded counterparts, many African countries still don�t find them affordable enough. South Africa is rolling out a $500 million plan to provide antiretrovirals to everyone who needs it. Such plans depend on international aid.
And that means business for Indian companies of the likes of Cipla, Ranbaxy, Aurobindo and Dr Reddy�s.
The companies need approval principally by the US Food and Drugs Administration (FDA) or the World Health Organization (WHO). And that comes with its own challenges. Ranbaxy is fighting FDA charges that it falsified vital data.
Aurobindo has gone to court in South Africa over a contract given to another firm when it had offered the lower tender. And many Indian companies have had to fight allegations over sub-standard medicine.
"India is probably where Japan was in the 1960s and 70s, trying to establish itself in the global marketplace," says Vikash Salig, South Africa CEO at Dr. Reddy�s Labs (Pty) Ltd.
"And sadly one of the strategies that we find emanates from vested interests and to some extent from innovator companies is to place concern around quality, safety and efficacy of generic products. And given the momentum India has created, they seem to be facing the brunt of it."
Indian companies produce precisely what Africa needs. "The generic penetration in South Africa is far, far too low," says Salig. "The cost of private healthcare is increasing at a rate that is becoming more and more unaffordable. India offers a wonderful base of high quality low-cost manufacturing operations. The ability to collaborate with a powerhouse like India can only help us in South Africa."
Despite the controversies, Indian companies have managed to build trust in the market.
"If you look at the whole of Indian pharma, the Ciplas of this world, Aurobindo, Matrix, they supply a lot of the treatment programmes on the continent. There is a growing acceptance that drugs from India are of very good quality, they are efficacious, they are safe, and of course they are affordable," says Ngozwana.
Harry Broadman, managing director of Albright Stonebridge Group and the author of Africa�s Silk Road reckons the way India invests in Sub-Saharan Africa is the same as its approach in other parts of the world.
"India�s engagement in Africa is not a political engagement but there�s a role to be played in trade, investment and finance. India�s comparative advantage in Sub-Saharan Africa has been very under-stated. Many people have focussed excessively on China," he says.
Two different countries, two different strategies. One is trying to impress with state-sponsored might, giving away goodies and walking away with plum deals.
The other is sending its private citizens to build trust, radiate through the people and build long-lasting businesses. The battle is intense, the stakes high. The result is in the hands of the African people. At last, power to Africa.
India has discussed the action plan with the African Union to set up over 80 training and capacity building institutions across Africa, an important decision that was unveiled at the second summit in Addis Ababa in May.
India and the 53-member AU discussed the Action Plan under the Enhanced Framework of Cooperation adopted at the Second India Africa Forum Summit held in Addis Ababa May 24-25. The Indian delegation was led by Gurjit Singh, Additional Secretary, Ministry of External Affairs.
After the offer of 21 institutions at the First India Africa Forum Summit, India plans to establish more than 80 institutions in Africa. Several of these would be implemented bilaterally, for which offers of specific institutions have been made to various African countries, according to a press release from the Indian embassy in Ethiopia.
Other institutions will be established through the Regional Economic Communities (RECs) to which also offers have been made and will be further discussed at the second meeting of India with Africa’s Regional Economic Communities to be held in New Delhi Nov 8 and 9.
The African Union is discussing the establishment of six pan-African institutions offered by India, including a food processing cluster, an integrated textiles cluster, a centre for medium range weather forecasting, an institution of agriculture and rural development, a civil academy, and a pan-African university for life and earth sciences.
India has also offered to increase the scholarships it grants to African students to 22,000 over a three-year period until 2014. These include the special agricultural scholarships; the Raman fellowships for Science and Technology; scholarships for graduate studies; fellowships for social science research; and a large number of short-term training positions both under the existing ITEC programme and nearly 500 positions per year for special capacity building courses for Africa.
During the meeting, a review of the implementation of decisions of the India Africa Forum Summit was also undertaken. Satisfaction was expressed that progress had been consistent and the structure of cooperation had been clearly defined which would make it easier for the model to be continued for the new institutions to be established, according to the embassy.
During the discussions, it was noted that several India-Africa conferences were to take place in India between October and December 2011. These include: the India Africa Workshop on Traditional Medicines in Jaipur, India Africa Civil Aviation Negotiation Conference in Mumbai, India-Africa RECs meeting in New Delhi, Workshop on Mobilisation of Domestic Savings in New Delhi, Conference on Economic Partnership for Infrastructure Development through the Lines of Credit in New Delhi; and India Africa Business Partnership Summit in Hyderabad.
It is not every day that global leaders set foot in this southern African nation of gravel roads, towering sand dunes and a mere two million people. So when President Hu Jintao of China touched down here in February 2007 with a 130-person delegation in tow, it clearly was not just a courtesy call.
And in fact, China soon granted Namibia a big low-interest loan, which Namibia tapped to buy $55.3 million worth of Chinese-made cargo scanners to deter smugglers. It was a neat illustration, Chinese officials said, of how doing good in Namibia could do well for China, too.
Or so it seemed until Namibia charged that the state-controlled company selected by China to provide the scanners � a company until recently run by President Hu�s son � had facilitated the deal with millions of dollars in illegal kickbacks. And until China threw up barriers when Namibian investigators asked for help looking into the matter.
Now the scanners seem to illustrate something else: the aura of boosterism, secrecy and back-room deals that has clouded China�s use of billions of dollars in foreign aid to court the developing world.
From Pakistan to Angola to Kyrgyzstan, China is using its enormous pool of foreign currency savings to cement diplomatic alliances, secure access to natural resources and drum up business for its flagship companies. Foreign aid � typically cut-rate loans, sometimes bundled with more commercial lines of credit � is central to this effort.
Leaders of developing nations have embraced China�s sales pitch of easy credit, without Western-style demands for political or economic reform, for a host of unmet needs. The results can be clearly seen in new roads, power plants, and telecommunications networks across the African continent � more than 200 projects since 2001, many financed with preferential loans from the Chinese government�s Exim Bank.
Increasingly, though, experts argue that China�s aid comes with a major catch: It must be used to buy goods or services from companies, many of them state-controlled, that Chinese officials select themselves. Competitive bidding by the borrowing nation is discouraged, and China pulls a veil over vital data like project costs, loan terms and repayment conditions. Even the dollar amount of loans offered as foreign aid is treated as a state secret.
Anticorruption crusaders complain that secrecy invites corruption, and that corruption debases foreign assistance.
�China is using this financing to buy the loyalty of the political elite,� said Harry Roque, a University of the Philippines law professor who is challenging the legality of Chinese-financed projects in the Philippines. �It is a very effective tool of soft diplomacy. But it is bad for the citizens who have to repay these loans for graft-ridden contracts.�
In fact, such secrecy runs counter to international norms for foreign assistance. In a part of the world prone to corruption and poor governance, it also raises questions about who actually benefits from China�s projects. The answers, international development specialists say, are hidden from public view.
�We know more about China�s military expenditures than we do about its foreign aid,� said David Shambaugh, an author and China scholar at George Washington University. �Foreign aid really is a glaring contradiction to the broader trend of China�s adherence to international norms. It is so strikingly opaque it really makes one wonder what they are trying to hide.�
Until recently, wealthy nations could hardly hold themselves out as an example of how to run foreign aid, either. Many projects turned out to be tainted by corruption or geared to enrich the donor nation�s contractors, not the impoverished borrowers. But over the past 10 or 15 years, some 30 developed nations under the umbrella of the Organization of Economic Cooperation and Development (O.E.C.D.) have made a concerted effort to clean up their assistance programs.
They demanded that foreign money be awarded and spent transparently, using competitive bidding and outlawing bribery. Increasingly, they also are also pushing to give borrowers more choice among suppliers and contractors, rather than insisting that funds be recycled back to the donor nation�s companies.
China, which is not a member of the O.E.C.D., is operating under rules that the West has largely abandoned. It mixes aid and business in secret government-to-government agreements. It requires that foreign aid contracts be awarded to Chinese contractors it picks through a closed-door bidding process in Beijing. Its attempts to prevent corrupt practices by its companies overseas appear weak.
Some developing nations insist on independently comparing prices before accepting China�s largesse. Others do not bother. �Very often they are getting something they wouldn�t be able to get without China�s financing,� said Chris Alden, a specialist on China-African relations with the London School of Economics and Political Science. �They presume that the Chinese are going to give value for money.�
Development experts say they have tried to convince the Chinese government that better safeguards and a more open process will enhance its efforts to gain influence and business. If its projects collapse because of kickbacks or inflated costs, they argue, China will end up exporting not only goods and services, but a reputation for corruption that it is already battling at home.
But Deborah Brautigam, the author of a coming book on China�s economic ties with Africa titled �The Dragon�s Gift,� says Beijing is hesitant to hobble its companies with Western-style restraints before they have become world-class competitors.
Thinking Business, Not Ethics
�The Chinese are kind of starting out where everyone else was years ago, and they see themselves as being at a disadvantage,� Ms. Brautigam said. �The Chinese don�t particularly want a big scandal. That doesn�t further their interests. They just want their companies to get business.�
Sometimes they get both. In 2007, the Philippines was forced to cancel a $460 million contract with the Beijing scanner company, Nuctech Company Ltd., to set up satellite-based classroom instruction after critics protested the company had no expertise in education.
It also canceled a $329 million contract awarded to ZTE Corporation, a state-controlled Chinese communications company, after allegations of enormous kickbacks. ZTE denied bribing anyone, but the controversy has lingered. Last month an antigraft panel recommended filing criminal charges against two Philippines officials in connection with the contract.
A Manila-based nonprofit group, the Center for International Law, has mounted a legal challenge against still another Chinese contract in the Philippines, to build a $500 million railroad. Professor Roque, who leads the center, contends that the price of China�s state-owned contractor �was simply plucked out of the sky.� Officially, China�s directive to its companies is toe an ethical line overseas.
�Our enterprises must conform to international rules when running business, must be open and transparent, should go through a bidding process for big projects and forbid inappropriate deals and reject corruption and kickbacks,� Wen Jiabao, China�s prime minister, told a group of Chinese businessmen in Zambia in 2006.
But China has no specific law against bribing foreign officials. And the government seems none too eager to investigate or punish companies it selects if they turn out to have engaged in shady practices overseas.
Indeed, it has an added incentive to look the other way because of the state�s ties to many foreign aid contractors � connections that sometimes extend to families of the Communist Party elite.
In January, for example, the World Bank barred four state-controlled Chinese companies from competing for its work after an investigation showed that they tried to rig bids for bank projects in the Philippines. But two of those companies remain on the Chinese Commerce Ministry�s list of approved foreign aid contractors, according to its Web site.
The Namibia controversy is especially delicate because until late last year, the contractor�s president was Mr. Hu�s son, Hu Haifeng. The younger Mr. Hu is now Communist Party secretary of an umbrella company that includes Nuctech and dozens of other companies. As soon as allegations against the company surfaced this summer, China�s censors swung into action, blocking all mention of the scandal in the Chinese news media and on the Internet.
�This is a signal to everyone to back off,� said Russell Leigh Moses, an analyst of Chinese politics in Beijing. �Everyone goes into default mode, because once you get the ball rolling, no one knows where it will stop. No one wants their rice bowl broken.�
Nuctech has denied any wrongdoing in court papers filed here in Windhoek. A spokeswoman said the company had no comment because the matter was unresolved. China�s Commerce Ministry and other government agencies did not respond to repeated requests for comment.
Namibia�s anticorruption investigators allege that Nuctech funneled $4.2 million in kickbacks to a front company set up by a Namibian official, who split the funds with her business partner and Nuctech�s southern Africa representative, a Chinese citizen.
A Deal Ends in Arrests
China has promoted Nuctech as one of its global �champions.� In 10 years the company has gained customers in more than 60 countries, marketing advanced-technology scanners that help detect contraband or dangerous materials inside cargo containers. Nuctech�s spokesman says it is the only Chinese company that makes such equipment.
The Namibian government was interested in equipping its airports, seaports and border posts with scanners to comply with stricter regulations on international commerce. On a state visit to China in 2005, Hifikepunye Pohamba, Namibia�s president, visited Nuctech�s headquarters and factory, according to court testimony. The following year, Nuctech sent a representative, Yang Fan, to Windhoek, Namibia�s capital.
Hu Jintao�s visit to Windhoek a few months later opened up an option for finance. �China says the sky is the limit. Just say what you want,� said Carl Schlettwein, the permanent secretary of the Namibian Finance Ministry, who participated in the negotiations.
At first, Mr. Schlettwein said, the talks stalled because Namibia was unwilling to grant China access to its substantial mineral deposits in exchange for lines of credit. Once China dropped that condition, Namibia agreed in principle to a $100 million, 20-year-loan at a 2.5 percent interest rate, then well below the market. �Purely from a financial point of view, it was a fine deal,� Mr. Schlettwein said.
Namibian officials decided to draw on the credit line to finance most of the cost of the scanners. Mr. Schlettwein, who negotiated the scanner contract, said he wanted to seek competitive bids from scanner suppliers around the world, but Chinese negotiators refused.
�They said �that is not our system,� � he said. � �We tell you from whom you buy the equipment.� All of us, including the minister, were very worried about the nontransparent way of doing things,� he said, but reasoned that the Chinese government �will not unduly cheat us.�
Last March, less than a week after the Finance Ministry paid Nuctech an initial $12.8 million, Mr. Schlettwein�s unease turned to distress.
A Windhoek bank official, following the strictures of Namibia�s new money-laundering act, called to ask why Nuctech had deposited $4.2 million in the account of a consulting company set up by Tekla Lameck, a Namibian public service commissioner.
Mr. Schlettwein, who says that he has never met Ms. Lameck and that she had nothing to do with the scanner purchase, alerted Namibia�s anticorruption commission. In July, Ms. Lameck, her business partner and Nuctech�s representative in Windhoek were arrested on suspicion of violating Namibia�s anticorruption law. All three have denied wrongdoing.
Investigators charge that Nuctech agreed to hire Ms. Lameck�s consulting company, Teko Trading, in 2007, a month after President Hu�s visit. Nuctech agreed to pay Teko 10 percent of the contract if the average price of one scanner was $2.5 million. If the price was higher, Nuctech would pay Teko 50 percent of the added cost. A subsequent agreement fixed the amount of commissions at $12.8 million, according to court records.
At his bail hearing last month, Yang Fan, Nuctech�s representative, said his company hired Teko because �Teko explained how to do business here in Namibia.� He did not elaborate. But in 2007, another Namibian official complained to the anticorruption commission that Ms. Lameck had introduced herself to the Chinese Embassy in Windhoek as a representative of Swapo, Namibia�s governing political party. She claimed that no business could be done in Namibia without Swapo�s involvement, the complainant said.
Investigators have been seeking Nuctech�s explanation of the affair for more than two months. There is little sign the company has complied with their requests, although investigators say they remain hopeful.
Namibia�s chief national prosecutor, Martha Imalwa, traveled to Beijing in July, hoping to question officials from Nuctech and another company involved in a separate inquiry. But according to her deputy, Danie Small, Ms. Imalwa was allowed to present questions only to the international division of China�s Supreme People�s Procuratorate.
A court has temporarily frozen $12.8 million in Nuctech�s assets while the inquiry continues. Meanwhile, at Namibia�s Finance Ministry, Mr. Schlettwein is belatedly trying to determine what other buyers paid for comparable scanners. When he asked South African officials for pricing information, he said, he was told Nuctech�s contract there is also under investigation.
Perhaps predictably, competitors say Namibia agreed to pay far too much. Peter Kant, a vice-president at Nuctech�s American rival, Rapiscan Systems, said that comparable equipment and services costs about $28 million, or $25 million less than Nuctech�s contract.
Mr. Schlettwein last month tried to send a letter through official channels to Rong Yonglin, Nuctech�s chairman, to ask that the contract be renegotiated. But a Chinese Embassy official in Windhoek refused to accept the correspondence, saying he knew no one with that name.
Bilateral trade between India and Nigeria has touched new heights, crossing USD 10 billion mark for the first time, according to the official statistics.
Bilateral trade between the countries grew by 17 per cent in the last year to reach USD 10.22 billion, securing India's position as second largest trading partner of Nigeria.
However, Nigeria remains first in Africa for India, Mahesh Sachdev, Indian high commissioner to the country stated in weekly newsletter, India Page.
Despite decline in oil prices, global economic meltdown and India's ban on rice exports, the growth in Nigeria-India trade accelerated from 9.8 per cent to 17.5 per cent over past two years, he noted.
Imports from Nigeria to India increased by 14.1 per cent to USD 8.70 billion, while Indian exports to Nigeria shot up by 41 per cent to USD 1.
India has offered Democratic Republic of Congo $263 million in loans to build hydroelectric plants and repair battered infrastructure in the war-ravaged central African nation, Congo's foreign minister said on Friday.
The two countries agreed the final terms of the loan package this week during a four-day visit by Foreign Minister Alexis Thambwe Mwamba to the south Asian economic powerhouse.
"The Indian government has made available $168 million for the Katende dam project in Kasai Orientale (province), $45 million for the Kakobola dam, and $50 million to rehabilitate the rail system in (the capital) Kinshasa," he said.
Congo is increasingly looking to forge new partnerships to help finance ambitious plans to rebuild and expand infrastructure, most of which was destroyed during decades of kleptocratic dictatorship and a devastating 1998-2003 war.
Officials in Kinshasa announced last month that they had secured $25 million in loans from India to improve water and sanitation facilities and build a new IT training centre.
The announcement of the new Indian loan package follows a $6 billion infrastructure for minerals deal signed with China.
The Chinese deal is a cornerstone of President Joseph Kabila's post-war economic policy to help rebuild mineral-rich but cash-strapped Congo.
However, the International Monetary Fund (IMF) and traditional partners had feared the contract, which uses mineral reserves as a guarantee for infrastructure projects, could plunge Congo deeper into debt. And the IMF had delayed forgiveness of most of the $10 billion Congo owes pending a revision of the deal.
Last month, Congo and China agreed to amend the contract, reducing the total value from an original plan of $9 billion, and Paris Club lenders are due to meet soon to discuss Congo's request for debt cancellation.
Thambwe Mwamba told Reuters by telephone from India that Congo did not expect resistance from western lenders over the new credit line.
"These are loans that we need and that were accepted by the World Bank and the IMF," he said.
India has extended a line of credit of $50 million to the small land-locked African nation of Malawi which has invited Indian companies for investment in hydropower, farmlands and mining including uranium. As the first Indian leader to visit Malawi, a nation of 13.5 million sandwiched between Zambia and Mozambique, Vice President Mohammed Hamid Ansari announced Thursday evening the soft loans and grants at a state banquet hosted by Malawian President Bingu Wa Mutharika.
India has expressed its desire to be part of an expanded programme of the Nigerian government to develop its energy sector and will invest atleast $360 million in developing two oil blocks in this West African nation. This investment would be separate from those it is prepared to make in the oil refining sector.
''India will invest $350 million in developing two oil blocks in the West African nation, besides increasing its engagement in the gas sector as well,'' petroleum and natural gas minister, Murli Deora, said after meeting his Nigerian counterpart Henry Odein Ajumogobia at Abuja on Monday.
''India is looking forward to partnering Nigerian National Petroleum Corporation (NNPC) through the Indian oil and gas conglomerate - ONGC Mittal Energy Ltd. - for the establishment of a greenfield petroleum refining plant,'' Deora said.
The two oil blocks in question are Nigerian Oil Prospecting Licences (OPLs) 279 and 285. Drilling operations have begun in one of these oil prospects.
According to Deora, India buys at least 400,000 barrels of oil per day from Nigeria, the annual value of which he estimated to be at $10 billion.
Deora said India was ready to partner with the NNPC in the establishment of a greenfield refinery with the aim of boosting the domestic production of petroleum products in the country.
''We will be importing about 40 million barrels, most of which are on spot basis from Nigeria. We have a refinery of about 180 million tons and about 25 per cent of Indian import is from Nigeria alone. At the current value, it will be worth $10 billion from Nigeria alone".
"We will like to have more Nigerian crude on terms contract basis. Some Indian companies are already playing in Nigeria's upstream sector. We will like to consider opportunities in Nigeria's upstream sector. India has the capacity to work with Nigeria in the midstream and downstream sectors," he said.
Talking about the ongoing reforms in Nigeria's oil industry, Deora said India was keen to learn about the nation's strategies and see how it could partner in the proposed transformation.
RS Sarma, managing director of the state-owned Indian oil and gas giant, The Oil and Natural Gas Corporation Ltd (ONGC), said his company has been working with the NNPC in the formulation and implementation of the gas master plan.
He also said his firm has proposed to partner with NNPC in the development of a greenfield refinery that could help bring some relief to the crisis of petroleum product supply in the country's downstream sector.
"We have several companies from India that have come here. In the last several years, we have been talking with NNPC about a new greenfield refinery in Port Harcourt. Feasibility studies have been completed," he said.
The Gas Authority of India Ltd, (GAIL) was interested in setting up petrochemical plants, LPG plants and LPG transportation pipelines. Along with its consortium members, GAIL has been shortlisted as one of the 15 companies qualified to participate in Nigeria's ambitious $30 billion National Gas Master Development Plan.
Similarly, Indian Oil Corporation has offered to assist in refinery up-gradation, improving refinery operations by imparting training to technical personnel and providing consultancy, besides setting up LNG liquefaction plants.
The minister of state for petroleum resources, Odein Ajumogobia, who stood in for the minister of petroleum resources, Dr. Rilwanu Lukman, at the meeting, said Nigeria is eager to partner with any country that shares a common vision with it on the need to transform the oil and gas industry in such a way that it serve the greater need of the people.
"Nigeria hopes to further strengthen existing bilateral relations, especially with countries that such as India that buys our crude oil. However, we believe we can achieve more through greater cooperation in terms of technical assistance in the exploration of hydrocarbon.
"The country is determined to transform its oil and gas sectors to a path of sustainable growth and is therefore ready to partner with any country or organisation that share a common aspiration in that regard," he said.
India and South Africa on Friday inked three pacts, including one on air services, as the leaders of the two countries discussed ways to provide fresh impetus to bilateral ties and agreed to extend support to each other for the UNSC non-permanent seat for 2011-2012 term.
On his maiden visit to any Asian country as President of South Africa, Jacob Zuma held delegation-level talks with Prime Minister Manmohan Singh during which they discussed bilateral as well as global issues including reforms in the U.N. Security Council.
Besides the UNSC non-permanent seat for the 2011-2012 term, both countries are also in race for permanent berth in the global body.
“We will step up our efforts for reform of global institutions of governance, including of the United Nations Security Council. We have agreed to support each other’s candidatures for the non-permanent seat for the 2011-2012 term,” Mr. Singh said after his meeting with Mr. Zuma.
He said the leaders have decided to impart a forward-looking character to these ties and agreed to focus on the expansion of economic, trade and investment relationship.
Mr. Singh said, “The links between India and South Africa are rooted in history. We can never forget that South Africa was the land of the awakening of the Father of our Nation, Mahatma Gandhi, for which we owe a deep debt of gratitude to its people.”
Terming their ties as “historic and unique”, Mr. Zuma described his visit as “more than (a) success” and said it “resolved all issues which needed to be resolved by two friendly countries.”
Besides ‘Air Services’ agreement under which the two countries have added three stops for all flights including Johannesburg and Durban in South Africa and Mumbai and Thiruvananthapuram in India, the two countries also signed MoU on cooperation in agriculture and mutual cooperation in foreign and diplomatic services.
The Air Services pact will also enable the two countries to enhance their ties in flight security area and increase number of flights from both sides.
The MoU on cooperation between the Foreign Services Institute of India and the Diplomatic Academy of South Africa will provide for training of the officers.
The first meeting of the India-Japan dialogue on Africa to be held in Tokyo on Tuesday and Wednesday will kick off the countries’ effort to synchronise strategies in that continent. While China has a lead in Africa, both Tokyo and New Delhi have been devising ways to leverage their presence there.
The Indian team going to the meet will be headed by joint secretary in-charge of Africa in the Ministry of External Affairs Gurjit Singh. The idea was first discussed when Japanese foreign Minister Katsuya Okada visited India in August this year.
According to government officials, Tokyo feels that the goodwill they get in return for the money they spend would be negligible as Indian projects are hugely popular in Africa.
India will provide $500 million line of credit to Mozambique to boost exports and plans to double bilateral trade to $1 billion by 2013, Trade Minister Anand Sharma said Thursday.
India-Mozambique trade which was $426 million in 2009 needed to be stepped up to realise the potential that existed between the two countries, he said at India-Mozambique business partnership meet, which was attended by visiting Mozambique President Armando Emillo Guebuza.
Sharma said India was also willing to help Mozambique in skill development and cooperate in areas of infrastructure, mining and railways.
Mozambique, which is rich in oil and several minerals including coal, offered great opportunity for Indian investment, Guebuza said.
Leading Indian companies such as Tatas, Videocon, Bharat Petroleum and IRCON are already operating in Mozambique.
Our strategic community and official agencies should pay more attention to the conditions and power dynamics in the Horn of Africa because what happens in the region has a direct bearing on our security.
Africa has been of growing interest to India for political and economic reasons but does it have security implications for us? The answer is ‘yes,' especially as we focus on a particular sub-region, the Horn of Africa. A recent, distinguished visitor to India from the area — Hailemariam Desalegn, Deputy Prime Minister of Ethiopia — highlighted the wider implications of terrorism and piracy in the east African region. He even suggested that there should be “a naval blockade and no fly zone over Somalia.”
The immediate relevance of the threat posed by piracy has been underlined by the latest incident in which a Bangladeshi-flagged merchant ship, MV Jahan Moni, was hijacked by Somali pirates at a location barely 90 nautical miles from the Lakshadweep Islands.
The Horn of Africa comprises four countries — Ethiopia, Eritrea, Djibouti and Somalia. As a quintessential microcosm of Africa, the area has seen it all: imperialism, neo-colonialism, Cold War, ethnic strife, intra-African conflict, poverty, disease, famine and much else. Without its recovery and progress, Africa's resurgence would never be complete. With the headquarters of African Union located in Addis Ababa, capital of Ethiopia, the continent's apex organisation gets a direct and unhindered view of what happens in its immediate vicinity.
The sub-region covers a wide spectrum from Ethiopia — an ancient civilisation and a nation that retained its independence (except for a short period) — to Somalia, the most failed state on the planet today. Eritrea and Djibouti, smaller neighbours located on the seashore, have had their own share of strife and strained relations with Ethiopia and Somalia respectively. Eritrea emerged as an independent state after a 30-year-long confrontation with Ethiopia, a development that turned the latter into a landlocked country. Djibouti, the erstwhile French Somaliland, has been a beacon of relative stability and prosperity, which has contributed to mediation and peace-making efforts in and outside the Horn of Africa.
Somalia today is a mere geographical expression, not a united country. In the past decade, it has gone through 14 governments. In its northern part, three quasi-sovereign governments exist — Somaliland, Puntland and Galmudug. The southern part is controlled partly by the Transitional Federal Government, but its writ runs in parts of Mogadishu only. Outside, Islamic groups named the Union of Islamic Courts call the shots. The on-going armed conflict within the capital city reminds me of the years I spent in the civil war-torn Beirut. The South has become a veritable hub of Islamic fundamentalists and terrorist groups such as Al-Shabab having links with the al-Qaeda. The North has been the breeding ground of pirates who pose a serious threat to international shipping. Somalia may aptly be depicted as ‘Africa's Afghanistan.'
Somali pirates, operating in the waters off the Somali coast and in the Gulf of Aden through which passes a massive quantum of the world's goods and energy supplies, pose a grave danger. The trend now is for them to take their operations far out on the high seas. The number of attacks in 2008 was 111 and 217 in 2009. The year ending now has seen the problem grow. In a recent assessment, the Institute of Security Studies in Pretoria stressed that piracy has been growing “in frequency, range, aggression and severity at an alarming rate.” Pirates keep trying to harm international shipping, content to extract ransom, but their continuing operations and the potential of building links with international terrorist organisations cause widespread worry. The probability of a major, spectacular attack such as the sinking of an oil tanker cannot be ruled out.
Navy's magnificent work
In this context, the magnificent work the Indian Navy has been doing in the area since October 2008 deserves wider appreciation. Its warships patrol the Gulf of Aden and quietly provide escort and security assistance to not only Indian but also foreign merchant vessels. About 1,350 ships belonging to different countries have availed themselves of this facility so far. During the first fortnight of September 2010 alone, INS Delhi scored success on four separate occasions to foil attacks by pirates. In all, 22 piracy attempts have been averted by the Navy. It has discharged, as Navy Chief Admiral Nirmal Verma put it, “its responsibilities with distinction.”
It is worth noting that a considerable degree of consultation, coordination and cooperation in capacity building in anti-piracy operations has been taking place. However, there is a problem about what to do with the pirates apprehended on the high seas as Indian laws do not permit their prosecution by our courts. :?:
There are, of course, ships of several other countries, including the United States, European Union member-states, Russia, Australia, China and Japan. The growing presence of Chinese vessels demonstrates the country's reach as the emerging naval power. It also juxtaposes China's undue sensitivity about the presence of other Navies on the South China Sea. External Affairs Minister S.M. Krishna observed recently: “China is taking more than normal interest in the Indian Ocean and we are monitoring it carefully.”
The world's Navies have been tackling the consequences and addressing the symptoms of the underlying malaise, which is the destruction of Somalia as a state and the resultant anarchy and absence of the rule of law. The United Nations has been helping in the process, both on the political and peacekeeping aspects. But 8,000 troops provided by Uganda and Burundi are considered to be inadequate for the task. On a recent visit to Somalia, Yoweri Museveni, President of Uganda, complained that the international community “did not take the Somali problem seriously enough.” Apparently, moves are afoot to increase the size of the troops to 12,000, whereas the African Union wants it to go up to 20,000 quickly.
‘Not sea bandits'
Other factors also explain the piracy phenomenon. Sugule Ali, a pirate leader, stated: “We don't consider ourselves sea bandits. We consider sea bandits to be those who illegally fish and dump waste in our seas and carry weapons in our area.” Objective analysts would agree that there is some merit in the argument, but this is hardly a justification for the continuing attacks. Piracy represents a serious challenge to international law and order. Therefore, international community must do more to resolve the fundamental issues, taking a holistic view. As experts have suggested, there is a need to deal with this problem “from the beach side, in concert with the ocean side.” Further, what is required is to craft much greater cooperation among the countries concerned than has been secured so far.
Our strategic community and official agencies too should pay more attention to the prevailing conditions and power dynamics in the Horn of Africa. The government would be well advised to become more active in examining and discussing the complex problem in-depth with the governments in Eastern Africa, the African Union and others concerned so as to be able to make a meaningful contribution to its resolution. The Navy can do only fire-fighting, but surely India is capable of striving more at the diplomatic and political levels. What happens in the region has a direct bearing on our security and well-being, and this is becoming clearer and more urgent by the day.
A spectre is haunting Europe and America, home to the colonialists and cold warriors of yesterday, the spectre of an Africa — which they ruled and exploited for a century-and-a-half — now coming under the sway of rising powers like China and India.
Read any western account of the growing Chinese and Indian presence in Africa and chances are that the charge of ‘new colonialism' will figure somewhere. And if there is ‘new colonialism,' can new colonial rivalries be far behind? In this telling, not only are China and India sucking Africa dry, but the two are also said to be locked in competition with each other for access to Africa's mineral wealth and oil.
So central is the notion of an Oriental ‘Scramble for Africa' to the western mind that it is almost impossible to speak of India's presence in Africa without dragging China in as well. Consider this typical lede from a report on the forthcoming Africa-India summit in Addis Ababa, filed by the French news agency, AFP: “India will seek to expand its economic footprint in Africa, where rival China has made major inroads, at a second summit between the South Asian powerhouse and African nations this week.”
Like other spectres the West conjures up from time to time, the actual picture in Africa is not so frightening, least of all for the Africans themselves. “What they say doesn't make sense,” Oldemiro Baloi, Foreign Minister of Mozambique, told a group of Indian journalists in Maputo last month. “We did not fight for our independence just to shift from one colonial master to another. And India and China did not support our liberation struggle in order to enslave us.” The West doesn't like to be challenged but Africa has an interest in diversifying its partners, he added. “India is itself a poor country which has values based on solidarity and does not impose conditionalities or attach strings to its aid. Earlier, the western countries would complain implicitly about India and China but now they are more blunt. ‘Why is India doing this, why is China doing this?' And we say, because they are good, they are competitive.”
Though the tendency to see India and China as rivals in Africa is widespread, the fact is that the Chinese investment and trade presence are much larger. But there is another reason why the ‘rivals' frame may be deceptive: from the perspective of Africa, the two countries have core competences which may actually complement each other in many ways.
The Chinese excel in large infrastructure projects and have deep pockets while the Indians have an edge in ICT, capacity building and training and also emerging areas like agriculture and floriculture. The Indian ability to relate to Africans is also much greater, which is why non-Indian MNCs prefer to use Indians as managers for projects involving interaction with local officials and populations. The fact that India is a democracy, and a chaotic one at that, may mean Chinese companies steal a march over Indian ones. But India's democratic culture and consultative approach make it an attractive partner for African nations looking to enhance their own skills and capabilities. In other words, Africa is looking to do business with both China and India at the same time and there does seem to be more than enough room for both.
And yet, there's no reason for India to be complacent. As the African economy emerges, its politics stabilises and new opportunities arise, competition from around the world will be stiff. The world can look forward to greater supply of food, minerals and energy but Africa has the right to drive a tough bargain. India is well placed because of the unique set of capabilities it offers. At the same time, it must consciously avoid the path of exploitation other big powers before it have taken.
Thus far, India's engagement with Africa has operated at two levels. The first level is official, where the government has grafted on to the political goodwill built up over several decades some real financial heft. After pursuing regional and pan-African initiatives like the Team-9 framework for cooperation in West Africa and the e-network project, the first Africa-India summit in 2008 envisaged a line of credit worth $5.6 billion to be spent on development and capacity building projects. Least-developed African nations were to get preferential access to the Indian market and India also committed itself to establishing 19 centres of excellence and training institutions in different fields across Africa.
Side by side with this official thrust, the Indian private sector has also shown a willingness to invest billions of dollars in Africa. The Second Africa-India summit to be held in Ethiopia this week is likely to increase the pace of this engagement. There is talk of pushing bilateral trade with Africa to $70 billion by 2015, up from the current level of $46 billion. Cumulative Indian investments in Africa stood at $90 billion in 2010 and are likely to rise dramatically in the years ahead.
At the same time, there are several steps India needs to take to ensure the current momentum is maintained and even intensified.
First, India must ramp up its diplomatic presence in Africa. Indian companies and citizens will be more likely to work in countries where India maintains an embassy. And it would help if these embassies were robustly staffed by young diplomats anxious to make a mark rather than by those at the fag end of their career who see a tour of duty in Africa as a punishment posting and who have little or no interest in African culture and society.
Second, the government should consider establishing a special purpose vehicle (SPV) to pursue strategic investments and business opportunities in Africa, especially in sectors such as mining, infrastructure and agriculture. Such an SPV could harness the talent and resources that the Indian public and private sectors have to offer but which their managements are often unable to utilise in overseas projects in a timely manner for a variety of reasons.
Third, the SPV or some other official entity must pay attention to corporate social responsibility issues connected to all Indian FDI projects in Africa, especially since many of them might be in countries where domestic regulatory frameworks for workers' rights and environmental protection are inadequate or dysfunctional. As public pressure in India makes it less easy for Indian companies to cut corners at home, some of the motivation to invest in Africa might be linked to their belief that they can get away with dodgy business practices there. India has a strategic interest in ensuring that Indian companies operating abroad act responsibly and must come up with an appropriate monitoring mechanism.
Fourth, there must be a strict audit of all monies disbursed through the Lines of Credit for Africa. Two years ago, there were reports of questionable dealings in the subsidised export of rice to a number of sub-Saharan African countries. With Indian credit lines now running into several billion dollars — the eventual beneficiaries of which will be Indian companies and suppliers to whom recipient governments are obliged to buy from — there must be complete transparency in the process from start to finish.
Fifth, a greater effort should be made to build on the domain knowledge and cultural equity that the Indian diaspora across Africa has in abundance about local business conditions and customs. It is estimated that there are as many as two million people of Indian origin living in Africa. Though the bulk of the diaspora is in countries like South Africa, Kenya, Tanzania and Nigeria, Indian businessmen and even teachers and professionals can be found in virtually every African country. For a variety of reasons, these communities are not so well integrated within the political and cultural milieu of their host countries. But the more economic and cultural interaction there is between India and Africa, that could well change.
Sixth, the “commerce of ideas” that Mahatma Gandhi envisaged the future relationship between India and Africa to revolve around should be made a central element of Indian policy. The 2.2 billion people of India and Africa share many problems and could learn from each other's experiences in resolving these. Promoting partnerships between the media and academic communities might be one way to do this. Innovative work in the field of handicrafts has just started and the rich field of cultural interaction has remained practically unexplored. As much if not more than business deals and lines of credit, it is this commerce of ideas which will provide true depth to the emerging partnership between Africa and India.
Africa Wednesday declared its unambiguous support for India's candidature for a permanent seat in an expanded UN Security Council and backed New Delhi's stand for reform of global institutions of governance.
"Africa not only expects from India but will be able to assist India in areas like the UN reforms," Teodore Obiang Nguema Mbasago, chairperson of the African Union and president of Equatorial Guinea, told reporters at a joint press conference with Indian Prime Minister Manmohan Singh.
"India will be able to count on the support of Africa (for India's bid for a permanent seat in the Security Council)," Mbasago said at the end of the two-day 2nd India-Africa Summit at the African Union headquarters here.
The 53-nation African Union holds the key to reform and changes in the UN Security Council if it votes as a bloc.
If it’s China’s construction prowess that gives it a foothold in Africa, Prime Minister Manmohan Singh’s six-day trip to the continent sought to differentiate India’s long-term strategic offering for Africa’s many small states — helping them gain expertise in a range of services from education to healthcare and information technology.
This comes in addition to hefty lines of credit (LoC) to push investments and duty-free access to exports from Africa to improve bilateral trade.
African countries, too, have come to realise this. For instance, Tanzania President Jakaya Kikwete highlighted this aspect of the India-China rivalry, particularly with reference to his country.
“China helped build a 200-bed hospital in Dar-es-Salaam and India is helping train our doctors in specialised areas of open-heart surgery and renal diseases,” Kikwete said at a joint press conference with Singh today.
Last year, 29 Tanzanian doctors trained in India. “This is not enough. We want many more slots,” Kikwete said.
Even as New Delhi is helping build capacities in African countries, the private sector is coming out of its shell to put their money in brick and mortar and large-scale organised farming, encouraged by some African countries’ offer to set aside land for such investments.
Prathap Reddy-chaired Apollo Hospitals Enterprises Ltd has decided to invest $150 million to set up a super-speciality hospital in Dar-es-Salaam. Kikwete offered support to Apollo for building four more such hospitals.
“We will focus on areas such as agriculture, small and medium industries, healthcare and human resource development. We support the President’s national agriculture initiative. We will provide a new line of credit of $180 million for water supply projects in Dar-es-Salaam,” Singh said.
In Addis Ababa, Singh had committed a $5-billion LoC to Africa over the next three years in addition to another $700 million specifically for improving education facilities and skill sets.
Besides healthcare and agriculture, Singh said, India is ready to provide all the help it can to enable Tanzania create a pool of world-class IT professionals.
“If we can produce a steady stream of highly trained scientists, technologists and engineers, our cooperation would be worthwhile and we would be putting our money to good use,” he said inaugurating a Communication and Information Technology Centre of Excellence in the capital city.
“Maritime trade and people-to-people exchanges have drawn us closer. Today, we seek to build a modern and dynamic partnership on the strength of these traditional bonds,” Singh had said earlier after the bilateral meeting with Kikwete. He also announced India’s readiness to cooperate with Tanzania in the area of space technology and applications.
Kikwete said that since a bulk of Tanzania’s population lives in rural areas, they are unable to enjoy the benefits of the country’s fast economic growth.
“The economy grew 7 per cent last year, but people in rural areas are asking: is the economy growing?” he said. While telecom has growth 20 per cent, industry 10 per cent and tourism 40 per cent, the farm sector posted a sluggish growth rate of 4.3 per cent. “We need farm equipment, fertilisers, high yield seed varieties and better irrigation equipment,” he said.
He offered Indian companies its abundant natural resources — natural gas and phosphate — to set up fertiliser plants. “We have these resources in plenty.”
Kikwete also wanted the private sector to set up assembly plans to manufacture irrigation equipment. The two countries also signed a double taxation avoidance agreement (DTAA) to create a more hospitable investment environment.
Bilateral trade between India and Africa is set to double in the next five years from the current level of $53 billion, with sectors such as transport equipment, services, health and agriculture projected to drive the growth.
This was the agenda set at the second India-Africa Business Partnership Summit, organized by FICCI, here on Wednesday. The Andhra Pradesh Chief Minister, Mr Kiran Kumar Reddy inaugurated the two-day summit, with over 120 African delegates and 250 Indian delegates, comprising heads of PSUs, corporate houses, government representatives and consultants participating in the event.
“Bilateral trade has more than doubled from $25 billion in 2006-07 to $53.3 billion in 2010-11. I see a faster growth in the next five years,” Dr Rajiv Kumar, FICCI Secretary General, told Business Line.
According to an Exim Bank report, India's exports to Africa have surged from $10.3 billion in 2006-07 to $21.1 billion in 2010-11, primarily due to increase in exports of transport equipment and petroleum products.
The concomitant rise in imports from Africa during the comparable period attests to increased two-way relations, wherein India's imports from Africa have more than doubled from $14.7 billion to $32.2 billion, according to Dr Kumar.
The approved cumulative India's investments in Africa during 1996-2011 amount to $16.3 billion. This, according to the Exim Bank report, was largely driven by small and medium enterprises.
Mr T.C.A Ranganathan, Chairman and Managing Director of Exim Bank, said the bank was helping in the setting up of food processing, textile, diamond and IT clusters in Africa. “The diamond and IT clusters will be coming up at Botswana and Ghana respectively,” he pointed out.
Global logistics solutions provider, DHL Global Forwarding has chipped in to improve logistics infrastructure between India and Africa, in tune with the projected growth in bilateral trade. The company plans to launch four Oil & Energy Centres of Excellence across the continent, including in Angola, Ghana and Kenya, over the next 12 months.
The ministry of food processing industries is planning to set up a food processing cluster in Africa. The proposed cluster would entail an investment of Rs 117 crore to be spent primarily on the setting up of common infrastructure for food processing parks which includes cold storage, food testing labs, incubation centres, standard designed factories, pre-cooling chambers and other modern technologies used by the industry.
This cluster is part of India's $5-billion credit line for Africa announced at the India-Africa Forum Summit last year.
"The cluster is likely to come up within next three years. We are floating a competitive bid to appoint a project management agency which will help the ministry in implementing this project," said a top ministry official.
The ministry is looking at 4-5 groups of countries for this project. A cluster comprising countries such as Ethiopia, Kenya, Uganda and Tanzania is in race with another group comprising Angola, Botswana and Namibia.
"The location will be decided by African Union. The union will also provide free of cost land with last-mile connectivity, basic infrastructure, fast-track clearance and incentives to attract investment into the cluster. The proposed cluster would attract more investment if it is established in countries close to Europe which export food products in large quantities," he said.
The cluster will address a particular value chain or a combination of value chains. It will reduce the post-harvest losses and wastages. Some estimates indicate that in the case of perishable commodities such as fruits, vegetables and fish, as much as 50% of production may deteriorate and may be lost due to a lack of proper storage facilities.
"The cluster will be able to process 2.5 lakh tonne of raw materials a year, primarily horticulture produce. We will rope in private companies to set up their shops in African clusters. This will help these companies to do business outside India and have an access to cheaper raw material. They can market their food products in domestic markets of Africa, at the same time export their products to European and other Asian countries from their African base," he said.
In civil war-ravaged Africa, small-scale food processing industries are mostly in rural regions creating jobs and income for about 60% of the labour force. It has a great potential for food production, but in many areas needs an input of overseas capital in the form of industries and expertise.
Desperately seeking an entry into the resource-rich Africa, India has offered its capabilities in science and technology and institution building to the African countires.
The idea behind the offer is to help African nations develop and market home-grown commercial products, which eventually will help them come out of their poverty.
As a quid pro quo, New Delhi expects more access to Africa’s rich mineral reserves, including strategic minerals, and some diplomatic leverage in a continent where China wields considerable influence.
Over the years, China established diplomatic relations with 48 out of 54 African nations and invested heavily in building roads, ports and other infrastructure in those countires. Africa is a stable trading partner and resource supplier for China.
“Our strategy is to invest in knowledge and skills to uplift the quality of life for Africans. Africa needs roads and ports, but it also requires more education, job and better quality life, where we intend to score,” pointed out a scientist associated with building Indo-African partnership in science.
The Ministry of External Affairs and Ministry of Science and Technology in association with the African Union have been working on a science and technology programme since 2010. Some of the initiatives are already showing results.
More than 50 scientists from Central Leather Research Institute in Chennai went to Ethiopia in the last two years to train African researchers on how to convert animal hide into world-class leather products. The experience encouraged other African countries to take a leaf out of Council of Scientific and Industrial Research (CSIR) book.
“We want to establish a series of scientific institutes, which can be a point of connection for the industry following CSIR model,” said V S Massingve, MozambiqueScience Minister.
The CSIR plans to set up its first three outstation research centres in Mozambique, Tanzania and Democratic Republic Congo for application and industry oriented scientific research.
India is extending help to set up a weather forecasting centre for helping African nations with accurate weather forecasting, required in agriculture. A textile cluster and more support to the Pan-African University in Nigeria are also in the offing.
National Innovation Foundation, that promotes grass root innovation, signed an agreement with the science ministries of Mozambique and Zimbabwe for the transfer of products innovated by grass root innovators in India. Both the agreements were signed during the first India-Africa science and technology ministerial conference.
India Thursday once again relied on the diplomacy skills of former minister of state for external affairs Shashi Tharoor to impress upon the African continent to forge science and technology (S&T) partnerships with it.
At the India-Africa S&T Ministers Conference and Tech Expo here, Tharoor, who as minister was responsible for bilateral ties with Africa, was at his best. He impressed upon the Indian and African delegations that the two are facing the same challenges of development and, hence, it was natural for them to come together to find common solutions for critical issues such as affordable healthcare, climate change, energy, food and water security.
His days as the Under Secretary-General at the United Nations and his experience in international diplomacy coming in handy, the Congress MP from Thiruvananthapuram switched effortlessly between speaking in English and French, a language that peoples of several African nations converse in.
“India and Africa have had long and close relations for many years, going back to shared experience of colonialism and, subsequently, our strong movements against colonialism and apartheid,” he recalled.
“We have moved beyond that. We have moved on to a relationship of independent countries, prosperous and prospering, and also facing genuine challenges of development. We are facing these challenges in a globalising world, in which the interdependence of nations remains, absolutely, the fundamental principle,” Tharoor told the gathering, co-chaired by African Union’s Human Resources and S&T Commissioner Prof. Jean Pierre O Ezin.
“Given the various challenges and the pluralism of our societies…given the compatibility of our values and our tendency to face challenges that might daunt others, India and Africa have every reason to mount a credible partnership in the 21st Century,” said the former minister, who was instrumental in launching the India-Africa Initiative.
Noting that science and technology is only one aspect of a multi-faced relationship between India and Africa, Tharoor said it is an “extremely important” one, considering the aspirations of the peoples of both sides in looking at the 21st century with “confidence and competence” to take advantage of what the future offers.
Under the S&T Initiative, India and Africa have implemented various programmes and projects, with ministries of external affairs and science and technology working closely to strengthen the relationship.
Tharoor particularly referred to the India-Africa Forum Summits in 2008 and 2010, which laid the foundation for the consolidation of the strategic partnership.
“Given that our strategic partnership is based on fundamental principles of equality, mutual respect, mutual benefit and historical understandings among the two peoples, it is extremely valuable that we have turned to S&T as an effective catalyst for social development and economic transformation of our peoples and our nations,” he said.
“The truth is that we all understand, I believe, that S&T is possibly the single most likely cause for the long-term rise of our nations and for the economic advancements of our peoples. Today, in the 21st Century, no country would rise and prosper without a significant and cutting edge progress in the domains of S&T,” Tharoor noted.
“We don’t believe that India and Africa have any reason to be left behind as the world marches forward in the 21st century,” he added.
Highlighting India's commitment to development in Africa, Minister of State for External Affairs Preneet Kaur said here on Thursday that 22,000 new scholarships for African students in various academic courses and training programmes, including special agriculture scholarships and C.V. Raman fellowships have been made available.
Kaur, who was addressing the inaugural session of India-Africa Science and Technology Ministerial Conference, said proposals for the institutional strengthening of identified institutions in Africa and the transfer of need based technologies have also been initiated.
"There is a provision for 22,000 new scholarships for African students in various academic courses and training programmes including special agriculture scholarships and C.V. Raman fellowships," said Kaur.
"As per India's commitment to assist African countries in the field of Science and Technology, proposals for institutional strengthening of identified institutions in Africa and transfer of need based technologies have also been initiated," she added.
She informed that her ministry has duly secured approvals from the Union Cabinet to support these initiatives through its "Aid to Africa" budget.
Kaur also said that India has successfully implemented the Pan-African e-Network Project, including tele-education, tele-medicine and connectivity between leaders in 47 African countries and an agreement has also been signed for its implementation in the 48th country, South Sudan recently.
Under the framework of the Science and Technology Initiatives for Africa, Department of Science and Technology in partnership with Ministry of External Affairs organised the 'India-Africa Science and Technology Ministers Conference'.
This major ministerial level event has being organised in close coordination with the African Union Commission and is being attended by science and technology ministers from across the African continent along with senior official from various countries. he event is expected to provide a platform for the advocacy, outreach and commitment of India under the framework of the New Science and Technology Cooperation Initiative with Africa.
The ministerial conference also intends to help to develop linkages and also secure the interests and commitments of the African partners to this Indian initiative.
East Africa and India will increase cooperation in order to improve security on the Indian Ocean, a senior Kenyan government official said on Monday.
Defense Minister Yusuf Haji told journalists in Nairobi that both regions share common security concerns in the Indian Ocean.
"East African countries and India will increase cooperation in order to tackle insecurity in the Indian Ocean which is mainly caused by piracy and terrorism," Haji said when he officially opened the international symposium on East Africa-India relations.
The two-day symposium was jointly organized by the Centre for Security Studies, Kenya National Defense College and the Policy Research Institute of African Studies in India.
"The two regions will explore areas of deeper understanding and identify which sectors can be operationalized for the common benefit of both regions," he said.
Haji said that forum will discuss emerging perspectives in India’s relations with the East African region as part of greater south-south cooperation.
"Indian Diaspora in East Africa play a very significant role in promoting India-Africa relations," the defense minister said.
University of Mumbai’s Centre for African Studies Professor Aparajita Biswas said that the Indian Ocean is of direct interest to India as it forms part of the country strategic maritime frontiers which extends from the Persian Gulf to the east coast of Africa and across the Malacca strait.
"A lot of Indian trade passes through the Indian ocean as it heads to its export markets and therefore its security is paramount," she said.
She said that Indian foreign policy was realigned to reflect the growing importance of the region. She added that the economic boom in India has made the country build foreign excess reserves which could form part of foreign direct investment into East Africa.
"We are pushing for more people to people interaction across the two regions in order to leverage existing ties brought about by huge India Diaspora population," she said. Biswas said that there are over 2.5 million people of Indian origin in Africa.
International Peace Support Training Centre Director Brigadier Robert Kibochi said that East Africa and India have common interests that cut across many sectors including trade, maritime security and peace operations.
"India has one of the largest contingents of UN Peace Keeping troops which are posted in DR Congo and South Sudan and are working closely with their counterparts from East Africa," he said.
Kibochi said that East Africa can therefore learn lessons from these peacekeeping missions.
"Opportunities to develop and cross fertilize experiences by India and the east Africa region in the service of peace could be mutually beneficial," he added.
"We are living in a globalized world and therefore no single country can tackle security alone.
"The increasingly blurred line between international security and domestic security has led the international community to engage more frequently into domestic conflicts," the director said.
U.S. International University lecturer of International Relations Professor Macharia Munene said that Kenya and India are regional powers separated by the Indian Ocean.
"Each can claim a share of the ocean and the resources in it but it is the attempt to safeguard those resources that the two countries are attracted to each other," Munene said.
"Their interests converge as both countries want to make the India Ocean as safe as possible," he said.
The National Institute of Design and the external affairs ministry have inked a USD 1 million MoU to train and empower craftswomen in five African countries, it was announced here Wednesday.
In January, Commerce Minister Anand Sharma, during a meeting in Harare with his Zimbabwean counterpart Welshman Ncube, had said that the National Institute of Design (NID) was undertaking a project for the training and exposure for craftswomen of rural Africa to empower them through design intervention in basketry making, as part of the India-Africa Forum Summit Action Plan.
An MoU on this was signed in the capital between Gurjit Singh, additional secretary in the ministry of external affairs, and Pradyumna Vyas, director of the NID, an institute statement said.
The initiative will cover five African countries over a period of three years.
"This collaboration between the ancient civilizations with rich tradition in craft skills will further strengthen the bonds between India and Africa", the statement said.
An NID team will visit Zimbabwe to identify 25 craftswomen who would be trained in India in collaboration with New Basket Workshop Foundation, an African NGO. The project aims at women's empowerment through skill enhancement and appropriate marketing through leading Indian brands like Fab India.
India has assured that it will assist Zimbabwe in reviving its textile sector. India will provide skills training and also help in the development of textiles clusters. The two ministers also reiterated the need for enhancing and diversifying the bilateral trade between the two countries which currently stands at USD 128 million.
The two ministers also agreed to convene the meeting of the Joint Trade Committee within the next six months.
Product development and diversification will be achieved through a model of collaborative workshops bringing on board basketry artisans of both Africa and India on a common platform, along with designers and design students facilitating knowledge, experience and skill sharing in the process of design intervention.
At the onset, five African countries - Zimbabwe, Malawi, Ethiopia, Tanzania and Uganda - will be the beneficiaries.
For each of these countries, one need assessment-cum-workshop in the respective country, followed by a workshop in India and a third workshop in the respective country for 25 participants will be conducted over a period of three years.
The project will encapsulate a major brand development exercise for the entire initiative lending to a suitable design identity for the endeavour.
Building upon growing political and economic ties, India and the 54-nation African continent are now poised to expand their cooperation in frontier areas of research, capacity building and knowledge industries.
Empowerment through knowledge and technology was the buzzword at a two-day science and technology conclave here that brought together more than 100 scientists, diplomats and 31 science and technology (S&T) ministers from African countries.
The March 1-2 conclave, at the Vigyan Bhavan convention centre, focussed on building capacities in research and development, social entrepreneurship and innovation technologies.
"There exists an enormous potential for cooperation in science and technology between India and Africa, given the fact that we both are emerging economies, share common problems and have to meet the aspirations of our people," said Jean Pierre O. Ezin, Commissioner, Human Resources, Science and Technology, at the African Union Commission.
He called for strengthening ties between India and Africa in sectors of research and development, human resource development and exchange of technical know-how.
Among the key areas the two sides agreed to work on are all people-related sectors to provide the over two billion population living in India and Africa better living conditions, quality food and water, affordable healthcare and meeting energy needs of two fast-growing economies.
The African Union, which represents 54 nations of the African continent, expressed its keenness to have a long-term strategic partnership with India in science and technology (S&T), given India's "remarkable progress" in this area in the last decade.
"The challenges faced by nations of Africa is similar to ours. Some of our solutions may also be similar," India's S&T and Earth Sciences Minister Vilasrao Deshmukh told the conference, and flagged social entrepreneurship and innovation as key areas for collaboration.
At the end of the conference, hosted by the Indian ministries of S&T and external affairs, the ministers from India and Africa adopted a declaration that reaffirmed the commitments for a strong engagement made at the India-Africa Forum Summits, recalled their common challenges and growth potential, and outlined means to achieve development by becoming knowledge economies.
The areas identified for future cooperation included capacity building, with India assisting the Commission of the AU and Regional Economic Communities by providing training and other capacity interventions towards improving policy enabling environment in the African nations.
With India being the lead thematic partner at the Pan African University's Institute of Earth and Life Sciences in the Western African region at the University of Ibadan in Nigeria, it was agreed to enhance interactions between researchers from both sides, apart from an outreach programme in African countries for the C.V. Raman Scholarship and Fellowship Programmes.
The conference also explored institutional relationships of Indian scientific establishments with Institute Pasteur in Tunis, Institute of Mathematics and Physical Sciences at Benin, and School of Science and Technology at Masuku in Gabon. India's Council of Scientific and Industrial Research (CSIR) will help Mozambique to set up a similar institution.
The foundation of cooperation in science and technology was laid during the India-Africa Forum Summit held in New Delhi in 2008. Prime Minister Manmohan Singh had announced substantive commitments of India to engage with African nations during the second summit in Addis Ababa in 2011.
India has committed USD 5 billion in lines of credit for the next three years to help Africa to achieve its development goals. An additional USD 700 million was pledged to establish new institutions and training programmes. Of this, USD 185 million was set aside for science and technology.
Among those who provided fillip to the India-Africa science diplomacy at the conference were Egypt's Minister of Scientific Research Nadia Eskander Zakhary, who is also the chair of the African Ministerial Conference on Science and Technology (AMCOST), India's Minister of State for External Affairs Preneet Kaur, Minister of State for S&T Ashwani Kumar, and former minister of state for external affairs Shashi Tharoor.