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  • India and the new scramble for Africa

    India and the new scramble for Africa

    Jorge Heine

    Africa’s enormous natural resources, many of them lying fallow because of economic mismanagement or outright civil wars, are precisely what India needs.

    Gandhiji, who knew Africa well, once said, “commerce between India and Africa will be of ideas and services, not of manufactured goods against raw materials after the fashion of the western exploiter.” The Mahatma was prescient only to some extent: though services and ideas play a role in the burgeoning Indo-African links, raw materials and industrial products still predominate.

    As Africa enters into its fifth consecutive year of growth, projected at 6.2 per cent in 2008 (up from 5.8 per cent in 2007), it has become, as the OECD’s Javier Santiso has put it, “the new frontier of emerging markets.” South Africa, Botswana, Ghana and Kenya are at the forefront of an “African Renaissance” that South African President Thabo Mbeki has been preaching about since 1998, but that is only now starting to materialise. The number of companies listed in stock exchanges in Sub-Saharan Africa has gone up from 66 in 2000 to 522 in 2007, and even hedge funds and private equity managers are moving in. The investment rate, at 20 per cent of GDP, is still too low, and foreign debt, at $250 billion, remains a burden, but by and large Africa’s economic outlook is much better than it was a few years ago.
    India’s presence

    India’s growing presence in Africa is best epitomised by events in the Zambian copper belt. Once a leading copper producer, Zambia nationalised its copper mines in the late 60s, shortly before Chile did in 1971. Yet, as opposed to Chile, whose state-owned CODELCO is today’s the world’s leading copper company, Zambia ran its mines into the ground. In despair, 30 years later the Zambian government invited the former owners, Anglo American PLC, the South African mining giant, to move in again, which it did, buying up their former properties for a song. Yet even fabled Anglo was unable to deal with the mess, and abandoned Konkola, the jewel in the crown of the Zambian mines, and other properties a few years later.

    Enter Vedanta Resources, an FTSE 100 Indian metals and mining group, which, with impeccable timing, bought 51 per cent of Konkola Copper Mines in 2004 (recently upgraded to 79 per cent) and has them now up and running; a major expansion, to be ready by 2010, should bring up production to 500,000 tons of finished copper. An Indian company stepped in where neither Anglo nor CODELCO, which was also offered Konkola, dared to tread. With the price of copper at four dollars a pound, four times what it was four years ago, in a number of boardrooms of mining companies around the world the question of “who lost Zambia?” must be resonating. (Vedanta also recently bought ASARCO, the third largest copper producer in the United States for $2.6 billion in cash.)

    Welcome to the brave new world of India in Africa, where the captains of Indian industry, like Anil Agarwal of Vedanta (who boasts he is now “26 per cent of Zambia’s GDP”) but also Ratan Tata of the Tata Group, Onkar Kanwar of Apollo Tyres and many others have moved in with a vengeance. Tata Steel has a $1.5 billion joint venture in an iron project in Cote d’Ivoire, and Tanzania has become a magnet for Indian companies, attracting some $825 million in investment since 1990. These companies are making up for time lost until the early 90s, when Africa’s economic difficulties and India’s inward-oriented development had kept them apart. Trade between India and Africa has gone from $961 million in 1991 to $30 billion in 2006-2007. The continent’s fastest growing region is East Africa, with the oldest links with India, and the largest Indian-origin communities.

    As a recent, special issue of the South African Journal of International Affairs (vol. 14, # 2; full disclosure: I am on their Editorial Advisory Board) on the subject shows, both Africa and India have much to gain from all this. India’s high growth rate, averaging eight per cent for the past four years, in what is now a trillion-dollar economy, is gobbling up all the raw materials it can get, be they iron, copper, gold or oil. Africa’s enormous natural resources, many of them lying fallow because of economic mismanagement or outright civil wars, are precisely what India needs.

    The current upsurge in commodity prices, driven by Chinese and Indian demand, has helped both Africa and Latin America — and to look at the per capita oil, copper and iron consumption in the two Asian giants and compare it to the one in Europe or North America is to realise for how long this can go on.

    China, as elsewhere in the world, has gained advantage over India, securing oil rights in Nigeria, Angola, and , most controversially, in Sudan, among other countries. China’s trade with Africa in 2007 was $55 billion (up from $10 billion in 2000) and according to some, may have contributed as much as 20 per cent of Africa’s economic growth in 2007. The Chinese government would like it to reach $100 billion in 2010, thus becoming Africa’s main economic partner. In 2006, the China-Africa Summit in Beijing gathered 48 of the 53 African heads of state. India hosted a similar, albeit smaller, summit with African heads of state in New Delhi this past April.

    These new links are not only about trade, but also about cooperation. And in both fields, the action is in the South. A measure of how much out of the loop Northern countries are in this can be gauged from the fact that whereas all of U.S. international cooperation for Latin America and the Caribbean in 2007 amounted to $1.6 billion (of which $600 million went to Colombia), this was a mere one fifth of the $8.8 billion budgeted by Venezuela in international aid for the region. China has committed to a $5 billion Africa Development Fund. To continue to haggle for the OECD countries to step up to the plate and come up with the 0.7 per cent of GDP in international cooperation to which they committed long ago but have failed to deliver is not just futile, but irrelevant.

    New Delhi is not quite in Venezuela’s or China’s category in its Africa programmes, but it is moving in the right direction. In addition to its flagship, $200 million Nepad project to provide digital connectivity throughout the African continent by means of a Pan-African satellite and fibre-optics network, India is setting up cooperation programmes in Ethiopia and Botswana to improve agricultural productivity, in Ghana in poverty alleviation, in Benin, Senegal and elsewhere.

    One of the most innovative approaches is coming out of the India-Brazil-South Africa (IBSA) initiative, whose Third Summit is to take place next October in New Delhi. IBSA has set up its own cooperation fund, with projects in Equatorial Guinea and in Haiti leading the way. India, a somewhat reluctant partner, has started to realise the enormous potential IBSA entails, as India, while taking on the new responsibilities its new regional and, indeed, global, role implies, can also build on its foreign policy trajectory as founding member and leader of the NAM, an entity originally based on Afro-Asian solidarity.
    Advantage Africa

    Yet, contrary to what some might surmise from this new version of the “scramble for Africa” among the two Asian giants, if African countries play their cards right, they have much to gain. Chinese and Indian companies are more willing to invest in infrastructure and in the “downstream” facilities needed to bring products to port than western ones.

    South Africa, where Gandhi cut his political teeth from 1893 on, has been at the forefront of African ties with India, as was underscored by the recent visit to New Delhi of ANC chairman Jacob Zuma, whom many consider to be Thabo Mbeki’s most likely successor. South Africa’s exports to India have grown from a few hundred million dollars in the early 90s to $2.6 billion in 2006, much of it driven by gold, but also by other products.

    As the demand for India increases from around the world, there is a great temptation for New Delhi to focus exclusively on the Big Powers and shed its old Third World commitments as unnecessary ballast. That would be a mistake. As the considerable growth in trade and investment flows not only with Africa but also with Latin America shows, India has enormous opportunities in both of those continents. They provide many of the commodities India needs, plus ready markets for Indian products. Ideas and services are key in the Knowledge Society into which the Third Industrial Revolution has propelled us, and of which India has made so much so far. Yet, they still need to be under-girded by the material base provided by natural resources and manufactured products.


    (Jorge Heine is CIGI Professor of Global Governance at Wilfrid Laurier University and a Distinguished Fellow at the Centre for International Governance Innovation in Waterloo, Ontario. He serves currently as Vice-President of the International Political Science Association.).


    The Hindu : Opinion / News Analysis : India and the new scramble for Africa
    A grain of wheat eclipsed the sun of Adam !!

  • #2
    you know all this talk reminds me of the book" 2061 a space odyssey" in it the world is run by a central authority with 4 regional authorities the authority running the southern hemisphere is responsible for raw materials the authority running asia and the far east for processing the material adn producing goods and the authority running europe and america for research and finance , one wonders is the world really headed this way

    Comment


    • #3
      Good article Jay
      Hpwever I can tell you a few more things.Indians are able to invest more in Africa because there is already many Indians mostly Gujaratis,Keralites and Andhras who have emigrated a long time back to Africa and who are really flourishing there.You find these people mostly in Rwanda ,Uganda, Zambia, Botswana ,Zaire,Malawi and Namibia .The majority of the businesses there are owned by these people there .While Indian enterpreneurs invest money through these people or through the government.
      Where as Chinese government invests directly invests,those few private investors who are from China are actually westeners or India who through via China

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      • #4
        Africa is always a hot spot. I guess you forgot the fate of ethnic Indians in Uganda, Congo and South Africa in the late 60's and 70's. Nothing has changed in Africa, just take a look at the recent killings/lootings of whites in South Africa and Zimbabwe.

        The Chinese are entering in to un-charted territory, they'll defn feel the pinch once they cross the threshold. Just a casual read would say how volatile this continent is,
        Officials: 74 dead in attack on Chinese oil field in Ethiopia - Africa, World - The Independent
        Chinese engineer killed in Kenya attack
        Rioters attack Chinese after Zambian poll - Telegraph
        A grain of wheat eclipsed the sun of Adam !!

        Comment


        • #5
          Africa is always a hot spot. I guess you forgot the fate of ethnic Indians in Uganda, Congo and South Africa in the late 60's and 70's. Nothing has changed in Africa, just take a look at the recent killings/lootings of whites in South Africa and Zimbabwe.
          You are right JAY, that happened during Idi Amins regime ,but after his downfall Yoweri Museveni again rehabilated Indians backi in Uganda .He thought they were important for Uganda's economy

          Recently I went on a 10 day tour to Malawi where my uncle was involved in the construction of a Hydel Project .What i observed is that the locals have no high opinion about the europeans .That is the reason why not much of the local populace is'nt opposing Mugabe's white persecution.

          Another thing I observed is that we can't convince them with a gun barrel ,they had simply seen too much of it .
          PS:The Malawi people have a very good opinion about Indians

          Comment


          • #6
            35 years after Idi Amin, Indians again flocking to Uganda


            35 years after Idi Amin, Indians again flocking to Uganda

            Submitted by Mudassir Rizwan on Mon, 11/26/2007 - 07:04.

            * Features
            * Economy

            By M.R. Narayan Swamy, IANS

            Kampala : Thirty-five years after former dictator Idi Amin booted them out lock, stock and barrel, Indians are again returning to Uganda in large numbers and helping to rebuild an economy that was shattered following their exodus.

            The capital Kampala is again dotted with Indian-run stores and businesses, and Indian faces are a familiar sight on the streets. A Bank of Baroda billboard stands proudly in the city centre, with a beaming face of Mahatma Gandhi.

            There are also plenty of Hindu temples and - in keeping with the diversity of Indians - very many Indian community associations.

            Indian High Commissioner Niraj Srivastava puts the number of Indians, including people of Indian origin, in Uganda at nearly 20,000, although only 2,000 of the estimated 55,000 forced to quit the country in 1972 have chosen to return.

            Most others are beginning life anew in Uganda, opening a variety of shops and business establishments. There are also those who have come to the "pearl of Africa" - a country of 30 million -- to work in different industries.

            "The Indian community has recaptured the position (it once had)," said Srivastava. "Today Indians are present in all sectors including manufacturing. They are employing tens of thousands of (Ugandan) people."

            Agreed Jery Pacheco, who runs a popular restaurant, The Coconut Shack, and has lived here for 17 long years. "Yes, Indians are coming back to Uganda - and in large numbers. You can see them everywhere. And they are successful too," Pacheco, who is from Goa, told IANS.

            The Indian Association Uganda is the leading community body that plays an active role in binding the many Indian groupings in the country. It brings out a publication, Namaste, which spreads the message of India to Indians.

            Besides the Indian Association Uganda, there are also the Andhra Cultural Association, Bengali Association, Indian Women Association, Jain Samaj Uganda, Kerala Samajam, Karnataka Sangha, Lohana Community, Maharashtra Mandal, Ramgarhia Sikh Society, Sindhi Association Uganda, Tamil Sangam, Youth League, Rajasthani Association, Arya Samaj, Indian Catholic Community Uganda and Khoja Shia Ithnasheri Jamat.

            There are at least a dozen shrines set up by Indians, including a Jain temple, a Shri Swaminarayan Mandir and a gurudwara in Kampala and a Ganesh Mandir at Entebbe, the nearest town where Uganda's international airport is located. There are also two churches and two mosques.

            "Today Indians control more and more businesses," said James Mwangi, a Ugandan businessman who is into hospitality management. "So many shops are run by Indians. As of now they are the largest expatriate business community, ahead of even Kenyans."

            Kenya, a larger and prosperous country, is Uganda's immediate neighbour.

            Besides working for multinationals in various capacities, Indians run pharmaceutical stores, electronic and other shops, restaurants and bars, casinos, printing presses, tour and travel agencies and hotels.

            Indian restaurants do booming business - catering also to Ugandans and other expatriates. Among the hotels are Govinda, Haandi, Nawab, Khana Khazana, Pavement Tandoori and Kati Kati.

            There are also numerous Indian doctors.

            The Indian story was not as rosy three decades ago.

            In 1972, Idi Amin, eager to cement his domestic base, ordered the expulsion of all Indians, giving them just three months to quit, leaving behind everything they owned. The Indians had to comply, leading to a virtual collapse of the economy.

            The present Ugandan president, Yoweri Museveni, took power in 1986 and began to actively woo the Indians again. He promised that Indians who return will be restored the property they had lost. Indian diplomats say he kept his pledge.

            However, most of the expelled Indians had dug roots in Britain where they primarily went to and ignored his appeals. Just 2,000 returned to Uganda. However, other Indians have started to eye greener pastures in Uganda.

            "The present government wants them to stay," an Indian diplomat explained. This year, when an Indian was killed in mob violence following rumours that a natural forest was to be converted into a sugar factory, the authorities cracked down hard and fast and arrested the rioters. They also promised protection to the Indian community.

            Yet, minor irritants remain. Said an Indian from Tamil Nadu who did not want to be quoted by name: "The locals like most of us. Unfortunately, some Indians still don't treat Ugandans with respect. That is unfortunate."

            Ugandan businessman Mwangi disagreed. "I think relations between Ugandans and Indians are excellent," he said. "The past is over. Today Ugandan people want to benefit from Indian skills."
            35 years after Idi Amin, Indians again flocking to Uganda | Indian Muslims

            Comment


            • #7
              Originally posted by Jay View Post
              Africa is always a hot spot. I guess you forgot the fate of ethnic Indians in Uganda, Congo and South Africa in the late 60's and 70's. Nothing has changed in Africa, just take a look at the recent killings/lootings of whites in South Africa and Zimbabwe.

              The Chinese are entering in to un-charted territory, they'll defn feel the pinch once they cross the threshold. Just a casual read would say how volatile this continent is,
              Officials: 74 dead in attack on Chinese oil field in Ethiopia - Africa, World - The Independent
              Chinese engineer killed in Kenya attack
              Rioters attack Chinese after Zambian poll - Telegraph
              Jay,

              Good point, but please note the following
              1. The Chinese are the suppliers to the local despot/ dictator/ president for life/ warlord in charge. If these incidents cross their tolerance threshold, they would have the inclination and the ability to catch the top guy by his collar and slap him around till he falls n line
              2. India operates not formally but through private indoviduals, who have zero influence on the GOI, esp. the current government (the BJP would probably be different here). If anything happens to Indians, the GOI would call for "World Peace" in the UN but do nothing else.
              "Is God willing to prevent evil, but not able? Then he is not omnipotent. Is he able, but not willing? Then he is malevolent. Is he both able and willing? Then whence cometh evil? Is he neither able nor willing? Then why call him God?" ~ Epicurus

              Comment


              • #8
                Originally posted by antimony View Post
                1. The Chinese are the suppliers to the local despot/ dictator/ president for life/ warlord in charge. If these incidents cross their tolerance threshold, they would have the inclination and the ability to catch the top guy by his collar and slap him around till he falls n line
                You're giving the Chinese too much credit. They more apt to pay ransoms and bribes than military action. That's British, French, Russian fortay.

                Comment


                • #9
                  Originally posted by antimony View Post
                  1. The Chinese are the suppliers to the local despot/ dictator/ president for life/ warlord in charge. If these incidents cross their tolerance threshold, they would have the inclination and the ability to catch the top guy by his collar and slap him around till he falls n line
                  Not really, you cannot be the top dog in Africa. They are more like Afghanistan with all the tribal loyalty and stuff. As the Col pointed out, they are more like bribes to make quick bucks, when push comes to shove the Chinese will follow the Indians, eject. China is still not in a position to dictate or facilitate security for their citizens world over. Oh and most of the times, the Chinese Govt itself is in dark as to where their citizens are and what they do.

                  2. India operates not formally but through private indoviduals, who have zero influence on the GOI, esp. the current government (the BJP would probably be different here). If anything happens to Indians, the GOI would call for "World Peace" in the UN but do nothing else.
                  Again, you are giving way too much credit for the BJP. We dont have the means and granted, will power to push things the way we want. We still haven't reached that league yet and have plenty time to go.

                  Unlike Americans or French, the British or Russians, China and India are not well versed with the so called gun boat diplomacy.
                  A grain of wheat eclipsed the sun of Adam !!

                  Comment


                  • #10
                    Originally posted by Jay View Post
                    Not really, you cannot be the top dog in Africa. They are more like Afghanistan with all the tribal loyalty and stuff. As the Col pointed out, they are more like bribes to make quick bucks, when push comes to shove the Chinese will follow the Indians, eject. China is still not in a position to dictate or facilitate security for their citizens world over. Oh and most of the times, the Chinese Govt itself is in dark as to where their citizens are and what they do.
                    I see what you and the Colonel are saying. Yes, it will be interesting to see how that turns out

                    Originally posted by Jay View Post
                    Again, you are giving way too much credit for the BJP. We dont have the means and granted, will power to push things the way we want. We still haven't reached that league yet and have plenty time to go.

                    Unlike Americans or French, the British or Russians, China and India are not well versed with the so called gun boat diplomacy.
                    I will never, ever give too much credit to the BJP:P:P:P

                    I was just saying that ideologically the BJP would at least have some sympathy for the Indians diaspora over there (gujarati/ north indian business owners) unlike the current government where the Mayawatis/ Mulayams/ Yadavs who would probably drool over the prospect of seeing them getting pan seared with sesame oil;)
                    "Is God willing to prevent evil, but not able? Then he is not omnipotent. Is he able, but not willing? Then he is malevolent. Is he both able and willing? Then whence cometh evil? Is he neither able nor willing? Then why call him God?" ~ Epicurus

                    Comment


                    • #11
                      India and Mauritius have a double taxation agreement which allows Mauritius to have a financial sector. mauritius has a large percentage of its population of Bihari origin and hence Indic. Through Mauritius, India has access to SADC and so on as there are free trade agreements with Mauritius, an African island. India is certainly doing a good job on the Mauritian front and hence allows certain politicians to park their money there from time to time.

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