Politics

China and India Battle for Influence in Africa: Part 3

Written by Gaurav Bhola, MSM, Managing Editor & Community Manager on August 13, 2007 1:19 pm EST

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India’s traditional approach towards Africa has been one of friendship and fraternity. India’s strategy towards Africa is rather unique; India concentrates on capacity-building, while China follows traditional resource-based investment. Resource-based investments from China are mainly dependent on domestic compulsion for overseas natural resources.

While capacity building involves providing developing nations competence and skills in various areas for upgrade such as, industrial, technological, economic, social welfare, education, infrastructure, and other. This approach can transform communities, societies, cultures, and environments from the ground up and lead to more sustainable development than imposition from top down.

The emphases on grassroots upliftment projects integrate Indian firms deeply into local African society and economy. By hiring and training locals at certain stages of the projects the Indian firms give Africans an equitable stake in the success of the project. Consequently, the local populaces’ involvement in projects has a deep-impact upon their self-esteem and psyche creating an innate sense of accomplishment and pride; thus India and Indians endear themselves at the individual level, unlike China.

India’s private investments are increasing in clout and differ from China’s state-managed model. Indian multinationals Tata, Cipla, Mahindra, and others have successfully implemented profitable projects in Africa. Also, the increasing investments include African countries that don’t share India’s British-colonial past. Traditionally, India has pursued economic investments with African nations included in the British Commonwealth. However, India has made recent forays into West Africa.

Currently, India-West Africa nonoil trade exceeds $3 billion and is rising. The Indian investment in the West African nation of Cote d’Ivoire (Ivory Coast) is forecasted to expand to $1 billion by 2011. But British Commonwealth member Nigeria is India’s largest trading partner in Africa, accounting for more than $3 billion in bilateral trade.

Two years ago, Indian national oil giant ONGC and Mittal Steel joined hands to form a joint venture OMEL to invest $6 billion in infrastructure projects to set up railway lines, a power plant, and a refinery in Nigeria. In return, OMEL will receive rights to oil blocks from Nigeria.

Some Indian investments have followed China into controversial territory such as, India’s 25 percent stake in Sudan’s major oil fields. The success of China in obtaining major oil and gas investments has impressed India. China in one instance thwarted India’s deal with Shell Oil for 50 percent share in an oil-exploration project in Angola by offering $2.3 billion in aid, compared to India’s $200 million aid offer. Hence, India may attempt to imitate China’s strategies to avoid being eclipsed in future deals.

On the other hand, following China’s lead may imperil African goodwill towards India. India must persist on its course of capacity-building, skill, and technology transfer instead of possible mimicking of China’s strategy of exploitation. Otherwise, like China, India may be seen by Africans as a neo-colonialist power.

Part 4: China and India Battle for Influence in Africa: Part 4

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