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The world at Africa’s feet
As the first India-Africa Forum summit kicks off in New Delhi, let’s look at
the opportunities that are waiting to be tapped in the resource-rich
continent.
Africa -- the land where poorest of the poor live. It’s been almost three
centuries since the world’s industrialization started in the 18th century in
northwest England. However, still, more than 30 of the world’s 48 least
developed countries are located in Africa -- the continent where nearly 14 %
of the world’s human population lives.
But efforts are being made in the world’s second-biggest continent to change
and overcome developmental problems. The governments across Africa -- at
least the ones not mired in civil war -- are implementing policies which
have far-reaching pro-development implications. Poverty level is coming
down, per capita income is rising and Africans are starting to live a better
life.
To help further the process of economic development in Africa, November 20
was proclaimed as Africa Industrialization Day by the UN General Assembly on
December 22, 1989. The aim of the Day is to mobilize the commitment of the
international community to the industrialization of Africa.
Land of opportunity
Despite its plethora of problems, Africa is a land of promise and
opportunity because of its vast natural resource wealth. It is this reason
that India, China, the European Union and the United States have not been
able to resist the temptation to form partnerships with African countries
that are mutually rewarding. China in particular, has been signing deals
after deals with African countries to tap the continent’s natural wealth
and, in turn, aid Africa’s industrialization and development. Of late, Asian
trade and investment has been rising in Africa and this is part of the
global trend towards South-South co-operation among developing nations.
African exports to Asia have tripled in the last few years, with Asia
becoming Africa's third largest trading partner after the EU and the US. The
Indian and Chinese investments flowing into Africa are also on the rise.
China taps Africa
China has been at the forefront of the recent mad race to secure deals in
Africa. And the world has taken note of this fact as Chinese leaders,
including President Hu Jintao, Premier Wen Jiabao and other top State
officials, have been paying visit after visit to the resource-rich continent
in the past few years.
As the most populous country in the world, China knows it will soon have to
look outside to fulfill growing internal demand for natural resources,
including oil and gas. The Chinese government has been wise enough in
realizing this fact faster than most other countries.
This has given Beijing an edge over other countries seeking deals in Africa.
China has taken up many development works in Africa, apart from providing
cash for the natural resources it is buying. This has won the Dragon a lot
of goodwill. And governments across the continent are more than willing to
sign deals with the world’s fastest growing economy.
Beijing, on many occasions, has come on record to state that it is spreading
prosperity in Africa, compared to the West which has failed to do so. The
West, which is wary of China’s growing might, has been critical of the
Dragon’s strides in the world’s poorest continent. Opining that Africans
urgently need roads and radios instead of human rights and freedom, China
through its ExImBank has invested in nearly 300 projects across the
continent, most of these focusing on building roads, railways, ports and
mines.
China exhibited its vibrant Africa policy to the world by holding a meeting
-- the Beijing Summit of the Forum on China-Africa Cooperation -- with 48
African nations in November 2006. The Dragon made a move to floor the
African leaders at the summit with its pledge to double the aid to the
continent and to offer $ 5 bn in loans and credits by 2009.
With Beijing also deciding to build up emergency strategic oil reserves of
some 100 mm barrels over the next few years, it is increasingly looking at
African oil as it fits well into its strategy to secure energy assets for
future. Currently, China sources a third of its total crude imports from
African nations like Angola, Sudan, Congo, Gabon and Nigeria.
In the first half of 2007, China’s direct outbound investment stood at $ 480
mm, and it exported a staggering $ 16.4 bn worth of goods and services to
the continent’s nations in the same period. Further, to finance trade and
investment by Chinese firms in Africa, Beijing has launched a $ 1 bn special
fund.
In another significant move, China’s biggest lender, the ICBC bank is
acquiring a 20 % stake in South Africa's Standard Bank for $ 5.6 bn. The
deal is the biggest foreign acquisition by a Chinese commercial bank yet,
and is also the largest foreign investment in Africa.
While the Beijing Summit was a boom for African nations, it created a stir
among other world powers, including the US and EU. Both knew China played a
masterstroke by bringing nearly 50 African countries on its side by giving
out economic benefits. And China is aware of the fact that in a world where
political and economic blocks of nations are going to be the order of the
day, it was time to muster up as much international support as possible.
China's tactics in Africa have been very clear -- aggressively pursue
commercial deals and stay clear of politics. And African officials have been
very welcoming of this policy.
India’s bid to catch up
With China's influence growing over energy-rich Africa, India has already
pressed the alarm button. New Delhi is following Beijing’s path to increase
oil and gas imports from the resource-rich continent to reduce dependence on
Middle East nations like Iran. In comparison to China, which during
1995-2006 signed energy agreements worth $ 8 bn with African nations and
pledged investment of another $ 40 bn at a mega conference of African energy
ministers last year, India’s investment in Africa’s energy sector has been
only $ 2 bn.
However, speaking at the recent India-Africa Hydrocarbon Conference in New
Delhi, which was attended by 25 African nations, External Affairs Minister
Pranab Mukherjee said that India was seeking to take forward its partnership
with Africa. India is a natural market for Africa’s rich hydrocarbon
resources, Mukherjee had told the conference.
The prospects for partnerships with African countries have also grown in the
recent past with a surge in investments by Indian companies in nations like
Libya, Sudan, Nigeria, Egypt and Gabon. The co-operation holds significance
as Africa has the potential to play an important role in enhancing India’s
oil supply security through diversification of its crude oil import sources.
Significantly, Africa has 10 % of the world’s total oil and gas reserves and
its hydrocarbon exploration potential remains relatively untapped.
To give a push to Indo-African ties, Prime Minister Manmohan Singh last year
visited Nigeria -- Africa’s largest oil producing country. In Abuja, Singh
announced a "strategic partnership" with Nigerian President Umaru Yar’Adua
and signed four agreements to bolster bilateral relations, including in the
energy sector. Singh’s historic visit to Nigeria was the first by an Indian
Prime Minister in the last 45 years.
The Prime Minister also travelled to South Africa for the trilateral IBSA
summit with Brazil, where Africa’s biggest economy agreed to explore ways
for co-operation with India in civil nuclear field through “acceptable
forward-looking approaches”.
Prior to the Prime Minister’s visit, External Affairs Minister Pranab
Mukherjee also travelled to Africa last year and secured the 53-member
African Union’s crucial support for New Delhi’s bid for a permanent seat in
the expanded United Nations Security Council (UNSC). India has already made
it clear that the UNSC’s expansion will be meaningful only if it had a
representation from Africa, including in the permanent category. During his
trips to Ethiopia and Libya, Mukherjee was able to reach agreements on
enhancing bilateral ties in various fields.
India has also expressed its interest in strengthening co-operation with
African nations to jointly combat international terrorism. Further, the ties
between India and Africa are poised to move into the fast lane with New
Delhi currently holding its first summit with the African Union in New
Delhi.
With trade between India and Africa growing, a framework agreement between
New Delhi and the Southern African Customs Union for a preferential trade
agreement is on the anvil. India is also planning to give duty-free access
to products from least developed African countries, and is building a Rs
500-crore Pan African e-network to bridge the digital divide among 53
countries of the continent. Like China, India’s ExImBank has also extended
lines of credit to Rwanda and Sudan for various development projects.
US, Europe outpaced
While India and China have woken up to the realities and are investing in
every possible sector in Africa, the US presence has largely been restricted
to the energy sector. Investment experts say foreign direct investment
flowing into Africa has more than doubled since 1998, but few US companies
have invested in the region except for the oil and mining sectors. Official
US government figures show that American holdings in the sub-Saharan region
total just $ 19.6 bn.
Further, the US has shown interest in diversifying its energy supply sources
from the Middle East and is increasingly looking at the African continent.
Currently, Africa meets 16 % of the US’s imported fuel imports. So far, the
US’s interest in Africa has largely been restricted to geo-political issues,
like the strife in Sudan’s Darfur region. Several African nations have
become hubs of terrorism and insurgency, like Somalia and the Democratic
Republic of Congo. So, it becomes imperative for the US, which is leading
the global war against terror, to weed out terrorism from these countries.
To expand its military presence in Africa, the United States is also
planning to set up a unified military command there. However, top officials
have moved to allay concerns that US was trying to push more troops onto the
continent and impose American policy. Washington’s policy is to assist
African countries to build their security capacity and have a secured
environment, officials say.
At present, the US has some 1,800 troops at a counter-terrorism task force
base in Djibouti, in the Horn of Africa. Going by the speculation, Ethiopia,
one of Washington's strongest military allies in Africa, is likely to house
the Unified Military Command's headquarters.
China’s "economic" push into Africa has worried not just India but also
Europe. European Union member nations were forced to agree to suspend a
boycott of controversial Zimbabwean President Robert Mugabe so that a
long-delayed summit with Africa could take place. The indecision over
whether to invite the Zimbabwean leader to the summit had led to the planned
EU-Africa summit to be put into cold storage. African leaders had refused to
attend the summit if Mugabe was excluded, while Britain and other European
countries showed disinclination to invite him.
But EU diplomats realized that to stay in the race to keep securing African
resources, they would have to hold the first EU-Africa summit in seven
years. The summit took place in December last. But the diplomats said the
summit did not signal a change in EU’s attitude towards Mugabe. This is
because “the Africa-China summit has been an alarm bell for some”, said
European Commission spokesman for Aid and Development Amadeu Altafaj.
The 27-member EU is Africa's largest trading partner with trade totaling
over EUR 200 bn ($ 283.1 bn) in 2006.
The EU presidency and its diplomats were of the view that the long delay in
holding a proper dialogue with Africa had cost Europe a lot, not least in
losing business opportunities to China.
