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| A 'second wave'? Vasu Reddy, an Indian national, owns a gemstone processing and sales operation in Lusaka, Zambia. Joseph J. Schatz |
On China's heels, India vies for its old edge in Africa
India promised to increase lines of credit to Africa to $5.4 billion during a summit in New Delhi last month.
from the May 5, 2008 edition
Page 2 of 3
"The Indian government and business sector came in ahead of the Chinese. This is almost like a second wave, if you like," notes Bradford Machila, Zambia's Minister of Lands. "The main difference between investment coming from India and the investment coming from China is that the Chinese entities ultimately are state-owned." With Indian companies, Machila notes, "there is no government that is underwriting what they're doing."
With the power of the central government and the full might of the Chinese economy behind it, no one can out-China China. "The Chinese have deep pockets. They have the ability to undercut and win every contract – and not just against India. It's the US and Europe, too," says Harry Broadman, a World Bank adviser on Africa in Washington.
But Mr. Broadman and others note that Indian companies are more diversified and say that India's tradition of private sector creativity may be its strength.
With last month's summit, the Indian government is beginning to act as a facilitator for Indian businesses to expand into Africa. During the past five years, India has extended credit worth $2 billion to African countries. At the summit, India promised to grant preferential market access for exports from all Least Developed Countries, 34 of which are in Africa. India will also increase its lines of credit to Africa to $5.4 billion and its aid to $500 million over the next five years.
The most problematic area of competition with China is for oil. India imports 70 percent of its oil, and is heavily dependent on Nigeria. In a move that has escaped much international scrutiny, the government-owned Oil and Natural Gas Corp. Videsh Limited has invested $720 million in Sudan to secure a share of oil fields, and plans to spend $200 million on a 741 kilometre (460-mile pipeline. India has offered $500 million in credit to countries around the Gulf of Guinea – the source of 70 percent of India's African oil production.
Political favors
In its courtship of Africa, India is also trying to build support for its effort to gain a permanent seat on the United National Security Council – something that Africa wants as well.
Some say the Indian government needs to be more proactive as a bridge between African governments and Indian businesses, pushing Indian businesses as solutions to development challenges throughout Africa. "The embassies should learn more about the ventures going on in their area," suggests Sachin Bajla, founder and CEO of Taurian Resources, a Mumbai-based mining operation. "Look at what are the needs of a foreign government and what Indian company can fulfill that need."
While China and other foreign mining companies generally export raw minerals from Africa, Zambia wants India to start manufacturing raw materials here. The Indian government is also financing an "e-network" project to enhance Internet connectivity in Africa.
In Zambia, China's ties are historically strong, dating back to the construction of the railroad linking Tanzania and Zambia, and the Zambian government is close to Beijing. But Chinese business people are often accused of being insular and sometimes exploitative.
India's long history with Africa
Given its status in many quarters as leader of the postcolonial world and in the anti-apartheid struggle, its English-language heritage, and its historical trading ties across the Arabian Sea, India has ties that are broader and deeper – a point stressed by Indian officials.
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