India boosts bid to rival China in Africa

Indian Prime Minister Manmohan Singh told the leaders from 15 African countries this week that India would offer $5 billion for the next three years. How does this compare with Chinese investment in Africa?

By , Staff writer

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    Indian Prime Minister Manmohan Singh addresses a dinner to mark the government's second anniversary in New Delhi, India, Sunday, May 22. Mr. Singh just announced India would offer $5 billion in development aid to African countries for the next three years.
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If it wasn’t already clear, India’s announcement of $5 billion in development deals in Africa should certainly put to rest any question of whether India is dedicated to doing business on the African continent over the long haul.

The pledge of development aid to African countries – essentially a fund to help African countries to meet their development goals – stands in stark contrast to Africa’s largest single trading partner, China.

While China trades large infrastructure projects (built mostly by Chinese labor) for access to African raw materials, India spends money on training Africans to develop their own countries. And while Indian countries certainly have come into Africa as investors, Indian diplomats are quick to stress that the relationship between India and African countries is more one of equal partners.

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Speaking at India’s second Africa-India Forum, this year held in Addis Ababa, Ethiopia, Indian Prime Minister Manmohan Singh told the leaders from 15 African countries; “There is a new economic growth story emerging from Africa. Africa possesses all the prerequisites to become a major growth pole of the world…. We will offer $5 billion for the next three years under lines of credit to help Africa achieve its development goals.”

India and China vie for Africa

The rivalry between India and China for the attentions of Africa is reminiscent of the Scramble for Africa of the late 19th century, when European countries carved up the continent into colonies purely for the purpose of extracting resources.

The difference, of course, is one of approach, with India and China both pointing out their abhorrence for European-style colonialism, and their solidarity with African freedom movements.

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To date, China has been the largest single investor, aid-giver, and trade partner in Africa, with $126.9 billion in resource extraction and infrastructure deals as of 2010. India has lagged behind with $46 billion in trade deals, but has announced goals to invest $70 billion in Africa by 2015.

India's cultural connections

India may be dwarfed by Chinese investment, but it has cultural strengths and a historical presence in Africa that could make it the more natural trade partner with Africa, says South African economist Azar Jammine.

“The Indians and the Chinese have a lot to offer on all fronts, especially in the case of India, because they speak English, which the Chinese do not,” says Mr. Jammine, director of the Econometrix research firm in Johannesburg.

“Language plays an important role in the differences between the Indian presence and the Chinese presence in Africa," he says. "The antagonism felt toward China has rested on the fact that China has often brought in its own labor force. Whereas, the Indians tend to hire local people, and because they speak English, as do many people in eastern and southern Africa, there is a far greater possibility of a transfer of skills to the African population.”

India’s investments in agriculture and telecommunications may also have more of a direct economic impact on the lives of ordinary Africans, 70 percent of whom are engaged in some form of agriculture, and at least 30 percent of whom have access to a mobile phone.

Last year, the Indian telecoms giant Bharti Airtel announced a $9 billion deal to purchase the African operations of Zain telecommunications.

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