Eriksen Et Al - NUPI Report PDF

India in Africa
Implications for Norwegian Foreign and Development Policies

Stein Sundstl Eriksen, Aparajita Biswas, Ajay Dubey, yvind Eggen and Mzukuzi Qobo
Norsk Utenrikspolitisk Institutt Norwegian Institute of International Affairs
NUPI Report
Publisher: Norwegian Institute of International Affairs Copyright: Norwegian Institute of International Affairs 2012 ISBN: 978-82-7002-320-2 Any views expressed in this publication are those of the authors. They should not be interpreted as reflecting the views of the Norwegian Institute of International Affairs. The text may not be printed in part or in full without the permission of the author. Visiting address: C.J. Hambros plass 2d Address: P.O. Box 8159 Dep. NO-0033 Oslo, Norway Internet: www.nupi.no E-mail: info@nupi.no Fax: [+ 47] 22 99 40 50 Tel: [+ 47] 22 99 40 00
India in Africa
Implications for Norwegian Foreign and Development Policies
Table of Content
Executive Summary .............................................................................. 7 Purpose .............................................................................................. 7 Indias relations with Africa ............................................................. 7 India in Africa: forms of engagement ............................................... 7 Implications for Africa ...................................................................... 8 Implications for Norway ................................................................. 10 1. Overview ......................................................................................... 13 1.1 Historical background .......................................................... 13 1.2 Indias foreign policy ........................................................... 13 1.3. Indias Africa policy............................................................. 15 1.4. Sectoral overview of current engagement ............................ 18 1.4.1 Trade ............................................................................. 18 1.4.2 Investments ................................................................... 21 Investment overview ....................................................................... 22 1.4.3 The energy sector .......................................................... 22 1.4.4. Diplomacy and security ................................................ 23 1.4.5 Development assistance ................................................ 25 1.4.6 Agriculture and food security ....................................... 28 1.4.7 Health cooperation ........................................................ 30 1.4.8 Climate and the environment ........................................ 31 1.5. Country case studies ............................................................. 32 1.5.1 Nigeria........................................................................... 32 1.5.2 Sudan............................................................................. 36 2. African responses and implications for Africa ............................... 41 2.1 Introduction .......................................................................... 41 2.2 Differences between India and other powers ....................... 42 2.3 Implications for economic growth ....................................... 43 2.4 Political implications ............................................................ 46 2.5 Implications in specific policy areas .................................... 48 2.5.1 Good governance, democracy and human rights .......... 48 2.5.2 Management of natural resources, climate and the environment .................................................................. 49 2.5.3 Food security and agriculture........................................ 50 2.5.4 Security, peace and reconciliation ................................ 51 2.5.5 Capital movements, tax havens and corruption ............ 52 2.5.6 Health ............................................................................ 52 2.5.7 Decent Work ................................................................. 53
3. Implications for Norway ................................................................. 55 3.1 General implications: reconsidering assumptions ................ 55 3.2 Development cooperation .................................................... 57 3.2.1 Poverty alleviation ........................................................ 59 3.2.2 Good governance, democracy and human rights .......... 61 3.2.3 Fighting corruption ....................................................... 62 3.2.4 Climate and the environment ........................................ 63 3.3 Business engagement in Africa ............................................ 64 3.4 Multilateral cooperation ....................................................... 65
Executive Summary
Purpose
The growing engagement of emerging powers such as China and India in Africa has major implications for development on the continent. This report, commissioned by the Norwegian Ministry of Foreign Affairs, presents and reviews Indias new engagement in Africa and discusses the implications of this engagement for development in Africa and for Norwegian foreign and development policies.
Indias relations with Africa

Since Indias independence, it has supported African national stru ggles against colonialism and against apartheid in South Africa, and it had a leading role in the Non-Aligned Movement (NAM). But in spite of historical ties and ideological affinity, the African continent was relatively marginal in Indias foreign policy and diplomacy until 1990s. In official rhetoric, Indias relationship with Africa is still based on the shared historical experience of colonialism. Nevertheless, Indias involvement in Africa is driven first and foremost by what is seen as its national interests. There are three main factors that have led India to recast its Africa policy. First, securing cheap energy and other strategic raw materials on a long-term basis is an economic and political imperative. Second, Africa has emerged as an important market for Indian goods and services. Africa is viewed as an underdeveloped market for lowtechnology and cost-effective manufactured goods and services. Third, India considers the Indian Ocean region to be within its sphere of influence, and has expanded its military presence in the Indian Ocean.
India in Africa: forms of engagement

Between 2000 and 2009, the volume of trade between India and Africa increased by more than 700%. The increase mainly reflects a sharp increase in demand for oil and other raw materials, but during the same period Indian exports to Africa have more than doubled. Indian investments in Africa are in many sectors, including service, manufacturing and infrastructure. The investments are led by the private sector, but the government also takes an active role through investment by state owned companies, extension of credits and active diplomacy.
Diplomatic ties have been scaled up significantly, reflected both in terms of increased priority to Africa at the Ministry of External Affairs, and in the number of embassies and high commissions in Africa. India has continually participated in UN peacekeeping operations in Africa. It has entered into defence agreements with several countries in East Africa, funds training of officers, and has supplied military equipment to several African countries. Development assistance from India has been increased rapidly. The bulk is devoted to training, capacity building, consultancy services, deputation of experts, study tours and other soft investments. Two sectors where development assistance and economic cooperation are closely integrated are agriculture and health. A number of initiatives have been taken to increase cooperation in agriculture focusing on capacity building, research and sharing knowledge, while Indian agricultural firms invest in many African countries. In the health sector, training of health personnel, joint research and other forms of development cooperation correspond with Indian export of pharmaceuticals and medical tourism. India and African countries have joint interest in their call for developed countries to substantially cut their climate gas emissions and make legally binding commitments, while allowing voluntary cuts for developing countries, as well as providing funds to support developing countries in addressing address climate change, with some differences in approach.
Implications for Africa

By and large, Indias engagement in Africa has been welcomed by African governments. The fact that India can present its engagement as an expression of south-south solidarity has probably contributed to its legitimacy. African countries have benefitted from export to India both in terms of increased quantities of exports and in terms of higher prices caused by growth in demand. However, export of raw materials means vulnerability to fluctuations in prices. African imports from India can reduce prices for consumers and thereby contributing to improved standards of living. Where these imports compete with domestic producers, it can lead to reduced local output, factory closures and job losses. However, in most cases it is reasonable to assume that import from India primarily replaces imports from other countries.
India in Africa. Implications for Norwegian Foreign and Development Policies 9
Indian investments are an important source for much needed capital, normally followed by corresponding technology transfers and expanded trade. The actual effects, including labour conditions and potentially harmful effects from industrial development, depend more on sector and the actual projects than on the nationality of the investor. There are no indications of Indian businesses being particularly problematic as compared to e.g. national or other foreign companies. Capital movements are notoriously difficult to trace, but several factors point towards the possibility of informal capital movements and tax avoidance, and there are some allegations of Indian financial institutions being involved in illicit capital movements out of Africa. Indias engagement also has political implications for African countries. First, the emergence of India as a more significant political and economic partner can give African countries greater autonomy in relation to other external actors, since the existence of a greater range of partners can give African state more scope of choice. Second, closer ties with India can also contribute to giving African states more autonomy in domestic policy-making by enabling access to foreign resources, which again make governments less dependent on taxation of domestic actors and more able to resist pressure from domestic groups. Since India, like China, attaches greater importance to the principle of non-intervention and provide funding with less or no politically motivated constraints and conditions, Indian funds is potentially better than Western aid in terms of domestic autonomy. The actual implications of this will vary between countries depending on context. In countries where patrimonial relations between the state and social groups are predominant, Indias engagement is likely to reinforce existing forms of rule, especially if economic resources are transmitted through state institutions in ways that enable officials to use them to maintain patronage networks. There is little explicit environmental concern in Indias engagement in Africa. Parts of Indian engagement certainly have implications for the climate and the environment. However, there is no reason to believe that activities involving Indian actors and interests will differ in significant ways from those involving other foreign (or national) companies in this regard. In the agricultural sector, Indian companies are involved in long-term land leases of land, which is controversial. Most of the benefits accrue to the state and to companies and not to local inhabitants. This raises concern about Africas food sovereignty, protection of land rights for African subsistence farmers and displacement of farmers from their land.
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In security related areas, the two most prominent forms of direct Indian engagement are participation in peacekeeping operations and naval security. Here, India is a major contributor to those aspects of African security interests.
Implications for Norway

The increased interest from several emerging powers indicates that, far from being marginalized, Africa is of increasing interest, both in international relations and in the world economy. So far, China has dominated in Western attention, sometimes with a view that sees China as an exception to the normal and preferred relations between Africa and the world represented by the Western approach, dominated by aid and to some degree based on Western ambitious to reforming African states and societies based on what they see as African interests. With India, it is clear to everybody that China is not an exceptional case but the first and biggest representative of a trend, and that it is the Western relation with Africa that is indeed and exceptional form of international relations. Indias more explicit anti-neo-imperialist position, as compared to China, perhaps makes this even more evident. This has major implications for Norways relations with Africa. First, Western hegemony (if it ever existed) can no longer be taken for granted. The emerging powers do not only provide attractive resources, but also alternative development strategies and models for statehood, and make it possible to benefit from foreign aid without a corresponding Western reform agenda. Norways development cooperation with African countries should be re-considered in this light. Better integration of Indian engagement with Norwegian and Western aid might potentially serve the potential benefit of increased effectiveness. However, there is little identifiable interest in India to integrate its aid policy with that of OECD DAC; on the contrary, India explicitly presents itself as an alternative to Western aid. It should therefore not be expected that India can or will join the club of OECD donors in its Africa engagement. And given Indias commitment to the principle of non-intervention, it would not engage in attempts to influence forms of governance in Africa. Importantly, Norways and Indias development assistance to African country probably supplements each other even if not directly coordinated, for instance where India supports technical knowledge, institutional capacity or infrastructure development in ways that supposedly also enhances the effectiveness of Norwegian aid. At operational practical level there are few areas of direct interference between Norwegian and Indian engagement in Africa, whether in aid
or in other forms of engagement. As a general suggestion, interference should be identified and synergies explored for each country or case, and not generally. There are relatively few areas where general bilateral or trilateral cooperation between Norwegian and Indian institutions on Africa issues would be natural. Among the areas where dialogue and cooperation may be explored either on country or general level, are dialogue related to multilateral fora and on security issues, possible cooperation on climate change and CDM mechanisms, and in development cooperation involving NGOs.
1. Overview
1.1
Historical background
Contacts between India and Africa date back to ancient times. Indian merchants were engaged in trade along the eastern coast of Africa more than 2000 years ago.1 During the period of European colonial expansion, this trading system was brought an end. At the same time, the incorporation of both India and large parts of Africa into the British Empire facilitated the establishment of substantial communities of people of Indian origin in Africa. When India became independent, the government headed by the first Prime Minister Jawaharlal Nehru pursued a policy of supporting African national struggles against colonialism and against apartheid in South Africa. India supported Africas liberation movement both financially and politically. Thus, during the 1970s and 1980s, India provided both material and technical support to liberation movements.2 Nehru also played a leading role in convening the first AsianAfrican Conference, which brought together representatives of African and Asian countries in the Indonesian city of Bandung in 1955, giving rise to the Non-Aligned Movement (NAM). The NAM-inspired set of ideas were meant to help post-colonial Third World states like India and African countries to establish a pattern of cooperation different from that of the colonial period. But in spite of historical ties and ideological affinity, the African continent was relatively marginal in Indias foreign policy and diplomacy until 1990s. For much of Indias early post-Independence period, its foreign policy was mainly focused on the South Asian region, despite the assertion of AfroAsian solidarity. As a result its foreign policy during much of the Cold War was not directly oriented towards the unfolding of developments in Africa. However, India remained committed to NAM and its at least rhetorical emphasis on South-South cooperation.
1.2
Indias foreign policy
To understand Indias recent deepening involvement with Africa we must start by locating this policy within the framework of Indian for1 2
Basil Davidson, Africa in History: Themes and Outlines, Rev.Ed., New York: Touchstone, 1995. Ajay Dubey, India-Africa State Relations (1972-1997), Africa Quarterly 37, no. 1-2, 1997, pp.43-57.
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eign policy in general. The main pillars of Indian foreign policy since independence have been strategic and economic autonomy and regional dominance. Key expressions of these pillars have been membership in the non-aligned movement, close ties to the Soviet Union and a strategy of economic development based on self-sufficiency, import substitution and state-led industrialisation. However, since the end of the cold war and the introduction of economic liberalisation, this has changed. While the key objectives of regional dominance and strategic and economic autonomy remain in place, the means by which these objectives are sought realised have changed. On the one hand, the non-aligned movement has become less significant and the ties to the Soviet Union/Russia have been weakened. Instead, India has moved closer to the West and the US in geopolitical terms. The most significant indication of this was the signing of the nuclear agreement with the US in 2008. On the other hand, economic liberalisation and high growth rates have made the country much more integrated in the global economy. The Indian market has been opened up for foreign investment, and Indian companies have expanded internationally. This, in turn, has led to a more active role in the management of the global economy, clearly seen in the active role taken by the country in international trade negotiations. Together with Brazil and South Africa (the IBSA group), coordinated strategies have been developed. Moreover, the country has taken a more active role in international organisations such as the UN. A key objective for India is to get a permanent seat in the UN Security Council. For this purpose, it has aligned itself with Japan, Germany and Brazil, in an agreement to support each others bids for such membership. Thus, Indias foreign policy has been recast to reflect the changing environment. These changes reflect Indias growing political and economic role in the world system, and are indications of its ambitions to become a major global power. The chief drivers for India reconstituting its foreign policy is its rapidly growing economy and increasing integration in the world economy, including its dependency on oil and energy from abroad, the countrys emergence as a responsible nuclear weapons state and the prospects of Indias enhanced role on the international stage. Indias foreign policy aims at building a secure international environment that also contributes to the countrys development goals. In sum, India seeks to promote an environment that would enable it to accelerate its socio-economic development and safeguard its national security.3
3
A. Dutta, Role of Indias Defence Co-operation Initiatives in Meeting the Foreign Policy Goals. In Journal of Defence Studies. Vol.3 No.3, July 2009, pp.31-47
In 2007 Indias foreign secretary identified three key goals for Indias foreign policy. The first deals with ensuring a peaceful periphery; the second emphasizes sound relations with the major powers, and the third highlights issues of the future, namely food security, water, energy and environment.4 It is clear that Africa falls into the first and third of these categories, hence India attaches increasing importance to its relations with African countries.
1.3. Indias Africa policy

Indias Africa policy is stated in general terms and does not appear to differ much from policies towards most other states. Nonetheless, what lies behind it has implications for the region and beyond. In official rhetoric, Indias relationship with Africa is based on the moral high ground that it shared Africas history of subjection to colonisation. Thus, according to the government, Indias contemporary Africa policy is based on the aim to promote justice in the global order, and to increasing the leverage of their respective global positions in the international order. It is clear, however, that Indias deepening relations with Africa are both borne out of political expediency and based upon economic pragmatism. Commenting on Indias policy of engagement with African countries, former Minister of State for External Affairs Shashi Tharoor outlined the Indian model of engagement with the continent that revolves around capacity building, training and private sector investments. According to him, the model of our cooperation with Africa is clearly one seeking mutual benefit through a consultative process. We do not wish to go and demand certain rights or projects or impose our ideas in Africa. But we do want to contribute to the achievement of Africas development objectives as they have been set by our African partners.5 Nevertheless, Indias foreign policy is ultimately guided by its domestic concerns. Thus, while New Delhi publicly retains its ideological commitment to the principles of non-alignment and South-South struggle against the inequities of the global order, it has also become increasingly conscious of its growing need to secure supplies of food and energy, exploit new export markets and attract foreign capital and technological know-how. These are the key factors that have led India to recast its Africa policy.
4 5
S.S. Menon, The Challenges Ahead for Indias Foreign Policy. Address to the Observer Research Foundation, New Delhi, 10 April 2007. Tharoor unveils Indian model of engagement with Africa, Shasi Tharoor at the at the sixth India-Africa business conclave http://tharoor.in/press/tharoor-unveils-indian-modelof-engagement-with-africa/
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First, given Indias priority to diversification of its foreign oil supplies and Africas position as the last oil frontier, it is logical that India engages the continent to secure the raw materials and energy resources it needs. Alongside others, India has discovered that Africa is where the resources and future markets that will fuel its economic growth are to be found.6 Second, Africa has emerged as an important market for Indian goods and services. In this regard, the Indian private sector, with government support, has been active in expanding trade and investment in Africa to capture Africas untapped market potential. Africa is viewed as an underdeveloped market for low-technology and low- cost manufactured goods and services. Most Indian foreign investments have been associated with market penetration efforts for electrical and electronic products and automobiles.7 Manufactured products represent about half of Indias exports to Africa.8 Africa also presents an opportunity to access third markets like Europe and the US because of preferential access for LDCs to those markets, especially in the case of textiles and apparels. Third, India considers the Indian Ocean region to be within its sphere of influence, and in response to the existence of extremist organisations and criminal syndicates that traffic drugs, arms and people, as well as pirates, India has dramatically expanded its military presence in the Horn of Africa and the Indian Ocean.9 Thus, Indias involvement in Africa is driven first and foremost by what is seen as their national interests. While India continues to appeal to notions of third world solidarity and the legacy of joint struggles against colonialism, it remains the case that its own political and economic interests are at the core of the current engagement. A clear indication of this is the fact that so much of Indias recent investment has been in resource rich countries such as Nigeria, Liberia and Sudan, which were until recently quite peripheral countries for India. Indias engagement with Africa has been formulated through a number of recent meetings and agreements. The Banjul Formula was adopted by the African Union (AU) in 2006 at its Summit in Banjul, Gambia. In April 2008, the India-Africa Forum Summit (IAFS) were held in New Delhi. Following the Banjul Formula, participants from the African side at IAFS include the Chairperson of the AU, the
6 7 8 9
Mark Sorbara India and Africa - it's old friends, new game and rules, The Nation 9 February 2007. Ibid. p. 18. See Broadman HG, Africas Silk Road: China and Indias new economic frontier, World Bank, Washington, 2007, p. 83. Daniel Volman, China, India, Russia and the United States: The Scramble for Africas Oil and the Militarization of the Continent, Uppsala, Nordiska Afrikainstitutet, 2009.
Chairperson of the AU in the preceding year, the Chairperson of the AU Commission, the five initiating countries of NEPAD, the Chair of the Heads of State and Government Orientation Committee HSGOC and the Chairs of the 8 Regional Economic Communities (RECs). The AU chooses 15 participants for the Summit. At the IAFS in 2008, two agreements were adopted. These were the Joint Declaration of the Africa-India Partnership and the Africa-India Framework for Cooperation, which give a direction to Indo-African relations in the coming years. A meeting held in New Delhi in March 2010 entitled Developing Synergies: Creating a Vision, which gathered delegates from 34 African countries was aimed at expanding the India-Africa Project Partnership. The meeting was hosted as a precursor and intended roadmap to the second India-Africa Forum Summit (IAFS), held in Addis Ababa in 2011.10 During these meetings, India has committed itself to expanding cooperation with Africa and pledged support designed to improve the bilateral or sometimes regional cooperation within different sectors. The Indian government has committed large volumes of export credit to Indian companies; promised to improve market access for African exports and reduced limitations to both import and exports; approved development aid; offered training of Africans in Indian universities; and expanded defence cooperation. The private sector has also increased its interest in exploring African markets. From the mid-1990s, organizations like the Confederation of Indian Industries (CII), the Associated Chambers of Commerce and Industry (ASSOCHAM), the Federation of Indian Chambers of Commerce and Industry (FICCI), and the Federation of Indian Exporters Organization (FIEO) identified Africa as a thrust area and launched programmes to promote economic and business cooperation. FICCI has identified 8 countries in Africa as top priority for Indian exports: Nigeria, South Africa, Kenya, Mauritius, Ghana, Tanzania, Algeria and Sudan.
10 Sanesha Naidu, Upping the Ante in Africa: Indias Increasing Footprint Across the Co n-
tinent, in Emma Mawdsley and Gerard McCann, India in Africa: Changing Geographies of Power, Oxford, Pambazuka Press, 2011.
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1.4. Sectoral overview of current engagement

1.4.1 Trade In its efforts to improve trade with Africa, the Government of India has taken various measures to improve financing of export, put in place an expeditious system of clearance of overseas investments for public sector companies, bridge gaps on account of differences in language, harmonize manufacturing standards of the region, and find a mutually acceptable solution to the recovery of outstanding dues. India strengthened the commercial wings of its African missions in 2003 as a trade promotion measure. The volume of trade between India and Africa increased from US$1bn in 1991, to US$7.3bn in 2000 and $53.3 billion in 2010-11.11 At the March 2010 IndiaAfrica Conclave meeting in New Delhi attended by 400 African delegates from 34 countries, it was agreed to scale up bilateral trade with Africa to US$70 billion by 2015. 12 Figure 1 shows the growth of Indias trade with Africa since 2000. Figure 1. Indian Import and Export to/from Africa
Source: World Trade Atlas and the Indian Ministry of Commerce and Industry.
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11 http://www.business-standard.com/india/news/exim-bank-to-issue-5-bn-fresh-linecredit12 Simon Freemantle and Jeremy Stevens, CII-Exim Bank Conclave on India Africa Project
to-africa/452388/
Partnership Confirms Thrust of India Inc. in Africa, Standard Bank Research Paper, 17 March 2010. 13 Available on http://www.tralac.org/pdf/20070717_India-Africa_top20s2007.xls
The biggest growth in Indian imports from Africa has been seen since 2005. This increase reflects Indias growing demand for oil and raw materials. During same period Indian exports to Africa have more than doubled. Manufactured products represent about half of total exports.14 Other leading exports currently include machinery, chemical and pharmaceutical products, transport equipment, food and livestock, etc. Indias top ten trading partners in Africa are South Africa, Nigeria, Egypt, Tanzania, Ghana, Angola, Tunisia, Kenya, Sudan and Morocco. These trade flows are largely driven by economic complementarities between the two regions. According to Broadman, Although African exports to Asia as a whole do not exhibit a significant pattern of product diversification, inter-sectoral complementarities between Africa and Asia do exist. The rich resource endowment in Africa provides a natural comparative advantage in raw materials and resourcebased products. China and India, on the other hand, have a rich stock of skilled labour compared to Africa and thus have a comparative advantage in manufactured products.15 Figure 2 shows the recent growth of Indian trade with Africa, compared to that of China. Compared to Chinese trade, which grew ten-fold to US$93bn between 2000 and 2008, Indian trade is clearly less, but still significant. Figure 2: China and Indias total trade with Africa (US$ millions)
Source: World Trade Atlas and the Indian Ministry of Commerce and Industry
14 See Broadman HG, Africas Silk Road: China and Indias new economic frontier, World 15 Ibid. p. 86 16 http://www.tralac.org/cgi-bin/giga.cgi?cmd
16
Bank, Washington, 2007, p. 83.
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Among the most important initiatives that India has taken to advance its economic cooperation with African countries is its Focus Africa Program, launched by the government under the EXIM Policy 200207 to increase Indian exports to sub Saharan Africa. The programme covers the entire African continent, but specific target markets are South Africa, Nigeria, Mauritius, Kenya, Ethiopia, Tanzania and Ghana. India now has Lines of Credit (LOCs) to African countries offered by Eximbank amounting to US $ 2.15 billion and covering 47 countries. These are targeted mostly at agriculture, infrastructure development, food processing, IT, and pharmaceuticals. While 15% to 20% of the contract value is paid as advance by the importers, the balance 80% to 85% of the contract value is disbursed by the EXIM Bank to the Indian exporters on shipment of goods. The recovery of credit is taken care of by the Exim Bank, without recourse to Indian exporter. 17 The EXIM Bank has also extended LOCs to several regional organizations in Africa. At the end of March 2009, close to $2.27 billion (or 60% of total EXIM Lines of Credit) went to African countries. Sudan and Nigeria are the largest beneficiaries. Table 3: Regional distribution of Indias trade with Africa, 2004 10 (US$m) Exports Southern West Central East Total Indian export Africas % of total exports Imports Southern West Central East Total Indian import Africas % of total imports 2009-10 3,309 3,137 350 3,512 178,751 5.8 2009-10 10,192 9,864 270 388 288,373 7.2
Source: Indian Department of Commerce, 2010. Note: Figures rounded to nearest million.
17 http://commerce.nic.in/trade/international_tpp_africa_10.asp
Indian exports to Africa are mainly concentrated in three sectors: manufactured products (49%) chemicals (11%) and machinery and transport equipment (10%), while mineral fuels (oil and coal) and precious metals constitute the largest proportion of imports. In fact, of the total of $ 26 billion worth of imports from Africa, 18 billion are imports of minerals and 4,5 billion are precious stones/metals.18 1.4.2 Investments Indias investment in Africa is led by the private sector, with most of the investments in the service and manufacturing sectors. However, in recent times, India has diversified its investments in Africa. One reason for this is that that India has substantial foreign currency reserves, and the government has lifted regulations and controls to allow firms to go abroad. It has also removed the $100 million cap on foreign investment by Indian firms. Big Indian business houses such as the Tatas, Essar, Vedanta, and Kirloskar have invested in Africa. The Tata Group has invested about US$ 100 million and plans to triple that amount over the next three years. The Group claims to have employed 700 people in Africa.19 Indian companies are also actively involved to explore commercial farming in various African countries (see below). Both state-owned enterprises and Indian private sector operators draw a great deal of support from the Export-Import Bank of India through its Lines of Credit programme. The credit lines are seen as strengthening and expanding export trade between the respective regions and India through deferred payments terms. Examples of projects funded through the programme executed by Indian companies include: supply of pharmaceuticals (Uganda, Ghana); building of transmission lines (Kenya); telecom projects (Malawi); railway construction project (Tanzania); erection of a sugar plant (Nigeria); and sewerage study (Ethiopia).20 Indian companies have also been operating in the infrastructure sector in Africa, with the government-owned engineering companies like IRCON (a construction company owned by the Ministry of Railways); and Rail India Technical and Economic Services (RITES), a consultancy organization in the fields of transport, infrastructure and related technologies, playing a significant role in constructing road and railways in countries like Kenya, Mozambique, Algeria, Niger, Sudan
18 http://commerce.nic.in/eidb/irgncom.asp 19 Details of Tata groups holding in Africa can be found in 20 Presentation by S.R. Rao, Chief General Manager, Export-Import Bank of India, at the
http://www.tataafrica.com/our_sectors/index.htm.
Organisation for Economic Cooperation & Development, Paris, March 16-17, 2006.
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and Zambia.21 This shows that although private Indian companies have become important actors in Africa, the government also takes an active role, both through investment by state owned companies and by active diplomacy and extension of credit.
Investment overview
Regional distribution East Africa (including Mauritius) North Africa West Africa Central Africa Southern Africa Sectoral distribution Primary products Manufacturing Services 73% 16% 8% 2% 1% 18% (agriculture, minerals, oil) 56% (chemicals, plastic products) 26%
Here, one notes that Mauritius alone attracted about 70 per cent of Indian OFDI flows into Africa. Among North African countries, Sudan has emerged as the top destination and is in fact the second important African host to Indian investment after Mauritius. About 12 per cent of total Indian FDI in Africa was located in Sudan. 1.4.3 The energy sector A key foreign policy priority for India today is energy security. 22 The Indian economy has grown rapidly from the 1990s, and securing cheap energy and other strategic raw materials on a long-term basis has become an economic and political imperative. India is expected to become the worlds third largest consumer of energy by 2030, bypassing Japan and Russia and with an economy expected to grow by an average rate of 5% per annum in the coming years. Moreover, it is projected that it will run out of coal, the primary source of its current energy needs, over the next 40 years. India possesses few proven oil reserves. With projections suggesting that India will depend on oil for almost 90 per cent of its energy needs by the end of this decade, it is
21 The Financial Express,RITES, IRCON to rebuild and Run Mozambique Railway Sys-
tem http://www.financialexpress.com/news/ritesircon-to-rebuild-and-run-mozambiquerail-system/114724/ (2009). 22 Cyril Obi, African Oil in the Energy Security Calculations of China and India, in Fantu Cheru and Cyril Obi (eds.) The Rise of China and India in Africa, London, Zed Books, 2010; Luke Patey, Fragile Fortunes: Indias Oil venture into War-Torn Sudan, in Emma Mawdsley and Gerard McCann, India in Africa: Changing Geographies of Power, Oxford, Pambazuka Press, 2011.
little wonder that energy security tops the political agenda. 23 The government is also seeking to diversify the countrys sources of oil suppliers, in order to reduce dependency on supplies from the unstable and unpredictable Middle East. Therefore, the hunt for new and reliable sources of energy is critical to Indias domestic growth as well as positioning it as a global economic power. A key driver for its engagement in Africa is its need to expand and diversify international sources of petroleum. Consequently, the Oil and Natural Gas Corporation Videsh, Ltd (OVL) has set the objective of doubling its reserves by the year 2020, pursuing international opportunities. India now imports about a quarter of its oil from Africa, but this figure is expected to grow in the coming years.24 African countries hold 8% of the worlds oil reserves, and 70% of its oil production is concentrated in West Africa's Gulf of Guinea. This is also the area where Indian energy investment has grown the most. Indias interest in Africas oil sector has three elements: contracts for crude purchase, participation in the upstream sector, and refineries. The participation of OVL in both South Africas and Nigerias upstream sectors has forged energy ties between the countries. OVL has also secured an oilfield in Egypt and signed a deal to explore oil in Ivory Coast, sent oil experts to African countries to provide African engineers with new technology and pledged concessional credit to resource-rich West African countries like Burkina Faso, Chad, Equatorial Guinea, Ghana, Guinea-Bissau, Ivory Coast, Mali and Senegal. 1.4.4. Diplomacy and security Over the last decade, the India foreign policy establishment has sought to overcome the institutional neglect to which it consigned Africa during the immediate post-independence period. Until 2003, the Ministry of External Affairs had only one joint secretary responsible for the singular Africa division. Today, three joint secretaries manage three regional divisions covering the continent. With the India-Africa Forum Summit in 2008, the government further increased its attention and diplomatic presence. At the end of the first decade of the 21st century, India had 26 embassies or high commissions on the continent. Such diplomatic attention has already paid off. In 2006, for example, the Economic Community of West African States (ECOWAS), supported Indias bid for a permanent seat on the United Nations Security Council (UNSC). More recently, External Affairs Minister Pranab Mukherjee has linked the countrys bid for a permanent seat on the
23 Devika Sharma and Swati Ganeshan, Before and Beyond Energy: Contextualising the
India-Africa Partnership, Occasional Paper no 77, South African Institute of International Affairs, 2011. 24 Obi 2010, op.cit.
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UNSC with Africas own candidacy, promising Indian support for Africas demand to get a permanent seat at the UNSC. Since its independence in 1947, India has continually participated in UN peacekeeping operations in different parts of the world - with a significant number of these commitments undertaken in Africa. Among other deployments, Indian forces have been involved in missions in Mozambique, Somalia, Angola, Sierra Leone, Ethiopia, Eritrea, the DRC, and Liberia. The Indian contingent serving in the DRC represents the largest national contribution to the UN Organization Stabilization Mission in the Democratic Republic of the Congo (MONUSCO). During 2010 India was the 3rd highest troop contributing country to UN peacekeeping operations (behind Pakistan and Bangladesh), averaging almost 9,000 soldiers or police officers per month. How can Indias contributions to peacekeeping in Africa be explained? Several commentators have attempted to analyse Indias reasons for involvement in UN peacekeeping operations, including a group of prominent Indian military officers who have served on UN missions. It is argued that Indian participation has served its geostrategic interests. This is most notable in the case of various East and Southeast Asian missions, which were seen in Indias foreign policy as essential to its conception of both regional stability and international order. What direct strategic purpose participation in African missions such as the Congo, Angola, Mozambique, Rwanda, Liberia and Sierra Leone has served, remain less clear. Commitment to these operations is explained as an expression of solidarity with non-aligned countries.25 This resonates with Indias anti-colonial position in world affairs. Another motive is that participation in peace operations may help India get support from African countries in international fora such as the UN, where it has long sought permanent membership in the Security Council. Other reasons for participation include humanitarian concerns, such as in the operations in Rwanda and Somalia. Peacekeeping operations also give Indias armed forces invaluable exposure to a variety of scenarios, including integration at international military level which is often difficult or prohibitively expensive to simulate or include in military exercises. Inter-regional rivalry may also be important element of Indias participation in peace operation operations. This would include the management of perceptions in its favour, to be seen as a major force in regional and world affairs. Finally, participa-
25 Wood, C The Politics of Peacekeeping in the Post-Cold War Era. Sorenson, DS, Wood,
PC (eds). Routledge. New York. 2004, p199.
tion in such operations also gives the Indian government revenue, since participating states are paid by the UN. India also has other forms of security-related engagements in Africa. The country has entered into defence agreements with Kenya, Mozambique and Madagascar, and conducts maritime patrols around Seychelles, Mauritius and Mozambique. In October 2008, Indian warships began conducting patrols off the Somali coast to protect ships from pirate attacks. India has also established a listening post in northern Madagascar, with a radar surveillance station equipped with a high-tech digital communications system.26 It also funds training of officers from various African countries. Moreover, India has supplied of helicopters and patrol vessels to several African countries and has become a major customer for South Africas arms exports. 1.4.5 Development assistance In parallel with recent growth in trade and investment India has also stepped up its development assistance. Reflecting the countrys growing emphasis on aid, there have been discussions about establishing a state development agency. First proposed in 2007, the idea appeared to have been dropped in 2010.27 However, in July 2011, it was reported that the government will go ahead with the plan.28 It is difficult to quantify precisely the volume and types of Indias development assistance to Africa. Figure 1 shows the main recipients of Indian aid, based on official figures. However, complete and disaggregated data are hard to find, and the available data makes it difficult to distinguish between what the OECD-DAC would define as aid and what is, for instance, export credit that can be described as an export subsidy scheme for surplus Indian goods.
26 Alex Vines, Indias Security Concerns in the Western Indian Ocean, in Emma
Mawdsley and Gerard McCann (eds.), India in Africa: Changing Geographies of Power, Oxford, Pambazuka Press, 2011. 27 http://www.thaindian.com/newsportal/business/plan-for-external-aid-agencydropped_100376138.html 28 http://www.guardian.co.uk/global-development/2011/jul/26/india-foreign-aid-agency http://www.hindustantimes.com/News-Feed/India/India-setting-up-foreign-aidagency/Article1-722089.aspx
26
According to AidData, total Indian development assistance to Africa in 2009 was a little over $ 400 million. Nevertheless, Indian development assistance remains small, compared to that of Western countries and China. Chinas aid to Africa in 2009 is estimated by Brautigam to be about $ 2,5 billion, while bilateral aid from OECD countries in the same year stood at $ 25 billion. India sees its policy of development cooperation as an inherent part of its foreign policy, and explicitly states that the aim of its policy of development cooperation is to promote Indian interests.29 India couples its development engagement with the commercial imperative of accessing vital resources. As argued by Mawdsley and McCann, 30 entrepreneurial and business relationships have become newly central to underpinning and shaping Indias aid and diplomatic agenda, and development cooperation is intended to open up markets for Indian companies, guarantee energy security and strengthen Indias negotiating position in international fora. The Indian Development Assistance Scheme (IDEAS), set up in 2005, is explicitly designed to increase Indian exports, promote economic relations to other developing countries and to support Indias strategic interests abroad.31 India established a new India-Africa Fund in 2003, allocating up to $200 million in credits to various projects designed to promote Afri29 Matthias Jobelius, New Powers for Global Change? Challenges for International Devel-
opment Cooperation. The Case of India, Friedrich Ebert Stiftung Briefing Paper no 5, 2007; Subhash Agrawal, Emerging Donors in International Development Assistance: The India Case, IDRC Canada, 2007; Peter Kragelund, The Potential Role of Non-Traditional Donors Aid in Africa, Issue paper no 11, International Centre for Trade and Sustainable Development, 2010. 30 Emma Mawdsley and Gerard McCann, The Elephant in the Corner? Reviewing India Africa Relations in the New Millennium, Geography Compass 4/2 (2010): 8193, p. 86. 31 Jobelius, op.cit., p. 4.
can economic integration within the framework of the New Economic Partnership for Africas Development (NEPAD).32 At the India-Africa Summit in 2008, India pledged to increase aid to Africa to US$500 million over the next 5 to 6 years, in addition to offering a duty free preference scheme. India has also written off the debt owed by countries under the HIPC (Heavily Indebted Poor Countries) Initiative, restructured commercial debts and supported a number of capital projects financed by export credit extended through the Export-Import Bank of India.33 The bulk of Indian development assistance to Africa is devoted to training, capacity building, consultancy services, deputation of experts, study tours and other soft investments. Under its Indian Technical and Economic Co-operation program (ITEC), India has provided more than $ 1 billion worth of technical assistance and training to African countries.34 More than 15,000 African students study in India, and training is given to senior African diplomats, defence personnel, and economic and financial officials. During the CII-Exim Bank Conclave on India-Africa Project Partnership in March 2010 in New Delhi, pledges were made to establish 19 institutions aimed at developing human resources capacities. These institutions include the Africa-India Institute of Foreign Trade; AfricaIndia Diamond Institute; Institute of Information Technologies; and Education Planning and Administration Institute, among others.35 They form part of plans to create a host of training institutes in Africa in areas of diamond polishing, IT, vocational education and PanAfrican Stock Exchange. Through these programmes, Africa can obtain access to Indian research and development, which has produced cost effective technology.36 India has also established a joint venture with the African Union to build a Pan African e-Network, which can support tele-education, tele-medicine, e-commerce, e-governance and infotainment, resource-mapping and meteorological services in African countries.
32 http://www.engineeringnews.co.za/article/india-sets-up-fund-to-support-nepad-projects33 Sanusha Naidu, Upping the Ante in Africa: Indias Increasing Footprint Across the Co n-
2003-07-07
tinent, in Emma Mawdsley and Gerard McCann, India in Africa: Changing Geographies of Power, Oxford, Pambazuka Press, 2011; Mark Sorbara, India and Africa: its old friend, new games and rules, http://www.sarpn.org/newsflash.php?news_id=7289&archive=1 34 ITEC was launched in 1964 as a bilateral assistance programme of the Government of India. Under it and its corollary SCAAP (a program of assistance meant for Commonwealth Countries in Africa), about 155 countries in Africa, Asia, East Europe, and Latin America are invited. 35 Simon Freemantle and Jeremy Stevens, CII-Exim Bank Conclave on India Africa Project Partnership Confirms Thrust of India Inc. in Africa, Standard Bank Research Paper, 17 March 2010. 36 Sanusha Naidu, Upping the Ante in Africa: Indias Increasing Footprint Across the Continent, in Emma Mawdsley and Gerard McCann, India in Africa: Changing Geographies of Power, Oxford, Pambazuka Press, 2011.
28
Three Centres of African Studies have been set up in various Indian universities to encourage social science teaching and research on African Affairs. The Indian Council of Social Science Research has also introduced the Mandela Rhodes Scholarships Programme, which offers educational opportunities for African citizens to study at tertiary institutions in South Africa. 1.4.6 Agriculture and food security Cooperation in the field of agriculture is a central pillar of the IndiaAfrica relationship. This cooperation has been strengthened and further developed with the impetus given by the two India-Africa Forum Summits in 2008 and 2011. Both Summits gave substantial priority to cooperation in the agricultural sector. Cooperation in this sector has, according to Indian and African leaders, great potential given the strong complementarities between India and Africa in the agricultural field. Indias move towards economic and technical cooperation in African agriculture over the past decade must be seen against the backdrop of declining support from traditional donors to this sector. Leaders of both India and African countries expressed enthusiasm about developing Africas agriculture, to ensure food security. In the 2008 Summit, it was decided to strengthen cooperation in land development, water management, agricultural plantation, breeding technologies, food security, agro-processing machinery, combat agrobase diseases, experimental and demonstrative projects, and training. Leaders at the 2nd India-Africa Summit in Addis Ababa in 2011 agreed to develop scientific research for raising agricultural productivity, on the one hand, and the conservation of land and environment, on the other. The aim is to ensure food security for their people and to bring down the currently rising cost of food prices.37 One of the main features of India-Africa cooperation in agriculture is that India has actively focused on capacity-building and sharing of experience. Particular attention has been given to research and knowledge sharing methods. India has sent teams of farm experts from the Indian Council of Agricultural Research (ICAR), to get firsthand knowledge of how African countries explore ways of improving their agricultural practices. As a part of the capacity building program, scholarships were provided to 75 students from African countries every year from 2011 onwards in various agricultural universities in India.38 Moreover the Prime Minister of India has proposed to establish
37 Second Africa India Forum Summit 2011, Addis Abeba Africa India Framework for 38 Second Africa India Forum Summit 2011, op.cit, also see 2011 Africa-India Capacity
enhanced cooperation
http://www.indiaafricasummit.nic.in/staticfile/framework-en.pdf
Building Scholarship, http://www.fundsforngos.org/scholarships-2/2011-africaindiacapacity-building-scholarship/
new institutions in the areas of agriculture and rural development. In December 2010, an MOU for cooperation in agricultural research and education was signed between the Department of Agricultural and Research (DAER) and ICAR of India and the Ethiopian Institute of Agricultural Research (EIAR), Ethiopia. 39 The priority areas of cooperation include agricultural research in Horticulture, Crop Science, Fisheries, Animal Science, Agricultural Engineering and Natural Resource Management, Agricultural Extension and Agricultural Education. It was agreed to extend cooperation through exchange of scientists, scholars, technologies, literature, as well as collaborative research projects, and a draft biennial work plan was developed. India also made a commitment to raise Lines of Credit facilities to African agricultural sectors. The largest single LOC approved by the Exim Bank so far is the one to Ethiopia (US$ 640 million) for its Tindaho Sugar Project, and it is also expected to facilitate Indian investments.40 The Exim Bank also extended an LOC of $27 million to Senegal for export of equipment for irrigation projects in 2006. Moreover, at the 2011 India- Africa Summit, Prime Minister Manmohan Singh announced a grant of 75 billion CFA (160 million) to Senegal, for the second phase of the programme of mechanization of agriculture.41 Large scale acquisition of farmland in Africa has made media headlines across the world. Some African countries are offering land on lease for up to 99 years to overseas farmers. Farmers from India have migrated to these countries and begun farming. Countries which offer such opportunities include Ethiopia, Malawi, Kenya, Uganda, Liberia, Ghana, Congo and Rwanda. Land that until a short time ago seemed of little outside interest is now being sought by international investors. Helped by the liberalisation of Indian policies on foreign direct investment by Indian companies, these opportunities are tapped by Indian companies. Leading Indian investors in African agriculture include Karuturi Agro Products, a subsidiary of Karuturi Global (one of the world's largest producers of cut roses). It has acquired 100,000 hectares of land in the Jikao and Itang Districts of the Gambela region in Ethiopia, for growing palm, cereal and pulses. It has also bought farm land in Kenya to grow sugar cane, palm oil, rice and vegetables. Another leading firm, Ruchi Soya Industries, acquired a 25-year lease for soyabean processing on 152,649 ha in Gambela and Benishangul Gumaz States of Ethiopia.42
39 ICAR
signed MoU with the Ethiopian Institute for Agricultural http://www.icar.org.in/node/4151 40 ibid 41 Second Africa India Forum Summit 2011, op.cit, 42 Author collected data from farmland in Gambela , Addis Ababa , Ethiopia.
Research,
30
Tea and coffee companies from India have also acquired estates in Africa. Tata Coffee entered into an agreement in 2006 with the Ugandan government to set up a 3,600 metric tonnes per annum capacity plant in that country.43 The B. M. Khaitan-owned McLeod Russel India, the largest integrated tea company in the world, has acquired Ugandas Rwenzori Tea Investments for $25 million, and Jay Shree Tea & Industries, which recently acquired three tea gardens in East Africa (two in Rwanda and one in Uganda), is now looking at increasing its presence in Africa. In addition to large companies like the above, individual Indian farmers have moved, along with machinery and technology, to countries like Burkina-Faso and Namibia to make unused lands arable and to produce food grains. 1.4.7 Health cooperation In the health sector, the main ties between India and Africa are export of pharmaceuticals, training of health personnel, joint research and medical tourism. India and African countries have agreed to share experiences and support manufacturing capacities to make available affordable and quality pharmaceutical products. It has been decided to collaborate in health-related research, information sharing on healthcare and community health programmes. Under the framework of the Pharmaceutical Manufacturing Plan for Africa, the public and private sectors in India are cooperating with African firms for production of low cost medicines, especially for priority areas like HIV, Malaria, TB and so forth. Other priorities include transfer of technology and working together on common issues of intellectual property rights and patents. The Indian pharmaceutical industry is one of the countrys fastest growing sectors, and much of the industry growth is driven by exports. African countries account for about 15% of the sectors $8- billion exports. Since a large number of Africans suffer from HIV, Indian ARV drugs are much in demand in African countries. In addition to ARVs, Indian companies also export anti-infectives. India also provides training and continuing education for health professionals. 44 Under the Pan-African e-network, the Indian government agreed to create direct linkages between Indian institutions and health centres in Africa.45 Through this project, many African health centres
43 Ethiopia: India private investment reaches $4 billion, at
http://allafrica.com/stories/200811200996.htm (November, 2008). 44 Second Africa-India Forum Summit 2011, Addis Ababa, Africa-India Framework for Enhanced Cooperation. http://indiaafricasummit.nic.in/staticfile/framework-en.pdf, Plan of Action of The Framework For Cooperation of The India-Africa Forum Summit 2008, Delhi, India www.indianembassy.gov.et/.../Joint%20Plan%20of%20Action.doc 45 India - Pan-African e-network for medical services and human resources http://www.impactalliance.org/ev_en.php?ID=49340_201&ID2=DO_TOPIC
have been linked with top medical institutions in India for training doctors, nurses and hospital staff. Moreover, in tele-medicine, 12 Super Speciality Hospitals in India have been connected to provide services to 53 remote hospitals in Africa. As medical treatment in India is advanced and cost-effective, medical tourism is a fast-growing industry. The number of patients arriving from Africa has multiplied over the past few years. For instance, it is expected that the number of patients from Kenya travelling to India will more than double to 50,000 during the current year, compared to previous years.46 1.4.8 Climate and the environment Indias position on climate change mediates between the interests and concerns of developing countries and those of emerging economies. India and African countries agree on issues of climate change, based on the approach of common but differentiated responsibility, equity, intellectual property rights and trade measures to figure in the climate negotiations.47 Both India and African countries want developed countries to provide funds and assistance to developing countries, and address climatic issues, to the benefit of the large number of marginalized and poor people. They call for industrialised countries to substantially cut their emissions and to make legally binding commitments for reducing GHG, while allowing voluntary cuts for developing countries like India and African countries. However, African countries prefer money earmarked for developing and least developed countries to be made available differently. They would like to enter into negotiations with the European Union (EU) on their proposed roadmap for climate negotiation, if assistance is provided. On the contrary, India wants more time for negotiations since it would like first assess the commitments and progress of countries under the Kyoto Protocol before negotiating roadmaps proposed by EU. India has proposed the next round of negotiation to be held after the release of the report of Intergovernmental Panel on Climate Change in 2015. At the Durban Conference in 2011, the EU projected India as a deal blocker for a new legally binding agreement. Though African countries initially wanted India to accept the EU roadmap, they finally accepted Indias position. The chief negotiator of the African group
46 The first ever Indian medical tourism conference and exhibition in AFRICA - IMTD 2011
KENYA http://www.prlog.org/11179965-the-first-ever-indian-medical-tourismconference-and-exhibition-in-africa-imtd-2011-kenya.html 47 Nitin Sethi & TNN Agencies, BASIC nod to Indias stand on climate talks, The Times Of India, Nov 2,2011
32
pointed out that Indias per capita GHG emission was a small fraction of that of EU. India proposed that rich countries must make legally binding commitments to cut their emissions, because most of the GHG in the atmosphere was historically their product. Therefore, emission control by developing countries, based on equity and growth combination, should be voluntarily.
1.5. Country case studies

Africa consists of more than 50 countries with an enormous internal variation, and the relations between India and individual countries vary considerably. The format of this report does not allow for a full reflection of that diversity or a presentation of the relations with different countries. Instead, two cases are presented below to present more in detail relations between Indian and two countries of key economic and strategic relevance: Nigeria and Sudan. 1.5.1 Nigeria India established diplomatic relations with Nigeria even before the countrys formal independence in 1960. The core principle of respect for each others internal affairs has been a fundamental basis of relations between the countries. A number of developments during the early years of Nigerias independence tested the strength of the IndoNigerian relationship. The first was Sino-Indian border dispute of 1962, during which Nigeria took a pro-Indian stance against most African countries that chose either abstention or even support for Chinas cause. The second was during the war between India and Pakistan. Here, Nigeria chose neutrality. The third issue was the Nigerian civil war. Though India was not known to have offered support for the Federal side, it did not recognise the Republic of Biafra, as did two African Commonwealth countries (Tanzania and Zambia). Several exchanges of visits between leaders of both sides serve as evidence of the extent of diplomatic friendship been the two countries. What seems to be a major point in the diplomatic relations between India and Nigeria was the signing of a strategic partnership deal called the Abuja Declaration in 2007. In addition to economic and diplomatic ties, the bilateral relations are supplemented by a relatively large degree of mutual migration. The Indian High Commission in Nigeria believe that there are about 35,000 Indians in Nigeria as at October 2010.48 However, there are areas of subtle tension between the two countries. From the Nigerian end, a major concern is the treatment sometimes
48 Figures obtained from the Indian High Commission in Nigeria.
meted out to Nigerians who travel to India. The Nigeria government has complained that Nigerians on legitimate trips to India are sometimes harassed at the airport under the assumption that they could be drug peddlers or engaged in other fraudulent business. Nigeria has argued that while citizens of both countries may be engaging in illegal activities, it is wrong to consider all Nigerian visitors as potential suspects. From the Indian end, concern has been expressed at the safety of Indians who are being kidnapped or suffered attacks from armed robbers. According to the Indian High Commission in Nigeria, Indo-Nigeria trade reached $ 10.2 billion during 2008-2009, although global recession brought this down to $ 8.7 billion in 2009-10. Nigeria is now Indias largest trading partner in Africa. Indias exports to Nigeria are dominated by manufactured items such as machinery, pharmaceuticals, electronics, transport equipment etc. The main non-oil imports of India from Nigeria include metaliferous ores and metal scraps, nonferrous metals wood and wood products and cashew nuts. The balance of trade has been in Nigerias favour, due to large Indian imports of crude. On the industrial front, Indian companies in Nigeria are second largest in terms of employment of Nigerians. Some areas of Indias business ties with Nigeria are pharmaceuticals, telecommunication, retailing and vehicles. Nigeria is believed to have total oil reserves of 36 billion barrels and ranks seventh in terms of natural gas reserves at 187 trillion cubic feet. The Nigerian oil and gas sector is riddled with complexities. Historically, there have been problems with the management of the resource. Often at the centre of these conflicts is the fundamental clash between local claims and national interest.49 Over the decades, policies by successive Nigerian governments have also been confusing - with institutions created and disbanded and policies formulated and reversed in the attempt to find a structure that will satisfy local claims and national interest. This is made all the more difficult by the nature of the various relationships the countrys energy sector has with external actors. Three more recent developments are crucial to international engagement in the oil industry. The first is the policy of opening up oil blocks to foreign investors. Under President Obasanjo, a number of foreign oil companies were allocated blocks. Apart from India, Chinas CNOOC Limited had the Right of First Refusal (RoFR) of about seven blocks in exchange for about $2.5billon from the Export-Import Bank of China, while two oil blocks were awarded to Korea National
49 For more on this, see, Abiodun Alao, Natural Resources and Conflict in Africa: The
Tragedy of Endowment, Rochester: University of Rochester Press, 2007.
34
Oil Company (KNOC) to guarantee investments in the downstream sector. The second is the efforts made by the present government to ensure that Nigerias oil export is free from sabotage and protests from the oil producing communities. After decades of protests, the government reached a form of agreement with the militants in the Niger Delta region. Two steps taken by the government helped to abate the protests in the region, at least initially. These are the granting of an Amnesty Program and the establishment of a special Federal Ministry dedicated to the development of the region. The third is the Petroleum Industry Bill, which is likely to affect the way international oil companies operate in Nigeria. Central to the bill is the government's desire to overhaul the fiscal and operational framework of the oil and gas industry. The bill's main aims are to reorganise and improve the efficiency of the Nigerian National Petroleum Corporation (NNPC); revise the countrys fiscal policy, with the companies engaged in upstream petroleum operations now to pay company income tax and to increase the local content requirement. There is, however, opposition to the bill. For example, parliamentarians from Nigeria's six oil-producing states object to the fact that it does not address the issue of distribution of oil revenues. The senators argue that the bill focuses only on production and commercial aspects without giving due consideration to the region where it is being explored and the local communities of the area. International oil companies operating in the country have unanimously disapproved the bill, with many of them expressing concerns that if the bill is passed they may have to reduce their investments in Nigeria.50 In recent years Nigeria has been one of the main sources of crude for India, with around 8% to 12% of Indian crude coming from Nigeria.51 Nigeria is attractive for India because its crude oil is light and commands a premium in the international market due to its quality. The Special Adviser to the Nigerian President on petroleum matters has responded positively to the Indian request for more Nigerian crude oil. Apart from trade in hydrocarbons, Indian has also come decisively into the Nigerian upstream sector and refining. Between 2005 and 2007, Indian companies participated in Nigerian bid rounds and won 8 oil blocks: ONGC Mittal (OMEL) won 3, OVL 3, Sterling 2, and Essar 1.52 In August 2005, ONGC Videsh Ltd (OVK) won 2 blocks,
50 Chevron expressed its concern over the bill saying that deepwater oilfields in Nigeria
51 Figures from the Indian High Commission, Abuja, Nigeria. 52 It was later discovered that one of the blocks (275) may not be lucrative.
would fail under the proposed legislation due to ill-advised fiscal terms.
which hold reserves of two billion barrels each, committing US$ 485 million in signing amount. The Indian government granted ONGC the approval to invest $359 million during the first exploration phase in the two deep-water blocks. ONGC Videsh is also involved in the Nigeria-Sao Tome joint development zone and backed a 15 % stake in an oil block. The oil sector has also become part of Indias infrastructural development activities. In 2006, the Indian Company Mittal Energy Limited committed to invest $6 billion in a new 180,000 barrels per day refinery; 2000 megawatts power generation and an East-West rail line or any other downstream project as determined by the country's steering committee. OMEL was also given the Right of First Refusal on a block in exchange for providing a feasibility study into a new railroad. There have, however, been problems with the deals implementation, as the Indians have not honoured their commitment. Specifically, Nigeria has asked the Oil and Natural Gas Corp (ONGC) and steel billionaire Lakshmi N Mittal to fulfil its USD 6-billion commitment of investing in infrastructure. The Nigerian Parliament ordered an inquiry to probe alleged irregularities.53 By November 2010, things seem to have somewhat stabilised, as the Indians had begun to take the issue of infrastructural development seriously, especially with the refinery and the power generation. There were slight concerns, though, with the railway, and while the Nigerian government would not exempt India from the agreement, there would be no deadline imposed to make this delivery. It seems certain that the relationship between India and Nigeria will continue to expand. While India will continue to be active in many aspects of Nigerias economic life, it is clear that the oil and gas sector will remain the main centre of interest and attention. Nigerians are interested in exploring further the relationship with India in this sector. But they are also determined to do this on a platform that is fair and mutually beneficial. For a country that has suffered significantly in the hands of oil multinational corporations from Europe and America, there is a natural tendency for Nigerians to be instantly suspicious of all forms of external involvement in the politics of their countrys oil. To retain its legitimacy, India will have to show that it is not just another country interested in exploiting Nigerias oil without assisting the country.
53 The non-cooperation from India did not come to some as a surprise. A Nigeria academic
interviewed for this paper pointed out that Indias action was just a strategy to elicit favours from the federal government, and at the end leaving us with nothing. Interview with Professor Omole, Professor of International Relations, Obafemi Awolowo University.
36
1.5.2 Sudan In recent years, Sudan has emerged as a small but fast-growing oil producer, first with the help of American and European corporations and, more recently, with investments from China, India and Malaysia. Before the countrys partition, Sudan pumped about 500,000 barrels of oil a day, and had become Sub-Saharan Africas third largest oil producer.54 After completing an oil export pipeline that runs from central Sudan to Port Sudan in 1999, its oil export has grown rapidly. In 2010, around 75% of Sudan's export revenue came from oil. According to the 2010 BP Statistical Energy Survey, Sudan's proven oil reserves are estimated at about 700 million barrels. There are also large reserves of natural gas, estimated at 3 trillion cubic feet. To attract more foreign investment, Sudan removed key price controls, liberalised its investment code and exchange regime, and reduced trade restrictions. These reforms and high oil prices created an economic boom in the country, with growth rates exceeding 5%.55 Oil has been a controversial issue ever since it was discovered in South Sudan in the 1970s. For 21 years thereafter, the country was embroiled in civil war between the north and the south. Control over oilfields was heatedly contested between warring factions. 56 In 1984, due to deteriorating relations between Washington and Khartoum, American companies, was off limits to Sudan. Similarly, other oil majors such as British Petroleum, Royal Dutch Shell and Total shied away from exploration and production activities in the country during the 1980s.57 During the North-South civil war, the SPLA stated that oil companies in Sudan were legitimate military targets, because of the wealth they extracted for Khartoum from the south. Chinese, Malaysian, Canadian and European companies all experienced attacks and kidnappings, which often led to a suspension of activities and a constant preoccupation with security.58 The Sudanese governments military tactics also led western corporations, mainly Canadas Talisman Energy, to face heavy criticism for being complicit in the violence. As a result of such pressure, Talisman and other western corporations withdrew from Sudan, thus opening up
54 Sudan now Africa's third largest oil producer http://www.afrol.com/articles/21889 55 Sudan: African Economic Outlook 56 Oil in Sudan, http://www.sudantribune.com/IMG/pdf/Oil_industry_in_Sudan.pdf 57 Luke Patey, State Rules: Oil companies and armed conflict in Sudan , Third World 58 Luke Patey, Fragile Fortunes: Indias Oil venture into war-torn Sudan, in Emma
http://www.africaneconomicoutlook.org/en/countries/east-africa/sudan/ Quarterly, Volume 28, Issue 5, 2007, pp 997-1016
Mawdsley and Gerard McCann, India in Africa: Changing Geographies of Power, Oxford, Pambazuka Press, 2011
the way for OVL. In October 2002, Talisman Energy announced that OVL would buy its share, and hoped to finalize the deal by the end of the year. Other companies, such as Lundin of Sweden and OMV of Austria, also decided to sell their shares in Sudanese oil fields. Eventually, the Sudanese government renewed operations in the petroleum sector by striking partnerships with Asian oil companies. The Sudanese company, Sudapet Ltd., has developed joint ventures with foreign companies in downstream projects, led by the China National Petroleum Corporation (CNPC), which owns the biggest single share in the consortium of the GNPC(40%); Indias Oil and Natural Gas Corporation (OVL), and Malaysias Petronas (with a share of 30% in the consortium).59 Indias investment in Sudanese oil fields was controversial in India as well. At first, the debate mainly focused on the companys safety r ather than the morality of investing in a country with a dubious human rights record. The approval of the $720 million investment had many opponents. Some argued that committing hundreds of millions of dollars in a war-torn region was too risky and that OVL risked losing its investment.60 The rationale of investing in a country ruled by a government that had harboured international terrorists was also questioned. However, OVL argued that by withdrawing, India would miss a golden opportunity (Oil and Gas Journal 2003). While the government did not want OVLs Sudan investment to become a political embarrassment, it decided to invest in Sudans oil industry, in spite of the risks involved. The fact that CNPC and Petronas remained in the country as western oil companies left was seen as encouraging. Because of their high levels of state-ownership, OVL and other Asian oil companies cannot be influenced in the same manner as western companies, which tend to fear damage to their reputations in home markets. The Sudanese government backed the entry of OVL. While cooperation with China was considered important, they found it better to diversify corporate and political partners than to be overly dependent on China. Thus, the agreement with India was part of the Sudan governments larger foreign policy agenda. While oil remains at the heart of relations and dominates Sudans trade with India, the country has also been included in Indias enlarged Focus Africa programme that was launched in 2002 to expand
59 Oil Fact Sheet On Sudan 1,September 2006, 60 Patey, 2011, op.cit.
http://africa.berkeley.edu/sudan/oil/sudanoilfactsheet-sept06.pdf
38
economic interactions with seven major trading partners. The Indian Government has identified five priority sectors in addition to oil and manufacturing. These are infrastructure, agriculture, human resource development, information and communications technologies, and small and medium industries. India also extended an EXIM Bank Line of credit of US$ 50 million. Between 1996 and 2005, Sudan attracted the fourth largest share ($964 million) of Indian foreign direct investment (FDI). 61 ONGC Videsh Ltd. (OVL) has played a leading role. Besides its direct oil operation, the company has completed a 741-km pipeline project from Khartoum Refinery to Port Sudan for transporting petroleum products, at a cost of US $ 1200 million. The other consortium members besides OVL were CNPC with 40% participating interest, Petronas with 30% and Sudapet with 5% stake, respectively. The contract is for 1 million tonnes of crude oil per year from Sudan which, in equity oil parlance, will mean a growth rate of 12% of the $750 million Indian investment.62 According to the terms of the deal, OVLs share from the oilfield will total 3 million tonnes of oil and gas per year. OVL has a 25% stake in the Greater Nile Oil Project which stands for about half of the countrys production. Moreover, OVL has completed a 741-km pipeline project from Khartoum Refinery to Port Sudan. In return, India expects Sudan to give 1 million barrels of crude oil per year. ONGC was also awarded the contract to build a new refinery in Port Sudan with a capacity to process 100,000 bpd, costing $1.2 billion.63 OVL also signed a deal to develop the Thar Jath oilfields located in South Sudan. The deal was signed with the Sudanese White Nile Petroleum Company - a consortium of Malaysian state oil firm, Petronas, which owns 68%, OVL which has a 24% stake, and Sudans state oil company Sudapet, with 7%. India foresaw the split of Sudan a few years ago and embarked on efforts to build relationships with the would be leadership of South Sudan. This included regular invitations to South Sudan officials to visit India for training and exchange programmes from 2006 onwards. In 2007, India became one of the first countries to open a consulate in Juba. Several India companies are active in South Sudan. The current Vice President of India, Mr. Hamid Ansari, led a high level delegation to participate in the Independence Day celebrations of South Sudan, on 9 July 2011.64
61 62 63 64
Mea Report, India-Sudan Relations, http://mea.gov.in/mystart.php?id=50044526 nformation from interview with ONGC officials in Khartoum. Information from interview with ONGC officials in Khartoum. Ansari to attend 'birth day' of South Sudan, http://expressbuzz.com/topic/ansari -toattend-birth-day-of-south-sudan/292219.html
The ruling National Congress Party (NCP) in the North and the Sudan Peoples Liberation Army (SPLA) in the South have agreed in principle to protect oilfields and infrastructure through the secession process. However, the demarcation of the border presents major risks, given the presence of several active conflict zones. The bone of contention is that, the majority of proven reserves are located in southern Sudan, in the Muglad and Melut Basins. Southern Sudan accounts for between 75-80% of Sudan's daily output, whereas the infrastructure for extracting and exporting South Sudans oil is based in Port Sudan in the north, on the Red Sea. This means that while Juba is reliant on Khartoum to transport the oil and share the profits, Khartoum is reliant on South Sudan for most of its oil exports. Indeed, since the split, North Sudan has lost 75% of its oil production sources.65 Moreover, in North Sudan, most of the productive oilfields are located in South Kordofan state, another disputed territory. It currently produces about 20% of Sudans overall daily output of 500,000 barrels. The rest is pumped from oilfields in South Sudan. Naturally, North Sudan, which currently depends on oil revenues for some 45% of its budget, is scrambling to find other sources of income to make up for the loss. The Comprehensive Peace Agreement in 2005 stipulated that the north and south were to share the income from oil production 50/50 from July 2005 to July 2011. However, so far, there is no settlement on this issue. At the time of writing (February, 2012), there are reports that the two Sudans are on the brink of a new war. Sudan has confiscated shipments of oil because of lack of payment for use of the pipeline. In retaliation, South Sudan has shut down its oil production, thereby losing most of its export revenue. Renewed armed conflict would almost certainly be centred on control over oil fields that lie across the North-South border in Unity State and Upper Nile State, where there have been violent confrontations. Indias oil investments would very much be on the frontline should hostilities breakout. Furthermore, there is no guarantee that even if the North and South maintain a peaceful border that southern Sudan will remain very secure. Inter-communal conflicts continue, and over 2,000 people were killed in 2009 from violence between ethnic groups. This has halted the exploration of oil in the South.66
65 Anthea Gordon, Oil In Sudan: An Independent Problem? 24 October 2011, 66 Patey, 2011, op.cit.
http://thinkafricapress.com/south-sudan/oil-sudan-independent-problem
2. African responses and implications for Africa
2.1
Introduction
By and large, Indias engagement in Africa has been welcomed by African governments, and there has been little controversy surrounding its engagement. Among the driving forces on the African side is that India offers cost effective and intermediate technology in fields of particular interest to Africa, such as information technology, agriculture, health and pharmaceuticals.67 The fact that India shares a common historical experience of colonisation with the African continent, and that it can present its engagement as an expression of south-south solidarity and cooperation has probably also contributed to its perceived legitimacy. However, India is first and foremost viewed as a business partner that can help African countries to promote growth. Cooperation with India is also seen as beneficial because it can reduce the dependence of African countries on both the West and China, giving them more choice and autonomy in economic and foreign policy. The coverage of India in African media68 indicates that for most Africans, India is just another country with which they can cooperate when opportunities arise. Few controversies have been found that seem to relate to India and Indian engagement specifically. To the extent that economic engagement has been controversial, it concerns specific projects and activities (such as the acquisition of agricultural land or specific infrastructure or industry projects), and even in such controversies, China has received much more attention than India. A general scepticism to the interests of emerging powers in Africa can be expected among some few elite representatives such as academics and NGOs but even these groups seem more interested in China than in India, and the general scepticism to emerging powers seems less in Africa than among some Western interest groups. In the following, we assess the implications of Indias engagement in various areas. It should be noted that it is difficult to generalise any implications of Indias engagement, as compared to e.g. Western
67 Renu Modi, The Role of Indias Private Sector in the Health and Agricultural Sectors of 68 Systematic assessments of African countries have not been done for the purpose of this
Africa, in Fantu Cheru and Cyril Obi (eds.) The Rise of China and India in Africa, London, Zed Books, 2010. report. The assessments here are made on the basis of continuous media monitoring of a few selected electronic media across the continent, as well as more thorough monitoring of selected African countries where the researchers are already involved.
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powers or China. In other words, it is difficult to see in what ways India really represents something new, or whether India is just another power that has finally started to see the potentials in Africa. Generally, the question can be approached by identifying what makes the India-Africa relations qualitatively different from, e.g. Western powers or China, and then develop some hypotheses or assumptions about the implications of those qualitatively different characteristics. However, in most cases it is difficult to identify significant characteristics of India-African relations that are different from relations with other powers. Another possible approach is to investigate empirically the actual manifestations of Indias engagement in Africa. As far as we know, this has not been studied in terms of general implications. That would be have been a huge task, and even if it had been done, the findings would probably be of limited value, since the recent years increase and expansion of Indian engagement suggest that the most dramatic implications have not yet come to the observable surface of African economic and political life. The following discussion presents some mechanisms by which Indias engagement may have implications for Africas development. It is supported by examples, but in most cases the discussion should be seen as a presentation of potential implications of Indias engagement for Africa rather than as conclusive statements.
2.2
Differences between India and other powers
To assess the implications of India in Africa, it is worth considering the characteristics of India as compared with other powers, of which the most relevant are the western countries (which, in the context of this discussion, can be seen as one category) or China. For many purposes, India can be seen as placing itself in between these two alternatives. This is seen, for instance, in aid. In contrast to China, India shares more of the liberal, democratic ideas (including much of the good governance agenda) that dominate much of the western engagement in Africa. However, like China, it has little or no intention of promoting such ideas in domestic politics in Africa, due to its reluctance to interfere in domestic politics. This is the most important difference between western aid and Indian aid, which otherwise is not very different in terms of actual activities (for instance, with the focus on capacity building). In economic engagement, there are some notable differences between Chinas and Indias strategy. One such difference is that while Chinas
engagement is largely state-driven, much of Indian involvement is driven by the private sector, which operates fairly autonomously of the state. There are exceptions to this, the major one being the role played by ONGC Videsh Ltd (OVL) in the oil sector. The Indian state is also active, both through state owned companies and in facilitating economic cooperation. Nevertheless, it remains a fact that the Indian government is not as active as the Chinese government in promoting the interests of its corporations abroad. The role played by the Indian government can thus be characterised as selective support, and is most evident in those countries on which India relies the most for oil imports. In more recent times, however, India has also begun to shift from its softer approach and ratchet up its commercial diplomacy, in a manner not dissimilar to China. Another difference concerns the use of labour. While China has employed large numbers of Chinese workers on projects in Africa, Indian projects have to a greater extent employed local labour. Third, and relatedly, India has been more involved with training and capacity building of Africans, both through funding capacity building and training in Africa and by organising training and education of Africans in institutions in India. The presence of the diaspora is often claimed to be a resource for India, as its members can be seen as natural partners and entry points for Indian companies entering Africa. This has no doubt been the case in Eastern and Southern Africa, at least to some extent. However, relations between Africans and the Indian diaspora have not been without tensions. This is well known in countries like Uganda and Kenya, where Indians have been discriminated and even expelled, but to lesser degree, it is seen in other countries too. Linking up with local Indians can therefore be a double edged sword. Because of the tensions that are found between Indians and Africans in countries such as Kenya, local communities may view Indian companies with a degree of resentment.69 The importance of the diaspora community should therefore not be exaggerated, especially in view of the fact that Indias recent engagements have been concentrated in parts of Africa with little Indian diaspora, such as the oil producing countries Nigeria, Angola and Sudan.
2.3
Implications for economic growth
Compared to China, India is still a relatively smaller trading partner for African countries, but its contribution to African international
69 Gerard McCann, Diaspora, Political Economy and Indias Relations with Kenya, in
Emma Mawdsley and Gerard McCann, India in Africa: Changing Geographies of Power, Oxford, Pambazuka Press, 2011.
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trade is still substantial. Indias share of African countries total international trade (including intra-regional trade) was 6 per cent in 2010, as compared to 17 per cent for China, and 3 per cent for Brazil.70 The figures illustrate that changes in Africas international trade the last decade are not primarily a re-orientation towards China (as many observers would emphasis a few years ago), but part of a global reorientation of Africas trade. This is best illustrated by the fact that OECD DAC countries share of Africas international trade has decreased from about 70 to approx. 50 per cent in the last decade.71 We may distinguish between different ways in which Indias growing economic engagement affects economic development in Africa.72 First, an important channel by which the growth of India and China affects sub-Saharan Africa is through their impact on the terms of trade, particularly primary commodity prices. Both countries are heavy consumers of crude petroleum, coal, copper, iron ore, nickel, etc. and are also important markets for various agricultural products like cotton, rubber, tropical woods, coffee, cocoa etc. Sub-Saharan Africa has an export structure that is highly concentrated on primary commodities. This has led to a significant redirection of African exports towards Asian markets away from OECD markets. Consequently, African countries still largely connected to the world economy through raw material exports have benefitted from the growth of India (and China), both in terms of increased quantities of exports and in terms of higher prices caused by this growth in demand. Between 1999 and 2009, Africa's terms of trade improved by around 30%, far more than any other developing region. This reflects price increases of a number of primary commodities, particularly oil and minerals. However, since raw materials are known to fluctuate more in price than other commodities and services, this means that African countries will be seriously affected if prices on their main exports drop. Second, African imports from India have grown significantly. This can have a dual effect. On the one hand, where these imports compete with domestic producers, it can lead to reduced local output, factory closures and job losses, thus reinforcing the trend towards deindustrialisation. This may adversely affect employment and create social and political tension. However, if new imports from Asia replace imports from other countries rather than domestic producers, it will not have such negative effects. Jenkins and Edwards73 argue that this has been the case for Chinese imports, and it seems reasonable to assume that
70 IMF, Regional Economic Outlook for Sub Saharan Africa, October 2011. 71 Ibid. 72 Rhys Jenkins and Chris Edwards, The Asian Drivers and Sub-Saharan Africa, in IDS 73 Ibid, p.28.
Bulletin, 37(1), 2006, 23-32.
the same applies to India. At the same time, it should be noted that the availability of cheap imports from Asia could make it more difficult for African countries to establish new industries, since it would be difficult for them to compete with imports from Asia, especially in labour intensive sectors. This could contribute to reinforcing Africas dependence on exporting raw materials and inhibit the development of African industry. On the other hand, increased availability of cheaper imports can reduce prices for consumers, thereby contributing to improved standards of living. Since the imports mostly replace more expensive imports from other countries, it is reasonable to assume that the growth in imports from India has been beneficial for Africa overall. Third, growth of exports from Asia could lead to increased competition for African countries in third country markets, with Asian exporters replacing African exports. However, since African exports tend to be resource intensive (export of raw materials) rather than labour intensive, while Asian exports are mostly labour intensive, African countries to little extent compete directly with Asia in third country markets, and they are therefore unlikely to face a competitive threat from Asia (this is not directly related to the relations between India and Africa and hence outside the scope of this report). Fourth, Asian investment can be an important source of much needed capital for African countries, normally followed by corresponding technology transfers and expanded trade. The actual effects depend on sectors and the nature of investments. In the medium-long term, Indias (and Chinas) rapidly modernizing industries and growing middle classes, with rising incomes and purchasing power, could stimulate a significant increase in African exports. In addition to raw materials, this includes agricultural products, as well as diversified, non-trade exports, such as processed commodities and light manufacturing products, consumer goods, food and tourism. To conclude, Indias engagement is likely to contribute to economic growth in Africa. It gives African countries access to new capital for investment, cheap imports, new export markets and contributes to price increases on raw materials exported by African countries. In recent years, the terms of trade have been favourable for exporters of raw materials. Indeed, much of the high rates of economic growth experienced by many African countries in recent years can be explained by the increase in prices of raw materials, which is closely linked to growth in demand from China and India. The fact that Indian economic engagement tends to utilise more local labour force suggests that
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the benefits of ties with India would be even greater although it is difficult to draw a general conclusion on this.
2.4
Political implications
Indias engagement also has implications for African countries at the political level. Based on extensive research on African states, some general comments can be made about the potential political effects of Indian engagement. A key point in the analysis is the implications of the strengthening of relations with India as a third category of international partner (outside Africa), distinct from both Western powers and China. In the context of historical dependence on western countries and increasing recent links with China, the emergence of India as a more significant political and economic partner can give African countries more autonomy in relation to external actors. The existence of a greater range of partners to choose from can give African state more scope of choice and more room to manoeuvre. This means that they can be more able to resist and reject demands imposed by western countries and international organisations dominated by them. They can do this without becoming too dependent on China, since India may constitute an alternative non-western partner. Since India, like China, attaches greater importance to the principle of non-intervention, closer ties with India can also contribute to giving African states more autonomy in domestic policy-making. Links with Asian countries can give governments access to more resources (through state-mediated trade and investment deals), which in turn means that they become less dependent on taxation of domestic actors. This can make them more able to resist pressure from domestic groups demanding their share of state resources. However, such increased autonomy from domestic society can also contribute to reinforcing the power of existing regimes. In many countries, ruling regimes have maintained control by incorporating existing elite groups into patronage networks inherited from the colonial era, laying the groundwork for the emergence of weak neo-patrimonial states, with no clear separation between the personal interests of officials and the interests of the institution to which they belong. Regimes secure the support they need, not through pursuit of state policies, but by using state resources to offer material rewards to clients in return for political support. In such states, members of the government have strong interests in preserving the existing regime and its form of governance. At the same time, the states very weakness is a resource, because it makes it possible for elite politicians to preserve their pow-
er and control. Many groups therefore see the reproduction of a weak state as being in their interest. How may Indias engagement affect such dynamics in African states? We may assume that ultimately, the political implications depend on domestic politics and on the power and interests of key political actors and their constituencies. Governance and politics take place in a relation between the regime and its constituencies, where regimes have specific political and economic interests. If we assume that regime survival will be a, if not the, primary concern of rulers, it follows that the forms of governance established will depend on the compatibility of regime interests and power on the one hand, and such governance on the other.74 Thus, if regime interests are best served by strengthening state institutions, it is likely that such a policy will be attempted. Conversely, if there is a real or perceived contradiction between regime interests and strong state institutions, it will not. Political development therefore depends on the specific dynamics of the relationship between regimes and their constituencies, and the formation of effective states depends on the creation of political alliances consisting of social forces with both an interest in strengthening the state and sufficient power to do so. It follows that the effects of ties with India are likely to vary between countries, depending on the specific distribution of power and interests in each country. In countries where patrimonial relations are predominant, Indias engagement is likely to reinforce existing forms of rule, especially if economic resources are transmitted through state institutions in ways that enable officials to use them to maintain patronage networks. This would imply that the prospects of improving governance and state capacity could be adversely affected. It should, however, be noted that little of Indias cooperation with African countries take a form that makes it particularly vulnerable to such risks, compared to that of other countries: for instance, there is little direct financial support to African governments involved. However, if and to the extent that growing economic ties with India can contribute to change in domestic power relations, for instance by leading to a strengthening of groups with an interest in improving governance, the prospects of political change and reform may be improved. But given the limited scale of Indias engagement compared to China and Western countries, the impact will be limited. In any case, it is too early to see any solid empirical evidence of the political
74 Rick Doner, Bryan Richie and Dan Slater, Systemic Vulnerability and the Origins of the
Developmental States: Northeast and Southeast Asia in Comparative Perspective, International Organization, Vol. 59, 2005, No. 2, 327-361.
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implications, whether in the positive or negative direction, of the recent increase in Indias engagement in Africa. Comparing India with China and western countries, some differences may be identified. In the case of China, less transparency about Chinese economic relations may in some ways make it easier for African regimes to manipulate economic ties for their own interest, without public scrutiny. Compared to western powers, the effects of access to resources through links with India are similar to those associated with western aid. Western countries seek to mitigate some of the risks through application of different forms of conditionality, by insisting on good governance and some degree of democratic accountability, and by supporting capacity building (but the success of those measures should not be taken for granted). However, with the partial exception of capacity building, India would consider such engagements to be in conflict with the principle of non-intervention.
2.5
Implications in specific policy areas
2.5.1 Good governance, democracy and human rights As elaborated above, the general implications of the emergence of India as an important partner for African countries can point in different directions in terms of state institutions, forms of governance, and democratic accountability of the regimes towards their populations, much depending on context. This is also valid for the specific political objectives promoted by Western aid. Although India in contrast to China would share most of the liberal, democratic ideals for good governance currently promoted in Western development cooperation, it would strongly oppose the integration of such a reform agenda in its engagement in Africa. Still, some characteristics of Indias engagement suggest that India nevertheless can serve, or possibly undermine, those agendas. On the one hand, India strengthens the capacity in the public sector through supporting skills development and infrastructure. On the other hand, the influx of more resources in a neo-patrimonial state system has the potential for fuelling patron-client relations, including practices that can be termed as corrupt. In terms of openness and transparency, efficiency and effectiveness, voice and accountability and so on, it is difficult to identify specific implications of Indian engagement. Both India and most African countries adhere to these principles, although practices may often contradict them, both in India and in Africa. The implications are proba-
bly dependent on the specific forms of cooperation rather than on the characteristics of India as a partner where for instance, the bias of Indian interest towards oil and other minerals would indicate possible negative implications, in line with the well-known correlation known as the resource curse. However, it is difficult to see any specific characteristics of Indian engagement in this regard as compared to, for instance, Chinese or European engagement in similar activities. A similar argument can be made for human rights. Given Indias commitment to the principle of non-intervention, it would not engage in attempts to improve human rights in Africa except for expressing general commitment. On the other hand, some of Indias economic engagement may, in more or less direct ways, have negative implications for human rights. The effects depend on the country context, the human rights in question and the actual interventions and forms of collaboration, as well as the counterfactual scenario: if the alternative is Chinese engagement, one may perhaps expect less sensitivity to some human rights issues, while some western actors may be more sensitive.75 Whether the actual effect of Indian engagement is to strengthen or undermine human rights can therefore not be answered in any general terms. 2.5.2 Management of natural resources, climate and the environment There is little explicit environmental concern in Indias engagement in Africa. At the same time, parts of Indian engagement on the continent clearly have implications for the climate and the environment. The oil sector probably represents the most significant component of Indias engagement in Africa when it comes to greenhouse gas emissions. But while there are environmental risks associated with all activities in the energy sector (oil, gas coal etc), there is no reason to believe that activities dominated by Indian actors and interests will differ in significant ways from those of western of Chinese companies in this regard. In addition, Indias engagement in the agricultural sector is also relevant. The expansion of commercially oriented farming, with increased use of fertilizers, pesticides and irrigation could, unless properly managed, create or intensify environmental problems. However, the main obstacle to sound management of natural resources and effective responses and adaption to climate change in Africa is linked to the institutional weakness of African states rather than to the policies of specific firms or nations. This means that to the extent that
75 This is not necessarily because of different ethics, but a result of more transparency and
risk of exposure at home or, in the case of companies, in capital markets.
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Indias engagement contributes to sustaining weak institutions and practices based on patrimonial ties (as described above), it could make sound management of natural resources more difficult. 2.5.3 Food security and agriculture In the agricultural sector, Indian companies have invested in several countries, including Ethiopia, Namibia, Nigeria, and DRC, where they have acquired farms for commercial food crops and bio-fuels production. Both African and Indian authorities see this as part of skills transfer in expertise and technology. The agriculture land purchase in Ethiopia by Indian companies indicates that it has many positive consequences, like inward investment, employment generation, revenue generation, infrastructure development and foreign exchange earnings. Long-term land leases by foreign governments and corporations in Africa are seen as controversial, due to their perceived threats (whether real or not must probably be assessed in each case) to local food security, since they appear to be meant to supply food to Indian markets, making Africa a food supplier to address Indias food security situation. For instance, in Ethiopia, there are incentives, which allow for food products to be exported almost duty-free to the Indian market. This contrasts with the official view from both India and African host governments that the arrangements represent a win-win situation. Moreover, most of the benefits accrue to the state and to companies and not to local inhabitants. This raises concern about Africas food sovereignty and food security, protection of land rights for African subsistence farmers and displacement of farmers from their land. This could lead to an increase in poverty among the affected groups, as peasants who are evicted from their land have no alternative livelihoods. It is an open question where they will settle after being evicted. According to two new reports,76 some are resettled by force by the government. Others may become squatters on land in other areas, some may be employed by the new land owners and some may migrate to cities, thus contributing to further congestion in slum areas and informal urban settlements. Given the sensitive nature of such agricultural investment, India faces criticisms of engaging in a 21st century land grab. Rowden77 throws light on atrocities that are similar to what India used to blame western countries for in the past. His report also lists the major ways in which the Indian Government has been increasingly pro-active in taking steps to facilitate this trend for over76 Oakland Institute, Understanding Land Investment in Africa: Country Report, Ethiopia ,
Oakland, The Okland Institute, 2011; Rick Rowden, Indias Role in the New Global Farmland Grab: An Examination of the Role of the Indian Government and Indian Companies Engaged in Overseas Agricultural Land Acquisitions in Developing Countries, 2011, http://www.networkideas.org/featart/aug2011/Rick_Rowden.pdf 77 Rowden, op.cit.
seas agricultural investment by Indian companies, such as high-level trade diplomacy and LOCs from its Exim Bank. In the light of the above, there are many aspects to India-African cooperation in the agricultural sector. On one hand, India has offered aid, set up agricultural institutions, and provided scholarships to African students in various agricultural universities in India. On the other hand, India has been encouraged to grow cash crops on African lands, which has raised controversy. The challenge for both Indian investors and African governments is to find ways to manage these relationships for better development results, mitigating negative effects of land acquisitions for the livelihoods of local peasants. Unless this is done is a way that is perceived by local residents as fair, Indian goodwill in Africa could erode. 2.5.4 Security, peace and reconciliation In the security related areas, the two most prominent forms of direct Indian engagement in Africa are the participation in peacekeeping operations and in naval security. India is a major (no. 3 in 2010) contributor to peacekeeping operations in Africa. However, continued Indian support to peace keeping operations should not be taken for granted, as much of it is not directly linked to key national interests and depends on domestic and international developments. The engagement in naval security with South Africa, coastal and island states is a very important contribution to African security: Countries on Africas eastern seaboard and the western Indian Ocean island states lack the capacity to exercise proper oceans governance of the vast areas granted to them in terms of international law and are unable to adequately render the quid pro quo that international conventions such as the United Nations Convention of the Law of the Sea (UNCLOS) require. This type of engagement is perhaps more predictable, as it is directly linked to Indias own interests. It is worth noting that India does not depend on multilateral organizations in Africa and can easily engage to secure its interests outside international organizations, for instance in bilateral collaboration with South Africa and several other African countries within defence and maritime security, or in the IBSA group for various purposes.
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2.5.5 Capital movements, tax havens and corruption Tracking capital movements and assessing their effects is notoriously difficult. Looking at the statistics, one sees that 70% of Indias total investment in Africa goes to Mauritius. As an offshore financial centre, Mauritius has attracted large number of Indian companies, for instance in the software industry and telecommunications. However, much of the investment in Mauritius is channelled to third countries or brought back to India. Routing overseas investment through Mauritius is very attractive for Indian companies as they benefit from low rates of dividend and income taxes in Mauritius as well double tax avoidance treaties. It is therefore difficult to estimate how much of this capital that is actually invested in Mauritius or in other African countries. The existence of tax havens such as Mauritius therefore contributes to obscuring the actual scale and form of Indian investment in Africa. At the same time, there are Indian companies that operate from other countries, such as Dubai, who may be investing in African countries, and these investments are not included in statistics about Indian investment in Africa. In addition, while difficult to estimate, it is also likely that capital is transferred through informal networks, between Indian businesses and members of the Indian diaspora. Moreover, Indian financial institutions engagement in Africa may influence the movements of capital out of Africa. Thus, in Nigeria, some civil society groups expressed the belief that Indian banks have been used by corrupt Nigerians to divert their stolen wealth. 78 While Nigerians do not hold the Indian government responsible for the activities of corrupt Nigerians, they express disappointment that the Indian government has not done much to prevent this practice. This is related to Indias lack of interest in the (Western) anti-corruption agenda in Africa. However, there are few or no indications that Indian engagement represents a higher risk in this regard than what is associated with African, Chinese or other engagements, whether in general or in highly corruption-exposed sectors such as oil and gas. 2.5.6 Health In general, Indias engagement in the health sector can be seen as beneficial for Africa. In particular, the availability of cheaper drugs is of great benefit for African countries and citizens. Training of health personnel and expansion of telemedicine is of course also beneficial, although the scale of Indian efforts is limited.
78 The former American Ambassador to Nigeria also pointed this out in a public interview in
December 2010. With the increasing clampdown on money laundering in Europe and America, India and China are becoming safe havens for Nigerians who have looted their countrys treasury.
One issue that has brought India to the focus of attention among Africans is the impression that fake drugs coming into Africa come mostly from India. Indeed, a Nigerian undergraduate gave a sweeping statement that Fake drugs are from India while fake goods are from China. Although there are indications that most of the fake drugs are actually not from India, this impression seems to have been established. 2.5.7 Decent Work Available data and methods do not enable a general comparison between companies of different country origins with regard to decent work. There are few indications that Indian companies in general differ significantly from, for instance, Chinese or other African companies with this regard. While African civil society groups have not come out very forcefully to criticize Indians, there are some complaints. One issue concerns the way some Indian companies treat their employees. Many are seen as treating their staff poorly, such that many of the staff would have left if they had an alternative. Interviews held during fieldwork indicate that this varies with the nature of enterprise. For example, complaints of poor treatment are more prevalent among those who work at lower levels, while those at more senior levels in Indian companies have less complaint. The second has to do with the ways Indian families have allegedly treated their domestic staff, especially female. There have been allegations that Indian families treat their domestic staff poorly. Apart from the fact that many are often made to work very long hours, there are also allegations that some have been sexually abused.
3. Implications for Norway
Many of the potential implications for Norway of Indias engagement with Africa are similar to implications of Chinas engagement. The following chapter lists a range of possible policy implications of Indias engagement, with emphasis on those that are specific for India or become more important following Indias engagement.
3.1
General implications: reconsidering assumptions
Historically, much of Western policy making towards Africa, in particular the more friendly, aid dominated policies, have been based on the assumption that one of Africas main problems is marginalisation, in particular with regard to trade and the world economy. It has also been assumed (implicitly) that there is a particularly close relation between Africa and western countries. This has been seen in aid, which after the cold war has primarily been seen as a western form of engagement. After the collapse of the Soviet Union and the democratic wave of the early 1990s, it has been assumed that western (liberal, democratic, market oriented, good governance) norms of statehood are generally shared among both governments and key constituencies. Thus, it is assumed that everyone aspires towards liberal democratic forms of statehood, and western countries eagerly wanted to assist African states in moving towards realizing those aspirations. It is also seen in trade and investments exemplified by the fact that much of aid for trade to Africa has been aiming at increased African export to Europe or USA. It is obvious that significant political implications follow when some of the main assumptions behind western countries Africa policies change. The increased interest in Africa from several emerging powers indicates that, far from being marginalized, Africa is of increasing importance both in international relations and in the world economy. The rationales are several: Africa provides access to resources that are expected to be scarce in the future, including oil, other minerals, and agricultural land; the region includes several of the fastest growing economies in the world, representing promising markets. In addition, the large number of countries in Africa makes the region important in strategies to build alliances, for instance in the multilateral system. Western countries engagement with domestic politics in Africa whether through good governance, human rights, or poverty oriented
56
policy reforms is, in a historical perspective, an exceptional form of international relations. The emerging powers engage with Africa in the form more common in international relations, that is, primarily for self-interest and with little interest in other countries internal affairs. China has deservedly received most attention, but there are important implications of the fact that India (and to less degree Brazil and other emerging powers) have followed China, and it is now clear that China is not an exceptional case but the first and biggest representative of a trend. The fact that this may sometimes be presented as cynical or unacceptable by western (more than African) agencies only illustrates that western countries see Africa as subject to a particular form of relationship. Hence, it is now clear that the development partners of African countries are, broadly speaking, divided into two blocks: the west and the rest. Since India (and other emerging powers) in many ways is closer to China than to the west in its approach to Africa, they represent the future normal while the western countries constitute the exception. Thus, while one could previously see the Africa-western relation as the norm, with China as the exception, the opposite is now the case. This is particularly evident in the engagement with domestic politics. The key point is not that India offers a different type of relation than, for instance, China (although there are differences), but that Indias engagement makes it impossible to maintain the idea that China is an exception while western countries represent a normal relation with Africa. It is also clear that the western hegemony since the collapse of the Soviet Union cannot be taken for granted. The emerging powers do not only provide attractive resources, but also alternative development strategies and models for statehood. This is illustrated by the fact that an Asian model is more explicitly discussed in many countries. Here, India represents a model quite different from China, since India shares the democratic and liberal norms of statehood endorsed by most African states. Hence, this model may be easier to accept as a possible model for Africa. These changes are not only of relevance to academics, diplomats and other analysts. In different forms (and of course widely different analytical frameworks), changes in Africas relations with the world increasingly affect ordinary citizens in Africa, through projects, media and popular discourse. These developments, and Africas new position in the world, are quite explicitly acknowledged in Norwegian policies (for instance, in the platform for an integrated Africa policy). But we are not convinced that the political implications are fully taken into account in current engagement with African countries, which sometimes seems based on
business as usual. But business as usual is probably not the best strategy if the basic underlying assumptions are no longer true.
3.2
Development cooperation
Indian aid is small in terms of volume as compared to many OECD countries and China. Due to Indias financial constraints and domestic challenges, it is not likely that the volumes will increase dramatically in the coming years. However, the relatively smaller volume of Indian aid does not reflect its importance as a development partner. This is because Indian aid is always coupled with other forms of collaboration, in particular trade and investments as an integrated part of Indian foreign policy towards Africa. For the same reason, a discussion (as in this section) of Indian development cooperation should not be limited to aid, but take into account the wider spectrum of Indian official engagement in specific African countries. In this perspective, India is a more important development partner to African countries than aid volumes alone indicate. Indian policies for development cooperation differ on some important points from the policies of Norway and most other OECD donors. For instance, aid is more explicitly associated to Indian economic interests, and in contrast to the norms in OECD-DAC it is almost always tied. At the same time, the norm of national ownership, also emphasized by the OECD-DAC, is much more prominent in Indian than in western aid, as Indian aid is based on principle of non-interference and puts more emphasis on respect for other states sovereignty. One general, potentially important implication for Norwegian development cooperation of the emergence of India as a development partner regards revision of assumptions. The emergence of India (and other new donors) in development cooperation makes it clear that Africa now has several alternatives to western donors. India proudly presents itself as explicitly anti-neo-imperialist which in this context equals anti-Western. India also presents its aid with normative emphasis on its international responsibilities. Moreover, the fact that India is a democracy seems to give its ideas of development cooperation more legitimacy.79 By implication, western aid may have to adjust to the fact that India and other new donors are alternative development partners for African countries. For western countries, this means that the coupling of aid to an agenda of reforming policies and governance becomes less effective. Western aid to Africa, particularly during the last two decades, has involved
79 See, for instance, Clemens Six (2009): The Rise of Postcolonial States as Donors: A
challenge to the development paradigm? Third World Quarterly, vol 30, no 6.
58
quite ambitious objectives to reforming African countries towards liberal democracy and good governance. These are both the direct objectives of many development programmes, and implicit in much aid. The possibility of realizing those ambitions depends on two premises: (1) a general Western hegemony when it comes to norms for governance, meaning that African governments and key constituencies have the same aspirations towards good governance, liberal democratic rule, human rights, transparency, anti-corruption and so on; and (2) the merger of a political reform agenda with financial, technical and material assistance in one package. This has been the case for much aid over the last two decades. These premises are now under threat, both because the western hegemony is weakened and because recipients of aid can now separate political reforms from material and financial assistance, since new donors are willing to provide aid without a corresponding reform agenda. Using aid to reform the governance of recipients has therefore probably become less effective: it cannot be taken for granted that recipients want such reforms, and if they dont, there are alternative sources of aid not coupled with such objectives. Moreover, the process towards coordination and harmonization of donors expressed in the so-called Paris agenda is not as straightforward anymore. In spite of the fact that India signed the Busan declaration on aid effectiveness, it is not likely that India will be interested in a commitment to coordination and harmonization with Western donors. Not only is the declaration not binding, but it focuses less on coordination with other (OECD) donors than on other components of the Paris Agenda, including national ownership, where India can be said to perform better than most OECD countries. For African countries, the whole notion of ownership is better ensured through cooperation with India, for whom the concept is self-evident. Thus, Western insistence on ownership may be seen as hollow when contrasted to Indias rhetoric and practice. Third and related to the above, the language of western donors may be more problematic in the future. While most Western donors have for a long time presented aid relations as partnerships rather than as relations between donor and recipient, India explicitly rejects the terminology of donor and recipient, and presents its aid as non-conditional, in contrast to the (explicit or implicit) reform agendas in Western aid, which is seen as a form of conditionality. Beyond these general implications, there are a range of possible implications at the operational (programme) level. They must be considered on a country to country and case to case basis. To the extent that there is direct interference between Norwegian and Indian development policies in Africa, there may be synergies. Indian contributions
are often in the form of skills development, capital or infrastructure, which potentially impacts positively on practically all other development efforts, including those supported by Norway. Improvements in skills and infrastructure, including information technology in public sector, may serve to improve the effectiveness of Norwegian development cooperation with the same governments. Within health, cheap pharmaceutical products from India greatly improve efficiency in the health sector, as may also initiatives in telemedicine and possibly egovernance. The same is probably the case for many other sectors, where India may provide cheap but applicable technology. Low and small scale energy production is one area where there is a potential match between Norwegian development policies and Indian technology. There is also the possibility that Norwegian aid can improve the positive (and mitigate the negative) effects of other Indian engagements, such as investments, if Norways contributions are effective in contributing to improvement in policies and governance (for instance, Oil for Development or Taxation for Development) or strengthening of non-governmental organisations. Ideally, more systematic integration of Indian engagement with Norwegian and Western aid would be of mutual benefit, in particular towards increased effectiveness. The interest among western donors in triangular cooperation between OECD, non-OECD and recipient countries reflect this objective. While it is worthwhile to explore such opportunities, one should not expect too much. Triangular cooperation will not necessarily meet enthusiasm among non-OECD partners, who may consider such cooperation as simply re-establishing older hierarchical relations wherein [the non-OECD donor] plays a subordinate role to a traditional donor.80 Such reluctance is particularly likely if it appears as if OECD donors regard coordination as a means of making non-DAC countries better aligned to Western modalities of aid, perhaps with the Western partner seeing itself as the senior partner in the collaboration. At the project level, collaboration might nevertheless be welcomed as long as it is of mutual benefit and not seen as an attempt to integrate India in a Norwegian or western aid agenda. 3.2.1 Poverty alleviation One significant implication of Indian engagement in Africa is its contribution to economic growth, which is likely to reduce poverty. There are even indications that growth is more effective in reducing poverty
80 Rowlands, D: Emerging Donors in International Development Assistance: A Synthesis
Report. Norman Paterson School of International Affairs, Carleton University, 2008. Page 16.
60
in Africa than in other regions.81 Moreover, as it appears that IndiaAfrican economic cooperation is diverse and more labour intensive on the African side than Chinese-Africa cooperation,82 the lesser contributions (in volume) of Indian investments may still have relatively larger impact. Many of the business relations established with India also provide increased opportunities for African export to India. India is a growing and potentially huge market that is relatively easier accessible to African exporters in terms of the demands for quality, and existing relations (not least via the Indian diaspora) can potentially ease market access. Against this background, it is remarkable that western efforts to support African countries in increasing their export seem to have been oriented towards Europe, a much more demanding market. As with all economic activities and in particular in sectors given priority in India, including energy and mineral extraction there is the risk of harmful effects for the poor, including loss of access to land used for agriculture or housing, pollution, and a range of other effects. These effects will vary between countries, sectors and individual projects. However, in general terms, there is no basis for claims that Indian businesses are worse than African, Chinese, or other multinational enterprises in this regard. The tendency of Indian companies to use more local labour than in Chinese investments suggests that local benefits may be greater, but this is difficult to generalise. The large scale purchase of agricultural land represents a serious concern in terms of poverty alleviation, well known from the heated debate on land grabbing. So far it has been difficult to identify particular aspects of Indian as opposed to other countries engagement in this field, but Indias ambitions to acquire land for production of food for export clearly represent a potential threat to poor peasants livelihoods. An obvious implication for Norwegian policies for poverty reduction would be to try to support, when feasible, the positive impacts of Indian economic engagement, and support efforts to minimize the negative impacts of industrial activities, land grabbing or other economic activities. However, it is difficult to justify specific interventions with regard to India and Indian companies. Such measures are probably most effective if done regardless of the nationality of the enterprises involved. Therefore, the most natural way to maximise benefits and mitigate harm would be to support national authorities in the African host countries or, in some cases, through multilateral fora.
81 Sala-i-Martin, X. & Pinkovskiy, M., 2010. African Poverty is Falling...Much Faster than 82 Although this may be changing, as China appears to have increased its use of African
You Think! National Bureau of Economic Research Working Paper Series, No. 15775. labour. See Taylor, 2010.
3.2.2 Good governance, democracy and human rights As indicated above, although India shares most of the liberal, democratic ideals promoted by Western donors, it is not likely that India will take part in efforts to promote those ideals in Africa. Engaging directly in reform of the recipient country would be contradictory to the rationale of Indian engagement with Africa, including development assistance. The same goes for human rights. The Indian view is that responsibility for this lies with the African state in question. While one can certainly expect India to pay general respect to human rights, Indian engagement in Africa does not correspond with Western approaches to rights-based development; implying that all development interventions should be normatively based on human rights and that each agency involved has a direct responsibility towards human rights conventions. Consequently, it would not be natural for India to participate in Western initiatives to respond to human rights violations in African countries, for example, by withdrawing aid or investments. Rather, as the case of Sudan demonstrates, one might expect that Western disengagement simply gives India the opportunity to increase its engagement. In such cases Indias engagement might make it easier for African countries to avoid pressure from Western donors concerning human rights. By implication (although not part of a deliberate strategy), while India does not undermine human rights in Africa as such, it may undermine Western efforts to support human rights. Whether this is also undermining human rights in Africa depends, of course, on the potential for Western efforts to actually succeed. In any case, India is far less significant than China in this regard. With regard to civil society, seen as a key component in safeguarding both good governance and human rights, India shares the tradition of Western countries of strong, vibrant, autonomous and critical civil society organizations. There has been little reference to civil society in Indian development policies or other forms of more recent Indian official engagement, and compared to Western countries there has also been little interest among Indian NGOs for Africa. The potential in transferring some of the ideas and practices of Indian civil society to Africa seems under-utilised. Here lies a potential for some synergies, for instance through Norwegian support to Indian NGOs capable and willing to engage in Africa. Recommendations: Policies, strategies and practices in development cooperation with African countries should take into account that some of the assumptions behind western engagement in policy and
62
governance reform in Africa may have to change as a result of the emergence of India and other new donors. Synergies with Indian aid should be explored on a case to case basis. For example, in support to African governments in capacity development, one should consider utilizing Indian resources, including those made available to African government through ITED. In each particular sector, for instance health or energy, other synergies should be explored. Initiatives to coordinate and collaborate may be seen as attempts to integrate Indian aid into a Norwegian/western aid agenda and if so, it might not be welcomed. In most cases, however, the synergies do not depend on actual cooperation but follows from the nature of the different interventions. One should therefore avoid collaboration for the sake of collaboration. Promotion of full Indian membership in DAC is an ambitious strategy and is not likely to succeed. A more realistic option is to take initiatives to establish separate forums for donor coordination with a limited mandate of coordination and information sharing. Initiatives for triangular partnerships should be considered, but are only likely to succeed if not seen as an attempt to make India align to and support Norwegian or Western aid. In aid for trade and other development cooperation aiming at economic growth and export promotion, the current emphasis on export to European markets should be reconsidered, as India is in many ways a more promising export market for African countries and existing India-Africa business relations can be utilized. In Norwegian dialogue with business partners, it should be made clear that there is no preference for export to Europe or Norway. Possible mechanisms for Indian-African cooperation within civil society should be explored. One possible measure is further de-linking of support to civil society development from Norwegian NGOs, inviting Indian (and perhaps other Southern) NGOs to apply for funding from NORAD or embassies. In parallel, the already established schemes in Fredskorpset for South-South cooperation could be adapted and better marketed for better utilization by Indian NGOs to engage in Africa.
3.2.3 Fighting corruption India would officially express resistance against corruption, and it has expressed a positive attitude towards international initiatives relevant to the fight against corruption, such as the statement (with G8) to wel-
come the Extractive Industries Transparency Initiative (EITI).83 Beyond such loose and non-binding statements, there is little explicit interest in India to actively support a (Western) anti-corruption agenda in Africa. Given the diversity of Indian companies involved in Africa, with different forms of relations with and support from the government, Indian practices are likely to be diverse. Generally, we may except that the risk of corruption depends more on the nature of the business than on the nationality of the owner. As an implication for Norwegian development cooperation, the case of India provides little support for any particular focus on the nationality of enterprises or other agencies in the fight against corruption; whether Western, Indian or African. Norways support to the fight against corruption is most likely to be effective through measures that are not specific to the home/donor country. 3.2.4 Climate and the environment In terms of greenhouse gas emissions, it is difficult to see important differences between Indian and Norwegian companies: both are primarily engaged in the oil sector with some (and probably increasing) exposure to agribusiness with potentials for increased greenhouse gas emissions. Both countries would oppose taking the responsibility for climate effects of their own companies contributions to greenhouse gas emissions in other countries. Reflecting some differences in technology and governance, some differences may be expected between Norwegian and Indian companies with regard to energy efficiency in production. The emphasis in Indias aid to Africa on capacity building with a bias towards oil producing countries may involve some synergies with Norways Oil for Development initiative, although the policy obje ctives are different. On other environmental issues beyond climate issues, larger Norwegian companies have relatively high environmental standards, while India is more diverse with this regard. Still, the most relevant and effective approaches to mitigating harmful effects would probably not be specific to the nationality of the company. In terms of climate change mitigation (for instance REDD or carbon capture projects) there is little direct overlap, whether in terms of synergies or conflicts between India and Norways engagement.
83 Joint Statement by Energy Ministers of G8, The Peoples Republic of China, India and
The Republic of Korea. Aomori, Japan on 8 June 2008.
64
In the area of climate change adaptation, agriculture is among the most important sector in most African countries. Both India and Norway support the agricultural sectors through aid, with some overlapping approaches, including an emphasis on capacity building. There may be possibilities to cooperation here, for instance in mutual technical assistance and technology development. India also has strong interest in acquiring land for large scale agribusiness. If this had been oriented towards domestic consumption, it might have served adaptation to climate change by improving national food security. Larger, industrialized units with a relatively stronger capital base can more easily adapt to changes (provided that the availability of water and other resources are not too heavily affected). But since most Indian agribusiness is oriented towards Indian or foreign markets and not towards (host country) national markets, it is not expected to have significant impact on host countries food security. Recommendations: Indias membership in, or at least coordination with EITI, is an opportunity that should be explored; the joint statement by energy ministers of G8 with China, India and South Korea in 2008 expressing support for EITI provides some leverage with this regard.84 The Oil for Development Programme should be prepared for engagement with India, whether in the form of Indian aid to the oil sector or relevant state institutions, or Indian oil companies. This is most naturally done on a case-by-case (countryby-country) basis. Trilateral collaboration with India and African countries should be sought in relevant areas, as it has the potential to yield positive results if accepted and successful.
3.3
Business engagement in Africa
Indias engagement in Africa represents, of course, a challenge to Norwegian companies in Africa in terms of more competition. Indian companies, with a combination of low costs and applicable technology and supported by export credits or other government support that may function as subsidies may certainly represent a threat to Norwegian companies. On the other hand, there may be synergies, for instance in Indian agribusiness where Norwegian companies may see increased market for agricultural inputs, or perhaps in the energy sector where Indian engagement may provide opportunities upstream or downstream. In most cases competition those synergies should be ex84 Joint Statement by Energy Ministers of G8, The Peoples Republic of China, India and
The Republic of Korea. Aomori, Japan on 8 June 2008.
plored in each country (market) and cannot be predicted generally. It does not seem natural to engage in these issues on any general (policy) level. Promotion of Norwegian business interests in Africa is often expressed as subject to the integration of Norwegian businesses commercial interests with promotion of development policy interests 85. The same rationality is not seen in Indias business engagement and it is not natural for Norway to cooperate with India on such terms. However, any attempts at the country level to support better synergies between business interests and development policy objectives could, if successful, also contribute to improving the effects of Indian economic engagement. This is most naturally done via aid, and Oil for Development is a good example. Such efforts are probably most effective when independent from the nationality of companies, whether Norwegian or Indian. It is therefore difficult to see clear policy implications from Indian engagement for Norwegian engagement in business development in general. At the international level, Indias membership in Extractive Industries Transparency Initiative (EITI) and other initiatives should be promoted, but such efforts are not directly related to Africa except for the fact that most of the relevant industry projects are in Africa. Synergies between Norwegian and Indian bu sinesses should be considered on a case to case basis. This could be cooperation on climate issues, financed via CDM or similar mechanisms.
3.4
Multilateral cooperation
The most obvious geo-strategic interests that guide Indias engagement in Africa are generally, either corresponding with Norwegian interests (e.g. security and stability) or at least not in direct conflict (e.g. the ambitions for a permanent seat in the UN Security Council). The two countries share an interest in investing in the multilateral system, although the actual priorities differ. Both countries will see strategic interests in improving relations with many African countries (and UN seats). Here is a potential conflict of interest, depending on issues. The two countries also to some degree draw legitimacy from a similar source, which may potentially lead to competition on the international scene between India and Norway. India may present itself as representing the poor countries, something that may increase Indian legitimacy vis--vis many other countries, rich and poor. India is better positioned than China in this regard, not
85 This is, for instance, repeatedly stated by Norwegian ministers both for development and
trade.
66
only because it has more poverty within its own territory, but also because India is a democracy, which helps increase legitimacy in some forums. Norway sometimes draws legitimacy from the same source in seeking to represent the interests and (perceived) views of poor countries in, for instance, UN and the Bretton Woods institutions. If conflicts arise between Indias and Norways position with this regard, India would obviously have more credibility. With regard to Norwegian strategies vis--vis Africa, the main implication is that coordination should be sought with India whenever relevant. This may be on climate change, security including peace keeping operations, maritime security and other issues. At present, the AU is engaged in developing an integrated strategic management plan for maritime security for the continent, and this represents an area for further collaboration and exchange of information. There is little identifiable interest in India to integrate its aid policy with that of OECD DAC; on the contrary, India explicitly presents itself as an alternative to western aid and draws legitimacy as such. It should therefore not be expected that India can or will join the club of OECD donors in its Africa engagement; it will remain a separate and independent player within aid. Recommendations: India will not necessarily appreciate and accept invitations to join already established multilateral forums that Norway use in its Africa strategies, for instance OECD DAC. Nonetheless, Norway could encourage India to engage more with such forums, primarily to share information, experiences and views, and not necessarily to align to those. Dialogue with India should be sought regarding Norways role in promoting African countries interests in multilateral forums. Norway should be prepared for a kind of competition in terms of enjoying the privilege of being seen as a representative of poor countries interests, including Africa. Dialogue with India should be sought in the area of security and peace operations, where Indias experience and interests are very valuable. The risk (albeit limited) of reduced Indian engagement in peacekeeping operations should be taken seriously, due to the heavy dependence on Indian contributions. This could involve diplomatic overtures, negotiations towards mutually acceptable cooperation agreements, raised as a memorandum of understanding between India and a European country.
Another potential area of trilateral cooperation may be in maritime security. Working on a bilateral basis or via the Southern African Development Community peace and security structures with India (which has clear and vested interests in maritime security in the region) would be a possible avenue for collaboration. This may mean that India and a third country form a partnership underpinned by a legal instrument negotiated inter se before jointly approaching either individual countries or the SADC. This collaboration could also involve research.

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India in Africa

Implications for Norwegian Foreign and Development Policies

Indias relations with Africa

India in Africa: forms of engagement

Implications for Africa

India in Africa. Implications for Norwegian Foreign and Development Policies 9

Implications for Norway

India in Africa. Implications for Norwegian Foreign and Development Policies 11

Indias foreign policy

India in Africa. Implications for Norwegian Foreign and Development Policies 15

1.3. Indias Africa policy

India in Africa. Implications for Norwegian Foreign and Development Policies 17

1.4. Sectoral overview of current engagement

India in Africa. Implications for Norwegian Foreign and Development Policies 19

Bank, Washington, 2007, p. 83.

India in Africa. Implications for Norwegian Foreign and Development Policies 21

India in Africa. Implications for Norwegian Foreign and Development Policies 23

PC (eds). Routledge. New York. 2004, p199.

India in Africa. Implications for Norwegian Foreign and Development Policies 25

India in Africa. Implications for Norwegian Foreign and Development Policies 27

Building Scholarship, http://www.fundsforngos.org/scholarships-2/2011-africaindiacapacity-building-scholarship/

India in Africa. Implications for Norwegian Foreign and Development Policies 29

India in Africa. Implications for Norwegian Foreign and Development Policies 31

1.5. Country case studies

India in Africa. Implications for Norwegian Foreign and Development Policies 33

Tragedy of Endowment, Rochester: University of Rochester Press, 2007.

India in Africa. Implications for Norwegian Foreign and Development Policies 35

http://www.africaneconomicoutlook.org/en/countries/east-africa/sudan/ Quarterly, Volume 28, Issue 5, 2007, pp 997-1016

India in Africa. Implications for Norwegian Foreign and Development Policies 37

India in Africa. Implications for Norwegian Foreign and Development Policies 39

2. African responses and implications for Africa

Differences between India and other powers

India in Africa. Implications for Norwegian Foreign and Development Policies 43

Implications for economic growth

Bulletin, 37(1), 2006, 23-32.

India in Africa. Implications for Norwegian Foreign and Development Policies 45

India in Africa. Implications for Norwegian Foreign and Development Policies 47

Implications in specific policy areas

India in Africa. Implications for Norwegian Foreign and Development Policies 49

risk of exposure at home or, in the case of companies, in capital markets.

India in Africa. Implications for Norwegian Foreign and Development Policies 51

India in Africa. Implications for Norwegian Foreign and Development Policies 53

3. Implications for Norway

General implications: reconsidering assumptions

India in Africa. Implications for Norwegian Foreign and Development Policies 57

challenge to the development paradigm? Third World Quarterly, vol 30, no 6.

India in Africa. Implications for Norwegian Foreign and Development Policies 59

India in Africa. Implications for Norwegian Foreign and Development Policies 61

India in Africa. Implications for Norwegian Foreign and Development Policies 63

The Republic of Korea. Aomori, Japan on 8 June 2008.

Business engagement in Africa

The Republic of Korea. Aomori, Japan on 8 June 2008.

India in Africa. Implications for Norwegian Foreign and Development Policies 65

India in Africa. Implications for Norwegian Foreign and Development Policies 67

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