Business Daily (Nairobi)

19 May 2011

Africa: Aid or Trade? That is the Question for India-Africa Talks

analysis

Compared to the buzz that a similar Chinese meeting would generate, the run-up to the May 20-25 India-Africa summit has been decidedly subtler, even as reports out of New Delhi suggest that further trade and investment trinkets will be dangled at the continent.

The first Indo-Africa summit in 2008 saw $5.4 billion in credit and $500m worth of grants announced, while a follow up action plan has since then sought to deliver on the promises given in the Indian capital.

Details remain scarce, but sources indicate that among the new initiatives to be unwrapped would be a $250 million aid package to African Union members, with five Indian ministers already touring the continent to set the stage for this.

Some 16 heads of state and government are expected to attend the tri-annual gathering, which will be headlined by Indian Prime Minister Manmohan Singh, in addition to an expected 45 African Foreign ministers.

Comparisons with neighbouring China are inevitable, but given Beijing's vast foreign reserves and state-backed entrepreneurial model, observers say India's approach will continue to be that of "soft-power"--an emphasis on trade and skills transfer.

"The main agenda is likely to concentrate on an all-round increase in India's engagement with Africa," Dr Satish Mishra, a senior fellow at the New Delhi-based Observer Research Foundation think-tank told this writer.

"Trade between India and Africa is bound to increase dramatically in the coming years because both the regions are registering impressive economic growth. The aim should also be to shift some of the manufacturing to Africa," he added.

India's economy has been chugging around bullishly, likely registering 8.6 per cent growth in the last fiscal year, while sub-Saharan Africa is expected to grow 5.5 per cent in the next year.

This projection portends good news for commerce. So far, there has been about $45 billion worth of bilateral trade between the two regions and a further $45 billion in Indian investments spread out over the continent.

India expects to increase two-way trade to $75 billion by 2015, and has ramped up its engagement with the continent, determined to replicate the success of the last decade.

India's trade with fellow BRICS member South Africa alone is targeted to bring in $15 billion by 2012, a revision after the realisation that they were on course to meet the $12 billion target earlier than envisaged.

The two countries are already part of an India-Brazil-South Africa tripartite trade grouping, IBSA.

A March India-Africa conclave in New Delhi, the biggest yet in what has so far turned into an annual series, saw some 650 delegates haggle over billions of dollars in potential new deals.

Some $18.3 billion worth of deals were discussed on a record 204 projects. In 2010 the conclave had discussed deals worth $10 billion.

The status of the 2008 pledges is still unclear, but the Indian Government says sites for proposed institutes  - a key cooperation plank - such as a diamond centre in Botswana and one centering on foreign trade in Uganda, have already been identified and negotiations entered into.

Tariff relaxation

India also opened doors for African exports to its markets, a tariff relaxation that it says 19 countries have taken advantage of so far.

Given its sizeable diaspora, it is also perhaps apt that India has chosen to hold the summit on African soil for the first time.

There are an estimated two to three million persons of Indian origin on the continent, and New Delhi has been seeking to tap them to aid its re-advance on the continent, even if their exact role in what has so far been a government-to-government affair remains hazy.

Given the success of Indian diaspora in North America, analysts say this is a rich resource if tapped.

"However, India on its part has not been able to convert the two million-strong diaspora in Africa into a resource," said Dr Suresh Kumar, the head of the department of Africa Studies at the University of Delhi.

"Africa, while trying to engage its own diaspora abroad, has not also been very forthcoming in engaging diasporas of other countries, including India diasporas as a strategic resource," he added.

A strong diaspora and historical links are something that China cannot lay claim to, even as bilateral trade and investment roared past $110 billion.

But what it offers, a no-governance strings-attached relationship, has so far proved more than able to make up for this.

As Premier Manmohan Singh jets in next week, he would then seem to have his work cut out if he is to sustain the interest of a long-time, if often abandoned, partner in the face of China's amorous advances.

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