19 May 2014

Africa: Narendra Modi's Election in India Is Good News for Africa


Washington, DC — The election of Narendra Modi of the Bharatiya Janata Party, or BJP, as India's next prime minister has global ramifications. Until now, Modi has been essentially persona non grata in the United States for his alleged role in Hindu nationalist riots in which hundreds were killed in 2002. Now Modi heads the world's second most populous nation and the world's largest democracy, and it would be in America's highest interest that President Obama and Modi meet soon in the United States. The two nations have too much in common to remain apart. Indeed, President Obama congratulated the newly elected prime minister and is expected to invite him to Washington soon.

Much has been written about Modi as the leader of the Hindu Nationalist Party, but it was not his religious nationalism that moved the electorate. Prominent Muslim leaders also supported Modi because the issue in India is the economy: jobs, employment and a growing competition with China. Modi campaigned on moderation and tolerance, and ignored the more militant right wing of his own party. The thrust of his campaign was almost entirely on the need for economic reform in India.

The Congress Party, led by the Gandhi family, had ruled for too many years over a stagnant economy, with a population growing younger and with more expectations. The party had no new ideas and represented a status quo that is no longer acceptable to most in India. More than 537 million voters turned out at the polls, representing two-thirds of all eligible voters.

Modi has promised to make India more competitive in the global economy, and domestically he has promised to create 10 million jobs and invest in infrastructure. According to The Guardian, international investors have poured more than $16 billion into the Indian economy over the past six months in anticipation of a Modi victory. Modi clearly will need to work with the Indian private sector far more closely than the Congress Party ever did. And Africa will play an important role in his international economic plans.

The Federation of India Chambers of Commerce International, the world's largest national Chamber of Commerce, had for many years been unhappy with the lack of cooperation between the government and the private sector, and most of India's businesses are believed to have also backed Modi's election bid. Rajan Bharti Mittal, one of the industrial giants of India, was recently elected as the organization's president, with an expressed desire to find ways that the private sector and the government of India can work more closely together. He especially wants the Indian government to support greater investment and cooperation in Africa, believing that Africa offers significant opportunities for the Indian economy. His company has significant investments in Africa already, especially in the mining sector, a sector important to India's future infrastructure.

Although Modi is said to have a good relationship with China, he also realizes that China has moved its economy beyond India and that China represents major competition for the future in Asia. China has significant investments in India, and those will no doubt be scrutinized more closely domestically, but if India is to turn towards a more active investment structure internationally, Africa will be a primary target.

There already is a significant Indian diaspora in Africa that will be useful to Modi.

The Indian government will also need to develop a partnership with Federation of India Chambers of Commerce International if it is to be more successful in Africa. Mittal is more than ready for such an alliance. This may bode well for the United States in Africa as well.

Mittal was educated in the United States and his company has joint ventures with many U.S. multinationals including Wal-Mart, AXA and Del Monte. Wal-Mart's entry into India, deliberately stalled by the previous government, will now be much easier, and with its entry will be more jobs for Indians. Such alliances between Indian and U.S. companies will no doubt be useful to the economies of the USA and India, as well as for Africans open to more international joint ventures. Look for the new prime minister to reach out to Africa very early in his administration.

Stephen Hayes is president and CEO of the Corporate Council on Africa. This post was first published in his blog for U.S. News & World Report.

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