Indian private investment is largely not government led or government subsidized but governed by the logic of commercial opportunities. And yet they are able to make a serious contribution to development. I never tired of telling my African interlocutors about the magnificent work being done by Indian entrepreneurs who have introduced low-cost Kirloskar irrigation pump sets in West Africa. These pump sets have made a significant impact in increasing the food production capacities of some African countries, particularly Senegal. It is a good example of appropriate technological and investment intervention, something which serves the felt needs of African communities without requiring them to make huge investments. This can be a good example for others to emulate.
Indian investors are respected across Africa because they are reputed to be effective in the local environment, to ensure the highest employment generation, to not be reticent on transfer of technology and to be quite willing to live among Africans and employ African managers. Their entrepreneurship and business skills — attributes for which the Indian private sector has long been well known — have been buttressed by India’s growing economic clout, which has added to the respect with which they are received. It helps, too, that they leave behind trained Africans well equipped to use the newly created assets.
The combined net flows from India to Africa emerging from governmental credits and private-sector investment, therefore, form another part of our sustainable model of cooperation with Africa, which has in turn given a huge incentive to many Indian companies to seek opportunities in Africa. Cumulative Indian investments in Africa rose to $90 billion in 2010 and are likely to grow significantly in the years ahead. Indian investment in Africa is contributing to the fulfilment of domestic demand in African countries, intra-African trade and foreign exchange earnings through exports. The pharmaceutical sector is a good example. Indian pharmaceutical companies like Ranbaxy and Cipla are not just supplying low-cost generic drugs, particularly anti-retroviral drugs to combat AIDS, across the African continent; many also have production facilities in Africa. The Indian pharmaceutical industry has established such a significant reputation for providing Africans with urgently needed health care, at affordable prices, that Chinese knock-offs of Indian drugs have been found smuggled into several African countries, with fake Indian packaging. If imitation is the best form of flattery, counterfeiting is the ultimate confirmation of the indispensable role Indian pharma is playing in Africa.
Indian investment in agriculture and horticulture, on the other hand, contributes mainly to exports, with Indian firms increasingly attracted by the large tracts of fertile land available in many African countries, especially in regions blessed with abundant rainfall and sunshine. The idea that Africa could become a breadbasket for India, as Indian domestic demand outstrips the country’s capacity to produce the food it needs, has begun to make Africa an important element in Indian thinking about long-term food security.
This has led, perhaps inevitably, to what Ethiopian Prime Minister Meles Zenawi described as ‘ill-informed and even ill-intentioned loose talk’ about Indian farming companies conducting ‘land-grabbing’ in his country, charges that had indeed been aired in the Indian press. When I met Zenawi in 2010, he was quite open about the fact that Ethiopia has 3 million hectares of unutilized land, which it intended to lease out to foreign agricultural enterprises. An Indian investor, Krishna Karaturi, had already made a reputation for himself by growing roses in Ethiopia for export to Europe, and in 2011 he was awarded a lease of 300,000 hectares in the Gambela province to produce maize. ‘We want to develop our land to feed ourselves rather than admire the beauty of fallow fields while we starve,’ Zenawi declared, adding, ‘I want to reassure Indian companies that they are welcome here. We want them to come and farm what is virgin land.’ Similar offers from Mozambique, Liberia and other countries indicate a productive future for Indian investment in agriculture, horticulture and floriculture in Africa.
All these investment flows are matched by a multi-tiered cooperative partnership which involves, almost uniquely, a major engagement with pan-African institutions, notably the African Union (AU). While India has had successful bilateral partnerships with most African countries over decades, its willingness to inject multilateralism into its relations with Africa has been broadly seen as reflecting a more complete partnership and greater respect for Africa than other partners offer. A substantial amount of the funds committed for capacity building in Africa is being channelled through the AU in a joint action plan involving shared decision-making on the allocation of resources. In West Africa, India has devised a regional initiative called the Team-9 framework for cooperation, which has brought in a regional focus for its development projects and concessional loans; African countries in the region have been clamouring to be included. This co-equal multilateralism is an important feature of India’s new model of engagement with Africa.
India’s trade with Africa has been growing rapidly. Two-way trade rose from some $5.5 billion in 2001–02 to over $46 billion in 2010–11, which represents an almost ninefold increase in as many years. There is even talk of aiming for $70 billion by 2015. Even so, the true potential is much greater and the spread and the composition of the trade have to be substantially diversified. With a view to increasing trade flows between India and Africa, India has also extended a duty-free tariff preferential scheme for the fifty least developed countries, thirty-four of which are in Africa. This covers 94 per cent of India’s total tariff lines and provides preferential market access on tariff lines for 92.5 per cent of the global exports of all least developed countries.
India and Africa are also engaging closely on trade policy; there has been systematic coordination with African countries on the Doha Round of negotiations, especially on agriculture. India has been particularly close to South Africa in concerting positions on international issues of global interest, a process that has been accentuated with the establishment of IBSA, which launched the India — Brazil — South Africa Dialogue Forum, a gathering of three large developing countries aiming to reify South— South cooperation. IBSA negotiated successfully together in the Doha Round and at other trade talks, and the three countries meet regularly, though insufficient progress has been made on concluding trilateral trade agreements among themselves. IBSA has set up its own cooperation fund, launching initial projects in Equatorial Guinea and Haiti, though the need for individual country branding of aid projects may still limit the possibilities for IBSA development projects. India also supported the inclusion of South Africa in the BRIC grouping, thus making that Goldman Sachs creation into ‘BRICS’. But so far both BRICS and IBSA have been forums for meetings rather than incipient international organizations; no institutional structures have been created for either group.