054_Global12_InFocus_IndiainAfrica_V6

Global issue 12

In FocusIndia in Africa  African Development Bank Group, and in million tonnes in 2004–05 to over 35 mil- needs to step up its presence on the conti- 2011 it had risen to $45 billion. By 2014, lion tons in 2010–11, according to reports. nent.” The state appears to be responding. bilateral trade is anticipated to climb to India is also increasingly interested in oil In the wake of a high-level visit led by Indi- more than $75 billion. exploration on the continent. Exploration an Prime Minister Dr Manmohan Singh, a These trade trends can be clearly traced and production firm Cairn India, for exam- number of important development, invest- on a national as well as a continental level. ple, made its first overseas acquisition in ment and trade deals have been signed. Economic relations between South Africa August, when it purchased a 60 percent in- According to Dr Vines, China’s domi- and India, for example, have grown many- terest in a gas discovery block on the South nance in several areas in Africa has prompt- fold since diplomatic relations between African west coast. Indian oil firms have ed India to move into less saturated eco- the two countries were first properly es- also bought into oil exploration projects in nomic areas. “India is competing in niche tablished in 1993. Bilateral trade between Nigeria and Libya. areas, in which the Chinese are not so in- 2003–04 and 2008–09 alone increased Africa’s nuclear energy potential is also terested, such as the diamond sector. It has threefold, from $2.5 billion to $7.5 billion. driving India’s interest in the region. “Ura- focused more so than China in areas like In January 2011, following a visit by India’s nium mining, essential to power India’s agriculture, ICT and medicine. India has commerce and industry minister, Anand nuclear energy sector, is another area that avoided direct competition.” Sharma, to South Africa, an unprecedented has elicited great interest from Indian com- Indian investment in Africa is also new bilateral trade target of $15 billion by panies,” notes the CII. India is exploring more private-led than China’s, accord- 2014 was agreed upon. uranium mining opportunities in Niger and ing to experts. “Qualitatively, in contrast At present, Africa enjoys a positive trade Namibia. to the Chinese, who largely concentrate balance with the subcontinent. India’s im- on state-to-state deals, extractive indus- ports from Africa reached $18.8 billion in tries and infrastructure development, the 2009 while exports from India to Africa Exports from Africa are Indian presence in Africa is largely com- were $13.2 billion in the same year, ac- typically raw materials, mercially driven, private and facilitated by cording to the African Development Bank. the Export-Import Bank of India and the Exports from Africa are typically raw ma- including oil and minerals, Confederation of Indian Industry,” says Raj terials, including oil and minerals, while Verma, a PhD candidate specialising in In- exports from India tend to be manufactured while exports from India dia–Africa relations at the London School and finished goods, including transport tend to be manufactured of Economics. equipment, industrial machinery and phar- Some studies suggest that India has per- maceuticals. Nigeria, South Africa, Kenya and finished goods, such as formed better than China in terms of em- nations for Indian products in Sub-Saharan industrial machinery and ventures. Dr Vines says that “the extentploying local Africans for their business- and Tanzania are the most important desti Africa. pharmaceuticals to which this is true varies, and it depends Oil is a central commodity shaping the on the company and the sector, but on the economic relationship between Africa and whole it seems to be a trend”. India and, therefore, merits special atten- Africa is an equally important source for The discussion also broadens out to tion. Mining and hydrocarbons are key India of precious metals and gemstones, whether India’s engagement is beneficial drivers of Indian engagement in Africa. especially gold and diamonds. India is the in terms of remedying Africa’s historic According to the Confederation of Indian world’s major jewellery maker – in 2008– dependency on Western donors and condi- Industry (CII), based in South Africa, India 09, the gems and jewellery sector consti- tions, which tie the hands of African poli- is the world’s fifth largest consumer of oil tuted 13 percent of India’s total exports. cy-makers. “The engagement of emerging and will be in third place by 2030. As In- Furthermore, India is the world’s leading economies such as India may allow African dia’s population continues to rise and be- processor of diamonds, accounting for 85 economies to bypass,” says Verma. Apart come wealthier, energy consumption levels percent in terms of volume on the total from this, the Indian tie-up can benefit Af- are predicted to double over the next two world market. Gold in particular defines In- rica in very particular and unique ways. decades. dia’s economic relations with South Africa, One of those areas is agribusiness. India In addition, because India lacks oil re- the latter being the world’s leading supplier has particular knowledge of a range of ar- serves, it is highly dependent on foreign of gold. eas that Africa would benefit from tapping producers. Currently, India gets over 70 The trend of Indian investment in Af- into to help address its food security chal- percent of its oil from the Middle East, with rica is also positive. In South Africa, for lenges, including small-farm mechanisa- Saudi Arabia followed by Iran being their example, cumulative investment between tion. Indian investment in agriculture also most important suppliers. However, Delhi January 1994 and January 2011 was around has the potential to directly boost produc- is now eager to diversify its portfolio of $212 million, and 102 Indian firms are now tion. In June, Delhi launched a three-year crude energy suppliers, mainly by boosting in operation in the country. Overall, In- project in West Africa to help boost the the amount of oil it purchases from African dian investment in Africa is believed to be region’s declining cotton industry. Compa- countries. To this end, India has been work- around $33 billion. nies like Olam International (headquartered ing hard to nurture its relations with major Dr Alex Vines, who heads the Africa in Singapore but essentially an Indian firm) oil-producing African countries, including Programme at Chatham House, believes have invested heavily in countries like Ga- Nigeria, Ghana, Equatorial Guinea, Côte that “we are seeing the beginning of an bon where they have vertically integrated d’Ivoire and Sudan. India also imports coal Indian re-engagement with Africa, which their activities from planting and harvest- from South Africa. India’s imports of crude is private-sector driven. Indian businesses ing to marketing of finished products. In- oil from Africa have increased – from 22 have been telling India’s foreign ministry it dian investors have also articulated their 54 lwww.global-briefing.org fourth quarter 2012global


Global issue 12
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