Indian Economy: Growth -3

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India plays down race for Africa's assets

Why does India not admit that a country with the geographical and population sizes, it definitely will look for assets wherever it can find?

<!--QuoteBegin-->QUOTE<!--QuoteEBegin-->India plays down race for Africa’s assets

By Alec Russell

Published: June 6 2007 22:16 | Last updated: June 6 2007 22:16

India’s minister with special responsibility for Africa has hailed a new era of Indian engagement and investment in the continent but firmly rejected talk of a race with China for its resources.

Indian traders often had an uneasy time in post-colonial Africa. But Anand Sharma, the minister of state for external affairs, told the Financial Times that India’s relationship with Africa had undergone a “major shift”.

“It is no longer a case of small traders coming out of India. It is Indian corporate giants which are coming, and Indian multinationals.”

While India had close diplomatic ties with Africa in the second half of the last century, it scaled down the relationship after the cold war. But trade figures point to a reawakening of interest.

In 1990 trade between India and Africa amounted to $967m (£485m). Just over a year ago that figure had increased to $9.6bn. In that period Africa’s share of India’s exports has more than tripled, to 6.8 per cent.

India has committed $200m to Nepad, the African development programme, $250m to the main development bank of the west African regional grouping and $500m of credit to help Indian companies invest in development projects.

There has been speculation that India and China are engaged in a scramble for Africa’s assets. Chinese state companies have outbid Indian companies on several large contracts, in particular for stakes in the oil fields of Nigeria and Angola.

But Mr Sharma played down the defeats, insisting India was not trying to compete with China. He said India was investing in a range of sectors, including pharmaceuticals.

He claimed India’s engagement is beneficial to the continent, citing investments in agricultural technology that are enabling countries to feed themselves. “Our companies are ethically very correct, they invest money, they generate capital and they generate employment.”

But a report into allegations of gold and weapons smuggling by United Nat­ions peacekeepers in Congo suggested not all Indian businessmen operated by such principles. It alleged that Indian traders from Kenya were middlemen in the scandal.

Analysts charting India’s courtship of Africa back its contention that its interests are broader than those of the Chinese, whose involvement has come under intense scrutiny. While many in Africa have welcomed Beijing’s offers of cheap loans and vast infrastructure projects, human rights groups argue it is over-ready to engage with regimes such as Sudan to feed its booming economy. There has also been concern that Chinese state companies tend to bring in their own workforce, and fear they could stifle local manufacturing.

Philip Alves, an economist at South Africa’s Institute of International Affairs, said as long as India accepted it would struggle to compete with China’s state-backed companies for Africa’s minerals, there need not be a “clash on the horizon”.

“The character of the Indian investment is different,” he said. “India is not as much of a manufacturing superpower as China. And China is not active in the service industries, in health, education, pharmaceuticals and telecommunications. There is so much scope for investment in Africa. There is plenty of room for everyone.”<!--QuoteEnd--><!--QuoteEEnd-->