Visit by prime minister Manmohan Singh to an India-Africa Forum Summit in Addis Ababa steps up fight with China for bigger market share as India announces a $5bn line of credit for development projects in African nations.
India bids for more trade with African nations
NEW DELHI // Prime minister Manmohan Singh attended an India-Africa Forum Summit in Addis Ababa on Tuesday, at which India announced a US$5 billion (Dh18.3bn) line of credit for development projects in various African nations.
Another $1bn was earmarked for training institutions and for a railway line in Ethiopia.
"Africa possesses all the prerequisites to become a major growth pole of the world," Mr Singh said in his address.
India's courting of African countries comes in part because of its ambition to reform the United Nations Security Council and become a permanent member there.
In any reform process, the votes of individual member countries of the UN will be vital.
One of the resolutions of the summit, which was attended by 15 African nations, states that "member states should exert utmost effort on the UNSC reform [process] during the current session of the UN General Assembly".
But India's interest in Africa is also commercially strategic, shaped strongly by China's dramatically increased engagement in the continent over the last decade.
"The greatest opportunities for returns on investment today lie in Africa," said Shipra Tripathi, the head of the Africa unit of the independent Confederation of Indian Industry.
In the 1990s, according to figures from the Almanac of China's Foreign Economic Relations and Trade, China's direct investment in Africa averaged $38 million (Dh140m) a year. In 2009, that figure stood at $9.3bn and China became Africa's biggest trading partner, with their trade valued at $90bn in 2009 and at $150bn in 2010.
Much of this investment is in the form of loans backed by the natural resources of African countries, as Deborah Brautigam, an international development scholar, pointed out last year in Foreign Affairs.
Offered oil, natural gas or metals as security, China has built roads, railways, hospitals, water infrastructure and schools.
In comparison, India has lagged, and it is now trying to make up the deficit.
Anand Sharma, India's commerce and industry minister, said in Addis Ababa this week that India's trade with Africa is valued at $46bn and is expected to touch $70bn by 2015.
Ruchita Beri, an Africa expert at the New Delhi-based Institute for Defence Studies and Analysis, said that despite ties dating back centuries to merchants traversing the Indian Ocean between India and the east coast of Africa, China had swiftly gained the upper hand on the continent.
"China is only now trying to build the sort of engagement with Africa that India already has," she said.
Ms Tripathi said that obstacles still remain in expanding India's commercial ties with Africa.
"Security is a challenge, and we need a more robust banking system and financial stability," she said. "Unlike China, we also have no strategy for natural resources in Africa."
But she emphasised that India's approach into Africa - involving their citizens deeply - would be the more rewarding one.
"The Chinese don't employ local people, and they use no local materials," which, she said, was a source of resentment for Africans looking for employment.
"We are entering in a less ad hoc and more sustainable mode."