The Contribution of India to the African Development

Marcin Nowikmarcin_nowik@interia.pl

14/06/2012, Pecs

Presentation outline

1. India as an emerging donor, what’s in it for Africa?(Instruments, figures and examples)

3. Motives & Rethoric4. Added value5. Critisism

How contemporary India contribute to African development?

1. Trade2. Investment3. Development cooperation

India as an emerging donor

Brazil RSA India Chinaassistance USD m 356 433 547 3 136

assistance % GNI 0,03 0,18 0,05 0,09

• 9,2 bln inr in 2000 up to 29,1 bln inr in 2010,(excluding lines of credit)

• 22% average increase of Indian aid for Africa in the period of 1998-2008

Place of Africa in overall Indian assistance

EXIM bank Lines of credit Export subsidies and

guarantees• Tied aid

For Sub-saharan Africa: 44,15% in 2011

MoEA of India Technical assistance • ITEC• SCAAP In kind, projects, grants, GBS

For Sub-saharian Africa: 4,85% in 2011-12 union budget

144 190 325558

567

1934

2939

Latin America and CarribbeanCISWest AsiaSE Asia, Far East & PacificNorth AfricaSouth AsiaSub-saharan Africa

Active Lines of Credit as on March 31, 2011 (US$ million)

Source: Exim Bank of India

Operative LOC examples:Receipient

Governmant of…Amount of Credit

USD m Purpose Tenor

Zambia 10.00 General purpose Up to 5 years

Angola 40.00 Railway rehabilitation Up to 20 years

Senegal 17.87 Supply of buses and spares from India Up to 20 years

Mali 27.00Rural electrification and setting up of agro machinery and tractor assembly plant in Mali.

Up to 20 years

Djibouti 10.00 Cement plant project Up to 10 years

Ghana 60.00 Rural electrification project and construction of Presidential Office Up to 20 years

Guinea Bissau 25.00Electricity project, mango juice and tomato paste processing unit and purchase of tractors and water pumps

Up to 20 years

Senegal 11.00 Women poverty alleviation programme and acquisition of vehicles from India Up to 20 years

India’s aid to African countries: grants and loans (Rupees million)

1998-99

1999-00

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

2009-10

2010-11

20011-120

200

400

600

800

1000

1200

1400

1600

Source: Union budget, 1998-2012

ITEC, SCAAP + ICCRThe Indian Technical and Economic Cooperation Programme (since 1964, 2 bln USD), slots

Components: Training (civilian and defence) in India of nominees from ITEC

partner countries; Projects and project related activities; Deputation of Indian experts abroad; Study Tours; Donation of equipment at the request of ITEC partner countries; Aid for Disaster Relief.

TEAM- 9

• Techno-Economic Approach for Africa- India Movement• Burkina Faso, Chad, Equatorial Guinea, Ghana, Guinea-

Bissau, Ivory Coast, Mali and Senegal + India• 500 USD million• Transfer of technologies and investment in: agriculture,

small- scale industries, pharmaceuticals and healthcare, IT, rural electrification and transportation.

Pan-African e-Network Project (2007-2012)

Fiber-optic and wireless network 47-countries have already joined the project Provide connectivity among the Heads of State of the

African Union Distance education and tele-medicine Cost US$ 125 million

Consolidation effords Bureaucracy Corrupition Misslocation Lack of multiannual country/region strategy

India Development Initiative (2003)Indian Agency for Partnership in Development (2011)

What motives stand behind Indian assistance for Africa?

Taking into consideration… India is home to roughly one-third of all poor people in

the world. It also has a higher proportion of its population living on less than $2 per day than Sub-Saharan Africa.

Eight Indian states account for more poor people than in the 26 poorest African countries combined (2010)

The prevalence of underweight children in India is among the highest in the world, and is nearly double that of Sub-Saharan Africa (2000)

Two periods of Indian contribution

I. Since country’s independence up to late 1980s- Ideological motives

II. Since economic liberalisation of 1991 up to nowadays, intensified in the first decade of 21st century - Pragmatic motives: commercial and geopolitical

What are the major motives to engage in Africa?

Energy security• Third energy consumer up to 2030• 0,4% global crude oil deposits• Currently 24 - 30% Indian oil imports come from Africa

• Aid/infrastructure-for-oil strategy• Investment in Sudan, Ivory Coast, Lybia, Nigeria, Gabon,

Angola in oil extraction, processing and transportation • Aid component: eg. ONGC, has invested US$10 million

to build a railroad in Nigeria (2006)

Access to mineral resourcesVedanta Resources, 750 m USD, Konkola, Zambia (copper)Arcelor-Mittal, 900 mln USD, Liberia (iron ore)

Access to markets 7,7% of foreign trade of India is with Africa (3% in case

of China, 2010) Total value of commodities exchange: 42 bln usd, 2010-

11), 10 bln dificit Dynamic increase (in 1991 it was less than 1 bln) Indian diaspora in South-East Africa Market smilarities (language, consumer preferences…)

Kirloskar Brothers (agriculture and industrial devices) Tata Group and Mahindra & Mahindra (automotive

industry) Ranbaxy Laboratories (pharmaceuticals) RITES and IRCON (railways) Bharati Airtel (telecomunication, Zain accisition, 10.7

bln USD, 42 m subscribers in 15 African countries)

Focus Africa Programme (2002) Supply low-cost, appropriate for developing country

Political motives

• Diplomatic influence• UN security council pernament seat• Competition with China

Rethoric of Indian assistance

• Rooted deeply in Cold War period (NAM),• Values: equality, true partnership, long-standing

solidarity, mutual benefit and respect, more inclusive, people oriented strategy.

• Historical and cultural ties are underlined: pre-colonial trade, shared colonial history, Gandhi and Nehru support for Africa liberation.

Added value of Indian engagement in Africa

- India’s own experience in democratic development and poverty alleviation;

- Low cost and appropriate technology provided;- Comparative advantages in: pharmaceuticals, IT,

education and training, vehicles, rural electrification, railways;

- Competitive profit seeking operations of Indian MNCs.- Use of local components, workforce, materials in

India’s FDI in Africa.

Critisim

- Aid an instrument to foster own commercial and geopolitical interests

- Indian policy towards Africa aims to develop India- Lack of equallity and true partnership- Indian investments harmful or exploitative- Indian exports competitive to local production- Inaccurate picture of long-lasting friendship

Thank you