- Why in News?
- What is Asia Africa Growth Corridor?
- Where did the idea of AAGC originate?
- Visions and institutions for AAGC
- Key pillars of AAGC
- Focal points of AAGC
- Asia-Africa connections
- How will Japan and India contribute to the project?
- Which were the other countries consulted for the Asia Africa Growth Corridor? Was China part of the process?
- Response of African Countries
- Is AAGC a counter to OBOR?
- Why is Africa lucrative?
- What kind of presence do the Chinese have across the African continent?
- India in Africa
- Significance/Benefits of the AAGC
- Conclusion and Way forward for AAGC
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Why in News?
- Recently, a Chinese newspaper said that Asia Africa Growth Corridor (AAGC) is welcome as long as it does not try to trip China’s Belt and Road initiative.
- Announced by Indian Prime Minister Narendra Modi in May, the AAGC, essentially a maritime corridor, was seen by some as a counterbalance to the Belt and Road initiative
What is Asia Africa Growth Corridor?
- The Asia Africa Growth Corridor (AAGC) is sponsored by India and Japan – two countries that have so far opted not to join the B&R initiative.
- The main objective of the corridor is to enhance growth and connectivity between Asia and Africa.
- The AAGC is an attempt to create a “free and open Indo-Pacific region” by rediscovering ancient sea-routes and creating new sea corridors that will link the African continent with India and countries in South-Asia and South-East Asia.
- The AAGC proposes to build robust institutional, industrial and transport infrastructure in growth poles among countries in Asia and Africa.
Where did the idea of AAGC originate?
- The proposal for an AAGC was first mentioned in the joint declaration issued by Prime Ministers of India (Modi) and Japan (Shinzo) in November 2016.
- To promote development of industrial corridors and network in Asia and Africa, the declaration included their intention to work jointly and co-operatively with other countries.
Visions and institutions for AAGC
- In the annual general meeting of African development bank(AfDB), the AAGC vision document was unveiled by the Indian and Japanese government officials.
- In November 2016, after the meeting of Modi-Abe work have started on creating a vision document on AAGC.
- It was entrusted to the three thing tanks
- Research and Information System for Developing countries (RIS)
- Institute of Developing Economies- Japan External Trade Organization (IDE-JETRO)
- Economic Research Institute for ASEAN and East Asia (ERIA)
The report will be presented to the Government of India and Japan, and other leaders and policy makers of Asia and Africa in 2018.
Key pillars of AAGC
As per the vision document, the four key pillars of AAGC include:
- Enhancing Capacity and Skills;
- Quality Infrastructure and Institutional Connectivity;
- Development and Cooperation projects; and lastly,
- People-to-people partnership.
Focal points of AAGC
The AAGC consists of five remarkable focal points:
- Effective mobilisation of financial resources;
- Their alignment with socio-economic development and development strategies of partner countries and regions;
- Application of high-quality standards in terms of compliance with international standards established to mitigate environmental and social impact;
- Provision of quality of infrastructure taking into account aspects of economic efficiency and durability, inclusiveness, safety and disaster-resilience, sustainability as well as convenience and amenities; and
- Contribution to the local society and economy.
Under the AAGC,
- Jamnagar (Gujarat) port will connect with Djibouti in the gulf of Eden.
- Ports of Mombasa and Zanzibzr will be connected to ports near Madurai.
- Kolkata will be linked to Sittwe port in Myanmar.
How will Japan and India contribute to the project?
- Japan’s contribution to the project will be its state-of-the-art technology and ability to build quality infrastructure.
- India will bring in its expertise of working in Africa.
- India is developing ports under the Sagarmala programme specifically for this purpose.
- The private sectors of both countries are expected to play big role by coming.
- Both the countries are coming together to form joint-ventures and consortiums.
- Not only India and Japan but South Africa, Mozambique, Indonasia, Singapore and Australia also sent representatives for the consultation process.
Which were the other countries consulted for the Asia Africa Growth Corridor? Was China part of the process?
- Apart from India and Japan, South Africa, Mozambique, Indonesia, Singapore, and Australia sent representatives for the consultation process. However, there is quiz about China.
Response of African Countries
- The African Development Bank (AfDB) has welcomed the AAGC vision.
- According to AfDB, trade corridors have always existed between Africa and Asia. It is important because infrastructure is costly and you cannot have infrastructure everywhere. There has to be particular zones where you have to build infrastructure.
Is AAGC a counter to OBOR?
- Unlike OBOR which entails development of a land corridor, AAGC will essentially be a sea corridor linking Africa with India and other countries of South-East Asia and Oceania.
- It is being presented as a “distinct initiative” borne out of a consultative process which would be profitable and bankable, unlike the “government-funded model” of OBOR (One Belt One Road) project.
Three things were kept in mind while preparing the vision document of AAGC:
- Firstly, the participant think-tanks are making the process more consultative, because this was one objection India came up with when OBOR was presented.
- Secondly, the centrality of people in Africa needs to be brought up front, rather than excessive emphasis on trade and economic relations alone.
- Thirdly, Japan’s ability to deliver quality infrastructure will play a major role in developing this corridor.
Why is Africa lucrative?
- In 2015, the five of the fastest growing economies in Africa were non-resource rich, with Ethiopia, Cote d’Ivoire and Rwanda leading the pack with GDP growth rates of 10.2 per cent, 8.8 per cent and 7.1 per cent, respectively.
- Similarly, in 2016, countries like Senegal clocked a growth rate of 7.5 per cent, while Ethiopia (8 per cent), Kenya (6.5 percent) and Tanzania (7 per cent) all recorded impressive growth.
What kind of presence do the Chinese have across the African continent?
- The Chinese influence on the African economy can be gauged from the 2017 African Economic Outlook, released at the AfDB summit, which showed that country was still the major consumer of African goods, accounting for 27 per cent of Africa’s total global exports.
- China is also a leader in greenfield investment in Africa; in 2015-16, the country invested a whopping USD 38.4 billion (24 per cent of total greenfield investment).
In comparison, India during the same year, invested just USD 2.2 billion (1.3 percent of total greenfield investments) across 64 greenfield projects. Japan investments at present are minuscule.
India in Africa
- India is the fifth-biggest investor in Africa, with investments over the past 20 years amounting to $54 billion, by extension, creating millions of jobs for African citizens.
Significance/Benefits of the AAGC:
- The stakeholders of the project are hoping that the sea-corridors will be “low-cost” and have “less carbon footprint” in compare to the land corridor.
- This idea enables the economies in Asia and Africa for further integration.
- It will also be collectively emerged as a globally competitive economic bloc.
- The corridor will facilitate greater people-to-people exchanges amongst the participating countries.
- The corridor will be a synergy between India’s Act East Policy and Japan’s ‘Expanded Partnership for Quality Infrastructure’.
- The model of AAGC stresses on developing countries by investing in those countries’ priority issues. Such an investment philosophy creates a win-win situation for all: it’s about gaining advantages by aiding other countries.
- The AAGC will provide a great chance for India to improve its position in the global market.
- Additionally, as the Chinese economy is facing a slowdown, India will hopefully be on the upswing with the AAGC vision.
Conclusion and Way forward for AAGC
- It would be prudent to note that the Indo-Japanese fulcrum for the development of both Africa and the South Asian region will bring the two continents closer to each other.
- It would be but natural for the intelligentsia to look at AACG as an Indo-Japanese counter-pivot to the OBOR, however, it would do injustice to the underlying ideal of a comprehensive and holistic socio-economic development for all involved which forms the crux of the AAGC.
- The initiative from India and Japan is for growth of all. With the AAGC vision study, a broad roadmap would be laid for development of the project, bringing in the geographical simulation model (GSM) for economic gains for Africa through its integration with India, South Asia, Southeast Asia, East Asia and Oceania.