Editorial Notes

[Editorial Notes] India –Africa Economic link

There seems to be a conspicuous disconnect between Indian developmental assistance to and India’s economic engagement with Africa. The time has now come to integrate these two axes for a more comprehensive engagement. It would also facilitate aided pilot projects being scaled up seamlessly into commercially viable joint ventures.
By IASToppers
August 02, 2019

Contents

  • Introduction
  • Current Economic scenario between India and Africa
  • Challenges
  • Suggestions
  • Way Forward

India –Africa Economic link

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Introduction

  • In July 2019, two important Indian dignitaries began their respective visits to Africa. President commenced his visit to Benin, Gambia and Guinea-Conakry and Defense Minister arrived in Maputo to Mozambique.
  • These visits indicate enhanced priority to Africa by India.

Current Economic scenario between India and Africa

  • India has substantive economic engagement with Africa, it’s trade with Africa totaled $63.3 billion in 2018-19.
  • In past five years, Indian leaders visits African countries more than 25 times and India has, post the India-Africa Forum Summit in 2015 agreed to provide concessional credit worth $10 billion during the next five years.
  • By 2017, India had cumulatively extended 152 Lines of Credit worth $8 billion to 44 African countries.
  • India has also unilaterally provided free access to its market for the exports of 33 least developed African countries.
  • In 2018, India was ranked the third largest trading partner of Africa having edged past the United States during the year.

India-Africa-in-Numbers-IASToppers

Challenges

  • India escalated its commitments to Africa in an era of low-commodity prices when most other partners, including China, have scaled back theirs, thus India’s efforts are being seen as countercyclical.
  • There is a disconnect between Indian developmental assistance to and India’s economic engagement with Africa.
  • India’s large developmental footprint in Africa is not enough as visible from the examples such as demand to remove the statues of Gandhiji, travails of Indian investors in Africa, occasional demonization of the Indian community and the non-recognition of Indian academic degrees.
  • India too is a developing country with similar domestic challenges of poverty, infrastructure deficit and underdevelopment as that of Africa. Hence, it is difficult to provide financial support to Africa.

Suggestions

  • India’s developmental profile should be reoriented to make it more economically productive, with prime focus being Indian companies getting mega projects in Africa.
  • Indian need to take direct control of its development programme, instead of handing to intermediaries such as the African Union, the African Development Bank Group and the Techno-Economic Approach for Africa-India Movement (TEAM 9), whose priorities are often different from India’s.
  • The aid India provides should be disbursed bilaterally and aligned with national priorities of the recipient state, which should be a substantial stakeholder and co-investor in schemes.
  • Nigeria, South Africa, Egypt, Ghana, Angola and Algeria are India’s top six trading partners in Africa, accounting for nearly two-thirds of its trade and half its exports, India’s development assistance should prefer these countries with its substantial interests, both existing and potential.
  • India’s own needs for raw materials, commodities and markets should be factored and it should prefer aiding to countries which are willing to help India by providing access to their natural resources for using India’s generics.
  • The aided project selected should be compatible with local requirements and should be cost-effective, scalable, future ready and commercially replicable.
  • For greater transparency, India should prefer its public sector to implement the aid projects.
  • The Indian Head of Mission in the recipient African state must be an integral part of the aid stream including project selection, co-ordination and implementation, this will ensure better harmonization between our aid and economic objectives.

Way Forward

  • In supporting Africa’s development, India should prioritize its own growth and development as well.
  • The disconnect between Indian developmental assistance to and India’s economic engagement with Africa should be integrated for a more comprehensive and sustainable engagement.
  • India has no coordinated Africa policy nor does there seem to be an avenue where the strengths of both actors can be leveraged which is something Indian policy makers should focus upon.

 

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