India Africa Trade Relations

Historical development of trade relations of Africa with other nations• Due to the compulsions of the Industrial revolution in Europe in the 18th century, several west Europeans countries started their search for raw materials needed by their fast growing industries and markets for the finished goods produced in these industries. Their main destination for this was the countries South East Asia which were rich in natural resources. This gave rise to imperialism in the third quarter of the nineteenth century and many countries of Asia were made as the colonies of several western European nations. However Europeans did not pay much attention to Africa despite its proximity to Europe in the south. The European nations thought Africa to be unproductive and did not explore it. This was the reason that Africa was known as Dark Continent to them. Later when they explored it they called it the White man's burden. They spread this ideology that they were spending on the development of an unproductive land. • David Livingstone and Cameron were the first to explore Africa and found this virgin land fit to be colonized by the land-hungry countries of Europe. King Leopold II of Belgium convened conference European nations in 1879 to discuss exploration of Africa. As a result, Stanley was sent to Africa and he made hundreds of treaties with the native chiefs of Africa. King Leopold II of Belgium assumed the title of sovereign of Congo. Very soon afterwards, the Portuguese made Angola and Mozambique as its colonies. The Italians had Somaliland and Abyssinia. The French acquired Algeria, Tunis, French Congo, Morocco and Ivory Coast. England established their colonies in Egypt, south Africa, North Somaliland, British East Africa or Kenya. Germany took over part of East Africa, Cameron and Togoland.• However, due to political awakening in Asia and Africa and revolution in Russia in the beginning of the 20th century, most of the countries in Asia and Africa increased the tempo of freedom movements in these countries and several countries in these two large continents of the world started gaining independence from the former masters one by one.• China and former European masters of African colonies started developing their trade relations with the newly independent countries of the Africa in the 1960s. The policy of China was not of mutual development of the African countries. The Chinese companies did not engage the local labour leave aside managerial and skilled posts even in construction work. This did not help the African countries in reducing their unemployment problems despite their good trade relations with China.
Africa and India trade relations – historical background• India was well known to Africa through our Father of Nation, Mahatma Gandhi who lived and worked in South Africa for 21 years up to 1915 and fought for the rights of black population of Indian or African origin. African nations thought of India as their natural alliance. It was tied to India through historical bond. Even Jawaharlal Nehru, the first Prime Minister of India, termed it as a sister continent. India having gone through the clutches of slavery herself supported the independence movements of several African countries. • At the time of independence in 1947, India was a poor and underdeveloped countries with hardly any industries in India. Even the Indian agriculture depended on old agricultural practices and crop yields per hectare were very low as compared to many developed countries of the world. As such, India had nothing to offer other than moral support to Africa. It had nothing to export and nothing import from Africa since African countries were also sailing in the same boat. Hence there were no significant trade relations between India and Africa immediately after independence and we could not do much in the developmental efforts in Africa for a quite a long period. The Indo African trade relations could make some semblance only after the Indian economy was liberalised in the eighties and nineties and we had some thing to offer to the African countries especially during the past one decade.
Indo African trade relations during the last 60 years since independence • As stated in the earlier paragraphs, India could not make any headway as far as the trade relations and development of Africa was concerned in the 1950s except that India's first Prime Minister Jawaharlal Nehru significantly represented India at some other important Afro Asian conferences held during this period. Pundit Jawaharlal Nehru was the main participant at the Banding Conference held in December 1954. It was the first conference of the Afro Asian countries where several countries of Asia and Africa could assemble together on one platform. India had made strong diplomatic preparations for this conference seeking support the all participating countries for the peaceful co-existence and to enhance goodwill and cooperation among the Afro Asian – African nations. It discussed social, economic and cultural matters between the countries of Asia and Africa. The very next year Pundit Jawaharlal Nehru visited Egypt on an invitation of President Nasser who was present at the conference.• India could do much in the development of Africa during the past 60 years faced by its own economic and political compulsions at home. On the other hand China did not lose its focus on China since 1960. On the other hand India despite its being looked upon as role model by many African nations could not do much in the sphere of developing trade relations with African countries compared to China. The momentum of goodwill created by Mahatma Gandhi, Jawaharlal Nehru and Indira Gandhi who were greatly respected by the African people could not be utilised much in the absence of any proper trade policy directed towards Africa. Even during the 1990s India lost its momentum when it got preoccupied with its trade relations with west whereas China constantly kept on directing its focus on Africa. In the early 1970s, China built the 1800 kilometre long Tan-Zam railway enabling Zambia to export its copper through East African ports. • Meanwhile China continuing its good trade relations with Africa helped it build its official buildings, conference halls and sports complexes and going much ahead than India in its role of African development. India's contribution towards African development had been minimal even during 1990s except granting scholarships to African students and donating three wheelers and Tata trucks to some African countries. Chinese Presidents and Prime Ministers had been making regular visits to African countries but India was very late in doing so. After Chinese economy started growing fast it started offering liberal credit and aid to the African countries whereas India had nothing to offer comparatively. So much so that Angola recently refused an International Monetary Fund offer for its reconstruction projects and instead opted for a $2 billion soft loan and aid package from China with a few strings attached overshadowing Indian move, if any.
African oil and rivalry between India and China in infrastructural development of Africa• China has entered into many lucrative trade agreements in respect of oil exploration in China. 25 to 30 per cent requirements of oil of China come from the African countries. Africa is the second largest supplier of crude oil in the world. Nigeria is one of the largest producers of oil in Africa. India also gets a part of its imports of oil from Nigeria. Although India may wish to deal with Africa in the same magnitude as China it is not in a position to compete with China at present. The offer of $200 million by the Indian public sector company Oil and Natural Gas commission (ONGC) for the infrastructural development of that country is just a meagre amount compared to $2 billion offered by China for the same purpose. • Both India and China are now investing in African countries like Sudan and Zimbabwe despite protests from the west. India has recently laid down a $200 million pipeline that links Port of Sudan on the Red Sea with Khartoum, the capital of Sudan. India's trade with Africa increased from $97 million in 1991 to $20 billion last year. Although, China's trade with Africa was lower than India's in the early 1990s but it stands at $55 billion annually at present which is much higher than India. China is Africa's third largest trading partner after the U.S and France presently. India claims that its renewed interest in Africa has nothing to do with Chinese expansion in this region. India's policy is not to enter into any rivalry, competition or race with China in expanding its trade relations with Africa or any other country.
India's recent developmental programmes in Africa• During the recent years India had been actively engages in promotion of trade activities and programmes with African nations. The Government of India launched a programme called "Focus India: Africa" under the Exim Policy of 2002-07. The main purpose of the programme was to boost Indian trade with the sub-Saharan African region. Mauritius, Kenya and Ethiopia were the target countries to be included in the first phase of the programme. Under this programme, the Indian government was to provide financial assistance to various trade promotion organisations, export promotion councils and apex chambers. The focus under the programme was to form Market Development Assistance. Under the programme, India's Exim Bank has extended Lines of Credit (LOCs) to support export of eligible goods on deferred payment terms. The offering os such credit is to expand export of those products which are identified and has potential to increase the trade between two regions. • India's potential exports to these countries are machinery and transport equipment, petroleum products, paper and wood products, textiles, iron and steel, plastic and linoleum products, rubber manufactured products, agro products, chemicals and pharmaceutical products. The imports from these countries can include petroleum, metallurgical goods, raw cotton, fruit, vegetables and preparations, chemicals, non-metallic mineral manufactures, precious stones, textile yarn, gold, nickel, and ferro-alloys. There are some other sectors which are important for investment. These are tourism, pharmaceuticals, electronics, computer software and accessories, information technology related products, financial services and textiles. It should also be noted that Andhra Pradesh, a large southern state of India has signed an agreement with Kenya and Uganda to send 500 farmers to cultivate land in the East African countries. This is an encouraging development.• In addition to the above efforts, several Indian businessmen look to Africa for starting their new ventures. A high level delegation headed by Ratan Tata, one of the wealthiest businessmen and industrialists of India visited Africa recently. Already Tata Motors and the another car giant Mahindra & Mahindra have made their entry into the South African motor industry and have launched their new vehicles in that country. Tata Africa Holdings, a subsidiary of Tata Group is trying hard to control stake in South Africa's second telephone network operator worth more tan Rand 4 billion. Presently the total bilateral trade relations between India and South Africa are reaching close to Ran 6.5 billion. India's imports from South Africa stand at Rand 3.12 billion and its exports are around Rand 3.35 billion. India's investment interests in South Africa stand around $100 million.• India is planning to provide duty free access to products form the least developed nations of Africa. To boost further the bilateral trade relations with Africa we have had two African – Indian summits so far. The first was held in April 2008 and the second summit and the second was held in recently at Addis Ababa. The pan African e-network which is being funded by India has helped to improve trade relations of India with 53 nations of the Africa. It would provide tele-education and tele-medicine facilties in African countries.• At the India-Africa summit, Manmohan Singh agreed to an easy access for African exports to the Indian markets. According to Prime Minister Manmohan Singh, "The 21st century could be turned into a "century of Asia and Africa". A frame work was created at the summit with a pledge to boost trade and investment and sharing of expertise in the development of agriculture in Africa. India has pledged to for cooperation in the fields of Science and technology, water management and education. India also has pledged to provide preferential markets to the 34 "least developed" nations of the African continent. The Prime Minister Manmohan Singh agreed to issue grants for projects in excess of $500 million to the African countries during the next five to six years. The Indian priorities will be for developing infrastructure in information technology, telecommunications, power and railways in Africa. The African leaders indicated to the Indian authorities that they should not look at Africa simply as a source of raw materials but should invest in the continent's human capital and share know-how and expertise with its nations. It will be in order to recall Mahatma Gandhi's brief observation that the "Commerce between India and Africa will be of ideas and services, not of manufactured goods against raw materials after the fashion of Western exploiters.
How India can have an edge over China in its role in African development• India in fact can play a more important role in the development of Africa than China. Former World Bank economist William Easterly in his book "The Whiteman's Burden" praised India's model of engaging Africa with a view to promote trade with Africa. The World Bank study of 2006 also observed that Indian firms are better placed in African markets than their Chinese counterparts. Compared to the Chinese firms which bring their own workers in Africa even for construction and other such works while the Africans are facing severe unemployment problems, the Indian firms which employ local manpower and engage even the managerial staff from the local market stand to gain advantage in the eyes of the Africans than China. • Looking at the mineral and energy resources of Africa, several major economic powers are trying to woo Africa to enhance their trade relations in the region. But African governments will want sustainable benefits from them to benefit the African citizens. India stands to benefit from this approach of the African governments by its policy directed at the economic development of Africa for the mutual benefit of both India and Africa.• India's policy towards partnership with Africa has a three pronged approach which is directed at information and communication technology, human resources development and deeper economic linkages between India and the African countries. This policy of India of African development will take both India and Africa to face the challenges of the 21st century.
Conclusion• India is going to play a very vigour role in the development of Africa in future. At the recently concluded India – Africa two day Summit which was attended by 14 African countries it was clearly seen that India is going to develop and aggressive strategy to play a higher role and show its presence in the region vis-à-vis China. India though a late entry to join its rivals in Africa, shows a lot of promised in a number of areas. Both India and Africa have taken a pledge to work together to meet the economic and political challenges facing India and the countries of the African continent. It has been clearly stated by India that Indo-African friendship will be based on equality, mutual friendship, respect and understanding to meet the aspirations of the people of this region. India Africa bilateral trade in goods and services have grown three times during the recent years but still there is a huge potential. India's constant economic growth at an average of 8% for the past four to five years is expected to do better in the coming decade. So there is optimism about India's contribution for the development of Africa and for Africa's growth prospects. • Alpha Qumur Konare, the Chairperson of the African Union has stated that India truly understands the needs and aspirations of the people of African countries. All African leaders are alike in their thinking that India is of great help in the fields such as health, information technology, communications and agriculture. Prime Minister Manmohan Singh has stated that India-Africa Summit has provided a framework of co-operation between India and Africa. Although many countries have already mad a good start in the region especially the former colonial power France and China, but many Africans feel France as a legacy of colonialism thrust upon them. Hence there are better chances for India to develop its trade relations with Africa which would go a long way for the development of mutual growth and prosperity of both Africa and India.