“India’s Economic and Political Engagement in Africa: A Contrast to China’s Expanding Footprint” | by Mushtaq Ahmad Mahindro | Aug, 2023

Photo by Andrew Stutesman on Unsplash

India’s trade and investment relationship with Africa has been growing, and the nature of imports from Africa varies across different countries and regions. Here’s an overview of India’s imports from Africa and its trade and investment areas with the continent:

Trade volume: India-Africa trade has grown rapidly over the past couple of decades. Total trade stood at around $89 billion in 2021–22.

Indian exports: India mainly exports pharmaceuticals, vehicles, petroleum products, and machinery to Africa, while it imports crude oil, gold, coal, and other raw materials from the continent.

Investments: Indian companies have invested over $70 billion in Africa as of 2019. Some major Indian investors in Africa include companies like Tata, Airtel, Reliance, Mahindra, Godrej, etc. They are present across sectors like telecom, automobiles, pharmaceuticals, energy, etc.

Lines of Credit: India has offered over $12 billion in lines of credit to African countries for infrastructure and development projects. This plays a key role in Africa-India economic engagement.

Capacity Building: India provides technical assistance and capacity-building support to African countries through initiatives like ITEC (Indian Technical & Economic Cooperation). Thousands of African students also study in India annually.

Recent Developments: At the 2022 India-Africa summit, India offered $10 billion more in lines of credit and $1 million for the India-Africa health sciences fund. Enhancing trade and investment partnerships is a priority.

China’s trade and investment engagements with Africa:

Trade Volume: Bilateral trade between China and Africa has grown rapidly from just $10 billion in 2000 to over $254 billion in 2021. China is currently Africa’s largest trading partner.

Chinese Exports: China mainly exports manufactured products like machinery, electronics, vehicles, etc. to African countries. It imports crude oil, minerals, and other resources from Africa.

Investments: China’s cumulative FDI in Africa exceeded $43 billion by 2020. Major areas of investment include infrastructure, mining, construction, manufacturing, finance, etc.

Infrastructure Financing: China has become a major infrastructure financer in Africa, providing over $153 billion in financing since 2003. Key instruments are loans from Chinese policy banks.

BRI Projects: China has been collaborating with African nations on major infrastructure projects under its Belt and Road Initiative (BRI) like railways, ports, roads, bridges, etc.

Beyond Economics: China has been expanding military ties and soft power outreach in Africa through avenues like military aid, cultural institutes, etc.

India’s political engagements/influence in Africa:

Here is an overview of India’s key political engagements and influence in some major African countries:

South Africa: Strategic partner and part of IBSA grouping. IBSA stands for India, Brazil, and South Africa — a trilateral grouping formed to boost cooperation among major emerging economies from three continents. Some key points about the IBSA grouping include promoting international cooperation, increasing trade and investment flows, and cooperating on global issues like reforming institutions of global governance such as the UN, IMF, etc. The IBSA countries have sought to boost cooperation in sectors like agriculture, education, energy, science & technology, transportation, tourism, etc. through agreements. A special IBSA Fund was created in 2004 to implement development projects in fellow developing countries. So far there have been 6 IBSA summits bringing together the heads of states of the three countries to discuss matters of mutual interest. So in summary, IBSA is a unique trilateral grouping of developing country powerhouses that aims to leverage the strength of the three economies. But it has yet to realize its full potential.

Nigeria: Major economic partner and oil supplier. Cooperate in multilateral fora. Support India’s UNSC bid. Defense partnerships to counter-terrorism.

Kenya: Key Indian Ocean partner. A major recipient of Indian credit lines. Security cooperation. Support Kenya’s UNSC membership.

Ethiopia: Historical ties since the Ethiopian Emperor visited India in the 1950s. Large Indian diaspora. Support Ethiopia’s UN peacekeeping.

Mozambique: Strategic Indian Ocean country. India assisted in the peace process. A major recipient of credit lines. Defense partnership.

Tanzania: Historical ties through the freedom struggle. Recipient of Indian lines of credit. Agriculture and IT cooperation.

Uganda: Defense partnership especially in training. Supports India’s leadership claims. Recipient of Indian lines of credit.

Rwanda: Emerging ties through business forums and credit lines. Cooperation in IT, agriculture, and education.

Ghana: Close ties since Nkrumah’s leadership. India’s largest trading partner in West Africa.

Senegal: Important Indian Ocean partner. Recipient of Indian lines of credit for infrastructure.

India has been working to enhance trade and investment ties with African countries. This includes initiatives such as the India-Africa Forum Summit, which aims to promote economic cooperation, trade, and investment between India and African nations. The Indian Technical and Economic Cooperation (ITEC) program offers training courses to African professionals.