India attempts to enter the African market

It may have taken India’s government a long time to notice, but optimistic forecasts on Africa’s economic growth may finally be pushing Prime Minister Narendra Modi to try to pinch away at the daunting gap of Chinese investment on the continent, where trade between both nations has ballooned to valued figures over $200 Billion USD. By comparison, Indian trade with Africa is dwarfed by that figure, but remains steady enough to capitalize on already existing bilateral trade agreements between India and the likes of Nigeria (where India is a major crude oil importer), Ghana (where infrastructure projects are supported by Indian investments), and fellow BRICS member South Africa, where trade is centered around energy, specifically Indian imports of South African coal.

The relationship between the Indian subcontinent and Africa is a storied one that is perhaps most notable for cultural ties as opposed to bilateral economic trade. Immigrants who hailed from India traveled to Africa in search for work, and those families have stayed through Africa’s rapid transformation in a post-colonial world. Many of the immigrants who left their homelands for Africa have remained, and their families today make up significant communities that have maintained success on the continent, with large Diasporas in South Africa, Kenya, and Tanzania. Events like Id Amin’s rule of Uganda saw many NRIs (Non-Resident Indians) relocate to other parts of the continent, leading to a wide population distribution across Africa, giving India’s officials and Modi himself a demographic to appeal to, through which to collect contacts and conduct business. Modi’s ability to ignited crowds in Madison Square Garden in New York displays a savvy that can likewise be replicated through other active Diasporas. Should India’s pivot to Africa be acted upon enthusiastically, then India may one of the few formidable opponents that could literally give China a run for its money (and influence).

India’s target for investment in specific African nations will likely require a few more years of cultivating productive and meaningful relationships with nations where a brief history of economic cooperation exists or their lacks a significant Indian diaspora. India’s open embrace of the entire continent, as opposed to the trend of meeting with limited representation from African Union members is proof of India’s interest in foraging new ties on the continent. Modi’s “Make in India” campaign will need customers of Indian-made products and Africa’s involvement as an importer of such goods is crucial for the campaign’s success, as “Make in India” is a bold move and will without a doubt be used to gauge Modi’s performance in the next 2-3 years as a benchmark of the economic reforms being purported by the BJP.

Capital for Indian investors may be plentiful but reforms aimed at downsizing government sway and influence over economic activity outside India’s borders remains a hindrance to the abilities for only a select, connected, few to benefit from projects on the African continent, while other investors remain in limbo with few palpable prospects. China’s governmental structure has allowed expedited processes for Chinese businessmen to invest heavily on the continent with little to no red tape blocking their path, whereas Indian businessmen have had to either forgo investment for the time being or circumvent the traditional, yet inefficient channels propped by a heavy government-laden lag. The roots of China’s success can be understood by witnessing the coinciding goals of both the CPC and the business magnates of the nation. The government wants influence, and the magnates want emerging markets. The same cannot be said by India judging by past governmental activity that has seen a fair amount of hold-ups and of course, the inter-government differences by political allegiance to alliances, a peril for democracy but a caveat for a single-party dictatorship.

Nevertheless, Modi and the BJP’s acclimation to the leadership of India will likely result in an alignment of the goals for the administration with the objectives of Indian corporations in an attempt to propel an economy that was inherited in a slow, growth-stunted stage. India has already managed to make inroads with much of the continent, but unless adequate reforms can be made quickly to India’s foreign business bureaucracy, the race to become involved in the world’s newest economic darling could put India too far behind to catch up.

By Arman Sidhu

Arman Sidhu is a political commentator based in Phoenix, Arizona, USA. He writes with a focus on contemporary issues ranging from technology governance to international relations. He is a former Reagan Fellow at the Goldwater Institute.