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How COVID-19 Will Reshape Africa’s Ties With India

by Prof. Dr. Tal Edgars - 3 December, 2020, 12:00 921 Views 0 Comment

Those who believe in cyclical theories of history argue the infamous stock market crash of 1929 signalled the failure of markets and paved the way for a bigger state, which then led to the New Deal in America and welfare states in Europe.

Fast forward to the 1970s and it was the turn of the state to overreach as big government proved unable to resolve intractable economic and social problems. This paved the way for the return of the markets via Reaganism and Thatcherism and an economic consensus that even centre-left social democrats ended up accepting.

Now fast forward again to where we are today. Some contend that in years to come we will look back at the coronavirus crisis as a major corrective because the Great Recession of 2008- 2012 arrived after the markets had once again overreached and – together with the Great Lockdown – these two crises are paving the way for a much bigger and more interventionist debate.

During the 15th Confederation of Indian Industry-EXIM Digital Conclave on India-Africa partnership, Minister of External Affairs S Jaishankar emphasised that Africa is “India’s priority”, and “For India, Africa’s rise as one of the global system’s poles is not just desirable, it is absolutely necessary… Broader global rebalancing is incomplete without the genuine emergence of Africa.” This then is what both drives and informs India’s Africa outreach.

India has never in the past been as engaged in Africa as it is now. According to official data, India has completed 194 developmental projects in 37 African countries at a cost of $11.6 billion and is currently working to complete 77 additional ones in 29 countries. These span multiple sectors, including infrastructure, ICT, power generation, agriculture, irrigation, even oil and gas. India has also invested around $7 billion in Mozambique, South Sudan and other regions of North and West Africa.

India-Africa ties have seen steady growth over the past few years, so much so that India has become Africa’s third-largest export destination. With an investment of $54 billion, India happens to be one of the biggest investors in the continent.

COVID-19 in particular seems to have propelled greater Indian outreach to the continent. India has been delivering aid and training to African countries in their fight against the virus. It has thus far sent medical teams to, Mauritius, Comoros, as well as other countries such as Maldives. The Indian Navy medical teams have been stationed in Mauritius and Comoros, where they’ve toured local hospitals, trained personnel and assisted in COVID-19 management techniques.

The above also reflect the fillip to defence ties between India and Africa. India has also been active in peacekeeping in Africa, setting up defence academies, deployment of training teams. On February 6, the first-ever India Africa Defence Ministers Conclave took place in Lucknow in conjunction with India’s defence Expo. Over 154 delegates from Africa participated in the conclave, which also included defence ministers from 14 African countries.

However, the arena remains crowded as other global powers are also reaching out extensively to Africa, which has become a coveted destination for FDIs, loans and even defence bases, not just for traditional powers such as France and the United States, but also for others such as China and Turkey.

In fact, the greatest challenge to India in Africa comes from China, with its far larger economy. Africa is key to China’s Belt and Road Initiative with 20 African countries signing on to it.

The Africa Attractiveness report found that from 2014 to 2018, China was the largest investor in Africa in terms of total capital, with around $72,235 million, whereas India accounted for only $5,403 million. China also has a reputation for the speedy delivery of projects undertaken, something India lacks. With the private sector at the fore, private companies have also come under scrutiny for tax evasion and flouting local rules.

India, however, has an edge in its approach and the emotional bonding it shares with Africa. This not only includes Mahatma Gandhi’s legacy, but also the Indian diaspora in countries such as South Africa, Kenya, Uganda, and Tanzania. Besides, India’s developmental partnership is also far less exploitative than that of China’s, and simultaneously more responsive to African needs.

For instance, while countries such as Nigeria and Kenya have been quick to welcome Chinese investments and infrastructure projects, many have come under scrutiny or renegotiation of terms. In 2019, a court in Kenya halted construction on a $2 billion power plant financed by China for lack of transparency.

According to UN trade data for 2017, total imports of 39 African countries from China exceeded $71 billion, while those from India amounted to $21 billion, again making Africa far more dependent on China. However, most importantly, Africa’s debt to China has increased exponentially over the past decade, almost $30 billion in 2016.

With COVID-19 hitting Africa hard, the International Monetary Fund estimates that sub-Saharan African economies will shrink by nearly 3.2 percent this year. While China has announced some debt relief, countries are now increasingly reviewing Chinese investments and loans. In 2018, Ethiopia renegotiated its Chinese debt. Now pandemic-hit Kenya wants to renegotiate its Chinese loan borrowed to build a railway, and in Nigeria and Zambia projects are being put on hold because of COVID-19. Countries are having second thoughts about hitherto sought after Chinese loans.

COVID-19 will reshape Africa’s ties with China and this would present India with yet another opportunity to build on the existing base of its partnership with Africa. Where it will be difficult for India to go alone, it will have to enter into partnerships, like activating the India-Japan-Africa corridor or partnering with other countries such as France or the US.

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Prof. Dr. Tal Edgars
The author is Special Envoy and Group Executive Chairman, GBSH Consult Group Worldwide.
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