When African leaders and heads of government emerged from an Indian state reception at the Pragati Maidan Crafts Museum in 2015, it was clear where their allegiance lay. Dressed in full traditional Indian kurta pajama and safa (head gear) the African leaders had deliberated on trade and investments and they seemed convinced that the Indian way was the way to go. This has since been followed by frequent individual country forums with India, an interaction spearheaded by Indian Prime Minister Narendra Modi.
A series of meetings between India and African countries have ensued, with the latest being the Africa Development Bank (AfDB) forum in India where Africa Growth Corridor was launched to rival the One Belt One Road Initiative by China. Under the Indian initiative, it gives priority to development projects in health and pharmaceuticals, agriculture and agro-processing, disaster management and skills enhancement.
Similar events have been happening between Africa and China with massive investments and deals being signed between African countries and China especially in infrastructure, mining and manufacturing. China is the fourth largest foreign investor in Africa almost surpassing traditional partners like US and Europe. India is ranked seventh with a much smaller budget compared to China. By 2015, China was already investing US$200 billion in foreign direct investment compared to India’s US$70 billion.
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The interactions that took place on the Pragati Maidan evening seemed like a new front in trade persuasions for the 21st century but the relationship dates way back. India has a longer trade and commerce history although Chinese trade with East Africa has been documented to have happened earlier. East African cities have witnessed Indian businesspeople for long but these have mainly been family-run businesses.
According to Malancha Chakrabarty, an Associate Fellow in New Delhi-based Observer Research Foundation, although a few Indian companies like the Birla Group invested even in the 1960s, there weren’t too many big investments from India.
“India’s relationship with East Africa dates back to the 16th and 17th century when Gujarati traders first went to East Africa. Indians set up businesses when India was under British rule, and even post-independence, Indian businesses were established in East Africa. However, such enterprises were typically small family-owned businesses,” she notes.
Since the turn of the millennia, China has taken a huge push into investments in Africa initially as a source of natural resources and later as a trade partner and infrastructure development. The Sino Africa interactions have matured over time placing China as a leading investor primarily in East Africa.
Many trade analysts have seen the rising emergence of India as rivalry between China and India and their desire to control natural resources and trade in Sub-Saharan Africa, while others view the continent as big enough to fit the interests of both countries.
Though China has emerged a bigger trade partner, India has been making various inroads in countries like Kenya, Uganda, Tanzania, South Africa and Mauritius.Companies such as Bharti Airtel and United Telecom Limited (telecom), Reliance Industries (Petroleum), TATA group (Automobiles, IT), Dr. Reddy’s and Cadila(pharmaceuticals), Bank of Baroda and Indian Bank (finance), Tata Chemicals (Chemicals), Kalpataru Power Transmission Ltd (Power), Mahindra Satyam(IT), Jain Irrigation(Agriculture), Life insurance Corporation (Insurance), National Mineral Development Corporation (Mining), Hindustan Machine Tools (Manufacturing), RITES (Infrastructure), among many others are major Indian players in East Africa.
India’s main exports to East African Community include pharmaceuticals, bicycles, automobiles and automobile parts, textiles, sporting goods and agro-processing machinery. The total exports from India to the EAC for the year 2015–16 amounted to US$7.31 billion and total imports amounted to US$1.33 billion, culminating in a total trade figure of US$8.64 billion. East Africa, like many other regions of Africa, requires an economic partnership in several sectors such as infrastructure, healthcare and pharmaceuticals, technology, agriculture, power and energy.
Chakrabarty notes that India has a head start. “Although, India cannot match China in terms of the scale of investment, India enjoys more goodwill. China is facing a severe backlash in many African countries due to employment of Chinese workers in their units. African workers are rarely employed by Chinese firms and wherever they are employed, it is usually in low-end jobs. This is going against China. On the other hand, Indian firms don’t suffer from such problems.”
Indian companies have managed to take advantage of East Africans of Indian heritage to establish links and deals in their foray to the region. For example, Indian companies have grown influence in the information and communication sector through acquisition of stakes in companies that were owned by Kenyans of Indian origin. These include Indian companies like Tata Communications which has acquired stakes in leading East African data company Access Kenya.
Other leading Indian investors in East Africa include Bharti Airtel, Reliance Group, and Essar Telecom.
Agriculture
In agriculture, India has pledged to work with African countries to solve issues of food security. According to Chakrabarty, deals signed during the AfDB annual summit could mean more influence for the two trading partners.
“India and Africa must work together in agriculture to address food insecurity. India’s nascent seed industry can provide improved seeds to the African market. India’s development cooperation with Ethiopia in the sugar sector has been very successful.”
Other deals that India and East Africa have been pushing include farm machinery supplies, training on the use of the machinery in mechanized agriculture and cooperation in the use of mining machinery. Others include investing in Africa’s climate-smart future in farming and opening avenues for cooperation between Indian and African industry groups.
Mining
In mining, India has also made an unobtrusive move to East Africa mainly through private companies. For example, Sanghi Group has invested over UD$80 million in what is going to be the second largest cement company in East Africa. Through local entity Cemtech, the project in Kenya’s Pokot area is expected to rival traditional cement heavyweights like Bamburi Cement. Mehta Group is also venturing into cement production in Kenya and Uganda.
For years, East Africans have made medical trips to India especially in search of advanced medical attention for terminal ailments. India has positioned itself as a key investor in this area. For example, Kenya and India have entered into solid agreements to develop healthcare solutions for Kenyan hospitals as well as medicine development. During a visit to India, Kenya’s president Uhuru Kenyatta signed a deal to establish a cancer hospital in Kenya as well as establish the production of generic drugs for the region.
Chakrabarty supports the private sector driven investments in Africa especially in the health sector. “India is making an important contribution in East Africa’s health sector by export of generics, setting up processing units, creating health infrastructure, telemedicine, medical tourism, and capacity-building. This is a very important step towards a healthy workforce in Africa which is a prerequisite to development.”
During the AfDB annual meeting in 2017, African ministers of health identified the need to improve the supplies of medical equipment, hospital management and rationalization of medical staff to improve the management of healthcare services, especially cancer. African ministers noted how the cost of diagnosing cancer and other critical diseases affecting the majority of the African population remained high, impacting the distribution of economic resources in Africa.
While China has had a great impact on development of roads, railways, ports and airports, India has invested heavily in irrigation and water provision in East Africa.
While India’s investment in Africa remains lower than that of China’s, its influence is rapidly growing, buoyed by long-established links with East Africa as well as well-established knowledge of trade and commerce in the region. India recognizes the East African market as huge and unexploited.
According to documents released during the CII-EXIM Bank Regional Conclave on India and East Africa, Indian traders have a market access to more than 145.5 million people and combined GDP size of about US$147.5 billion. The large Indian diaspora in East Africa acts as significant in attracting new Indian investments, abundant labour force – educated, trained, mobile, skilled and enterprising, and the world’s fastest reforming region in terms of business regulations.
During this forum, Ugandan President Yoweri Museveni noted the role of India and East Africa as purely complementary. “India and Africa can complement each other very well. We have a historical link of using the English language which we should take advantage of. The Indians have been here for the last 130 years. In 1924, the father of Mehta began producing sugar in Uganda,” he was quoted saying.
What is left to be seen is how India works to build its comparative advantage in a continent that yet to be developed. Significant opportunities present itself, however in order to be successful they must assess how they’re perceived as compared to other partners such as China, United States, Russia and Turkey. India’s key advantage is the existent populations that settled in East and Southern Africa over 100 years ago, but that alone will not enable the 1.5 billion populated country to
