June 22, 2008

While China is driving the African Safari, India is yet to board it!!!

The world might not subscribe to China and its policies for many reasons but they definitely are worthy of credit for their amazing farsightedness. They have proved this time and again and are all set to prove it again. In the given scenario wherein crude oil prices are showing no sign of respite, each and every government is untiringly trying to secure themselves with respect to their ever growing energy demands, it is as if the Chinese had thought of this imminent energy crunch a long time back and had started planning accordingly. In fact, the way they are going about it is also worthy to note. Particularly over the last one decade, the world has been witnessing that a country, which has never bothered to look beyond its immediate neighbourhood was suddenly becoming very keen about Africa. Billions of dollars from China have been poured into countries, which otherwise have been a pariah for global investment. It is being reported that China’s trade with Africa has been growing at almost 40% since 2001. By 2006, the trade between China and Africa had already reached the magic figure of $50 billion. In effect, China has become the third largest trading partner of Africa after the United States and the European Union. To an extent, China has been able to productively engage even with Sudan, which otherwise had been reeling under a humanitarian crisis and a relentless civil war!! And all this, China had been doing with an underlying objective, to secure their energy demands. There is no secret in this, as one close analysis of Africa’s exports to China clarifies everything. According to an IMF report – In 2006, oil and gas accounted for over 60% of Africa’s exports to China, followed by non-petroleum minerals and metals at 13%. The report also states that Africa’s imports from China comprised mainly manufactured products and machinery and transport equipment, which together accounted for about three-fourths of total imports.

This probably explains it all, and even the reason of China’s trade with Sudan, as after Nigeria, Sudan has one of the largest reserves of oil in Africa! But this trade has immensely helped even African nations, as in many of the African countries, along with the Chinese investments for manufacturing that is pouring in, China is putting effort to invest in the social and physical infrastructure of the oil rich countries in terms of setting up roads, hospitals, schools, and telecom facilities. For a beleaguered Africa, used to destruction through civil war, this trading relation has come as nothing less than a blessing. In the short run, nothing could have been a more win-win situation for both involved and especially for Africa. While the world continues to debate as to how ethical the Chinese investments in Africa are, and while India continues to ponder as to whether it should follow the path of China or continue with its own set of conflicting foreign policy; China quietly makes major inroads in Africa to make it as its next destination of manufacturing. In counties like Sierra Leone, Zambia, Liberia, Mozambique, Nigeria and Angola, China is setting up industrial zones. For not only Africa offers the right kind of market in terms of low cost Chinese products, it also offers very low cost labour for manufacturing.

Yet, it is not always so straightforward whenever China is involved. There are allegations that China has been pumping in millions of dollars worth small arms into Africa, especially in Sudan to fuel the ongoing civil war in lieu of oil. Whatever the case might be, Africans don’t seem to be too uncomfortable with a Chinese presence.

Contrast this with India. We’re a country having more historical connections with Africa than perhaps any other country. And probably, no other country has ever perhaps thought about the plight of Africa so selflessly as India. Yet, when it comes to give a logical direction to this emotional attachment for mutual benefit, India continues to lag behind and seems to be bereft of any direction. More unfortunate than this is the fact that India seems to have a reactionary approach with respect to Africa than a proactive one. Its approach is not because of its own urge, but seems more as following the footsteps of China (the recent overture in terms of Indo-African summit included). And while the leaders of more than a dozen African countries pledged their solidarity with India, they also know that many of the intended Indian investments would eventually get mired in red tape much unlike the way China does. When seen in retrospect, no other country has more leverage than India in Africa, given the huge population of Indian origin that one finds in abundance in Africa. In certain countries like Mauritius or South Africa, Kenya or Uganda, the Indian diaspora is the most prominent, richest and influential community of the country. Still, India – typically known for its proverbial habit of missing the bus – has failed to take mileage out of it. The Indo-African trade continues to be half of what China has with Africa.

Irrespective of the allegations that China faces, it is certain that it is doing a far better job than even donor agencies. For the world knows that Africans are fed up with debt assistance and subsequent debt traps and are now looking for jobs and better quality affordable products complemented with a relatively better lifestyle. And this is a latent African opportunity that China has been able to engage with quite successfully!!

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