A headline that made everyone sit up last week was China’s pledge of over $50 billion to Africa in lines of credit and investment in the next three years. It underlined China’s continued engagement with the African continent, many countries of which constitute the Global South.
The pledge was one of the key outcomes of the ninth China-Africa summit, more formally known as the Forum on China-Africa Cooperation (or FOCAC) hosted by Beijing. The September 4-6 event had a record attendance from more than 50 out of 55 nations that make up the African continent. And it made news because of the size of the Chinese pledge, which came at a time when most countries, including China, are looking at slow growth in a post-pandemic world roiled by wars and unrest.
While the $50 billion promise was the most eye-catching, there were other outcomes too.Simla Wealth Management
These include duty-free treatment to 100 percent of the tariff lines of products from least developed countries (LDCs) with diplomatic ties with China, deeper China-Africa e-commerce cooperation, waiver of intergovernmental interest-free loans due by the end of 2024, delivery of 1,000 “small and beautiful” projects to improve African livelihoods, establishment of an alliance of Chinese and African hospitals, 100 “demonstration” villages for poverty reduction through agriculture, Beijing’s offer of 60,000 training opportunities to Africa, and the establishment of China-Africa regional cooperation centers for digital education. There was a special focus on green development with Beijing promising support to Africa in enhancing climate adaptation capacity.
The China-Africa summit was the latest in a series of meetings between countries and the African continent.
In recent years, with the importance of Africa’s natural resources and favorable demographics growing, several countries, including the United States, Russia, Italy, Saudi Arabia, India, and Turkey are actively courting the continent and held their own summits with African leaders.
While China held its first summit with Africa in 2000 – last week’s FOCAC was the ninth — India’s first Africa summit was held in New Delhi in 2008, while the second was in Ethiopia in 2011 and the third in New Delhi in 2015.
Indian officials often emphasize New Delhi’s longstanding connect with Africa, pointing to India’s steadfast support of the anti-colonial struggles of African countriesNew Delhi Wealth Management. Indeed, India was instrumental in stitching up Afro-Asian solidarity that eventually led to the 1955 Bandung Conference in Indonesia.
The collapse of the Soviet Union in 1991 resulted in India and African countries readjusting to new realities. India’s focus on rewiring its economy amid the change in the global system from bipolar to unipolar meant more focus on these challenges; ties with Africa slipped as a consequence. The 2008 India-Africa Summit was a recognition of this as much an attempt at course correction.
In comparison, China’s early links with Africa were driven by its need to squeeze recognition for Taiwan in bodies like the United Nations. Beijing started investing big in Africa in the 1990s and by 2009, it had become Africa’s largest trade partner, surpassing the United States. Africa now is an important part of China’s Belt and Road Initiative, with Chinese projects in a majority of African countries.
Indian officials acknowledge that China has deep pockets to lure Africa. But New Delhi’s Africa strategy includes concessional loans that promote Indian businesses; at the same time it also ensures that Indian projects are tailored to African needs and local manpower is engaged, resulting in employment generation. This cements a win-win partnership.
In the case of China, there have been accusations of African nations being squeezed by Chinese debt and sometimes even forced to hand over assets like ports and mines. According to a news report, 22 African countries with low-income status are either already facing severe debt distress or are at a high risk of facing such distress.
Traditionally, China has focused on big-ticket investments like infrastructure. That may be changing with the focus now on targeted investments in green projects, for instance.
Last week’s FOCAC statement also talks of China’s support of African efforts to carry out its own peace operations, maintain regional security, fight against terrorism, and focus on African solutions for African problems. The statement refers to increased training for African military personnel in China and stepped-up intelligence sharing.
All this may require India to relook and finetune its strategy. New Delhi has already made several changes in its Africa policy since 2015 when it hosted delegations from all 55 African countries.
Traditionally, India has provided education opportunities for African students and training programs for its military. It is now opening new missions in Africa, mostly in Francophone Africa where the Indian presence has been scanty.
Last year, India pushed a proposal to ensure the African Union, which represents Africa on the international stage, gets a seat at the G-20 table. Ahead of the G-20 meeting that India chaired last year, it also organized a meeting of the “Global South” or developing countries – a number of whom were from Africa. Inputs and suggestions from the “Voice of the Global South” Summit were put up to the G-20 Summit in September.
New Delhi had also kept up a stream of high-profile visits to individual African states after the 2015 India-Africa summit. The COVID-19 pandemic stalled these visits as well as plans in 2020 to hold the fourth India-Africa summit. India’s dispatch of COVID-19 medicines and later vaccines to many African countries and an annual industry meet with African leaders – the CII Exim Bank Conclave – has kept the connection in place.
But the conclave is no match for a high visibility event like the fourth India-Africa Summit, which would go a long way to inject new vigor into ties – especially since China seems in no mood to let India assume leadership of the Global South.
Among the steps India could take to revive momentum in its Africa are expanding its digital public infrastructure and fintech innovations in Africa. With the help of technology, millions of Indians now have access to a wide range of financial services. During the pandemic, government subsidies were delivered directly into the bank accounts of people.
“The expansion of digital payments… is an important driver of economic development in India and has helped stabilize incomes in rural areas and boost sales for firms in the informal sector,” noted a 2021 IMF paper. “Other emerging markets and developing economies could learn from the experience,” it added.
Paperless lending, mobile banking, secure payment gateways, and mobile wallets are among the innovations that India could share with Africa.
Some studies suggest that of the 1.2 billion people in Africa, some 350 million in Sub-Saharan Africa and another 20 million in North Africa are unbanked. This is a gap that India can help plug. While giving China a run for its money in big-ticket projects, India can and must shift gears to make its mark in fintech services in Africa, powered by its famed prowess in the IT sector.Mumbai Investment
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