Continuing with my theme from last week, ‘A Paradox of Strategies’, we now discuss strategies of the two countries in the quest for Africa!

Whilst the Chinese move into Africa in an efficient methodical planned business like manner, India is moving in it’s slow, slightly chaotic way (reflective of it’s democracy) to improve its positioning in Africa. The ambitions of both countries may intersect; the approach though is a stark contrast!

China first came into contact with Africa when legendary explorer – conqueror Zheng returned from Kenya around 600 years ago with a Giraffe. In the 60s it was Africa’s leftwing revolutions that sparked interest while today it is Africa’s resources!

China is hungry for oil and other raw materials that Africa has, this is evident by the over 700 Chinese companies that have set up on the continent in the past few years. With the support and financial backing of the central government, these companies are investing time and money in infrastructure projects, building roads, railways, power plants & football stadia, often in places that the West has chosen to ignore or have been left neglected.

Chinese outlook: why they love Africa

1. Need more energy and resources to fuel their booming economy
2. New markets to export the products of the booming economy
3. Support from international organizations.
4. Support from allies helps counter U.S. influence in both the region and globally.

What made the two click?

African nations out of favor with the West are increasingly turning to China for material support. China’s policy of “not interfering in the internal affairs of other nations” is often more attractive than aid packages tied to anti-corruption requirements. Using their increasing wealth as leverage, China has increasingly wooed Africa by writing off large amounts of debt. In 2000, China wrote off US$1.2 billion in African debt; in 2003 it forgave another US$750 million.

China’s support, both politically and economically, of Zimbabwe and the Sudan makes it possible for the two world pariahs to survive despite heavy economic sanctions from the West. Another example is Angola, which refused to take a US$ 2 billion loan from the IMF for infrastructure development, preferring to go to China instead. The exchange: 10,000 barrels of oil daily!

China first established a presence in the unexploited the Muglad oilfields of southern Sudan 10 years ago, now it imports 50% of the region’s crude oil, and 13 of the 15 most important foreign companies operating in Sudan are Chinese. But it’s not just Sudan’s oil that is of interest, China has also become Sudan’s largest supplier of arms.

And the list doesn’t end with Zimbabwe or Sudan:

? China launched Nigeria’s first space satellite.

? Chinese exports to Ethiopia make up over 93 percent of the two nations’ bilateral trade.

? Chinese troops are part of the UN peacekeeping mission in Liberia

? China contributed to construction projects in Tanzania and Zambia

We discussed the Chinese model above, i.e., barter between money & diplomatic influence for unfettered access to mineral resources & black gold!

The Indian model (if we can call it that) is primarily hedged off its historical relations. Early contact & East Africa go back at least 2000 years. When Vasco Da Gama arrived in Mozambique, Mombasa & Lindi in 1497, he was surprised with the number of Arabs & Indians he found there. (www.asiansinafrica.com)
Indians have been trading & living in Africa for centuries. A sizeable number of Indians were also carried over by the British to East Africa for labour requirements. From India’s Freedom struggle, the Non – Aligned movement, to the commercial influence of the Indian Diaspora & the vibrant Indian democracy have all been positively enshrined in Africa’s aspirations. You would find India to be a cherished destination for African students till the early 90’s.

The difference being India is more an inspiration than a way to meet your materialistic requirements…

China though has forced India to start thinking differently. India’s big jolt came in 2004 when it lost out to an oil bid in Angola. China blew away India with a $2 billion vs. India’s measly $200 million offer to develop Angola’s railways.

Indian investments are largely driven by the private sector. They are also generally more equitable for the locals. To keep costs down Indian companies find it easier to employ locals whilst the Chinese government led investment brings with it Chinese labour.

Although India is also in Africa for economic reasons, there is an effort to humane-ness. India’s big push is to get Africa connected and educated. Ethiopia, South Africa, Ghana & Mauritius will be the initial countries for a $1 billion pan Africa e-network project, a joint project with the African Union. India also plans to export its Open University system, amongst the largest in the world, to Botswana & Uganda amongst others in Africa.

Africa is but one of the ‘fields’ the two countries are approaching, a similar approach was witnessed in the Middle East & the next frontiers are closer home – South East Asia & in far away developing Latin America.

During the 2007 Cricket World Cup, India made ‘heavy weather’ of building one cricket stadium in the Caribbean islands. China made SIX and it does NOT even play Cricket.

The future shall tell if India’s soft power – a more inclusive presence or China’s business like approach shall reap greater benefits.

This entry was posted on Monday, July 16th, 2007 at 9:19 am and is filed under Investment, Economy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.